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The industry associations testified that the automatic origin rules are so far very complicated and opaque, so it is difficult to assess how the changes in the NAFTA industry will affect the industry. Picture credits: 2

WASHINGTON – The hearing of the US International Trade Commission on Thursday should gather feedback on the economic implications of the proposed US-Mexico-Canada Free Trade Agreement (USMCA).

However, most industries warned against the negative impact of US steel and aluminum tariffs, as well as potential new tariffs for cars and auto parts.

The Association of Automobile and Equipment Manufacturers and the Alliance of Automobile Manufacturers called on the government to exclude Mexico and Canada from the 25% steel and aluminum tariffs, saying that the problem had to be solved before the heads of state and government signed the interim trade agreement at the G-20 summit sign at the end of the month.

Automobile manufacturers and suppliers say they are paying 30 to 50 percent more for domestic steel due to tariffs, jeopardizing sales.

The White House has justified the tariffs for reasons of national security.

quotas

Some analysts expect the Trump government to replace tariffs for Canada and Mexico with import quotas, as in South Korea. However, the Aluminum Association is expected to repeat its call for full exemptions on Friday – even without quotas. In a letter to President Donald Trump last week, he supported the trilateral efforts to protect against the dumping of subsidized imports of Chinese aluminum, but said that trade measures for regional metals were not required.

The industry associations testified that the automatic origin rules are so far very complicated and opaque, so it is difficult to assess how the changes in the NAFTA industry will affect the industry.

"It's clear that USMCA's automatic origin rules introduce unnecessary complexity, require costly changes to supply chains, and potentially wasteful investment," said Association of Global Automakers president John Bozzella. "In addition, car manufacturers need to invest in sophisticated processes to ensure compliance with these rules, and suppliers throughout the supply chain need to establish similar costly processes and we are concerned that the combined impact of these requirements will affect the global competitiveness of our industry as a whole."

Overall, the need for regional content for Duty Free broadcasts will increase from 62.5 percent to 75 percent. In addition to the vehicle standards, there are three standards for parts – for steel, aluminum and the labor value.

Working hours require 40 percent of the content of works with an average minimum wage of $ 16. However, compliance is difficult because hourly, agency, and office workers are averaged over a product, plant, or vehicle class.

"No one knows exactly how that will work, and if that's not possible within the four walls of your business, go to your suppliers to get data on labor values, and they think that's intrusive," Kristin Dziczek, Vice President for Industry, Labor and Economics at the Center for Automotive Research said last week during a panel discussion after the elections here.

Officials at the hearing said that compliance costs and administrative burdens would vary by company.

collective debate

Pending car and car pricing is unjustified and makes assessing the USMCA even more difficult, Bozzella said.

The American Automotive Policy Council, representing Detroit 3, saw the trilateral trade agreement more sovereign. Although he called for the abolition of metal tariffs, since the agreement already promotes procurement in North America (70 percent salary), the rules of origin for the automakers are manageable.

"We believe the new rules will strike the right balance by discouraging" freeloaders "who could use the USMCA as a route to outsourcing while granting those who invested in the region the duty-free benefits of the agreement." said Matt Blunt. President of the Political Council. "Although the new rules pose some challenges to our industry, we believe that the administration has sufficient flexibility to enable our automakers to remain competitive while successfully transitioning to the new, more stringent rules of origin of the USMCA. "

The trade association, however, contacted the rest of the industry and urged the White House not to impose tariffs on car imports.

The Trade Commission has 105 days to complete its report to Congress and the White House, but it is not expected to take so long.

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