Earlier this week the authorities announced the detailed text of the proposed revisions to the NAFTA agreement. At the eleventh hour, the three parties announced the joint FTA text agreed to by Canada, Mexico and the US (USMCA FTA). The text has been submitted by the three administrations to their legislatures for review and possible approval.
In particular, the automotive Rules of Origin have been significantly modified, both for Light and Heavy Duty vehicles. The proposed rules include various categories of components, steel and aluminum requirements and Labor Value Content requirements. Companies with North American IT and Research & Development functions will enjoy an allowance. Also included are credits for assemblers with engine, transmission or advanced battery plants in North America.
Also impacted are industries such as Dairy and Textiles/Apparel. For the specific Rules of Origin and additional provisions, please see the USTR website at:
https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement
MIC teams are working to analyze the proposed rules and the impact on the Origin Calculation System module. The proposed rules are aimed to go into effect for calendar year 2020, impacting FTA planning, solicitation and calculation activities in calendar year 2019.