The panel report in the USMCA Chapter 31 auto rules of origin dispute was circulated today (our WorldTradeLaw.net Chapter 31 panel reports page is here). Based on a quick skim, the panel's findings seemed reasonable to me, but I may come back to this after having looked more carefully at the legal provisions in question.
Here are a few questions/comments in lieu of actual substantive analysis of the panel's reasoning:
- I was really hoping that the panel would find no violation and then have to deal with the complainants' non-violation claims. I can imagine that the panelists were not very eager to go this route though.
- How will the U.S. react to this ruling? USTR's spokesperson tweeted: "The disappointing USMCA panel interpretation of the agreement could
result in less North American content in automobiles, less investment across the region, and fewer American jobs. We are reviewing the report
and considering the next steps. We will engage Mexico and Canada on a possible resolution to the dispute, including the implications of the Panel's findings for investment in the region." What steps will the U.S. take now? - How will Canada and Mexico react to the U.S. reaction? Are we likely to see retaliation proposed here in the event of non-compliance? Could this dispute be considered together with the U.S. complaint about Canadian dairy TRQs and various recent Mexican policies as part of a larger compromise?
- I'm torn about preferential trade agreements in general. My thinking rambles along like this: These agreements are fundamentally flawed because they are discriminatory, but perhaps they are the best we can do right now, and if we are going to do them we should make the rules of origin flexible, even though that undermines the "regionalism" aspect, but really we need to find a way to get back to multilateralism.
