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Stevens, Sewell, Walorski, Baird Call for Extension on Automotive Rules of Origin Requirements

Date: April 13, 2020
Source: Congresswoman Haley Stevens

WASHINGTON — On Friday, Congresswoman Haley Stevens (MI-11), along with Reps. Terri A. Sewell (AL-07), Jackie Walorski (IN-02), and James R. Baird (IN-04), led a bipartisan group of 31 Members of Congress to call on United States Trade Representative Ambassador Robert Lighthizer to provide temporary flexibility in entry into force for new automotive Rules of Origin (ROO) requirements under the United States-Mexico-Canada Agreement (USMCA).

The USMCA, which passed on a strong bipartisan vote, included more robust rules-of-origin requirements for autos and auto parts. These rules govern what percentage of a car and its parts must be from the United States, Mexico, or Canada in order to have duty-free status. In recent months the automotive industry has worked to modify their production to comply with the new ROO requirements, and manufacturers have invested in new training and software systems necessary to certify compliance. Due to the ongoing global COVID-19 pandemic, many automakers have experienced severe supply chain disruption making it difficult to meet these new requirements by the planned implementation date of summer 2020. This targeted extension will allow the auto industry an appropriate adjustment period while still requiring important new labor and enforcement provisions in the agreement to go into effect.  

“We were happy to support the bipartisan passage of the USMCA and look forward to implementation of the modernized agreement,” the lawmakers wrote. “However, we encourage you to consider options that will allow the automotive sector to meet the rules of origin requirements of the agreement in an orderly, successful manner. Taking the time to do this process right will allow manufacturers and their workforces across the country to maximize the intended benefits of the agreement and will minimize disruption during a particularly challenging time for the industry. We look forward to continuing to work with you to find creative solutions for automobile manufacturers and workers while ensuring that full USMCA implementation is a success.”

“MEMA applauds the leadership of Representatives Haley Stevens, Jackie Walorksi, Terri Sewell and Jim Baird in urging delay of the entry into force of the complex USMCA auto rule of origin provisions,” said Bill Long, President and CEO, Motor & Equipment Manufacturers Association (MEMA). “They understand that without delay or a compromise on implementation, the motor vehicle parts sector will face another severe economic challenge at a time when a global pandemic has shut down our industry in North America. On behalf of the industry, we also thank the other 27 Members who joined in this effort.”

The full text of the letter can be found attached or below.

“Dear Ambassador Lighthizer, 

We strongly supported the bipartisan United States-Mexico-Canada agreement (USMCA) and look forward to seamless entry into force of the new agreement in the near future. We write to respectfully request flexibility in the planned entry into force for USMCA’s automotive Rules of Origin (ROO) requirements. This targeted extension is necessary to allow the auto industry an appropriate adjustment period and account for delays caused by the COVID-19 pandemic. Alternatively, we ask that you seriously consider other accommodations or flexibilities that will allow the automotive sector to avoid being penalized by the new requirements upon the agreement’s entry into force.

The ongoing global COVID-19 pandemic is causing severe consequences for supply chains as manufacturing companies rapidly adjust to protect their workers and mitigate production disruption. Many automakers and suppliers announced facility closures in North America in response to the pandemic, the adverse economic impacts of which cannot yet be fully calculated. Also, many are joining the effort to manufacture life-saving equipment.

Amidst the economic hardship created from the current public health crisis, the industry is attempting to modify their production to comply with new ROO requirements in the USMCA. In order to comply, companies must complete complex and extensive solicitations throughout their multi-tiered supply chains. Manufacturers also need to invest in new training and software systems necessary to certify compliance with the new ROO requirements. We understand that companies throughout the auto supply chain have made substantial progress in conducting the necessary solicitations and investments.  However, a substantial lack of clarity remains around the Uniform Regulations that are necessary for the U.S. auto industry to determine whether their supply chains comply with the USMCA.  It is crucial that industry stakeholders have the opportunity to understand these details and ensure full compliance. 

We were happy to support the bipartisan passage of the USMCA and look forward to implementation of the modernized agreement. However, we encourage you to consider options that will allow the automotive sector to meet the rules of origin requirements of the agreement in an orderly, successful manner. Taking the time to do this process right will allow manufacturers and their workforces across the country to maximize the intended benefits of the agreement and will minimize disruption during a particularly challenging time for the industry. We look forward to continuing to work with you to find creative solutions for automobile manufacturers and workers while ensuring that full USMCA implementation is a success.”

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