U.S. wants to strengthen rules of origin within NAFTA
The Trump administration is using “careful language” when it comes to its desire to strengthen the rules of origin in the North American Free Trade Agreement, industry experts say, something that could bode well for any potential impact on the automotive supply chain.
In the document released Monday outlining the United States’ objectives when it comes to NAFTA renegotiations, the United States Trade Representative said it wants to “update and strengthen the rules of origin, as necessary, to ensure that the benefits of NAFTA go to products genuinely made in the United States and North America.”
The U.S. also wants to ensure rules of origin “incentivize the sourcing of goods and materials from the United States and North America” and establish procedures that streamline rules of origin certification and promote strong enforcement.
NAFTA’s rules of origin currently stipulate that vehicle must have at least 62.5-per-cent North American content in order to gain duty-free access to all three member countries.
Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, the list of objectives did not contain any surprises to the auto parts industry.
“We’re seeing careful language around rules of origin as the administration and the industry south of the border has substantive conversations about how regulatory change would affect the industry,” he said.
“I think they have a very good understanding of how intertwined the three countries interests are in this sector and, very specifically, how deeply the American interest flows across both borders.”
While the objectives do not point to any specific changes that could potentially be made to rules of origin, U.S. Commerce Secretary Wilbur Ross has previously said the rules were “far too lenient.”