Solution to automotive rules of origin in the T-MEC would be ready by mid-2023: Eugenio Salinas

Monterrey, NL. The private sector is awaiting the results of the negotiations of the federal Ministry of Economy on the automotive rules of origin and if they are going to continue the consultations in the energy part, however, the solution to the differences of interpretation that the United States makes on the rules of origin could be known by mid-2023.

This was indicated to The Economist Eugenio Salinas Morales, coordinator of the Cuarto de Junto in the T-MEC negotiations, during the Global Agri-Food Forum, which was held on November 23 and 24 at Cintermex.

“In the part of the international panel to solve the differences in interpretation that the United States makes on the rules of origin, there is a high probability in favor of Mexico and Canada, so the United States would have to amend the methodology for the application of the rules of origin”, affirmed the representative of the private initiative.

Last August, the Ministry of Economy reported that the controversy presented by Mexico is due to the fact that the United States is using a certain methodology so that the essential parts of the vehicle, such as engines or suspensions, are considered original to be later incorporated into a vehicle. He estimated that the solution to this dispute could occur until the middle of next year.

On the other hand, the energy issue “continues to create uncertainty, since some investment decisions are at the expense of reaching an agreement, we could not anticipate if there would be some type of retaliation.”

“There is no more information on what has been advanced to the Mexican government, if the United States accepts the explanations or if it considers that a panel would be the best way to resolve the controversy,” Salinas said.

On the issue of energy, in July of this year the United States and Canada argued that with the Energy Reform of the government of the President of the Republic, companies from both countries are discriminated against and billions of dollars in investments are put at risk in clean energy, mainly.

This is because the Reform gives priority to the Federal Electricity Commission (CFE), which affects foreign companies that have already invested in solar, wind and combined cycle plants.

“I already had the opportunity to have a good talk with Alejandro Encinas Nájera, the new Undersecretary of Foreign Trade (replacing Luz María de la Mora), who already knows T-MEC, since he was very involved with labor issues, he asks us a little of patience.

He added that as coordinator of the Cuarto de Junto that he coordinates, it is necessary to talk about issues with Ecuador, and with the United Kingdom, which for reasons of Brexit must be negotiated, that is, everything else that implies negotiation in bilateral treaties.

The Cuarto de Junto is made up of the entire private sector of the country, with two large domes, the National Agri-Food Council (CNA) and the Confederation of Industrial Chambers of the United Mexican States (Concamin).

The treaty with South Korea.

In relation to the possible Free Trade Agreement with South Korea, the federal Ministry of Economy confirmed to them in a meeting that was held recently, that it will wait for the private initiative to present an analysis through a firm of economists, and that the result that it throws is whether the treaty can be good, especially risks that it can imply.

It is expected that before the end of 2022 the analysis will be delivered and a proposal made for a decision to be made.

Some specialists have warned that with this treaty China could outsource some products through South Korea.

“This issue is part of what you have to analyze, there is geographical proximity; The aspects of the study take into account the defensive part, to what extent to face unfair or illegal because it affects rules of origin, where is the opportunity, when we have distance and country where we will compete, we have to see the offensive part, that from here to there we export and from there to here it can be imported”, Eugenio Salinas.