The USMCA and recognition of the Mexican State's ownership of hydrocarbons

Abstract

Chapter 8 of the US-Mexico-Canada Trade Agreement (USMCA) recognizes the direct domain and the inalienable and imprescriptible ownership of Mexican hydrocarbons. This article aims to understand that chapter (1) from the perspective of the metamorphosis of investment agreements, (2) its relationship with other chapters of the USMCA, and (3) its effectiveness for the Mexican government. The report concludes that (A) Chapter 8 is the response to the current uncertainty of the international foreign investment regime and the need to adjust investment treaties; (B) the recognition that the Mexican States owns hydrocarbons through government contracts that are entitled to the treaty protection for investments provided for in the USMCA; and (C) Chapter 8 does not appear to be an effective tool for the Mexican government because certain limitations present in other parts of the agreement continue to be applied to the hydrocarbons sector, such as the obligation to grant the same treatment to U.S. and Canadian investors as to Mexican ones. Finally, it becomes evident that Chapter 8 of the USMCA does not seem to be a good model to follow for the Bolivian case.