Autos Drive America President and CEO Jennifer Safavian issued the following statement in response to the Composition of the USMCA Dispute Settlement Panel on the Auto Rules of Origin
Autos Drive America welcomes the news that the United States-Mexico-Canada Agreement (USMCA) Parties have established a dispute settlement panel to affirm the correct interpretation of the auto rules of origin provisions under the USMCA. The Association and its members support a swift and fair resolution of this dispute, which is critical to the success of the North American automotive industry.
“Stable and predictable trade policy is vital for capital intensive industries like the automotive sector that must make sourcing decisions several years in advance of production,” said Jennifer Safavian, president and CEO of Autos Drive America. “Since the North American Free Trade Agreement became law more than 25 years ago, our members have been committed to maintaining an integrated manufacturing platform and consumer base across North America. In the U.S. alone, they have invested more than $98 billion into their operations over the past 60 years. That is why Autos Drive America’s members engaged in regular consultations with officials from all three countries throughout the entire USMCA negotiation and implementation process.”
Autos Drive America shares the concerns raised by other industry partners and the governments of Mexico and Canada regarding the United States’ change in interpretation of the methodology used to determine passenger vehicles’ regional value content (RVC) as agreed upon by all three countries. As outlined in the panel requests, the U.S. reinterpretation contradicts the text of the USMCA treaty and the related Uniform Regulations.
“The rules as negotiated and agreed to carefully struck the desired balance of the three countries to promote additional investments needed for the North American auto industry to remain globally competitive. That is why automakers began making substantial additional investments in all three countries to comply,” said Safavian.
The United States’ new interpretation of the USMCA’s rules significantly undermines the industry’s compliance efforts. This comes at a time when North America is in a high-stakes global race with other regions to lead in electric and autonomous vehicle technologies. Autos Drive America is concerned that, if upheld, the U.S. reinterpretation will needlessly continue to divert limited resources away from investments in these critical areas.
“Affirming and upholding the USMCA and the Uniform Regulations will support the agreement’s goals,” emphasized Safavian. “It will remove the cloud of uncertainty that hangs over our members’ future investments that will support the localization of high-value, high-tech auto parts, and create new manufacturing jobs in the U.S. and the North American region.”