Dispute That Led to Mexico Seizing US-Owned Port ‘Not Unprecedented’: Expert

A port in Mexico, owned by Vulcan Materials Company of Birmingham, Alabama, was vacated by the Mexican military, according to a statement from US Sen. Katie Britt (R-Ala.). In the statement, Britt said, “I am happy to hear that Mexican governmental forces have now heeded our request to withdraw from Vulcan’s port facility, following a nearly two-week unlawful takeover.”

According to reports, Mexican police and naval personnel seized the property at Punta Venado in Quintana Roo, Mexico, at 5:30 a.m. on March 14 to allow a ship belonging to Cemex, a Mexican building materials company, to offload cargo. Vulcan Materials and the Mexican government have been in arbitration over alleged violations of the North American Free Trade Agreement since late 2018.

Jonathan Doh, an associate dean of research, and a professor of management at Villanova University, Pennsylvania, stated that disagreements are common in international business, although, in his experience, this dispute has gone on longer than usual.

Disputes Not Unprecedented

These disagreements are not unprecedented, according to Doh. He said that this is the very reason why we have these provisions in international trade agreements. The deal between Vulcan and the Mexican government is covered by the North American Free Trade Agreement, first negotiated in 1994, then renegotiated as the US–Mexico–Canada Agreement. Trade agreements ensure that all parties are treated equitably and have some recourse for disagreement. The goal is to ensure that foreign-owned businesses are treated the same as domestic businesses.

According to Doh, cultural, legal, and commercial differences must be addressed to ensure free trade, and this is the reason why such agreements are essential. Doh also pointed out that U.S. legal precepts are likely foreign to many Mexican citizens, meaning that it’s important to have trade agreements in place.

Vulcan Lists Tax Complaints

Vulcan claims in its complaint that various Mexican agencies have levied unfair taxes on the property and ignored their own courts’ warnings to stop the taxes and return Vulcan’s money. Meanwhile, Mexican officials allege that Vulcan has engaged in illegal mining. Some US companies have accused Mexico of dragging its feet in trade agreements.

In documents filed with the US State Department as part of the arbitration process, Vulcan claims that the Mexican government has “deployed the full powers of the State to interfere with Legacy Vulcan’s integrated project to quarry limestone and produce aggregates for export to the United States.” Vulcan has been operating in Mexico for more than 30 years and built the port in Quintana Roo to load deep draft vessels with limestone for export to the United States.

Mexican President Andrés Manuel López Obrador has a reputation as a nationalist who tends to favor Mexico’s state-owned energy company, Pemex. For example, policies brought in to comply with the U.N.-brokered Paris Agreement and open the country’s energy markets to foreign suppliers for compliance have been walked back by López Obrador.