Canada to join Mexico in complaint on U.S. car-origin rules – Driving

December 24, 2021 by No Comments

Trudeau pressured to get more aggressive against growing U.S. trade protectionism

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Eric Martin, Driving The Stellantis minivan assembly plant in Windsor, Ontario Photo by Fiat Chrysler Automobiles /Reuters

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Canada plans to formally join Mexico in calling for an arbitration panel to resolve a dispute with the U.S. over how to interpret rules governing the origin of vehicle parts.

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The two countries expect to request in the first days of January the creation of a tribunal of experts to rule on the matter as allowed under the U.S.-Mexico-Canada Agreement, known as USMCA, according to three people familiar with the plans. The individuals spoke on condition they not be identified because they aren’t authorized to speak publicly on the issue.

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Canada Trade Minister Mary Ng’s office didn’t immediately respond to requests for comment.

The conflict focuses on differences over how to calculate the percentage of a vehicle that comes collectively from the three countries. Both Mexico and Canada believe the trade deal stipulates that more regionally produced parts should count toward duty-free shipping than the U.S. wants to allow. Motor vehicles are the top manufactured product traded between the three countries.

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The panel — whose findings are binding — will be tasked with deciding whether the U.S. application of the content rules, known as rules of origin, is inconsistent with the trade pact.

Canada and Mexico can seek the formation of a three- or five-member panel chosen from a roster of legal and trade experts previously agreed to under USMCA. The panel process would be finished at earliest the start of July 2022, based on timelines laid out in the trade deal, according to an August report from attorneys from White & Case.

If the tribunal finds the U.S. is violating the terms of the pact, President Joe Biden’s administration will be obliged to seek a negotiated resolution. If talks fail, Canada and Mexico could impose an equivalent “suspension of benefits,” such as higher tariffs.

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Source: https://driving.ca/auto-news/industry/canada-to-join-mexico-in-complaint-on-u-s-car-origin-rules

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