Final Report of USMCA Arbitration, US – Automobile Rules of Origin - Failure of an attempt to impose a condition that was not obtained through USMCA negotiations -

Author Name UMEJIMA Osamu (Takasaki City University of Economics)
Creation Date/NO. November 2023 23-P-034
Research Project Comprehensive Research on the Current International Trade/Investment System (pt.VI)
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This paper presents the final report of the USMCA arbitration, United States – Automobile Rules of Origin, and provides an overview of the rules of origin in free trade agreements in general, and the regional value content (RVC) calculation for passenger vehicles and light trucks (the “automobiles”) under NAFTA and the USMCA.

USMCA increased the RVC for automobiles to 75 percent, from 62.5 percent under NAFTA. An importing party is then required to permit duty-free imports up to one-tenth of recent production of automobiles with RVC of 62.5 percent until July 2025. The United States added to the permit a condition that the RVC must be calculated without applying the roll-up method.

The Panel rejected the interpretation by the United States, and found that the roll-up applies to the RVC calculation. This paper found no errors in the findings of the Panel. The United States, however, has been hesitating implementation of the rulings.