b'4American Journal of Transportation ajot.comSAVE SAVETIME & MONEYUS clashes with Mexico, CanadaDIRECT ACCESSTRADING INBULK, BREAK BULK,SEAMLESS SUPPLY INTO ALL OF NORTHOVER 50 GLOBALLIQUID & CHAIN WITH A AMERICA MARKETS SPECIAL CARGO CONNECTED NETWORKon car rules in USMCA risk SIMPLE. The U.S. is clashing with MexicoU.S. labor federation in a move that and Canada over rules for cars shippedits head heralded as a historic first. COMPETITIVE. acrossregionalborders,withauto- United Auto Workers spokesper-makersandgovernmentstellingtheson Brian Rothenberg said in an emailCONNECTED.Biden administration that its imperil- that the group, the largest U.S. auto ing the success of their new trade pact. union,supportstheBidenadminis-Thedisputefocusesonhowtotrations stricter interpretation of the calculatethepercentageofavehi- USMCA. EUROPE U.S. MID-WESTcle that comes collectively from theS UrpriSeS TAnCe TO SPECIAL CARGOTOthree countries under the U.S.-Mex- U.S. MID-WEST ICON/BADGE NORTH AFRICAico-Canadaagreement,accordingtoFor Mexico, the Biden adminis-people familiar with the matter, whotrations demand came as a surprise, asked not to be named because con- because the nation believed that the versations are private. The deal tookissuehadbeensettledintalkswith effectlastJuly,replacingtheNorththen-PresidentDonaldTrumpsSHIP WITH US TODAYAmerican Free Trade Agreement, oradministration in 2018 and 2019, the Nafta, but the new so-called rules ofpeople said. Cars are at the heart of originaredesignedtobephasedinthe USMCA, and Mexico views the over several years. U.S. demand by the Biden adminis-The U.S. insists on a stricter waytration as an attempt to renegotiate a than Mexico and Canada believe theykey aspect of the deal, the people said.agreed to for counting the origin ofMexico, together with Canada, is certain core parts including engines,considering filing a formal complaint(YEARcontinued from page 2) cali of a $1.4 billion brewery by the transmissionsandsteeringsystemsagainsttheU.S.undertheyear-oldof goods become more expensive andAmerican Constellation Brands. It can-in the overall calculation, the peopleUSMCA, which could result in a dis- thedryingupofcriticalAmericancelled the Mexico City airport project, said. That makes it harder for plants inpute panel to hear arguments for theexports including agriculture. resulting in billions of dollars of waste. Mexico and Canada to meet the newnations, the people said. And, it reversed efforts to open energy threshold of 75% regional content, upMexican Economy Minister Tati- M exiCo And TheUSMCA investment to the private sector. from 62.5% under Nafta, in order toana Clouthier plans to travel to Wash- Many assumed that US re-shoringAMLOissomeonewhohas trade duty-free, the people said. ington next week and discuss the issueor near-shoring to Mexico would accel- been quite populist in his approach, For example, if a core part useswith Tai, the people said. erate because of the successful com- said Miller. Investors look at Mexico 75% regional content, and thus quali- A quarter century after Nafta wentpletion of the USMCA, coupled withand are very nervous.fies under that requirement for duty- into effect, Trump demanded rules toAmericasgrowingtradewarwithThe North American vehicle trade freetreatment,MexicoandCanadarequire more regional content and aChina. However, while some transferwasthesingle-biggestfocusofthe arguethatUSMCAallowsthemtominimum hourly wage in car produc- of light industrial goods manufacturingnewagreement.Carandtruckpro-round the number up to 100% for thetion to incentivize companies to man- has taken place, the moves have largerduction comprises a more-than $100 purposes of meeting a second, broaderufacture more in North America andbeen within Asia, from China to South- billion manufacturing juggernaut, one requirement for an entire cars overallthe U.S. Tai, as a lawyer for Houseeast Asia, notably Vietnam. thathasdevelopedsincetheadvent regional content. The U.S., however,Democrats, played a key role in nego- Part of that reflects the continuedof NAFTA into complex and efficient doesnt want to permit rounding up,tiatingchangestotheUSMCAinadvantagesofproducinggoodsinsystem of cross-border supply chains. making it tougher to reach the duty- 2019 to win broad bipartisan supportAsia, despite the necessity for trans- The Trump administration spent con-free threshold for the overall vehicle. in Congress. siderable energy and polit-Thatshowtheissueissumma- Makingtherulestoocumber- icalcapitalongivingthe rizedinanotewrittenbyMexicossomecouldcauseautomakersto The rules of origin that were negotiatedUS more leverage in vehi-AutomotiveIndustryAssociation,forgo applying for duty-free treatmentin USMCA to some extent were fightingclemanufacturing,critics knownasAMIA,andobtainedbyand instead pay tariffs that the U.S.thelastwar,EricMiller,presidentofwould say, to the exclusion Bloomberg News. charges under World Trade Organiza- the Rideau Potomac Strategy Group of other sectors. USTRspokesman AdamHodgetion rules, said Flavio Volpe, presidentUndertheUSMCA said in an email that the U.S. remainsof Canadas Automotive Parts Manu- pacificcarry.Partisafunctionofrulesoforiginforduty-freestatus, committedtothestrongerregionalfacturers Association. Mexicosownproblems,includingNorthAmericancontentofcars, valuecontentrequirementsthattheThatwouldmakethefree-tradesecurity and the government of Presi- light trucks and auto parts increases countries agreed to in the USMCA,dealirrelevantforpreferentialtariffdentAndrsManuelLpezObra- to75%overthreeyearsfromthe without elaborating. purposes. Motor vehicles are the topdor (often known as AMLO), whichNAFTArequirementof62.5%.Of ThepressofficeofMexicosmanufactured product traded betweenappears to discourage foreign invest- this, at least 40% to 45% (depending economyministrydeclinedtocom- the U.S., Mexico and Canada. ment as often as it embraces it. onthecategory)mustbemadeby mentimmediately.AspokespersonUnder WTO rules, the U.S. couldVietnamhaslowerwages,aworkers earning at least $16/hour.for Canadian Trade Minister Mary Ngapply a 2.5% tariff on passenger vehi- stable political system, no drug prob-declined to comment. cles from its neighbors if the USMCAlemsorgangwars,saidMiller.iCe S UpplyC hAin , eV S And TheU.S. Trade Representative Kath- werent in place, though the duty forCompare that to Mexico, which hasUSMCA erineTai,appointedbyPresidentlight trucks is higher at 25%. struggledincreasinglywithgover- Sofar,atleast,thisreformhas JoeBiden,hasrepeatedlystressedWe had to find a balance in thenance and citizen security. failedtoevolveintodramatically in recent weeks that the administra- Naftanegotiation:howhardcouldThen,theresMexicosspottymorenearshoring,especiallyMex-tion is pursuing a worker-centeredyoupushforlocalsupply,Volperecordonforeigninvestment.Theico-basedmanufacturingrelocation. trade policy and has sought friendlysaid. There is a point where you turnAMLOgovernment,forexample,Part of this reflects investor skittish-tieswiththenationstradeunions.a screw too hard and you break theengineered a plebiscite in March 2020ness. But a bigger factor may be the Last month she addressed the largest(CLASHEScontinued on page 5) that blocked the construction in Mexi- (YEARcontinued on page 5)'