Canadian Companies Step Up Pressure on Mexico in USMCA Review: Energy, Critical Minerals, and Canola in the Crosshairs
The USMCA review phase is starting to gain political and business momentum, and from western Canada several issues are already emerging that could complicate talks with Mexico. Organizations such as the Calgary Chamber of Commerce and the Business Council of Alberta acknowledge that Mexico is an increasingly important link in regional competitiveness—especially given the reshuffling of supply chains that has favored “nearshoring”—but they warn that regulatory decisions in energy, mining, and agriculture are creating friction that could escalate within the agreement’s framework.
The backdrop is that Mexico has cemented itself as a key player in North American trade, driven by export manufacturing and growth in sectors such as auto parts, electronics, and medical devices. However, that same trend has increased scrutiny around legal certainty, regulatory quality, and infrastructure capacity (power, water, logistics, and security) to sustain new investment. In that context, concerns voiced by Canada’s private sector add to earlier tensions that have already surfaced in consultations and dispute panels under the agreement.
The first front is energy. From Alberta and Calgary, critics argue that policies aimed at strengthening state-owned companies—particularly Pemex and, in the power sector, the dominant role of CFE—reduce access to private capital and make the rules for investing less predictable. The core argument is not the state’s presence per se, but the perception of an “uneven playing field” and regulatory shifts that change the risk calculus for long-term projects, at a time when North America is trying to secure enough energy that is competitive and has a lower carbon footprint to support its manufacturing base.
Adding to this concern is a technical feature of the USMCA: the narrower scope of the investor–state dispute settlement (ISDS) mechanism in certain areas, including energy, which—according to these organizations—raises investment risk for Canadian companies. Their view is that with less access to arbitration protections, projects become more vulnerable to administrative and regulatory changes. For Mexico, the challenge is twofold: on the one hand, maintaining state stewardship where the Constitution defines it; on the other, offering stable rules that make it possible to expand generation capacity, grids, and fuel supply at a time when electricity demand is rising due to industrial relocation and data centers.
This debate also includes a potential path forward: the expectation—mentioned by the Canadian organizations themselves—that the Mexican government will gradually scale back financial support for Pemex by 2027. If that trajectory materializes, it could accelerate partnership models, farmouts, or greater private participation in specific segments, as long as there is regulatory clarity, permits, and workable commercial terms. In the near term, the market will continue to watch variables such as Pemex’s debt path, its tax burden, investment in exploration and production, and the energy system’s ability to supply export-oriented industry without driving up costs.
The second axis is mining for critical minerals. Alberta and Calgary are focusing on lithium, cobalt, and other inputs tied to batteries, electric vehicles, advanced technologies, and defense. From their perspective, the USMCA should be the platform for integrating regional supply chains and reducing reliance on Asia, particularly China. The direct criticism here is that state control over lithium in Mexico makes it harder, in their view, to fully integrate North America’s supply chain—along with concerns that Chinese companies could use subsidiaries to gain preferential access to the regional market.
For Mexico, this discussion is unfolding at a moment when the country is trying to capture more value added in manufacturing, but is running into bottlenecks: investment in power transmission, environmental permits, regulatory certainty, and water availability in northern industrial states. With critical minerals, there is also the challenge of moving from extraction into refining and processing stages, which tend to be more capital-intensive, technology-heavy, and tightly regulated environmentally. A USMCA negotiation could push Mexico to define more precisely how it will balance sovereignty goals, investment attraction, and compliance with environmental and labor standards—issues that are now central to North America’s trade agenda.
The third front is agrifood: canola. Canadian business organizations argue that Mexico’s restriction on importing genetically modified canola functions as a non-tariff barrier and question whether it aligns with the spirit of the USMCA, which favors science-based decision-making and transparent procedures. For Canada, it is an important product; for Mexico, the issue sits within a broader debate over agrifood policy, biosecurity, and how to balance health and sustainability goals with affordable supply—especially in an environment where food inflation has been a sensitive issue for households.
In terms of trade magnitude, Canada remains an important partner but a relatively smaller one compared with the United States: bilateral exchange accounts for a limited share of Mexico’s total trade. Even so, the USMCA’s weight as a certainty framework is significant because it shapes investment decisions, rules of origin, regulatory disciplines, and access conditions to the world’s largest market. Moreover, in the 2024–2026 environment, regional integration intersects with factors such as still-elevated interest rates in North America, moderate economic growth, and fiscal pressures—making any signal of stability and cooperation that lowers country risk and the cost of capital more valuable.
Looking ahead, the tone and outcome of the USMCA review will depend on how willing the partners are to trade certainty for regulatory flexibility. For Mexico, the treaty’s main benefit has been anchoring exports and attracting manufacturing investment; the main risk is that accumulated disputes in energy, mining, or sanitary measures become a source of uncertainty that delays projects—especially in sectors requiring large capital outlays and long timelines. For Canada, the goal is to expand its footprint in a market with growth potential, but with rules it sees as less clear in strategic areas.
In short, the warnings from Canada’s business community put on the table that Mexico’s moment of deepest productive integration with North America coincides with a negotiation that will require fine-tuned definitions on energy, critical minerals, and agrifood trade. If Mexico can combine state stewardship with predictable rules, sufficient infrastructure, and compliance with trade commitments, it can strengthen the country’s appeal for nearshoring; if not, the cost could show up in more disputes, higher risk premiums, and more cautious investment decisions.
