Additional Auto Rules of Origin Proposal a Hurdle in USMCA Talks
A last-minute push to tighten up the steel and aluminum segment of the auto rules of origin has angered Mexico, media reports said Dec. 6. Rep. Henry Cuellar, D-Texas, had referred to this last-minute ask as not coming from House Democrats the day before (see 1912050054). The reports say that steel unions asked for a “poured and melted” standard, rather than allowing Mexican processors to take imported slab and make it into sheet metal for cars.
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However, according to the Center for Automotive Research, most of the metals produced in Mexico are not of high enough quality to produce the cars assembled there. “The Mexican automotive industry imports 90 percent or more of the steel it uses each year -- much of this from the United States,” a report on the Mexican car industry said, though Mexico also imports steel from Asia and Europe. It's those imports that would cause problems for the rule of origin, but that would be true under the current standard or the poured and melted standard under discussion. Bloomberg reported that Brazilian aluminum slabs are common inputs in Mexico vehicle production.
Concamin, a trade group of industrial companies in Mexico, told Mexico's chief negotiator that the poured and melted standard would be impossible for Mexican companies to comply with. Jesus Seade, that chief negotiator, was talking with the U.S. trade representative Dec. 6 in Washington. Reuters reported that when asked about the steel and aluminum proposal, he replied, “Everything can be resolved.” Mexico imports little semi-finished steel (see 1905300026).