Top Mexican Official Tells Congressional Trade Leaders, USTR That USMCA Auto ROO Problematic

Mexico's Economy Secretary, Tatiana Clouthier, said she talked about Mexico's concerns about the auto rules of origin with the chairman of the House Ways and Means Committee, the ranking members of that committee and of the Senate Finance Committee, two other Republican senators, and four business groups, including two auto manufacturing trade groups, as well as a major aerospace manufacturer.

When she spoke with Autos Drive America CEO Jennifer Safavian, she said, they discussed the negative impact the interpretation of the auto rules of origin could have. To the Business Roundtable, she emphasized that under NAFTA, Mexico and the U.S. developed a production platform that positioned North America as a competitive and innovative leader.

Clouthier's readout did not cover her meeting with U.S. Trade Representative Katherine Tai, the woman with the power to change how the regional value content is calculated. Mexico, and the auto industry, are startled to find out that when a part qualifies under its own rules for North American content, the value of the part does not contribute to the overall vehicle regional value requirement (see 2106180027). Under NAFTA, there was roll-up, so if an engine's value was 30% Mexican, 40% from the U.S., 10% German and 20% Chinese, the full value of the engine contributed to the vehicle. The USTR says that under USMCA, only the 70% that is North American counts toward the final calculation.

In USTR's readout of their July 22 meeting, it said: "Ambassador Tai highlighted that [the] United States remains committed to the full implementation of the USMCA, including the strong auto rules of origin, and Mexico’s important labor reforms. The two leaders agreed to stay in touch in the months ahead."

Spokespersons for Autos Drive America, Sen. Mike Crapo, R-Idaho, Rep. Richard Neal, D-Mass., and Rep. Kevin Brady, R-Texas, did not share their perspectives on these meetings by press time.