Mexico Wants A Transition Period To Help Automakers Before USMCA Takes Effect

BY Brad Anderson | Posted on

Mexico has asked the United States and Canada to grant its automotive industry extra time to adapt supply chains before the deadline to implement the United States-Mexico-Canada Agreement (USMCA) takes effect on July 1.

According to Mexican auto lobby AMIA, 90 days is not enough time for car manufacturers to adapt supply lines to meet the new rules of origin requirements under the new trade agreement. AMIA is pushing for authorities to postpone the deal until January 2021, Reuters reports.

Speaking during a webcast event hosted by the Wilson Center think tank in Washington, Mexico deputy economy minister Luz Maria de la Mora insisted the nation needs a longer period to transition from the outgoing North American Free Trade Agreement.

“We have absolute understanding of what the industry is facing and we’re willing to have a transition period specifically for the auto sector as it has been requested,” she said. “We have put this issue on the table many times. But unfortunately, this is not a Mexican decision, this is a trilateral decision. And we are still in discussions with our counterparts to see if there will be any kind of flexibility on their part.”

Under the USMCA, 75 per cent of the content of cars produced in Mexico, the U.S., and Canada will need to be sourced from North America compared to 62.5 per cent under NAFTA. Additionally, 40 to 45 per cent of content needs to come from ‘high-wage’ areas. The changes will be phased in over three to four years but car manufacturers have to certify compliance with the initial requirements as soon as the agreement takes effect.

 

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