Top Mexican Official Says July 1 Is Earliest Date Possible for USMCA Into Force
Mexico's undersecretary for foreign trade said July 1 is the earliest the new NAFTA could go into effect, but also suggested that an August or September date of entry into force would be fine. Luz Maria de la Mora spoke on a webinar hosted by the Wilson Center's Mexico Institute on April 7.
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She said that Mexico notified Canada and the U.S. that it has concluded its domestic procedures in preparation for the date of entry, and that Canada did the same, but that the U.S. has not yet sent the letter of notification. Because Mexico did this on April 2, if the U.S. notifies yet this month, July 1 is the date of entry as provided for under the treaty.
Even though Mexico has sent its notification, de la Mora said all the changes to domestic legislation have not been completed. “Before this [public health] emergency happened, we were making good progress” on changes to the federal copyright law, industrial property law, laws related to sanctions, infrastructure statutes that deal with technical barriers to trade, and import and export tax law. “We are waiting and see how [our] Congress could take over work that has been done.”
She said Mexico also has to publish a tariff decree in its equivalent of the Federal Register. She said that a high-level task force for implementation of the U.S.-Mexico-Canada Agreement has been working every day, despite telework as a result of the COVID-19 spread suppression measures.
The undersecretary said that Economy Ministry officials are “in constant consultations” with the auto industry about how to write uniform regulations for the changes to the auto rules of origin. She said those regulations will answer questions such as:
“What is the methodology that can be used to estimate the percentage of regional value content? What is the formula that can be used? What are the documents that can be used to show you are actually complying with … the rule of origin that is provided in each of the tariff lines?”
And, she said, uniform regulations are needed for four chapters, not just autos, including rules for textile and apparel and on Customs procedures. She said when NAFTA went into effect in 1994, the uniform regulations were not issued until September 1995, so there's precedent for going into force without the regs being done. But, she said, the USMCA says they have to be done by the date of entry into force, “which is what we are intending to do.”
De La Mora said that Mexico, in response to its auto suppliers and original equipment manufacturers, has asked the U.S. and Canada to agree “to have a longer transition period for the uniform regulations. This is still something we are discussing; we do not have a final response from the U.S.”
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, in a phone call with reporters earlier that day, said that given the financial difficulties automakers and their suppliers are facing with the coronavirus shutdown, he and some other members of Congress think the changeover from NAFTA to USMCA should happen later.
“We think [U.S. Trade Representative Robert] Lighthizer is wrong for not extending it,” he said. “But right now he’s in the driver’s seat. Last conversation I had with him, I didn’t see him changing his mind.”
Webinar moderator Earl Anthony Wayne, a former ambassador to Mexico, asked de la Mora when industries that are asking for a delay of entry into force until 2021 might find out what the governments will do.
She didn't entertain the possibility of a delay until 2021, but again said that you could split the development of uniform regulations from the date of entry into force. “We are very aware of the practical challenges that this implementation will bring to the table. We’re willing to have a transition period specifically for the auto sector, as it has been requested,” she said. “We have put this issue on the table many times but, unfortunately, this is not a Mexican decision. We are still in discussions with our counterparts, to see if there would be any flexibility. If there's any kind of flexibility on the part of the U.S. and Canada, we are more than happy to do that.”
If the treaty goes into force on July 1, de la Mora expressed confidence that the details of the rapid response team on labor violations and the panelists for that function and for other dispute settlement channels will be in place. With regard to customs facilitation, de la Mora said there might be a working group formed to address digitizing more customs functions, and that Mexico is working to deal more expeditiously with reports of transshipment.