OTTAWA -- The organization that lobbies on behalf of the Detroit Three automakers in Canada is glad Canada has teamed with Mexico in a spat with the United States of how that country is interpreting content rules in the United States-Mexico Canada Agreement.
Canada intends to sign onto Mexico's complaint against the United States over that nation's interpretation of rules of origin in the automotive industry, Canadian Trade Minister Mary Ng said on Thursday.
Mexico asked last week for a dispute settlement panel under the terms of the U.S.-Mexico-Canada trade pact. It wants to clear up disagreements over how to apply automotive sector content requirements under the treaty.
Brian Kingston, head of the Canadian Vehicles Manufacturers’ Association says his group “welcomes the announcement that Canada will be joining Mexico as a party against the U.S. interpretation of the automotive rules of origin under [the USMCA].”
“The competitiveness of the North American automotive industry depends on [the USMCA] being implemented as negotiated,” he said in a statement.
The USMCA, which replaced the longtime NAFTA trade pact in July 2020, says 75 per cent of a vehicle's components must originate in the three nations to quality for tax-free status, up from 62.5 per cent under NAFTA.
Mexico and Canada favour a more flexible interpretation of the regulations than the U.S., which sought an overhaul of NAFTA in order to protect U.S. manufacturing jobs.
"The interpretation that the United States adopted ... is inconsistent with USMCA and the understanding shared by the parties and stakeholders throughout the negotiations," Ng said in a statement.
The panel should produce a report "in the summer of 2022", the statement added.