Canada and Mexico have won their challenge to the US interpretation of auto rules under the new North American trade pact, a dispute settlement panel announced Wednesday, a decision that favors auto parts makers north and south. from the US border.
A year ago, Canada and Mexico filed a complaint against the United States over how to enforce the automotive content requirements under the US-Canada-Mexico free trade agreement, TMECwhich entered into force in 2020.
The American interpretation of the rules is “inconsistent” with TMEC, the panel said in its ruling.
Canada “glad to see that existing dispute settlement mechanisms support our rights and obligations negotiated in the USMCA”, said the Canadian Minister of Commerce, mary ngit’s 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 nationalistic energy policies are putting their companies at a disadvantage.
According to him TMEC75% of a vehicle’s components must originate in North America to qualify for a tax break, but the United States disagreed on how to calculate that figure.
Mexico and Canada said that if a “center piece”, like the engine or transmission, has 75% regional content, TMEC allows that figure to be rounded up to 100% when calculating the broader requirement for regional content for an entire car.
The United States said that the content of the “main parts” was not to be rounded when determining the contents of the entire car.
under the TMECThe United States must now agree with Canada and Mexico how to implement the panel’s decision or face possible retaliatory tariffs.
“The decision is good for Canada and Mexico“, said flavio volpePresident of the Auto Parts Manufacturers Association of Canada. He added that the resolution is important also because it shows that disagreements can be resolved under the rules of the new trade pact.
“Demonstrates that the dispute resolution vehicle within the TMEC works“, said.
Source: Reuters
Source: Gestion
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