On Aug. 31, MEMA submitted comments to the Department of Labor (DOL) regarding its July 1 interim final rule (IFR) for high-wage components for the U.S.-Mexico-Canada Agreement (USMCA) labor value content (LVC) requirements. MEMA seeks greater clarity in the regulation because there is still uncertainty related to potential compliance and impacts for parts suppliers.
Pursuant to the USMCA implementing legislation, which passed earlier this year, the DOL is required to implement the LVC high-wage requirements and establish procedures for producers to follow.
“Although the vehicle producer is obviously the party subject to the LVC requirement, what is less obvious are the implications of the LVC requirements on parts producers,” MEMA stated. “As a result, some elements of the LVC are essentially de facto requirements imposed on suppliers, such as recordkeeping.”
In the comments, MEMA urged DOL to clarify the limited purpose for which vehicle producers may use parts from their direct suppliers in their LVC calculations. MEMA also pushed for flexibilities related to information-collection related to temporary or seasonal workers and third-party employment agencies. Additionally, MEMA sought a key clarification related to recordkeeping requirements and timelines. Lastly, MEMA noted that the DOL’s regulatory impact analysis was underestimated.
“Making these changes to the final regulation will mitigate misinterpretations and provide important clarity for vehicle and parts producers alike,” MEMA stated.
For more information about this topic, please contact Leigh Merino.