North America vows to strengthen economic ties, Mexico energy row rumbles on

© Reuters. FILE PHOTO: U.S. President Joe Biden and Mexican President Andres Manuel Lopez Obrador meet at the National Palace during the North American leaders summit in Mexico City, Mexico January 9, 2023. REUTERS/Kevin Lamarque

By Jarrett Renshaw and Dave Graham

MEXICO CITY (Reuters) -The United States, Mexico and Canada on Tuesday vowed to tighten economic ties, producing more goods regionally and boosting semiconductor output, even as integration is hampered by an ongoing dispute over Mexico's nationalist energy policies.

U.S. President Joe Biden, Mexican President Andres Manuel Lopez Obrador and Canadian Prime Minister Justin Trudeau met in Mexico City and pledged to beef up supply chains after weathering serious disruptions during the COVID-19 pandemic.

Lopez Obrador said Mexico would help Biden clamp down on the trade in synthetic opioid fentanyl, which is blamed for thousands of U.S. deaths, as the leaders also promised to reduce their countries' carbon footprint and tackle inflation.

"We're working to a future to strengthen our cooperation on supply chains and critical minerals so we can continue to accelerate in our efforts to build the technologies of tomorrow - right here in North America," Biden said in a joint news conference with his fellow leaders after their meeting.

Lopez Obrador said the region would promote economic development by creating a committee for import substitution to make North America less dependent on other parts of the world.

The White House said the three countries would improve legal pathways for migrants, and Lopez Obrador again urged Biden to press Congress to enact measures that would regularize the migration status of millions of Mexicans in the United States.

The United States said the region would in early 2023 organize a semiconductor forum to increase investment in the strategic high-tech industry dominated by Asia.

The White House said coordination would be needed on semiconductor supply chain mapping to identify needs and investment opportunities in making chips that are used in everything from telecoms to carmaking and defense.

Mexico's hopes of benefiting from the push to boost semiconductor output have been undermined by the energy dispute, with Washington and Ottawa starting formal dispute settlement proceedings against Mexico's policies in July.

The spat, which centers on Mexico's efforts to give priority to its cash-strapped, state-run energy companies at the expense of private investors, was being closely watched at the summit. The leaders did not answer questions on it at the news conference.

Mexican Foreign Minister Marcelo Ebrard had suggested energy would not feature prominently in Tuesday's talks, noting that a resolution process was under way and the three leaders did not want to turn the summit into a dispute panel.

"I wouldn't imagine it's a major issue in today's summit," he told Mexican radio, while noting Trudeau was likely to raise the matter in separate talks with Lopez Obrador on Wednesday.

MIGRATION

The Biden administration has focused much of its attention with Mexico on containing illegal crossings at the southern U.S. border, and policy analysts argue Washington is often reluctant to let other issues complicate dealings on migration.

On Monday, Canadian International Trade Minister Mary Ng put across her country's concerns about Mexico's energy policies and their potential effects on Canadian investments in a meeting with Mexican Economy Minister Raquel Buenrostro.

Ng said it was important to find a "mutually acceptable resolution" to the dispute, and also flagged concerns about the treatment of Canadian mining companies in Mexico.

Biden and Trudeau met earlier on Tuesday, and the U.S. leader said he would visit Canada in March, according to the White House. As their meeting started, Biden said the region should aim to be "the clean energy powerhouse in the world."

Biden also stressed "strengthening our supply chains so that no one can arbitrarily hold us up."

Under the North American Drug Dialogue (NADD), the three countries would adopt an "updated strategic framework" to address threats posed by banned narcotics, the White House said. This would include greater information-sharing on chemicals used to make drugs including fentanyl.

The White House said the three were also committed to curbing methane emissions from solid waste and wastewater by at least 15% by 2030 from 2020 levels.

They would also create a virtual platform to give migrants streamlined access and information on legal ways to enter Mexico, the United States, and Canada and make them less likely to rely on smugglers, it said.