Ten years ago, the industry bickered about how much North American content was necessary for a vehicle to qualify for duty-free treatment under the North American Free Trade Agreement.
The debate is about to be reopened. Next month, Canadian, Mexican and U.S. trade officials will hold meetings to discuss changing content levels.
Not surprisingly, the industry is returning to the same sides it took 10 years ago. Foreign-based automakers such as Toyota Motor Corp. have asked the government to consider reducing NAFTA's local content requirement from 62.5 percent to 50 percent. The Big 3 wants the current percentage to remain intact.
When the NAFTA debate first raged in the 1990s, some groups, including the UAW and U.S. parts trade associations, pushed for the highest content level possible. They worried that a low content level would open the floodgates to imported parts, resulting in less U.S. manufacturing and fewer U.S. manufacturing jobs.
"I can assure you that we don't want it to change, nor does the UAW," says Stephen Collins, president of the Big 3 lobby group, the Automotive Trade Policy Council. "Why should it be rolled back? It's what Congress approved."
Under NAFTA, if an automaker can show that its vehicles contain 62.5 percent North American-made parts and material, the vehicle can be exported across the borders of Canada, Mexico or the United States without paying import duties.
The 62.5 percent level was a compromise. Some groups pushed for 75 percent content.
Toyota is re-framing the old question.
North American trade is becoming more complex, says Earl Quist, director of industry affairs at Toyota Motor North America Inc.'s office in Washington.
Canada, Mexico and the United States have additional free trade agreements that don't jibe with NAFTA, Quist says. And Toyota would like to see all of the agreements use the same automotive content requirements - 50 percent, he says.
Toyota also wants the individual tariffs on imported parts to "go to zero," Quist says.
The U.S. levies an import tariff of 2.5 percent for car parts and 25 percent on truck parts. Mexico's parts tariffs run from 13 percent to 30 percent. Canada's are 6.1 percent.
But Quist adds: "This isn't about our production plans. Our efforts to purchase local content won't change. All of our North American vehicles meet the 62 percent requirement and will continue to."