Image credits: ErikaWittlieb
News Article

USMCA Increased Investment in Automotive Industry: USTR

By Rodrigo Andrade | Thu, 07/07/2022 - 10:41

The US Trade Representative (USTR) office published a Report on the Operation of the United States-Canada-Mexico Agreement (USMCA), showing that the treaty benefited the exchange of technology in the automotive industry. 

“The autos provisions that the US negotiated in the USMCA are supporting investments in new technologies and production, which will create good-paying jobs and benefit workers,” said Trade Representative Katherine Tai. “We will continue to work with Canada and Mexico to ensure that the North American autos industry remains robust and competitive in the face of new global challenges”.

The paper reports on the activities of the past two years pertaining to the automotive industry and states that actions taken during that period were effective in meeting the USMCA’s rules of origin. It was prepared in collaboration with the Interagency Committee on Trade in Automotive Goods and incorporated input from the vehicles and auto parts production businesses, labor organizations, associations and other stakeholders. 

“Over the past two years, auto and parts producers have made significant investments in North American production to meet these requirements and have demonstrated compliance with the new rules,” reads the report. It also addresses the difficulties that the automotive sector has faced in terms of shortages and supply chain challenges, especially considering the COVID-19 pandemic and Russia’s invasion of Ukraine. 

The challenges affecting the automotive industry have also hurt Mexican companies. “Inventory uncertainty persists, as well as the inflationary onslaught on the consumption side, with a high level in the price indexes that reflect annual advances both in general (7.88 percent) and vehicles (8.94 percent), with data up to the first fortnight of June 2022,” said Guillermo Rosales, President, Mexican Association of Automotive Distributors (AMDA). 

Despite the challenges, the sector seems to be recovering. In June, vehicle sales in Mexico increased by 1.9 percent year over year and vehicle production in the country is forecasted to increase by 16 percent during 2022, according to National Auto Parts Industry (INA), as published by MBN. INEGI forecasts a 16.53 percent recovery in vehicle production in comparison to 2021 but this depends on many external factors such as the availability of raw materials and microchips.

Photo by:   ErikaWittlieb
Rodrigo Andrade Rodrigo Andrade Junior Journalist & Industry Analyst