Mexico is warning that the U.S. interpretation of the revamped North American free commerce deal that additionally contains Canada may push automakers to desert the area as a result of cumbersome and dear content material necessities.

Luz Maria de la Mora, Mexico’s undersecretary of financial system for overseas commerce, stated that if the U.S. doesn’t come to an settlement with Mexico concerning the guidelines of origin of auto elements, firms may search to maneuver their enterprise to nations with extra favorable commerce agreements. The U.S.-Mexico-Canada Settlement pact changing NAFTA took impact final July with the brand new so-called guidelines of origin designed to be phased in over a number of years

“USMCA could turn out to be inconsequential for commerce within the auto sector in North America as a result of firms could determine to not trouble with even complying with USMCA, as a result of it turns into so expensive, so cumbersome, and so troublesome,” De la Mora stated in an interview with Bloomberg Information. “It might not be value their effort to essentially attempt to procure from North America, so why trouble investing in North America.”

Final week, Mexico formally requested the start of consultations with the U.S. as a way to settle a dispute over the U.S. interpretation of the best way to measure regional content material of a automotive made in North America as a way to commerce duty-free.

The U.S. has a 30-day interval to answer Mexico’s request and a 75-day interval to achieve an settlement with Mexico earlier than Mexico may probably request {that a} formal panel hear arguments from the 2 nations.

De la Mora stated that that Mexico desires to unravel the difficulty with the U.S. “in a pleasant approach,” however warned that the area’s auto commerce might be impacted if the U.S. authorities doesn’t budge.

De la Mora stated that the Mexican authorities requested consultations with the U.S. solely after ready to see if the administration of President Joe Biden would change the Trump administration’s interpretation of the settlement, however that conversations till now haven’t resolved the variations between the 2 nations.

“We’re not negotiating. The negotiation already happened,” she stated. “What we’re making an attempt to do is perceive if we’ve got a typical understanding on what’s the textual content of the settlement.”

De la Mora stated that Mexico is engaged on fixing different points for automakers by supporting firms in Baja California state that might be concerned in enhancing the semiconductor provide chain. She famous that Intel Corp. and Skyworks Options Inc. have already got operations within the state and added that Ford Motor Co. is planning extra funding in Mexico.