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As you are aware, the U.S. House of Representatives passed an updated version of the USMCA earlier this week. The passage by the House includes revisions to an agreement initially agreed to by the US, Mexico and Canada in September 2018.
The next step for the USMCA is the Senate, where it is not expected to be put to a vote until 2020.
What are some of the changes in the USMCA versus NAFTA?
- If autos are to qualify for no tariffs, then 75% of the components must be manufactured in Canada, Mexico or the United States (currently at 62.5%).
- 30% of the work on the vehicle must be performed by individuals making $16 or more per hour, with a 40% requirement in 2023.
- The new agreement allows works in Mexico to unionize.
- The definition of steel and aluminum for Mexico in regards to the automotive rules of origin includes “melted and poured” in North America.
- USMCA will be subject to mandatory review every 6 years, if all parties agree, then there is a 16 year period for review, with subsequent reviews every 16 years.
If you have any further questions how your business may be impacted by the USMCA if and when it is passed next year, contact experienced trade attorney David Hsu by phone/text at 832-896-6288 or by email at attorney.dave@yahoo.com or dh@gjatradelaw.com.