T-MEC News
After months of legislative deliberations in Canada, the 13th of march the Canadian House of Commons and Senate unanimously approved the ratification of the T-MEC. Canada´s General Governor also signed the Royal Assent Act on the same day, concluding the Canadian process. This is in preparation for the notifications between the three countries that will bring the Treaty into effect in Mexico, the United States and Canada on the fist of July. Canada is Mexico’s third largest trading partner and maintains a bilateral trade of more than $37 billion dollars.
Importers of the automotive industry will have the opportunity to request more time to comply with the regional agreement. The agreement explains that to request the extension, car producers in the North American region will have to present a plan to meet the conditions of the T-MEC on rules of origin, like region and labor content value. They will also have to submit timetables to adjust their production to the conditions of the trade agreement as well as documents that prove that they comply with the purchase of aluminum and steel in the region or prove that they are in the process of moving their supply to businesses in the region. This agreement was published in the midst of the work stoppage suffered by the automotive industry due to the Covid-19 pandemic, which keeps most of the plants in the region inactive and is currently negotiating with authorities in the three countries to resume production.
Industry representatives in Mexico have even expressed that the industry will be able to adjust in time to the new regional content provisions of the T-MEC, which raises the regional content value of vehicles, as well as the labor content value from 30 to 40% in the next 3 years. “Since last year we have been working on the issue of wages from component value added” said José Luis Hortema, president of the Laguna Cluster in a with Forbes Mexico. “It would be in its best interest, however, it has been almost two years in which the companies have been very attentive to see how this issue of T-MEC and these annexes that were included, these are great challenges that the industry has to do so they agreed to implement them in this period of 60 days, surely this will be gradual,” he explained.
Contributing Advisors
Ricardo Elizondo UrdialesAudit Partner, MXGA, Mexico Global Alliance.
