Canada joins Mexico in auto dispute against US

TRENTON, Canada

Canada united with Mexico on Thursday to officially dispute the US stance on vehicle manufacturing that the two countries say violates terms of the three-country free-trade agreement.

The dispute concerns a US decision that 75% of a vehicle and some key parts must be manufactured in the US by 2025 or be subject to tariffs.

But Canada and Mexico said that contravenes provisions of the Canada, US, Mexico Agreement (CUMSA) -- the free trade pact signed in 2020 that replaced the North American Free Trade Agreement.

Canada’s International Trade and Export Promotion Minister May Ng said in a statement to Anadolu Agency that the US stance is “inconsistent” with CUMSA provisions.

The position of the two countries is that if a vehicle uses 75% of regional manufacturing, it qualifies the entire vehicle to be duty-free. If not, it could make the car subject to tariffs when imported by the US, raising the price of the vehicle and thereby hurting Canadian and Mexican manufacturers.

Canada and Mexico have tried for a year to get the US to change its interpretation of the deal but to no avail and now they have requested the dispute go before a CUMSA settlement panel.

"Canada, Mexico and the United States would all benefit from certainty that CUSMA is being implemented as negotiated, and Canada is optimistic that a dispute settlement panel will help ensure a timely resolution of this issue," said Ng.

Automotive vehicles are the number one manufactured product amongst the three nations.