The Trump administration wants to increase the level of regional content in North American-built vehicles to 82% to qualify for preferential treatment under the U.S.-Mexico-Canada Agreement on trade, with 50% of that value produced in the United States, four people familiar with the U.S. negotiating position said, Reuters is reporting Friday.
The expansive demand, unveiled during this week's U.S.-Mexico negotiations over revisions to the six-year-old USMCA in Mexico City, has no provision for counting any parts content from Canada in the totals, the report noted. Canada is not represented in the Mexico City talks, the sources said.
The shift, if accepted, would be a major break from the current USMCA, which requires that 40% of the "core parts" value of North American passenger vehicles be produced in high-wage jurisdictions, effectively the U.S. or Canada, Reuters said.
That threshold is now 45% for pickup trucks. Overall, vehicles built in North America currently must have 75% regional content to qualify for preferential treatment under USMCA.
The U.S. demand and lack of accommodation for Canada are consistent with Trump administration officials' frequent questioning of why Canada should export vehicles and auto parts to the U.S. and voicing a desire to move that production to the U.S, the report noted.
Auto industry officials said there was a high likelihood that U.S. Trade Representative Jamieson Greer would seek to negotiate the new rules of origin with Mexico and then present them to Canada as a take-it-or-leave-it proposition. Greer has been evasive about whether USMCA would continue as a trilateral trade pact or be broken into separate bilateral agreements.
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