Regional Tradeoffs: Panel ruling favours Canada and Mexico in 2020 US-Mexico-Canada Agreement dispute

Washington D.C., United States — Mexico and Canada have won a dispute with the United States regarding cars shipped across regional borders, according to a report first published by Bloomberg.

According to people familiar with the decision, a publicly unavailable report by the 2020 US-Mexico-Canada Agreement’s dispute-resolution panel made a ruling loosening the formula deciding whether a vehicle had enough parts assembled in North America to qualify for duty-free trade.

Initially, the United States employed a duty-free trade formula that made it harder for automotive plants in Mexico and Canada to meet the new threshold of 75 per cent regional content, up from 62.5 percent under NAFTA.

The ruling could potentially benefit consumers and carmakers alike because it would allow the manufacturers to build more components—such as high-cost batteries—and assemble more cars in Mexico, where workers’ wages are a fraction of their U.S. counterparts, said Sam Fiorani, v-p of global vehicle forecasting at AutoForecast Solutions.

A spokesperson for Canadian Trade Minister Mary Ng declined to comment until after the ruling is published.


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