MEXICO CITY (Reuters) – The Mexican government on Tuesday called on the United States and Canada to give the automotive industry extra time to adapt its supply chain as a deadline for implementing a new approach to North American trade agreements.
FILE PHOTOS: Morning traffic on the 405 freeway in Los Angeles, California, USA, November 12, 2019. REUTERS / Lucy Nicholson / Photo File
“We have an absolute understanding of what the industry is facing and we are willing to have a special transition period for the automotive sector as requested,” Deputy Economy Minister Luz Maria de la Mora said at a webcast hosted by the Wilson Center think tank in Washington.
The AMIA Mexican car lobby said on Monday that 90 days were not enough time for car makers to adjust the supply chain to meet the origin requirements in the United States-Mexico-Canada Agreement (USMCA), which could take effect on July 1.
AMIA has urged authorities to delay until January 2021 the start of sectoral rules in the new trade pact, which will replace the 26-year-old North American Free Trade Agreement (NAFTA).
“We have put this problem 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 partners to see if there will be flexibility on their part, “de la Mora said.
Last month, groups representing car makers and suppliers in the United States supported the delay of the USMCA entry date to give them more time to prepare for change.
The new USMCA trade deal will require 75% of North American content compared to 62.5% under NAFTA, and 40% -45% of content from so-called “high-wage” areas.
This will be gradual in more than three to four years, but car makers must declare compliance with preliminary requirements when the agreement enters into force.
Canada and Mexico recently said that they had completed their internal legal process to make this agreement effective, but the United States still had to follow it.
Mexico’s economy ministry told the auto industry that USMCA allows alternative transition schemes that can give companies more time to comply, AMIA said.
“We can see a scenario where we have USMCA, which will take effect in July, August, September, in the very near future and at the same time we can also have a transition period for the automotive sector,” de la Mora said.
Reporting by Sharay Angulo and Anthony Esposito; Editing by Steve Orlofsky
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