Business & Investment

U.S. and Mexico unable to resolve car trade disputes

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At this week’s meeting, the United States and Mexico failed to resolve the dispute over trade rules for automobiles, threatening the goal of boosting regional manufacturing under a new trade deal.

U.S. Trade Representative Katherine Tai and Mexico’s Economic Minister Tatiana Clautier discussed this topic in Washington on July 22, but are familiar with the talks asking them not to be identified as talking about personal issues. According to the report, the resolution could not be reached. Canada also shares Mexico’s position in the conflict.

Thailand told Clouthier that the United States “continues to commit to the full implementation of the USMCA, including strong vehicle origin rules,” her office said in a statement on July 22 without giving details. Stated. The pair said, “I have agreed to stay in touch for the next few months.”

“The rules of origin were not interpreted in the manner agreed upon when the agreement was signed,” Clautier told reporters in Washington on July 23. To be what the previous administration took. That is where we are now. “

Bloomberg News reported last week that the conflict focuses on how to calculate the proportion of vehicles coming collectively from the three countries under the US-Mexico-Canada Agreement. The deal came into force in July last year and replaced the North American Free Trade Agreement (NAFTA), but the new so-called rules of origin are designed to be phased in over the years.

The United States insists on a stricter method than it believes Mexico and Canada have agreed to count the origins of certain core components, including engines, transmissions and steering systems in the overall calculation, he said. People said last week. This makes it difficult for Mexican and Canadian plants to meet the new thresholds for 62.5% to 75% of NAFTA’s regional content in order to trade duty-free.

For example, if the core part uses 75% regional content and therefore meets the tax exemption requirements, Mexico and Canada will increase the number to 100% for the USMCA to meet the second broader range. Claims to allow rounding up. Local content requirements for the entire car. However, it is difficult to reach the tax exemption standard for the entire vehicle because the United States does not want to allow rounding up.

Mexico, along with Canada, is considering filing a formal complaint against the United States under the USMCA a year ago, which could result in a conflict panel hearing national claims, according to people familiar with the matter. There is sex.

According to Flabio Volpe, chairman of the Canadian Auto Parts Manufacturers Association, if the rules are too complicated, automakers can stop applying for tax exemption and instead pay the tariffs charged by the United States under the rules of the World Trade Organization. There is sex.

It will make free trade agreements irrelevant to the purpose of preferential tariffs. Automobiles are the top products traded between the United States, Mexico and Canada.

Under WTO regulations, the United States can apply a 2.5% tariff on passenger cars from neighboring countries if the USMCA is not implemented, but the tariff on light trucks is as high as 25%.

“Non-compliance with USMCA rules can disrupt the operations of the North American automotive industry, resulting in unnecessary burdens and reduced competitiveness,” the Mexican Ministry of Economy said in a statement. rice field.

— With the help of Maya Averbuch.

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U.S. and Mexico unable to resolve car trade disputes U.S. and Mexico unable to resolve car trade disputes

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