MEXICO CITY—Representatives from Mexico and Canada are seeking formal consultation with the United States over the interpretation of content rules for automobiles set out in the United States-Mexico-Canada Agreement (USMCA), which took effect July 1, 2020. Requesting consultation is the first non-contentious stage of a dispute resolution mechanism provided for in the North American trade pact.

In late August, Mexico requested formal consultation over the interpretation and application of tougher content rules for cars under the USMCA, after voicing disagreement in May over the issue in a virtual meeting when it cited differences with the United States' methods. On August 27, Canada announced it was joining Mexico in seeking the consultation, citing that both countries use more flexible interpretations of language in the agreement.

"We know how important the auto industry is to Canada's workers and the Canadian economy," says Patricia Skinner, spokeswoman for Global Affairs Canada. "Canada has advised the U.S. and Mexico that it intends to join the consultations as a third party. Canada continues to work with the auto industry on this and other important issues."

"We are pleased Canada has decided to join the request for consultations, which we requested on August 20, in relation to the interpretation the United States makes of the rules of origin in USMCA for the automotive sector," Mexico's economy minister, Tatiana Clouthier, recently said on Twitter.

The USMCA, the successor to the North American Free Trade Agreement, requires 75 percent North American content for a vehicle to be considered as being from North America. The same percentage will apply for essential parts from July 1, 2023, up from 69 percent now, and compared with 62.5 percent under the previous trade pact.

Mexico argues that once the level of essential parts hits 75 percent, it is considered 100 percent and should be counted as such toward the overall value of the automobile.