Mexico’s auto industry lobby rejects news proposals on rules of origin

The Mexican Automotive Industry Association (AMIA) voiced its rejection to the latest proposal by the U.S. trade representatives involved in the renegotiation of NAFTA, who demanded a four-year phase-in period for cars made in North America to meet a 75% regional content threshold plus requiring substantial work involved in the manufacture of vehicles at wages of US$ 16 an hour or higher.

According to a report by Reuters, the U.S. proposal requires the US$ 16 wage on work comprising 40% of the value of light-duty passenger vehicles and 45% for pickup trucks.

“The U.S. plan would allow automakers to count the high salaries paid for engineering, research, sales, software and product development jobs towards 15% points of these goals, a provision that benefits Detroit automakers and disadvantages foreign brands that do such work outside the United States,” says the report.

“The U.S. proposal isn’t acceptable. The percentage, the transitions, the restrictions. You have to understand the U.S. proposal is like putting padlocks on padlocks,” said Eduardo Solis, president of AMIA, about the two-layered rule of origin. 

“Imagine a car that does comply with the percentage but doesn’t comply with all the core parts. Or you comply with core parts but don’t meet the steel and aluminum requirements. Or you comply with the first three but you don’t meet the wage requirements…It has the potential to influence investments, influence production in all three countries,” Solis added.

According to Reuters, automakers would get a four-year phase-in rate for light passenger vehicles, but only two years for pickup trucks, a high-value product segment that USTR views as important for U.S. production. For comparison, the original 1994 NAFTA had an eight-year transition period to reach the 62.5% threshold.

Solis said the Mexican auto industry is working on its own proposal for rules of origin and hoping to have it ready for next week. NAFTA talks resume May 7 in Washington.

MexicoNow

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