The USMCA trade agreement has stalled due to rules governing the use of steel and aluminum for the automotive industry, according to a news report from Bloomberg News. The agreement, which needs to be ratified by the legislature in the US, Mexico and Canada before going into effect, requires 70 percent of steel and aluminum used in vehicle production to come from North American producers in order to be duty-free.
The report said the US added a demand last week to count only steel and aluminum slab toward the 70 percent requirement, which would complicate steel production due to most slab imported by the US and Mexico comes from Brazil, Japan and Germany. The demand was reportedly proposed by the United Steelworkers union last year.
“The USMCA rule of origin is challenging to comply with, but we can meet this additional requirement,” said Matt Blunt, President of the American Automotive Policy Council which represents the Big Three US Automakers. “Passage of USMCA remains our highest priority.”
Representative Richard Neal, chairman of the US Congressional Ways and Means committee, said he was optimistic the agreement could be ratified despite the origin proposals, and it’s still “very possible” that the House of Representatives could vote on it this year.
Mexico’s industrial chamber, Concamin, sent a letter to Mexico’s chief negotiator, Jesus Seade, this week, according to Bloomberg News, saying that the changes the US is seeking on steel and aluminum are “unacceptable and impossible for the nation’s automakers,” and would also “threaten their competitiveness and destroy two decades of supply chain integration.”