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Canada, Mexico amigos in free trade cause U.S. neighbors press for stronger North American economic ties, but insist United States abide by NAFTA dispute rulings Gary Park Petroleum News Canadian Contributing Writer
Canada and Mexico, junior partners in the North American Free Trade Agreement, have taken their boldest step yet to ensure the United States plays by the rules of the world’s largest trade pact.
With the United States pressing for a more comprehensive North American energy policy but refusing to accept NAFTA panel rulings on Canadian softwood lumber exports, leaders of the two countries have called for more cooperation and less confrontation.
After meeting in Vancouver Sept. 30 with President Vicente Fox, Prime Minister Paul Martin said Fox “fully supports Canada’s position to make sure that (NAFTA decisions) are upheld.”
Fox endorsed Canada’s call for changes to make NAFTA’S dispute mechanism work more speedily and effectively.
He said NAFTA has brought wealth and jobs to all three signatories and should be strengthened to handle growing competition from Asia.
Fox said Mexico “regrets any unilateral decision that fails to abide by the decisions of the arbitration panels … When international commitments are promptly honored, it will diminish uncertainty in the region and can maximize the benefits of NAFTA.”
He said the NAFTA partners have already lost jobs to Asia and need to “regain the competitiveness of this region in the world. Today more than ever, cooperation and exchange are the cornerstones for progress. Fair trade governed by rules is the basis for the growth of our economies.” Martin: Bush administration ‘mocks’ free trade Martin earlier told 1,700 British Columbia municipal politicians that the Bush administration “mocks” free trade principles by flouting the rules.
The Canadian prime minister said he has told President George W. Bush that the NAFTA signatories must become a more integrated economic unit to compete against China and India.
“That’s why it is so counterproductive when one nation decides to flout the rules,” Martin said.
Against that background, Fox used his fleeting visit to build a bridge across the United States, linking his country’s oil and gas opportunities with Canadian investors and companies.
He dangled the prospect of outsiders providing oil and gas services and possibly joining state-owned Pemex in partnerships.
But Fox stopped short of raising hopes of changes to Mexico’s constitutional provision limiting mineral ownership to the state, viewed by many outsiders as the biggest single deterrent to their participation.
He made it clear that Mexico will keep control of oil and gas development and pricing, despite Pemex’s struggle to sustain production from its maturing fields and the fact that 15-20 percent of its natural gas is imported from the United States. Mexican production drop coming The Canatrell oil field is facing a precipitous drop after being on stream since 1980, with output forecast to drop next year to 1.9 million barrels per day from 2.14 million bpd in mid-2004.
Fox told business leaders in Calgary that Mexico’s deepwater offshore oil plays need foreign technology, while the onshore sector lacks the required pipeline network for northern exploration and development.
To that end, he said foreign and domestic private investors are pumping US$20 billion a year into pipelines, drilling and power generation.
TransCanada has a C$181 million contract to build and operate a gas pipeline and TransAlta operates two power plants.
But Pemex remains untouchable within both houses of Mexico’s Congress. Proposals introduced by Fox in 2001 to allow for greater private sector investment in Pemex are still bogged down before legislators, who don’t want to meddle with a system that sees almost two-thirds of Pemex revenues go directly into government coffers, accounting for one-third of Mexico’s total public revenue.
Fox has tried unsuccessfully to channel more of Pemex’s cash into oil development, but has been unable to sway state governors.
His visit included meetings with researchers working on advanced petroleum technology, including enhanced oil recovery, at the University of Calgary; talks with Hal Kvisle and Charlie Fischer, chief executive officers of TransCanada and Nexen, respectively; and a speech to the Vancouver Board of Trade.
He put special emphasis on ways Canada and Mexico should consolidate their trading and widening their strategic relationship, underscoring the fact that both countries experience frequent irritants in their trading relationships with the United States.
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