Canada and Mexico have won their challenge to US interpretation of auto rules under the new North American trade deal, a dispute settlement panel announced Wednesday, favoring automakers. parts north and south of the US border.
one year ago,Against the United States over how to implement the automotive sector’s material requirements under the free trade agreement between the United States, Canada and Mexico, TMEC, which went into effect in 2020.
American interpretation of the rules “Incompatible” with TMECThe panel said in its decision.
“Canada is pleased to see that the dispute settlement mechanism supports our negotiating rights and obligations under the USMCA,” Canadian Trade 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 are hurting its companies,
According to the USMCA, 75% of a vehicle’s components must originate in North America in order to qualify for the tax break, but the United States disagree on how to calculate this figure.
Mexico and Canada state that if a “centerpiece”, such as an engine or transmission, has 75% regional content, TMEC allows all cars to round that figure to 100% when calculating the comprehensive requirement for regional content. Is.
United States said that the contents of “Major parts” should not be rounded up when determining the contents of the entire car.
Under the USMCA, the United States must now agree with Canada and Mexico on how to implement the panel’s decision or face possible retaliatory tariffs.
“This decision is good for Canada and good for Mexico,” said Flavio Volpe, president of the Canadian Auto Parts Manufacturers Association. He said the resolution is also important because it shows that the disagreement can be resolved under the terms of the new trade deal.
“It shows that the dispute resolution vehicle within TMEC works,” he said.