Mexico vows to stand firm in trade spat with U.S. and Canada

Mexican President Andres Manuel Lopez Obrador on Friday ruled out backing down in a trade dispute with the United States and Canada over his controversial energy policies.

Washington and Ottawa this week requested consultations with Mexico under a North American trade deal, the first step in a process that could lead to retaliatory measures.

But Lopez Obrador insisted that his push to boost the state's role in the energy industry would not violate the two-year-old US-Mexico-Canada Agreement (USMCA).

"We're not breaching any commitment," he told reporters.

"We're not going to give in because it's a matter of principle. It has to do with our sovereignty," he said.

The United States and Canada have repeatedly expressed serious concerns about changes in Mexico's energy policies that they say hurt foreign investors and impede development of clean energy.

It is the first formal trade complaint against Mexico under the USMCA.

Lopez Obrador has promoted reforms to strengthen the state-owned electricity provider CFE and roll back the effects of liberalization under previous governments that he says benefited private companies.

US Trade Representative Katherine Tai has said arbitrary treatment puts $10 billion in US investment in Mexico at risk, especially in renewable energy.

The first step in the dispute settlement process is for the parties to hold consultations within 30 days. If there is no resolution within 75 days, Washington can request the creation of a panel to rule on the issue.

While the process could lead to punitive tariffs on Mexico, senior US trade officials told reporters that the goal was to find a resolution to reopen the market, not to retaliate.

Mexico has stated its "willingness to reach a mutually satisfactory solution" during the initial consultations.