Skip to main content
Sister Publication Links
  • Automotive News
  • Automotive News Europe
  • Automotive News China
  • Automobilwoche
Subscribe
  • Subscribe
  • login
  • HOME
  • News
    • News by Brand
    • Auto Shows
    • Canadians Abroad
    • Photo Galleries
    • Automakers
    • Suppliers
    • Retail
    • Dealer Best Practices
    • Government Relations
    • Trade and Tariffs
    • Technology
    • Labour
    • Aston Martin
    • BMW
      • Mini
      • Rolls Royce
    • Daimler
      • Mercedes Benz
      • Smart
    • Ferrari
    • Ford
      • Lincoln
    • General Motors
      • Buick
      • Cadillac
      • Chevrolet
      • GMC
    • Honda
      • Acura
    • Hyundai
      • Kia
    • Mazda
    • Mitsubishi
    • Nissan
      • Infiniti
    • Stellantis
      • Alfa Romeo
      • Chrysler
      • Dodge
      • Fiat Chrysler
      • Jeep
      • Fiat
      • Lancia
      • Maserati
      • Ram
    • Subaru
    • Tata
      • Jaguar
      • Land Rover
    • Tesla
    • Toyota
      • Lexus
    • Volkswagen
      • Audi
      • Bentley
      • Bugatti
      • Lamborghini
      • Porsche
    • Volvo
    • VinFast
    • Toronto Auto Show
  • Opinion
    • Blogs
  • Video
  • Podcasts
  • EVENTS & AWARDS
    • 2022 Auto News Canada All-Stars
    • 2022 Canadians To Watch
    • Notable Champions of Diversity
    • Best Dealerships To Work For
    • Canada Congress
    • Retail Forum: Toronto
    • Leading Women Roundtables
    • Embracing Diversity Roundtable
    • Embracing Diversity Roundtable Volume 2
    • EVs Decoded
    • 2023 Best Dealerships To Work For nominations
  • Jobs & Classifieds
  • +MORE
    • IN THE DRIVER'S SEAT
    • NEWSLETTERS
    • SUBSCRIBE
    • CLASSIFIEDS
    • PEOPLE ON THE MOVE
    • COMPANIES ON THE MOVE
    • WEBINARS
    • ADVERTISE WITH US
    • CONTACT US
    • DIGITAL EDITION
    • PUBLISHING PARTNERS
MENU
Breadcrumb
  1. Home
  2. Trade and Tariffs
June 08, 2020 12:00 AM

Industry now knows the ‘how' of USMCA

  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    With a rulebook in hand for the United States-Mexico-Canada Agreement, automakers and suppliers can breathe a little easier when the industry says goodbye to NAFTA next month. But the hard part isn't over: Meeting the tougher rules of origin requires a herculean effort, industry and trade experts say.

    USMCA's long-awaited uniform regulations were published last week by the Office of the U.S. Trade Representative. The nearly 200-page document provides the granular detail on how to comply and eases some uncertainty for auto industry stakeholders that are scrambling to meet the requirements when the pact takes effect July 1.

    Longo: Trade office listened

    "It's almost like you've been holding your breath, not totally sure you could relax," Lou Longo, a partner and international consulting practice leader at Plante Moran, told Automotive News.

    With less than a month before USMCA takes effect, Longo said it's better for everyone that the regulations are out because now the industry can dig into the details, ask qualifying questions and plan ahead.

    As of last week, the industry was still digesting the minute details laid out in the regulations. But at first glance, Longo said, he hadn't noticed any surprises and said it was clear the trade office had listened to the auto sector's concerns.

    But compared with the North American Free Trade Agreement, which has been in place for 26 years, USMCA poses significantly more difficulties for automakers and suppliers for compliance because there are provisions that haven't existed before, he said.

    That includes a first-of-its-kind requirement that a significant portion of auto content be made with high-wage labour and stricter rules for regional value content and steel and aluminum sourcing, among other key changes.

    "This is a significantly different environment and a significantly different level of compliance and planning required for the industry and suppliers than they saw under NAFTA," Longo said.

    NAFTA had some of the toughest auto rules of origin in a trade agreement — until USMCA, which is "even more stringent and more challenging to comply with," said Matt Blunt, president of the American Automotive Policy Council, a trade association representing the Detroit 3.

    Blunt: Detroit 3 investing billions

    "No question: There are massive changes that will require a tremendous amount of investment in the United States," the former Missouri governor said last week during a web inar organized by the Washington International Trade Association.

    "Our companies have announced billions of dollars in investment. They've all cited the new rules of origin as part of the reason they were making those decisions to invest in the United States," he said.

