NAFTA: US pushes for stringent auto content
- Published: October 7, 2017
The Canadian automotive manufacturing industry is concerned about ongoing NAFTA negotiations in light of recent reports that the US is pushing for more stringent US auto content, according to media and industry reports.
According to a report by Inside US Trade, the US want to propose that cars and trucks must have at least 85 per cent North American content and at least 50 per cent specifically American content to qualify for duty-free status, according to a report by Inside U.S. Trade.
In a CTV news report, Flavio Volpe, president of the Automotive Parts Manufacturers Association (APMA) stated "you can't have protectionism within a free trade agreement. It's an oxymoron."
CTV News notes in its report that studies have found that Canadian-produced vehicles already contain 63 per cent American content, while those produced in Mexico contain 40 per cent, according to Volpe. But he said casting an American content requirement in stone would handcuff the industry's ability to pivot to suppliers in other countries -- including Canada and Mexico -- should they be able to offer a better product at a better price.
Volpe also noted in a Globe and Mail opinion piece that North America's automotive sector as a whole has benefited from NAFTA.
"The North American automotive sector has benefited from the rise of skills, infrastructure and commercial activity in Mexico. This has resulted in a third global automotive manufacturing power in the NAFTA region. The emergence of Mexico has allowed for U.S. and Canadian manufacturers to count on Mexico’s competitiveness as their lower-cost jurisdiction to help bolster their fortunes against the rise of other global threats that boast such a partner. With Canadian firms operating 120 factories with more than 43,000 employees in Mexico, the future of our automotive industry is increasingly as interwoven with that country’s as it is with the United States."