25 January 2022
Canadian Custom Brokerage

Canada joins Mexico in challenge of U.S. auto trade rules under CUSMA

The Government of Canada announced that it is joining Mexico’s request to establish a dispute settlement panel to address the United States’ interpretation of the rules of origin governing the regional value content calculations that must be performed for a vehicle to qualify for duty-free treatment under the Canada-United States-Mexico Agreement (CUSMA).

Canada and Mexico claim that the interpretation that the United States adopted in July 2020 is inconsistent with CUSMA and the understanding shared by the parties and stakeholders throughout the negotiations.

Canada joined consultations initiated by Mexico with the United States under Chapter 31 of CUSMA in August 2021. Trilateral consultations were held on September 24, 2021. There have been informal, trilateral technical discussions that have taken place following entry into force in July of 2020.

Mexico requested the establishment of a dispute settlement panel on this issue on January 6, 2022.

In the timeline provided under CUSMA, the dispute settlement panel would be expected to issue a report in the summer of 2022.

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