MEXICO is warning the revamped North American free trade deal could push carmakers to abandon the region due to new costly content requirements, reports Bloomberg News.
The dispute focuses on how to calculate the percentage of a vehicle that comes from the three countries under the US-Mexico-Canada Agreement.
The US insists on a stricter determination of the origin of engines, transmissions and steering systems. That makes it harder for plants in mexico and Canada to meet the new 75 per cent content rule, up from 62.5 per cent under the old NAFTA deal.
Mexico's undersecretary of the economy for foreign trade, Luz Maria de la Mora, declared that if the US doesn't come to an agreement with Mexico, that companies could seek to move their business to countries with more favourable trade agreements.
'USMCA may become inconsequential for trade in the auto sector in North America because companies may decide not to bother with even complying with USMCA because it becomes so costly, so cumbersome, and so difficult,' said Ms De la Mora.
'It may not be worth their effort to really try to procure from North America, so why bother investing in North America,' said Ms De la Mora.
Mexico recently requested consultations with the US to settle a dispute over the US interpretation of the way to measure the regional content of a car made in North America.
The US has a 30-day period to respond to Mexico's request and a 75-day period to reach an agreement with Mexico.
'We are not negotiating. The negotiation already took place. What we're trying to do is understand if we have a common understanding on what is the text of the agreement,' said Ms De la Mora.
SeaNews Turkey
The dispute focuses on how to calculate the percentage of a vehicle that comes from the three countries under the US-Mexico-Canada Agreement.
The US insists on a stricter determination of the origin of engines, transmissions and steering systems. That makes it harder for plants in mexico and Canada to meet the new 75 per cent content rule, up from 62.5 per cent under the old NAFTA deal.
Mexico's undersecretary of the economy for foreign trade, Luz Maria de la Mora, declared that if the US doesn't come to an agreement with Mexico, that companies could seek to move their business to countries with more favourable trade agreements.
'USMCA may become inconsequential for trade in the auto sector in North America because companies may decide not to bother with even complying with USMCA because it becomes so costly, so cumbersome, and so difficult,' said Ms De la Mora.
'It may not be worth their effort to really try to procure from North America, so why bother investing in North America,' said Ms De la Mora.
Mexico recently requested consultations with the US to settle a dispute over the US interpretation of the way to measure the regional content of a car made in North America.
The US has a 30-day period to respond to Mexico's request and a 75-day period to reach an agreement with Mexico.
'We are not negotiating. The negotiation already took place. What we're trying to do is understand if we have a common understanding on what is the text of the agreement,' said Ms De la Mora.
SeaNews Turkey
