If the U.S. position on calculating the regional content of automobiles prevails in a USMCA state-to-state dispute, Baker McKenzie associate Eunkyung Kim Shin predicted, companies would be likely to import more parts used to assemble the automobiles. Shin, who spoke at a Baker McKenzie webinar Nov. 15, said that when the entire value of a part counts toward the vehicle regional content threshold once that part meets its own rule of origin, it makes sense to build the part in Mexico, the U.S. or Canada. But if the non-local content of those parts is not disregarded when doing vehicle-level calculations, it might be cheaper just to import the parts from a lower-cost country, she said.
USMCA
The U.S.-Mexico-Canada agreement is a free trade agreement between the three countries, also known as CUSMA in Canada and T-MEC in Mexico. Replacing the North American Free Trade Agreement (NAFTA) in 2020, the agreement contains a unique sunset provision where, after six years (in 2026), any of the three parties may decide not to continue the agreement in its current form and begin a period of up to 10 years where USMCA provisions may be renegotiated.
A listing of recent Commerce Department antidumping and countervailing duty messages posted to CBP's website Nov. 10, along with the case number(s) and CBP message number, is provided below. The messages are available by searching for the listed CBP message number at CBP's ADCVD Search page.
CBP issued a final rule updating its Part 102 rules of origin to account for recent changes to the Harmonized Tariff Schedule of the U.S., in particular the World Customs Organization’s major five-year updates implemented in 2017 and 2022.
A listing of recent Commerce Department antidumping and countervailing duty messages posted to CBP's website Nov. 9, along with the case number(s) and CBP message number, is provided below. The messages are available by searching for the listed CBP message number at CBP's ADCVD Search page.
Major automakers and battery makers disagreed about how granular the EV battery supply chain rules should be, but most agreed that diverging from the battery timeline requirement, which begins in 2023, would allow far more vehicles to qualify for tax credits, thereby accelerating adoption of cleaner cars, trucks and SUVs.
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On passage of the Inflation Reduction Act, electric vehicles manufactured overseas were instantly disqualified from the $7,500 tax credit. In January, even cars manufactured in the U.S. will be eligible only if they are below certain price thresholds, and meet battery component local content thresholds. Those thresholds ramp up in 2024, as do those for the critical minerals in batteries.
The International Trade Commission, which is tasked with measuring the economic impact of the USMCA's stringent auto rules of origin, heard from auto industry players in the U.S. and Mexico that satisfying the labor value content audits is next-to-impossible.
Panelists from the three countries in the USMCA -- including the chief negotiator for Mexico in what became the USMCA -- said they expect, or hope for, the auto rules of origin to change four years from now, as part of the six-year review of the trade deal.
The Office of the U.S. Trade Representative, in a Federal Register notice published Oct. 26, asked for applications from people who would like to serve on panels that review final determinations in antidumping or countervailing duty proceedings and amendments to AD/CVD statutes of a USMCA Party. These people would be on the roster from April 1, 2023, through March 31, 2024. Applications are due by Nov. 30, and can be submitted at www.regulations.gov, docket number USTR-2022-0015.