USMCA auto provisions to be reviewed by U.S. trade office

WASHINGTON — The Office of the U.S. Trade Representative will conduct a review of the automotive provisions, including vehicle content rules, under North America's trade deal, according to a document set to post Thursday in the Federal Register.

As part of the process, the office must submit a report to the Senate Finance Committee and the House Ways and Means Committee by July 1 — two years after the United States-Mexico-Canada Agreement entered into force.

The report must include "a summary of actions taken by producers to demonstrate compliance with the automotive rules of origin, use of the alternative staging regime, enforcement of such rules of origin and other relevant matters," according to the document.

It also requires a review of whether the USMCA's vehicle content rules are "effective and relevant in light of new technology and changes in content, production processes and character of automotive goods," the document reads.

The USCMA's implementation statute mandates a review of the trade pact's operation as it relates to automotive goods every two years.

The trade office also is seeking comment from automakers and suppliers as well as labor groups and other stakeholders regarding the trade pact's operation and actions taken by the auto industry to demonstrate compliance.

As part of the request, the office is seeking views on the use of alternative staging regimes by automakers to meet the USMCA's tougher content requirements and enforcement of the auto rules of origin.

Automakers that were approved for an alternative staging regime — which allows a longer transition period for meeting regional value and labor value content thresholds — include Ford, FCA (now Stellantis), Honda, Hyundai, Kia, Mazda, Nissan, Tesla, Toyota, Volkswagen and Volvo.

The office's review and request for comments come after Canada in January joined Mexico in its request to form a dispute settlement panel that would address the U.S. interpretation of the automotive rules of origin under the USMCA.

Canada and Mexico, in their interpretation, say that if a core part meets the 75 percent regional content threshold, then that part can count as 100 percent originating in North America when determining the vehicle's overall RVC.

The U.S., however, considers the regional content for core parts and vehicles as separate calculations. For instance, if an engine meets the 75 percent threshold, then only 75 percent is counted toward the vehicle's overall RVC.

Industry groups including the American Automotive Policy Council and Autos Drive America are seeking a quick resolution to the disagreement.