Canada and Mexico have won their challenge to the U.S. interpretation of auto rules under the new North American trade pact, a dispute settlement panel announced Wednesday, a ruling favoring the automakers. northern and southern portions of the US border.
One year ago, Canada and Mexico filed a complaint against the United States over how to enforce automotive content requirements under the United States-Canada-Mexico Free Trade Agreement, TMEC, which came into effect in 2020 .
The American interpretation of the rules is “inconsistent” with TMECthe panel said in its decision.
Canada “is pleased to see that the dispute resolution mechanisms in place support our negotiated rights and obligations under the USMCA,” Canadian Commerce Minister Mary Ng said in a statement.
The decision comes amid another energy-focused USMCA dispute that has pitted the United States and Canada against Mexico. Ottawa and Washington argue that Mexico’s energy policies put its companies at a disadvantage.
According to the USMCA, 75% of a vehicle’s components must come from North America to qualify for tax relief, but the United States disagreed on how to calculate that figure.
Mexico and Canada state that if a “pieza central”, as the motor or the transmission, has a 75% of regional content, the TMEC allows that this cifra is redondee al 100% al calcular el requisito más amplio para el content regional de todo a car.
The United States stated that the contents of the “Main parts” should not be rounded off when determining the contents of the whole car.
Under the USMCA, the United States must now agree with Canada and Mexico on how to implement the panel’s ruling or face possible retaliatory tariffs.
“The decision is good for Canada and Mexico,” said Flavio Volpe, president of the Canadian Auto Parts Manufacturers Association. He added that the resolution is also important because it shows that disagreements can be resolved under the rules of the new trade pact.
“It shows that the dispute resolution mechanism within the TMEC is working,” he said.
“Entrepreneur. Amateur gamer. Zombie advocate. Infuriatingly humble communicator. Proud reader.”
