On April 21, 2020, the Office of the US Trade Representative (USTR) published in the Federal Register a request for petitions from North American producers of passenger vehicles and light trucks who request an alternative to the standard staging regime for the rules of origin for automotive goods under the United States-Mexico-Canada Agreement (USMCA or the Agreement) using the procedures and guidance for submitting petitions in the notice. To be assured of consideration, a vehicle producer must submit a petition with a draft alternative staging plan no later than July 1, 2020. A vehicle producer must submit a petition with its final alternative staging plan no later than August 31, 2020.
The USMCA includes new rules of origin to claim preferential treatment for automotive goods, including higher Regional Value Content (RVC) thresholds, mandatory requirements to produce core parts in the region, mandatory steel and aluminum purchasing requirements, and a Labor Value Content (LVC) requirement. The Agreement allows vehicle producers to request an alternative staging regime for these requirements that would permit a longer period of transition to help ensure that future production is able to meet the new rules. The standard staging regime is specified under the Automotive Appendix to Chapter 4 of the USMCA (Automotive Appendix), with the exception of Article 8, which specifies provisions relating to the alternative staging regime. You can find information about the estimated impact of the USMCA rules of origin on investment, production, and employment in the U.S. automotive sector on the Office of the United States Trade Representative (USTR) website: https://ustr.gov/tradeagreements/free-trade-agreements/united-states-mexico-canada-agreement/usautomotive-sector.
The alternative staging regime differs from the standard staging regime by providing additional time and a different phase-in of the new requirements. It provides an alternative to certain rules of origin requirements for passenger vehicles and light trucks, but does not replace any other rules of origin or any provisions of general applicability for these goods to claim preferential treatment under the USMCA.
For instance, under an alternative staging regime, importers of certain passenger vehicles and light trucks will have an additional two years – five years instead of three – to meet the requirements, and the vehicles will have different RVC and LVC thresholds. See the Federal Register for details.