The United States-Mexico-Canada Agreement (USMCA) will enter into force on July 1, Auto News reports.
Late last week, the Office of the U.S. Trade Representative acknowledged that both Canada and Mexico “have taken measures necessary to comply with their commitments under the United States-Mexico-Canada Agreement.”
“The crisis and recovery from the COVID-19 pandemic demonstrates that now, more than ever, the United States should strive to increase manufacturing capacity and investment in North America,” U.S. Trade Representative Robert Lighthizer said. “The USMCA’s entry into force is a landmark achievement in that effort.”
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The Trump administration had been considering a start date of June 1 but that sparked concern among automakers, trade groups and parts suppliers that believed the deadline could disrupt a smooth transition from NAFTA to the new trade deal.
On March 13, the likes of the American Automotive Policy Council, Here for America, National Automobile Dealers Association, American International Automobile Dealers Association and Motor & Equipment Manufacturers Association issued a statement urging for the date to be pushed back from June 1 citing unanswered questions on how to interpret the rules. In April, Mexico’s government also asked the U.S. and Canada for extra time to adjust its supply chains to comply with the new requirements.
Under the United States-Mexico-Canada Agreement, 75 per cent of the content of cars produced in Mexico, the U.S., and Canada needs to be sourced from North America. Under NAFTA, 62.5 per cent of content needed to originate from North America. Additionally, USMCA requires 40 to 45 per cent of content to come from ‘high-wage’ areas.
