Canada and Mexico have won their challenge to the US interpretation of content rules for vehicles under the new US-Mexico-Canada Agreement (USMCA), a dispute panel ruled on Wednesday, a decision that favors parts makers north and south of the US border.
Canada and Mexico a year ago filed a complaint against the US over how to apply automotive sector content requirements under the free-trade agreement, which came into effect in 2020.
The US interpretation of the rules is “inconsistent” with the USMCA, the panel said in its ruling.
Photo: REUTERS
“The decision is good for Canada and Mexico,” Canadian Automotive Parts Manufacturers’ Association president Flavio Volpe said.
Canada “is glad to see that the dispute settlement mechanisms in place are supporting our rights and obligations negotiated in USMCA,” Canadian Minister of International Trade, Export Promotion, Small Business and Economic Development Mary Ng (伍鳳儀) said in a statement.
“This is excellent news,” former Mexican secretary of the economy Tatiana Clouthier said in a video on Twitter. “That helps the entire automotive industry in the North American region enormously.”
Photo: REUTERS
The decision is “disappointing,” Office of the US Trade Representative (USTR) spokesman Adam Hodge said, adding that the decision could result in “fewer American jobs.”
Under the USMCA, the US must now agree with Canada and Mexico on how to apply the panel decision, or face possible retaliatory tariffs.
“We are reviewing the report and considering next steps,” Hodge said. “The USTR will now engage Mexico and Canada on a possible resolution to the dispute.”
“In the coming days, Mexico will begin a process of dialogue and cooperation with its trading partners,” the Mexican Secretariat of Economy said in a statement after the ruling.
ENERGY DISPUTE
The decision was announced amid a separate USMCA dispute centered on energy that has pitted the US and Canada against Mexico.
Ottawa and Washington argue that Mexico’s energy policies are putting US and Canadian firms at a disadvantage, while Mexico has defended its policies and said it has broken no laws.
Under the USMCA, 75 percent of a vehicle’s components must originate in North America to qualify for tax-free status, but the US disagreed with how to calculate that number.
Mexico and Canada said if a “core part,” such as the engine or transmission, has 75 percent regional content, the USMCA allows that number to be rounded up to 100 percent when calculating the broader requirement for an entire vehicle’s regional content.
The US said “core part” content should not be rounded up when determining the content of the entire vehicle.
Volpe said the decision is important because it demonstrates that disagreements can be settled under the rules of the new trade pact.
“It shows that the dispute resolution vehicle within the USMCA works,” Volpe said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday obtained the government’s approval to inject an additional US$7.5 billion into its US subsidiary, the Department of Investment Review said in a statement. The department approved TSMC’s application of investing in TSMC Arizona Corp, which is engaged in the manufacturing, sales, testing and design of IC and other semiconductor devices, it said. The latest capital injection follows a US$5 billion investment for TSMC Arizona approved in June. The chipmaker has broken ground on two advanced fabs in Arizona with aggregated investments approved by the department totaling US$24 billion thus far. According to TSMC, the first Arizona
The lethal hack of Hezbollah’s Asian-branded pagers and walkie-talkies has sparked an intense search for the devices’ path, revealing a murky market for older technologies where buyers might have few assurances about what they are getting. While supply chains and distribution channels for higher-margin and newer products are tightly managed, that is not the case for older electronics from Asia where counterfeiting, surplus inventories and complex contract manufacturing deals can sometimes make it impossible to identify the source of a product, analysts and consultants say. The response from the companies at the center of the booby-trapped gadgets that killed 37
FRIENDLY TAKEOVER: While Qualcomm Inc’s proposal to buy some or all of Intel raises the prospect of other competitors, Broadcom Inc is staying on the sidelines Qualcomm Inc has approached Intel Corp to discuss a potential acquisition of the struggling chipmaker, people with knowledge of the matter said, raising the prospect of one of the biggest-ever merger and acquisition deals. California-based Qualcomm proposed a friendly takeover for Intel in recent days, said the sources, who asked not to be identified discussing confidential information. The proposal is for all of the chipmaker, although Qualcomm has not ruled out buying some parts of Intel and selling off others. It is uncertain whether the initial approach would lead to an agreement and any deal is likely to come under close antitrust scrutiny
SECURITY CONCERNS: The proposed ban on Chinese autonomous vehicle software and hardware would go into effect with the 2027 and 2030 model years respectively The US Department of Commerce today is expected to propose prohibiting Chinese software and hardware in connected and autonomous vehicles on US roads due to national security concerns, two sources said. US President Joe Biden’s administration has raised concerns about the collection of data by Chinese companies on US drivers and infrastructure as well as the potential foreign manipulation of vehicles connected to the Internet and navigation systems. The proposed regulation would ban the import and sale of vehicles from China with key communications or automated driving system software or hardware, said the two sources, who declined to be identified because the