USMCA Review Puts Tighter Auto Rules of Origin Back in Focus

Cars at Pyeongtaek Port. [Photo by Yonhap]

The United States, Mexico and Canada are set to hold a joint review on July 1 to decide whether to extend the U.S.-Mexico-Canada Agreement, with the possibility of tighter rules of origin for autos and parts emerging as a key issue.

An industry analysis report published Tuesday by the Korea Automotive Technology Institute, known as KATECH, said the review could raise the prospect of strengthening or revising rules of origin in ways that reflect the U.S. position.

USMCA is a trade pact among the United States, Canada and Mexico that took effect in July 2020. It has a 16-year term and includes a sunset clause requiring a joint review every six years to determine whether to extend it.

USMCA passenger-vehicle rules-of-origin standards. [Photo provided by KATECH]

If the three countries submit recommendations to the Free Trade Commission by one month before the review, the meeting proceeds based on those proposals. The report said the talks are expected to focus on the 75% regional value-content requirement, labor value-content rules, and possible new requirements for the share of steel and aluminum sourced within the region.

The report identified the main auto-sector issue as “strengthening or revising rules of origin reflecting the U.S. position,” warning that additional tightening would likely force significant changes in regional production and parts-sourcing structures.

While the finished-vehicle and auto-parts industries support extending USMCA, they are calling for transition periods if standards are tightened and for improved consistency in documentation and requirements. The report stressed the need to assess scenarios tied to possible rule changes and to build and manage a supply-chain database.

* This article has been translated by AI.

Oh Jooseok