A dispute panel for the North American Free Trade Agreement ruled in favor of Canada and Mexico in interpreting rules for the production of automobiles.
The controversy is based on the Canada-United States-Mexico Agreement (CUSMA).
Regulations state that North American-made vehicles must contain at least 75% local parts.
If Mexico and Canada have 75% of the regional content in the core parts of the vehicle, such as engines and transmissions, the trade agreement reduces that figure to 100% when calculating the overall regional content included. claimed to be able to round up to . product.
The US disagreed and said it should not be rounded up.
The Panel’s decision was announced on January 11, following the conclusion of the North American Summit in Mexico City.
He said the US interpretation was “inconsistent” with the rules of the deal.
“Canada welcomes the findings of the panel report, which reaffirms our understanding of the outcome of negotiations on rules of origin for automotive products,” said International Trade Minister Mary Ng. statement.
“Canada is deeply involved in rules-based international trade and we are pleased that our rights and obligations negotiated at CUSMA are supported by appropriate dispute resolution mechanisms.”
Mexico originally filed its complaint in January 2022, and Canada joined shortly after, saying the new rules in the deal were aimed not only at deepening regional integration but also at making auto companies more competitive. rice field.
A spokesman for the U.S. Trade Representative said the decision was “disappointing.”
Adam Hodge says: statement The panel’s interpretation is that “North America’s content in automobiles may decline, investment across the region may decline, and American employment may decline.”
“We will engage Mexico and Canada on possible resolutions to the dispute, including the implications of the panel’s findings for investment in the region.”
The Mexican Ministry of Economy said: statement We will soon begin a process of “dialogue and cooperation” with our partners to address the Panel’s decisions.
Flavio Volpe, president of the Canadian Association of Auto Parts Manufacturers, said the decision was “good for Canada and Mexico” and shows that dispute resolution in trade agreements is effective.
Reuters contributed to this article.