Sector

Issues

Comments and Proposal

Steel

Strengthening Rules of Origin

• Introduction of “Melted and Poured” standard: Currently, the rules of origin of steel under the USMCA are different for each steel product (e.g., hot or cold rolled processing in North America) but there is an argument for introducing rules of origin based on whether the steel was melted and cast in North America (American Iron and Steel Institute)

• Blocking Mexico’s bypass exports: When importing steel between the three North American countries, inconsistencies in the reporting requirements and particularly weak regulations in Mexico, become detours of non-market economies. Sanctions should be imposed to prevent the abuse of customs duties, as Mexican import programs (i.e., Manufacturing, Maquiladora, and Export Services Industry (“IMMEX”) and Sectoral Promotion Program (“PROSEC”)) exempt or reduce customs duties on Mexico (Canadian Chamber of Commerce, American Iron and Steel Institute)

Joint Tariff Increase

Canada and Mexico should be subject to foreign steel tariffs equivalent to those of the US (50% equivalent to the tariff rate of Section 232) (American Iron and Steel Institute)

Reduction of Additional Customs Duties

• Opposition to customs duty imposition on USMCA-compliant products: The US government’s imposition of a 50% tariff on steel and aluminum products, regardless of whether they are in compliance with the USMCA, undermines corporate efforts and causes uncertainty. Therefore, the US government requested that appropriate measures be taken to prevent the imposition of additional customs duty on products in compliance with the USMCA (LG Electronics, LG Energy Solution, Samsung Electronics, Automotive Parts Manufacturers’ Association)

Automobile

Strengthening Rules of Origin

Stakeholders in the US expressed their support for strengthening the origin standards (General Motors, American Iron and Steel Institute)

• Prohibition of “roll-up” provisions: Prohibit the application of roll-up provisions for core parts (when a key part qualifies for USMCA origin, non-originating materials included in the part are also recognized as onshore), and mandate the tracking of core parts (Labor Advisory Committee, United Auto Workers)

• Regulations on country of origin for key parts of electric vehicles (“EVs”): Review of the list of core parts, principal parts and complementary parts subject to the Regional Value Content (“RVC”) requirements by reflecting technical changes following the conversion of EVs (American Iron and Steel Institute)

Maintaining Current Rules of Origin

Other stakeholders expressed concern about the possibility of strengthening the rules of origin (Hyundai Motor Group, American Chamber of Commerce in Canada (“AmCham Canada”))

• Maintaining application of “roll-up” rule: Request to ensure the flexible and practical application of the USMCA vehicle origin rule (LG Electronics, Korean Chamber of Commerce and Industry in the USA (“KOCHAM”))

Strengthening Labor Clauses

Argument to strengthen the Rapid Response Mechanism (“RRM”), which allows the US or Canada to conduct prompt investigations into labor infringement in Mexico and take measures such as import restrictions, if necessary, and to expand the scope of investigation (United Auto Workers)

Electronics and Home Appliances

Maintaining Current Rules of Origin

Request to maintain the current rules of origin (Korea Electronics Association, LG Electronics), or, if the country of origin regulations are strengthened, to allow appropriate implementation periods or phased standards for each product (Samsung Electronics)

Exclusion from Redundant Tariffs

Request that ICT products and parts be exempt from the International Emergency Economic Powers Act (the “IEEPA”) or Section 232 tariffs if they are produced in USMCA member states (IBM, AmCham Canada)

Critical Minerals

Supply Chain Security and Investment Protection

• Establishment of cooperative framework: Proposal to establish a mechanism to protect investments in the regional supply chain and mining sector (Investor-State Dispute Settlement (“ISDS”), etc.) to curb China’s market dominance (Mining Association of Canada, National Mining Association)

• Establishment of dedicated organization: It is necessary to establish an Annex to core minerals within the USMCA or establish a dedicated committee under the North American Competitiveness Committee (“NACC”) to systematically manage the Annex (Silverado Policy Accelerator, EVelution Energy)

Proposals for Rules of Origin

• Copper (strengthened regional production requirements): Similar to steel, a “Smelt-and-Refine” requirement should be introduced to increase the share of production in North America (National Mining Association)

• Battery materials (temporary relaxation of rules of origin): As the current supply chain for precursors, cathode materials and anode materials is weak, it is necessary to temporarily relax the rules of origin to stabilize supply and demand (KOCHAM)

China Regulation

Bypass Foreclosure and
Investment Monitoring

• Prevent customs evasion: It is necessary to foreclose bypass imports of Chinese products from various industries (EVelution Energy, Canadian Chamber of Commerce, American Iron and Steel Institute)

• Harmonization of onshore investment screening: In order to prevent Chinese companies from using foreign investments to avoid US tariffs, it is necessary to harmonize foreign investment screening policies between North American countries and jointly monitor security risks (Intel, Center for Strategic and International Studies (“CSIS”), Canadian Chamber of Commerce)