Mexico seeks consultation with US over auto content rules

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Mexico City, Aug 20 - Mexico sought formal consultation with the United States on Friday over the interpretation and application of tougher content rules for automobiles set out in the USMCA trade pact.

In May, the United States voiced disagreement over the issue in a three-way virtual meeting when it called for differences with Mexico methods. Canada and Mexico use flexible interpretations.

The Ministry of Economy and Finance of Mexico identified a divergent position between our governments on the interpretation of provisions on rules of origin for the automotive sector, Tatiana Clouthier said in a letter.

In a letter on Friday to U.S. Trade Representative Katherine Tai, Clouthier said Mexico wanted to resolve or avoid a possible dispute.

United States-Canada Agreement the successor to the North American Free Trade Agreement requires 75% North American content for a vehicle to be considered as being from Mexico.

The same percentage will apply for so-called essential parts on 1 July 2023, up from 69% now, and compared to 62.5% under the previous trade pact.

But once the level of essential parts hits 75%, it is considered 100% and should be counted as such to the total value of the automobile, Mexico says.

Its request for consultation is the first non-contentious stage of a dispute resolution mechanism provided in Chapter 31 of the pact, with an industry expert saying such talks must be held within 30 days, in this case by 20 Sept.

The United States is reviewing the request, said U.S. Trade Representative spokesman Adam Hodge.

We are reviewing the Mexico's request for consultations and remain committed to fully implementing the USMCA, including the strong auto regional content requirements to which we all agreed, he said.