Mexican trade team reshuffle feeds doubt over U.S. energy dispute

MEXICO CITY, Oct. 14 (Reuters) – Mexico’s president replaced a top trade negotiator on Friday in a sweeping overhaul of its economy ministry that leaves an inexperienced team to deal with a tense and potentially costly trade dispute with the United States and Canada.

Alejandro Encinas Najera, a relatively unheralded Labor Department official whose father is deputy interior minister, replaced Luz Maria de la Mora as deputy economy minister for trade, the government said.

The move surprised economic analysts and came a week after de la Mora’s boss, Economy Secretary Tatiana Clouthier, was resigned and replaced by Raquel Buenrostro, head of the tax agency.

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“This is a very bad sign for the economy,” says Gabriela Siller, economist at BANCO Base. De la Mora “was the one who had all the experience and was involved in all of these conversations so that everything could be worked out.”

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The reorganization has been accompanied by the removal of at least 12 other Economy Ministry officials in recent days, a government source said. The ministry declined to comment.

Buenrostro rose to prominence by boosting government tax revenues from large corporations and ending years of leniency with powerful corporations. But neither she nor Encinas had worked on the trade dispute that arose after US companies challenged President Andres Manuel Lopez Obrador’s nationalist energy agenda.

In July, the United States called for settlement talks, arguing that Lopez Obrador’s energy policies discriminate against US companies and violate a North American trade agreement.

Despite her trade inexperience, however, some analysts are hoping Buenrostro has more political clout than her predecessor and could urge the government’s national energy nationalists to cave in, reducing the risk of a damaging tariff dispute.

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“HARDLINERS WON”

You and Encinas likely have “more credibility with the Department of Energy and the President” than the previous duo, said Luis de la Calle, a former Mexico trade official, citing a statement from the Department of Commerce that said the reshuffle would be a “better one.” Coordination” enable departments.

“It doesn’t depend so much on the negotiations with the US, but on the internal negotiations within Mexico,” he said.

After resigning, Clouthier told Mexico’s La Jornada newspaper that there was a “pack” around the president and that the Department of Energy “wouldn’t budge.”

Under the trade agreement between the United States, Mexico and Canada, if the controversy is not resolved during consultations, an arbitration panel may be asked to consider claims.

Sources told Reuters this month that Washington and Mexico City, unwilling to escalate the trade dispute amid rising inflation, had extended the initial 75-day consultation window.

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Lopez Obrador has also presented an optimistic front, insisting that US officials on Friday “had decided not to take the step towards a body” and were looking for an agreement.

However, the United States can still opt out if talks don’t reach a satisfactory conclusion, and many analysts in Mexico saw the reshuffle of the Commerce Department as a sign that Lopez Obrador would not be willing to compromise on energy.

“I assume the hardliners won,” said Andres Rozental, a former Mexican deputy foreign minister.

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Reporting by Isabel Woodford, Adriana Barrera and Dave Graham; writing by Brendan O’Boyle; Adaptation by William Mallard

Our standards: The Thomson Reuters Trust Principles.

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