Braumiller Law Group attorneys told webinar listeners April 20 that outside of the automotive sector, the U.S.-Mexico-Canada Agreement has more liberal rules of origin than NAFTA. Jim Holbein said that the decision on whether a product qualifies based on tariff shift is a “much simpler rule to apply. I believe that’ll be useful, particularly if your process for obtaining origin is based all on NAFTA.” He gave the example of a flat-screen TV assembled in Mexico, which currently has content percentage rules. Under USMCA, if the manufacturing process qualifies as substantial transformation, that's enough to count as Mexican.
Mara Lee
Mara Lee, Senior Editor, is a reporter for International Trade Today and its sister publications Export Compliance Daily and Trade Law Daily. She joined the Warren Communications News staff in early 2018, after covering health policy, Midwestern Congressional delegations, and the Connecticut economy, insurance and manufacturing sectors for the Hartford Courant, the nation’s oldest continuously published newspaper (established 1674). Before arriving in Washington D.C. to cover Congress in 2005, she worked in Ohio, where she witnessed fervent presidential campaigning every four years.
The Office of the U.S. Trade Representative issued a pre-publication notice April 20 that carmakers must submit draft staging plans under the U.S.-Mexico-Canada Agreement no later than July 1. Their final plans are due by Aug. 31, the notice said. If USTR approves the plans, companies would have five years instead of three to increase regional content and adjust to other changes in the auto rules of origin. In order to be approved, the companies must show how every model can meet the stricter standards, even if that can't be done within the five-year time frame. Many cars imported from Mexico do not meet the current standards and pay the 2.5% duty. “The petitioner also should identify any North American investments and sourcing, preferably by calendar year and location, which will allow such vehicles to meet the standard USMCA rules,” USTR said.
European Union Trade Commissioner Phil Hogan said the EU could consider temporarily suspending tariffs on most-needed medical equipment to fight COVID-19, as well as asking other countries to do the same. He said the EU could consider “launching a more comprehensive negotiation of a plurilateral agreement that would lead to a level playing field, including the possible permanent liberalisation of tariffs on medical equipment and help to ensure that global supply chains can operate freely in this critical sector, and that our healthcare manufacturers could benefit from new market opportunities.”
The Council on Foreign Relations said that U.S., European and Japanese pushback over Made in China 2025, at least the part on high performance medical devices, may ebb after the coronavirus pandemic has passed -- because other countries will want to implement their own versions. “If any country knows a little bit about reducing industrial dependence on the rest of the world through conscious industrial choices, that would be China,” said Brad Stetser, a CFR senior fellow for international economics, during a webinar April 16. He said China is displacing imported semiconductors, but has been less successful in displacing imported aircraft.
As a date of entry into force, June 1 “is too aggressive and unrealistic,” said The American Association of Exporters and Importers in a letter sent April 15 to the U.S. trade representative. The organization did not say what day would be late enough for traders, who are affected by the COVID-19 public health emergency. “Many companies have personnel working from home due to COVID-19, which will make responses to queries for data slower, thereby causing delays in the certification process for USMCA,” they said. But they noted that without final regulations, “it is impossible for companies to know if there will be an impact or if supply chains may need to be shifted.” Once the regulations are in place, AAEI said, it will take time to solicit documents from suppliers. The group asked that NAFTA certificates of origin for 2020 continue to be valid during a period of informed compliance until Jan. 1, 2021.
Sen. Chuck Grassley, R-Iowa, who last week said that U.S. Trade Representative Robert Lighthizer is not sympathetic to auto industry complaints about U.S.-Mexico-Canada Agreement implementation, said that after talking to Lighthizer again, he has a different view. Lawmakers recently asked the USTR to delay the USMCA rules of origin requirements (see 2004130035).
A group of 31 House lawmakers, led by Rep. Haley Stevens, D-Mich., and Rep. Jackie Walorski, R-Ind., is asking the U.S. trade representative to delay the switch-over to the U.S.-Mexico-Canada Agreement auto rules of origin (ROO), even as the USMCA takes over from NAFTA. The group's letter, sent April 10, said the delay “is necessary to allow the auto industry an appropriate adjustment period and account for delays caused by the COVID-19 pandemic. Alternatively, we ask that you seriously consider other accommodations or flexibilities that will allow the automotive sector to avoid being penalized by the new requirements upon the agreement’s entry into force.”
The European Union director general said the union will be scaling back export restrictions on personal protective gear, and she said that the EU is still trying to convince individual countries to lift restrictions on ventilators. Sabine Weyand was speaking from Brussels on a webcast hosted by the Washington International Trade Association on April 9. Weyand said the temporary EU restrictions will expire April 25, and that officials are reviewing the list, as they have realized not all PPE is scarce.
The World Trade Organization is forecasting a huge hit to trade around the world, but how bad it will be depends on how long the lockdowns persist, the organization said April 8. In an optimistic scenario, restrictions on movement are lifted after three months. In a pessimistic scenario, they're lifted (or partially lifted) after six months. And in the worst-case scenario, the stay-at-home orders last for a year, and even after they're over, a lot of the people who lost their jobs do not get back to work, so big-ticket purchases like cars and major appliances continue to be depressed in 2021.
Export controls on masks used by medical workers -- an idea that had been floated (see 2004030063) -- have been averted, 3M announced the evening of April 6. The multinational company is producing 35 million masks a month in the U.S., and the president had said none of that production should be exported to Canada and Latin America, major recipients of that output. But now, the administration will address U.S. regulatory restrictions that prevented some Chinese masks from being used for medical workers, and 3M will import 166.5 million N95 masks, mostly from its China plant, over the next three months, the company said. “The plan will also enable 3M to continue sending U.S. produced respirators to Canada and Latin America, where 3M is the primary source of supply,” the press release noted.