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Automotive: Canada to challenge US interpretation of trade rules with Mexico

Canada announced Thursday that it wants to join Mexico in challenging the way the United States interprets auto sector rules under the North American Free Trade Agreement (AEUCMC or CUSMA).

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Last week, Mexico requested that a dispute settlement panel be set up to resolve differences in the interpretation of the trade agreement.

“Canada joins Mexico’s request to establish a dispute settlement panel,” said Canadian International Trade Minister Mary Ng.

In a statement, Ottawa said that “the interpretation adopted by the United States in July 2020 is not in accordance with CUSMA”.

The Canada – United States – Mexico Agreement, which replaced NAFTA on July 1, 2020, allows cars made in North America to benefit from duty-free treatment.

This trade agreement, ratified by former US President Donald Trump, raised the regional content requirement to 75%, compared to 62.5% under the old treaty.

Canada says it is “hopeful” that a dispute settlement panel can ensure “a speedy resolution of the matter.”

According to the schedule provided by the trade agreement, this group is expected to publish a report in the summer of 2022.

Canada and Mexico are also irritated by the protectionist policy of the United States in the development of electric cars. Both countries fear that the US investment plan will seriously harm their respective auto sectors.