The Mexican government has filed a petition with the United States to open a period of consultation to resolve differences over automotive rules of origin that were established under the U.S.-Mexico-Canada Agreement (USMCA), the Economy Secretariat reported Sunday, Aug.22.
The petition, which was formally filed on Aug. 20, gives both governments a period of 75 days to resolve the rules of origin dispute in accordance with the provisions of Article 31.4 of the free trade agreement.
“In the event of not reaching a mutually satisfactory agreement on the correct application and interpretation of these provisions, Mexico can request the establishment of a panel to decide on the matter,” the secretariat said in a statement.
The Mexican government has detected “a divergent position” regarding the rules, which include stipulations such as requiring at least 70 percent of steel and aluminum used in production of a vehicle must be sourced from within the USMCA region.
The rules also state that passenger cars and vans must meet 75 percent regional added value content, including essential parts, and that the value of the labor content must reach 40 percent for passenger vehicles and 45 percent for light trucks.
The USMCA entered into force on July 1, 2020, and is an updated version of the North American Free Trade Agreement (NAFTA), which had been in effect since 1994.