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COVID, USMCA, Mexican Corn – The Trading Room – Economic Newsletter

17 Apr , 2020  

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COVID: USMCA and Rules of Origin

This week it was reported in news outlets that industries in the region are seeking to postpone the entry into force of the USMCA automotive rules of origin; that is, to establish a transition period for said rules after USMCA’s entry into force.

 

USMCA’s entry into force remains a pending issue. So far, the US has not notified the completion of its internal procedures to trigger the 3 months term for its entry into force. However, it is said that it will take effect in mid-July or no later than September 1, which implies notification within the following weeks or months.

 

The region’s auto industry is concerned that rules of origin (RoO) will apply immediately with USMCA’s entry into force; regional content requirements will increase progressively. For this reason, 10 legislators in the US delivered a letter to the US Trade Representative (USTR) requesting “flexibility” and an adjustment period because COVID affected production in the region, complicating compliance with RoOs. In this regard, President Trump acknowledged last weekend that the agreement is different from the point of view that production will be lower.

 

In the case of Mexico, the president of the National Association of Buses, Trucks, and Tractor-trucks Producers (ANPACT), commented that “the complexity of complying with the origin regulations lies in the fact that for each component of a vehicle, calculations of regional content, the labor component, steel, and aluminum. In the case of an engine, they have approximately 700 suppliers, so meeting these requirements can take months.”

 

 

Furthermore, USMCA’s Uniform Rules are still being negotiated.

USMCA and the Law on Native Corn

On Monday the Federal Law for the Promotion and Protection of Native Corn was published in the Official Gazette of the Federation.

In essence, this law provides the following:

i) The production, marketing, consumption and constant diversification of native corn is recognized as a national cultural manifestation, and

ii) access to Native Corn is guaranteed without genetically modified organisms.

Since 2019, this law is somewhat controversial because it seeks to protect Mexican Native Corn from Mexico’s USMCA commitments to adhere to the International Convention for the Protection of New Varieties of Plants (UPOV 1991), Mexico is a party to said Convention but according to the 1978 Act. These conventions authorize the registration of patents on plant genes and varieties. However, UPOV 1991 extends rights to holders of such patents as compared to UPOV 1978.

 

Regardless of the above, we highlight that this law does not introduce restrictions on the importation of any type of corn into national territory.

VTZ contributed with Thomson Reuters Practical Law

 

For the third year, VTZ contributed Thomson Reuters Practical Law in the Guide to International Trade in Goods and Services in Mexico. Our Managing Partner, Adrian Vázquez, Junior Partner, Emilio Arteaga, and Associate, Mariana Malváez, answered a guide on key issues of international trade regulation in Mexico. Check the Guide here.

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