Mexico eyes resolution soon on dispute over USMCA auto rules

Mexico hopes to soon reach agreement on the interpretation of how automotive content rules in the United States-Mexico-Canada Agreement trade pact are applied, President Andres Manuel Lopez Obrador said on Thursday. Speaking at a regular news conference, Lopez Obrador said he did not want differences over the interpretation to go to an international arbitration panel.

Mexico hopes to soon reach agreement on the interpretation of how automotive content rules in the United States-Mexico-Canada Agreement trade pact are applied, President Andres Manuel Lopez Obrador said on Thursday.

Speaking at a regular news conference, Lopez Obrador said he did not want differences over the interpretation to go to an international arbitration panel. Mexico sought formal consultation with the United States in August over the interpretation and application of tougher content rules for autos set out in the USMCA trade pact, the successor to the North American Free Trade Agreement.

Mexico had voiced disagreement on the issue in a three-way virtual meeting in May when it cited differences with the U.S. methods. Canada and Mexico use more flexible interpretations. Mexico would have the option of requesting an independent panel of experts to weigh in if it could not resolve the dispute in a period of 75 days.

"An agreement is being sought," Lopez Obrador said. "We do not want it to go to an international panel. Those are the options that are available when there are these controversies in the treaty, but I do not think it will go there." The USMCA requires 75% North American content for a vehicle to be considered as being from the region.

The same percentage will apply for essential parts from July 1, 2023, up from 69% now and 62.5% under the previous trade pact. Mexico argues that once the level of essential parts hits 75%, it is considered 100% and should be counted as such toward the overall value of the automobile.