USMCA Auto Origin Provision Should Simplify Production Processes, Origin Calculations, USTR Says

A new provision in the U.S.-Mexico-Canada Agreement’s rules of origin for automobiles should prevent automobile manufacturers from having to segregate parts on the production line and also make origin calculations less burdensome, U.S. Trade Representative Robert Lighthizer told the Senate Finance Committee in one of a series of written answers to questions the committee posed to him at a June 18 hearing. Under the renegotiated NAFTA, called USMCA, certain “core parts” listed in Column 1 of Table A.2 must be originating for a vehicle to be originating, but Article 3.9 permits producers to bundle the parts under Column 1 together as a “super core” part when calculating the value of non-originating material (VNM) for origin purposes. “Many vehicle producers do not segregate core parts when producing vehicles, but use or bundle them within different modules along the production line,” USTR said. “The ‘super core’ calculation allows such producers to meet the core parts requirement without having to segregate each of the parts and do separate, burdensome calculations. The super core calculation incentivizes U.S. producers to use more originating content and maintains their competitiveness without accruing any possible efficiency losses from having to segregate core parts,” the agency said.