Rules of Origin Dispute Expected to Favor Mexico, Canada: AMIA
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Rules of Origin Dispute Expected to Favor Mexico, Canada: AMIA

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Rodrigo Andrade By Rodrigo Andrade | Journalist & Industry Analyst - Wed, 11/02/2022 - 12:05

The results of the USMCA dispute panel regarding rules of origin will be announced on Nov. 11, 2022. Key players in Mexico's automotive sector, including the National Auto Parts Industry (INA) and the Mexican Association of the Automotive Industry (AMIA), trust that the resolution will favor the stand backed by both Mexico and Canada. If the panel rules in their favor, the US will be forced to start the new rule of origin calculations in 45 days, as reported by MBN. 

“AMIA and the US and Canadian Associations believe that this panel will be resolved in favor of Mexico and Canada. We agree with the position of the Mexican government and support that position,” said José Zozaya, President, AMIA, to El Economista. AMIA worked as an impartial adviser to the court. 

Alberto Bustamante, Director, National Auto Parts Industry (INA), also said that the panel will likely rule in favor of the Mexican and Canadian posture: “We are sure that Mexico and Canada will win this dispute, since the Roll up facility granted by the USMCA rules of origin is written in black and white in the texts of the treaty itself.” 

The USMCA upped the Regional Value Content (RVC) from 62.5 percent to 75 percent for light vehicles and trucks. Canada and Mexico argue that if an auto part complies with the minimum required RVC, it can be considered to have a 100 percent of RVC when incorporated to the total sum of the RVC of the vehicle. The US argues that the RVC of an auto part cannot be rounded up to 100 percent, as previously reported by MBN.

Earlier this week, Members of the Auto Drive America trade group asked the US government to relax the country’s position on the rules of origin. The petition was presented by 11 automotive companies that are part of the block to the US Trade Representative (USTR). The organization considers that the US’s interpretation of the rules changed after automakers were already developing and investing in modifications to their supply chain and operations to meet the new standards that the USMCA implemented, as reported by MBN. 

"For the USMCA to fulfill its potential to create jobs and transition to new and greener technologies, the Administration [of President Joe Biden] should reconsider and abandon its advocacy of the previous administration's unilateral reinterpretation of the roll-up provisions, which would allow automakers to smoothly implement the billions of dollars of investments they have planned for the US and the region," stated Autos Drive America. 

Photo by:   LEEROY Agency

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