USMCA Automotive Rules: USTR

On November 22, 2023, the U.S. Trade Representative (USTR) requested comments and notice of public hearings on the operation of the U.S.-Mexico-Canada Agreement (USMCA) with respect to automotive rules of origin. 

USTR then received 18 comments from various stakeholders, including union representatives such as the United Auto Workers (UAW) and the Labor Advisory Committee for Trade Negotiations and Trade Policy (LAC); automotive industry associations such as the American Automotive Policy Council (AAPC), Autos Drive America (ADA), the Mexican Automotive Industry Association (AMIA), among others; and industry companies such as Volkswagen Group of America (VWGoA) and Daimler Truck AG. 

The comments suggest three types of proposals or lines of action to be implemented: technical, in order to improve the application of the origin requirements established in the USMCA; substantial, which imply transcendental modifications for the sector in the treaty; and rigorous, which suggest the implementation of severe actions for the application and compliance with the treaty. 

Automotive rules of origin

Among the technical proposals, the following stand out, according to the consulting firm Ansley: 

• Regarding the annual issuance of certification on steel and aluminum and VLC, some comments suggest that this be requested 60 days after the start of the certification period, while others propose that Mexican and Canadian exporters no longer be requested. 
• Comply with the dispute settlement panel ruling on the U.S. – automotive rules of origin dispute (USA-MEX-CDA-2022-31-01), including not conditioning original equipment manufacturers (OEMs) to abide by the U.S. interpretation of the origin requirements with respect to the calculation of VCR for granting approval of alternative transitional regimes; and add to the Uniform Regulations the practical examples of the essential component calculation methodology developed by Canada. This would allow for appropriate individual and super-core parts calculation.
• Work jointly with Mexico and Canada to develop the USMCA Audit Manual under Article 5.19.3(b), which establishes a trilateral subcommittee to develop and improve the 1994 NAFTA Audit Manual. 
• In heading 8708, add the rule of origin for auto parts destined for the aftermarket. Currently, this heading only considers the rule for parts used in original equipment and spare parts. However, the rule does not consider parts used by producers for accessories.