The Mexican auto industry association (AMIA), The association of heavy vehicle makers (ANPACT) and auto parts industry association (INA) have been lobbying for regional content rules in the new North American trade agreement, the US Mexico Canada Agreement (USMCA), to be implemented in 2021, instead of June 1, 2020 as earlier scheduled, as reported by Reuters.
The groups representing Mexican auto makers and auto parts suppliers claimed in a letter to Mexican Foreign Minister Marcelo Ebrard and Economy Minister Graciela Marquez, that there is still a lack of clarity regarding the content rules, so automakers have been unable to modify supply chains accordingly.
According to Mexican industry association Concamin, automakers in Mexico face "a potential scenario of non-compliance", as they are not aware of the official text for the Uniform Regulations which establish the methodology used to calculate regional content values.
The USMCA will call for 75% North American content compared to 62.5% under NAFTA, and 40% to 45% from "high wage" areas. The new content requirements are to be phased in over three to four years, but automakers have to certify compliance with the initial requirements when the agreement takes effect.
The current global coronavirus pandemic and the subsequent freezing of economic activity as parts of the world shut down to prevent the spread of the virus, forced North American auto makers, like many across the world, to shut down operations. Hence the issues facing the Mexican auto industry have been compounded, making it even more difficult to comply with the new rules by June 1, 2020.