Under the new North American trade pact, Mexico and Canada have won their challenge to the US interpretation of the auto content rules, a disputes panel has ruled, a decision that favors car makers. parts north and south of the US border
Both Canada and Mexico filed a complaint against the United States a year ago over how to enforce the automotive content requirements under the United States-Mexico-Canada free trade agreement (USMCA), which went into effect in 2020.
“The decision is good for Canada and Mexico,” said Flavio Volpe, president of the Canadian Automotive Parts Manufacturers Association.
“Canada is pleased to see existing dispute resolution mechanisms support our negotiated rights and obligations under USMCA,” Canadian Trade Minister Mary Ng said in a statement.
“This is excellent news,” Tatiana Clouthier, Mexico’s former economy minister, said in a video on Twitter. “That helps the entire auto industry in the North American region tremendously.”
The decision is “disappointing,” said Adam Hodge, a spokesman for the US Trade Representative’s office, adding that the decision could result in “fewer American jobs.”
Under the USMCA, the United States must now agree with Canada and Mexico how to implement the panel’s decision, or face possible retaliatory tariffs.
“We are reviewing the report and considering next steps,” Hodge said. The USTR will now “engage Mexico and Canada in a possible resolution of the dispute,” Hodge said.
“In the coming days, Mexico will begin a process of dialogue and cooperation with its trading partners,” the Mexican Ministry of Economy said in a post-ruling statement.
The decision was announced amid a separate energy-focused USMCA dispute that has pitted the United States and Canada against Mexico. Ottawa and Washington argue that Mexico’s energy policies are putting US and Canadian companies at a disadvantage, while Mexico has defended its policies and said it has not broken any laws.
According to the USMCA, 75% of a vehicle’s components must originate in North America to qualify for duty-free status, but the United States disagreed on how to calculate that number.
Mexico and Canada said that if a “core part,” such as the engine or transmission, has 75% regional content, USMCA allows that number to be rounded up to 100% when calculating the broader requirement for regional content. of a complete car.
The United States said that the contents of the “central part” should not be rounded when determining the contents of the entire car.
Volpe said the decision is also important because it shows that disagreements can be resolved under the rules of the new trade pact.
“This shows that the dispute resolution vehicle within the USMCA works,” Volpe said.
Source: Archyde.com
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