Complying with the proposed US-Mexico-Canada Agreement (USMCA) that replaces Nafta will be expensive for those in the automotive supply chain and could prove unworkable for some, according to John Bozzella (pictured), president and CEO of the Association of Global Automakers in the US.
Details in the draft accord include a proposal that, for vehicle-makers to benefit from tariff-free trade, 75% of a vehicle’s content should be sourced in one or more of the USMCA countries. Nafta’s threshold is currently 62.5%.
Speaking at a public hearing on the USMCA, Bozzella said: “The agreement’s automotive rules of origin are complex and contain a large number of layered requirements. It is clear that the USMCA auto origin rules will introduce unnecessary complexity, require costly changes to supply chains and potentially redundant investments.
“In addition, automakers will need to invest in elaborate processes to ensure compliance with these rules. Suppliers throughout the supply chain will have to establish similar costly processes… The new costs from complex and layered rules of origin in the revised agreement may prove unworkable for some.”...
This was excerpted from the 21 November 2018 edition of Automotive Logistics.