Canada will join Mexico against the US on automotive sector rules in T-MEC

Mexico last week requested a dispute resolution panel. Photo: Getty Images

Canada announced this Thursday that it intends to join the Mexico’s complaint against the United States for its interpretation of the rules of origin in the automotive industry in the T-MEC, a position that was immediately celebrated by the executive of the Latin American country.

Mexico last week requested a dispute resolution panel under the terms of the free trade agreement between the three countries, T-MEC, after a period of consultations to which he called Washington in August to resolve the discrepancies and that was enough.

“The interpretation adopted by the United States is inconsistent with the T-MEC and the understanding shared by the parties and interested parties throughout the negotiations”Canadian Trade Minister Mary Ng said in a statement announcing the decision.

Mexico and Canada are more flexible than the United States in the interpretation of the rules of origin of the agreement, which requires that 75% of the components of a vehicle originate in the three nations to avoid paying taxes, compared to 62.5% of the previous agreement, NAFTA.

I welcome Canada’s decision to join the Panel request“, the Mexican Secretary of the Economy, Tatiana Clouthier, later said on her Twitter account. “Together we will defend the competitiveness of this regional industry,” he added.

Mexico and the US, divided by interpretations in T-MEC

The Ministry of Economy (SE) recognized that there is a difference between Mexico and the United States (EU) on the implementation of the T-MEC, particularly in the interpretation of the rules of origin of the automotive sector.

The Secretary of the Economy, Tatiana Clouthier, has repeatedly requested respect the interpretation of chapter 4 of the T-MEC according to its “methodology and flexibilities”.

It should be remembered that chapter 4 of the new agreement considers four relevant components:

  • 75% regional content for cars and trucks
  • 75% regional content in centerpieces
  • 70% of steel and aluminum purchases in the North American region
  • The 40% regional labor value content that rises to 45% in the case of light trucks, where there is not the same criteria

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