Industry Experts Predict US/Mex Victory in USMCA Dispute

After Canada officially joined Mexico in the Panel for the Solution of Controversies of USCMA against the US, the Mexican Automotive Industry Association (AMIA) assured that the panel would side with Mexico and Canada.

Canada’s Trade Minister Mary Ng announced that the country would join Mexico in challenging the US’s interpretation of auto origin rules. The dispute arose after the US did not want to allow foreign-made materials assembled in North America to qualify for tariff-free benefits. This move comes after the three countries agreed to raise the percentage of a vehicle that must be assembled in the region to qualify for the tariff-free status from 62 to 75 percent.

"Canada, Mexico and the US would all benefit from certainty that USMCA is being implemented as negotiated, and Canada is optimistic that a dispute settlement panel will help ensure a timely resolution of this issue," Ng said yesterday.

Just last week, a separate dispute resolution panel ruled in a conflict between Canada and the US regarding a disagreement over Canada’s tariff-rate quotas for dairy products in favor of the US. Canadian authorities had previously pressured Prime Minister Justin Trudeau to adapt a stricter stance against their Southern neighbor after the “Three Amigos Summit” did not result in a resolution of the disagreements over US President Joe Biden’s proposed tax credit on EVs.

Mexican Minister of Economy Tatiana Clouthier celebrated Canada’s joining writing on Twitter: “I celebrate the decision of Canada to join the request for a panel that we presented on Jan. 6 to address the interpretation of rules of origin in the automotive sector by the US. Together we will defend the competitiveness of this regional industry,” Clouthier said.

Thanks to Canada’s support in officially seeking a panel of five regional experts to determine the outcome of the dispute, AMIA believes “Mexico has practically already won” and industry experts agree. The National Auto Parts Industry (INA) believes that “without a doubt” the panel will deem Mexico and Canada’s stance as the correct one.

“Mexico and Canada, which have at last decided to together seek a Panel for the Solution of Controversies, share the idea that the interpretation that the US makes in calculating or applying the rules of origin for the automotive industry is not only incorrect but also challenges the common principle of the advancement towards the integration of one of the most dynamic sectors at a global scale, which is the automotive sector,” said economic consultant Pedro Tello.