Recent actions by President López Obrador and Mexican officials threaten cultural, economic, and diplomatic ties fundamental to North American prosperity
WASHINGTON—United States Senator Bill Hagerty (R-TN), a member of the Senate Foreign Relations Committee, along with nine Senate colleagues whose states’ businesses and supply chains have been threatened by recent aggression from Mexican President Andrés Manuel López Obrador, are urging President Joe Biden to take action concerning this aggression by the Mexican government toward U.S. companies with investments and operations in Mexico.
“For over two centuries, the United States and Mexico have developed deep cultural, economic, and diplomatic relations that have been instrumental in creating prosperity in North America. A central component of this relationship is the economic integration that encourages American investment in and trade with Mexico […] However, recent actions by President López Obrador and officials in his government threaten to undermine the confidence of U.S. businesses in Mexico as a viable, predictable marketplace and destination for investment,” the senators wrote.
The senators pointed to a particularly influential company that has facilitated decades-long economic ties between the two countries, Vulcan Materials Company. Vulcan has been frequently targeted by the Mexican government’s arbitrary actions and was recently presented with orders to shut down quarrying and extraction operations on one of its three active mining parcels, despite its full ownership of this property and its possession of all the necessary permitting needed to operate.
“A continued shutdown of Vulcan’s operations in Mexico will have a direct and negative impact on the United States, as Vulcan’s Mexico facility is a critical component of the construction aggregates supply chain for the southeast United States. This facility provides construction aggregates for infrastructure projects in coastal markets that do not have the geology necessary to produce quality construction aggregates locally,” the senators continued.
Both Republican and Democratic members of Congress have previously sounded the alarm to the Biden Administration regarding President López Obrador’s deviation from the economic and legal norms that govern U.S.-Mexican relations and his retaliation against the U.S.-Mexico-Canada Agreement (USCMA). If these violations persist, they will undermine mutually-beneficial economic cooperation between the U.S. and Mexico and push businesses to pursue more predictable and suitable markets elsewhere.
“Therefore, we respectfully request that you take immediate action with respect to the Government of Mexico to reverse the harmful measures it has already taken and to prevent further damage to the economic relationship between the United States and Mexico,” the senators concluded.
Other signers include U.S. Senators Richard Shelby (R-AL), Rick Scott (R-FL), Tommy Tuberville (R-AL), Roger Wicker (R-MS), Bill Cassidy (R-LA), Ted Cruz (R-TX), Roger Marshall (R-KS), Marco Rubio (R-FL), and John Cornyn (R-TX).
A copy of the letter can be found here and below.
Dear President Biden,
We write urging you to prioritize and address the recent aggression by President Andrés Manuel López Obrador and his Administration toward American companies with investments and operations in Mexico.
For over two centuries, the United States and Mexico have developed deep cultural, economic, and diplomatic relations that have been instrumental in creating prosperity in North America. A central component of this relationship is the economic integration that encourages American investment in and trade with Mexico—which, in 2021, generated over $661.1 billion in total trade. As the world emerges from the pandemic and reassesses the global rebalancing of supply chains, North America is uniquely positioned to bolster its leadership as a manufacturing powerhouse as companies look to near-shore their supply chains from Asia and the rest of the world.
However, recent actions by President López Obrador and officials in his government threaten to undermine the confidence of U.S. businesses in Mexico as a viable, predictable marketplace and destination for investment.
For over thirty years, Vulcan Materials Company has operated a limestone quarry on three contiguous parcels of land in Quintana Roo, Mexico. This facility has brought investment and well-paying jobs to the region. However, under the leadership of President López Obrador, the Mexican government has taken numerous arbitrary and punitive actions against Vulcan, illustrating increasingly protectionist and anti-competitive policies that disregard the rule of law.
In 2018, Vulcan initiated NAFTA arbitration proceedings against Mexico due to arbitrary and capricious actions that prohibited Vulcan from operating on two of the three parcels it owns in Quintana Roo. In January of this year, President López Obrador began escalating hostilities, directly interfering with Vulcan’s ability to export materials and making numerous public statements advocating for Vulcan to stop quarrying. On May 5, the Mexican Government presented Vulcan with shutdown orders to immediately cease all quarrying and extraction operations on its one active mining parcel, despite Vulcan’s full ownership of this property and its possession of all the necessary permitting needed to operate.
A continued shutdown of Vulcan’s operations in Mexico will have a direct and negative impact on the United States, as Vulcan’s Mexico facility is a critical component of the construction aggregates supply chain for the southeast United States. This facility provides construction aggregates for infrastructure projects in coastal markets that do not have the geology necessary to produce quality construction aggregates locally.
Further, Vulcan Materials Company is not the only American entity to experience harassment from the Mexican government and raise concerns over President López Obrador’s anti-business rhetoric. There have been a number of stunning cases, particularly in the energy and power sectors, where multiple U.S.-owned facilities have been forced to close.
The Natural Resources Defense Council, the Alliance for Trade Enforcement, the United States Chamber of Commerce, and the National Association of Manufacturers have all cited numerous instances in which protectionist policies threaten the predictability of Mexico’s business climate. This is further underscored by the Mexican Senate’s recent passage of a bill to nationalize lithium mining and extraction. Under this protectionist measure, Mexican state-run companies will have exclusive rights to mine lithium, which is a critical mineral used in the production of electric car batteries and other next-generation technologies.
Both Republican and Democratic Members of Congress have raised concerns to your Administration regarding President López Obrador’s departures from the economic and legal norms that govern U.S.-Mexican relations and his assault against the U.S.-Mexico-Canada Agreement (USCMA). If these violations are allowed to continue, they will undermine crucial, mutually beneficial economic cooperation between our nations and encourage businesses to seek more predictable and suitable markets elsewhere.
Therefore, we respectfully request that you take immediate action with respect to the Government of Mexico to reverse the harmful measures it has already taken and to prevent further damage to the economic relationship between the United States and Mexico.
Sincerely,
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