The USMCA panel ruling on automotive rules of origin reached its one-year anniversary this January without the United States complying with the related measures pursuant to the ruling.
In the meantime, Mexico and Canada have not decided to implement retaliation against the United States.
On August 20, 2021, Mexico requested consultations with the United States regarding the interpretation and application of certain automotive rules of origin provisions under the USMCA.
Then, on August 26, 2021, Canada notified its intention to join the consultations.
The United States held consultations with Mexico on September 24, 2021.
Mexico requested and established a dispute settlement panel on January 6, 2022, and Canada joined the dispute as a co-complainant on January 13, 2022.
The Parties constituted the Panel on March 22, 2022, as follows: Elbio Rosselli, Chair; and Kathleen Claussen, Ann Ryan Roberson, Jorge Miranda and Donald McRae, members.
In January 2023, the Panel in this dispute issued a report finding in favor of Canada and Mexico.
Following that ruling, as required by the USMCA, the parties have engaged in discussions on a resolution of the dispute.
Automotive rules of origin
In the dispute on this issue, Canada and Mexico took the position that if a core part qualifies as originating under the flexibilities provided by the core part origination requirement, then the value of the core part is considered 100% originating when calculating the overall regional value content of the vehicle.
But in the U.S. view, the text of the USMCA does not support the Canadian and Mexican interpretation.
Certainty
The U.S. position is that the core parts requirement and the overall vehicle regional value content requirement are separate and distinct requirements that a vehicle must meet (in addition to the labor content value and steel and aluminum purchase requirements) to receive preferential treatment under the USMCA.
Several interested parties expressed a desire to see a resolution of the dispute that would provide greater certainty and clarity to the major parts requirements.
In the end, the panel found in favor of Mexico and Canada.