Ministry of Economy disseminates chronology of the failure of the automotive panel in the T-MEC

The Ministry of Economy released this Tuesday the chronology of the ruling of the panel on rules of origin in the automotive section under the Treaty between Mexico, the United States and Canada (T-MEC).

At the request of Mexico and Canada, a panel was held against the United States for the interpretation of the rules of origin of the automotive sector.

This Wednesday, December 14, the final report of the panel will be delivered to the Technical Secretariat of the T-MEC and on December 31 the ruling will be translated into Spanish and made known to the Parties (the governments of the three countries).

Then, from January 1 to 15, the Parties will review the ruling and on January 15 the ruling will be published.

Finally, from January 15 to March 2, in case you Mexico y Canada obtain a favorable result, the parties will have 45 days, after the publication of the ruling, to agree on its implementation.

Most analysts believe that USA will lose the ruling, as will the major non-US auto companies established in North America.

In the dispute process, the delegations of Mexico and Canada advocated above all the use of “roll-up” methodologies, while the delegation of the United States opposed it with respect to certain parts incorporated into finished vehicles. , with its intention to limit the use of foreign content in automotive production that is exported regionally.

The dispute settlement case is important for the three countries because the automotive sector covers the largest flow of intraregional trade, and also because new provisions of the USMCA are being tested to resolve conflicts between the parties.

Roll-up methodologies allow materials (for example, automotive parts) that have acquired origin by meeting a regional value content (RVC) threshold to be considered fully originating when used as inputs in a subsequent manufactured product. (for example, a finished vehicle).

Roll-up methodologies provide additional flexibility for finished product producers to satisfy the applicable CVR and thus obtain preferential tariff treatment.

Nine shipowners have asked the US government to drop its defense in the dispute settlement panel. The automakers are part of the Autos Drive America organization, which presented this petition to the United States Trade Representation (USTRfor its acronym in English) in a pre-hearing statement held on October 13 as part of the dispute settlement process.

Las 11 empresas son: BMW, Honda, Hyundai, Kia, Mazda, Mercedes-Benz, Mitsubishi, Nissan, Subaru, Toyota y Volkswagen.

Autos Drive America considered that the “unilateral reinterpretation” of the previous administration (of President Donald Trump) “seriously disrupted” the investment plans of automotive companies, and that this will have the undesired effect of “diverting limited investment resources from critical areas such as research and development of electric vehicles and autonomous vehicles”.

roberto.morales@eleconomista.mx