    Blunt was still poring over the uniform regulations, but he did highlight some areas where the association will ask the administration for changes, such as restoring examples that show companies how to comply and meet the requirements under various circumstances.

    One big success for the auto industry in the regulations is the addition of a six-month period of duty deferral, he said, which gives the industry until the end of the year to work with suppliers on gathering documents to demonstrate compliance.

    Meiman: Gives breathing room

    "This transition period gives automakers some breathing room to ensure that they're fully in compliance without risking prejudicial tariffs," said Kellie Meiman Hock, managing partner at international trade consultancy McLarty Associates.

    That breathing room expands with the uniform regulations in hand, but Meiman cautioned that the auto sector is still dealing with "unprecedented instability" in its North American supply chains because of the coronavirus pandemic.

    "This is still very hard," she said. "But it's nice to have one piece of the puzzle that was missing and missing for too long."

    RECOMMENDED FOR YOU
    Canada, U.S., Mexico gather to talk North American auto content rules, trade irritants
    Recommended for You
    mexico.jpg
    Canada, U.S., Mexico gather to talk North American auto content rules, trade irritants
    Mexico Canada US Flags
    Left leaning Mexico seeks closer Canada ties in labour and business amid mining spat
    4LIGHTNING-05_i.jpg
    Canada has nothing to fear from U.S. protectionist rhetoric, envoy to Ottawa insists
    cctv_vehicle-theft_1800x1200
    Sponsored Content: Many vehicle drivers in Ontario will be faced with a hefty insurance premium surcharge - on more vehicle models than you think – unless dealers do this
    Digital Edition
    Sept 2023 Issue
    View latest issue
    See our archive
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get Free Newsletters

    Sign up today for our Weekly Newsletter, Daily Newsletter and Breaking News Alerts. We'll deliver the news you need to know straight to your inbox.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Subscribe Now

    An Automotive News Canada subscription includes print issues delivered to your doorstep and digitally to your inbox – plus unlimited, 24/7 access to our website.

    Subscribe Now
    Connect With Us
    • Facebook
    • Twitter
    • Instagram

    Our Mission

    The Automotive News Canada mission is to be the primary source of industry news, data and understanding for the industry's decision-makers interested in Canada.

    Contact Us

    1155 Gratiot Ave
    Detroit MI 48207

    1-877-812-1257

    Email Us

    ISSN 2475-5001 (print)
    ISSN 2475-501X (online)

    Resources
    • About us
    • Contact Us
    • Digital Edition Archive
    • Advertise with Us
    • Reprints
    • Ad Choices
    • Sitemap
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News Canada
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • HOME
    • News
      • News by Brand
        • Aston Martin
        • BMW
          • Mini
          • Rolls Royce
        • Daimler
          • Mercedes Benz
          • Smart
        • Ferrari
        • Ford
          • Lincoln
        • General Motors
          • Buick
          • Cadillac
          • Chevrolet
          • GMC
        • Honda
          • Acura
        • Hyundai
          • Kia
        • Mazda
        • Mitsubishi
        • Nissan
          • Infiniti
        • Stellantis
          • Alfa Romeo
          • Chrysler
          • Dodge
          • Fiat Chrysler
          • Jeep
          • Fiat
          • Lancia
          • Maserati
          • Ram
        • Subaru
        • Tata
          • Jaguar
          • Land Rover
        • Tesla
        • Toyota
          • Lexus
        • Volkswagen
          • Audi
          • Bentley
          • Bugatti
          • Lamborghini
          • Porsche
        • Volvo
        • VinFast
      • Auto Shows
        • Toronto Auto Show
      • Canadians Abroad
      • Photo Galleries
      • Automakers
      • Suppliers
      • Retail
      • Dealer Best Practices
      • Government Relations
      • Trade and Tariffs
      • Technology
      • Labour
    • Opinion
      • Blogs
    • Video
    • Podcasts
    • EVENTS & AWARDS
      • 2022 Auto News Canada All-Stars
      • 2022 Canadians To Watch
      • Notable Champions of Diversity
      • Best Dealerships To Work For
        • 2023 Best Dealerships To Work For nominations
      • Canada Congress
      • Retail Forum: Toronto
      • Leading Women Roundtables
      • Embracing Diversity Roundtable
      • Embracing Diversity Roundtable Volume 2
      • EVs Decoded
    • Jobs & Classifieds
    • +MORE
      • IN THE DRIVER'S SEAT
      • NEWSLETTERS
      • SUBSCRIBE
      • CLASSIFIEDS
      • PEOPLE ON THE MOVE
      • COMPANIES ON THE MOVE
      • WEBINARS
      • ADVERTISE WITH US
      • CONTACT US
      • DIGITAL EDITION
      • PUBLISHING PARTNERS