Canada has signed on to a complaint against the United States over the latter’s interpretation of how free trade rules apply to the auto industry. The move will seek to settle the issue of country-of-origin rules on auto parts.
Canadian Trade Minister Mary Ng said Tuesday that her nation would join Mexico in asking for a dispute settlement panel under the terms of the United States-Mexico-Canada (USMCA) trade agreement, reports Reuters.
The topics at issue are the rules that dictate how much of a product must originate in the region in order to qualify for tariff-free status. Under the new deal, passenger vehicles must contain 75 percent regional content, up from 62.5 percent under the former trade agreement, NAFTA.
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Canada and Mexico say that the U.S. is violating the terms of the agreement by using a stricter formula for how thresholds are met.
“Canada is joining Mexico’s request to establish a dispute resolution panel,” Trade Minister Mary Ng said in a statement. “The interpretation that the United States adopted […] is inconsistent with USMCA and the understanding shared by the parties and stakeholders throughout the negotiations.”
Ng’s move was welcomed by Mexico’s economy minister, Tatiana Clouthier, who tweeted that “the regional industry that has been developed for long time has to be defended.”
This is the second major dispute over the new trade agreement and is viewed by some as a sign of the souring relations between the U.S. and its neighbors.
Both Canada and Mexico have also expressed their dissatisfaction with tax breaks being proposed for electric vehicles and EV components that are produced in the U.S.
Happy to hear this. The regional industry that has been developed for long time has to be defended. https://t.co/AmjkDJeshx
— Tatiana Clouthier (@tatclouthier) January 13, 2022