Mexico is warning that the U.S. interpretation of the revamped North American free trade deal that also includes Canada could push automakers to abandon the region due to cumbersome and costly content requirements.
Luz Maria de la Mora, Mexico’s undersecretary of economy for foreign trade, said that if the U.S. doesn’t come to an agreement with Mexico about the rules of origin of auto parts, companies could seek to move their business to countries with more favorable trade agreements. The U.S.-Mexico-Canada Agreement pact replacing NAFTA took effect last July with the new so-called rules of origin designed to be phased in over several years
“USMCA may become inconsequential for trade in the auto sector in North America because companies may decide not to bother with even complying with USMCA, because it becomes so costly, so cumbersome, and so difficult,” De la Mora said in an interview with Bloomberg News. “It may not be worth their effort to really try to procure from North America, so why bother investing in North America.”