Borderlands: USMCA panel rules in favor of Mexico, Canada over US

Borderlands is a weekly rundown of developments in the world of U.S.-Mexico cross-border trucking and trade. This week: USMCA panel rules in favor of Mexico, Canada over US; Lineage Logistics unveils plans for Texas cold storage facility; Mexico extends deadline again for Carta Porte tax document; and Volkswagen halts production of Jetta and Taos models.

USMCA panel rules in favor of Mexico, Canada over US

Mexico and Canada recently won a trade dispute over the U.S. on car-content rules governing auto manufacturing, according to Bloomberg.

The dispute resolution panel set up under the United States-Mexico-Canada Agreement (USMCA) made a preliminary ruling on Nov. 14, but the report hasn’t been made public yet.

Alejandro Encinas Najera, Mexico’s undersecretary of foreign trade, said during a news conference Wednesday the USMCA ruling is ready and would be made public in January.

The dispute concerns different interpretations for calculating a vehicle’s regional value content. The USMCA categorizes certain automotive parts for passenger vehicles and light trucks into core parts, principal parts, and complementary parts. Each applies different sets of originating rules.

Mexico and Canada favor more flexible calculations for the regional value content of core parts, while the U.S. has been applying a more strict interpretation.

Mexican authorities said U.S. officials were improperly interpreting stricter regional content rules under the pact. The USMCA raised the regional content requirement to 75% of a vehicle’s value of components. The requirement was 62.5% under the now replaced North American Free Trade Agreement.

The rules-of-origin requirements allow vehicles manufactured in North America to receive duty-free treatment under the USMCA. The USMCA automotive rules of origin regulations are intended to drive automotive investment into North American production.

Mexico requested the dispute settlement panel in January, with Canada joining Mexico’s request the same month.

The automotive production sector is one of Mexico’s most significant industries, comprising 3.5% of the nation’s GDP and 20% of its manufacturing GDP, as well as employing over a million people across the country, according to the International Trade Administration.

Mexico is also the largest export market for U.S. automotive parts and the fourth-largest producer of automotive parts worldwide, generating about $94 billion in annual revenues.

Jorge Molina, an international trade consultant, told El Financ iero that the USMCA trade panel’s ruling will benefit consumers in all three countries. They will be able to access a greater number of cars at a lower price since the vehicles won’t be subjected to tariffs that are currently applied by the U.S.

Lineage Logistics unveils plans for $80M Texas cold storage facility

Michigan-based Lineage Logistics recently received approval for plans to construct a 250,000-square-foot cold storage facility in Laredo, Texas, according to the Laredo Morning Times.

Lineage Logistics received approval for the $80 million logistics facility from the Webb County Commissioners Court on Dec. 2

“We are looking to build in Laredo a cold food storage facility,” Bridget Green, a senior manager at Lineage Logistics, said during the commissioners’ meeting. “We are primarily in metropolitan areas, but since Laredo is a significant port of crossing between Mexico and the U.S., there is a ton of produce that crosses your border and there are not enough facilities in your area, so this is an opportunity to get us into the market.”

The facility will create 80 jobs and is scheduled to be completed in 2023.

Lineage Logistics is a temperature-controlled industrial storage company for major importers, grocers and producers of fresh fruit and produce in the U.S.

Mexico extends deadline again for Carta Porte tax document

The Mexican government announced it is postponing the start of enforcement of the Carta Porte Complement (CCP) — a digital tax document issued to shipments aimed at protecting the transfer of legitimate goods across Mexico — until July 31, 2023.

It’s the fourth time this year and sixth over the past two years the Mexican government has postponed the controversial measure.

The Mexican Tax Authority (SAT) announced the creation of the electronic CCP bill-of-lading requirement in May 2021. The CCP is a collection of over 120 data elements, including everything from shipper and consignee information to the cargo and its value and carrier equipment.

The CCP is being issued by trucking companies across Mexico. However, the SAT has not been imposing fines for incorrect information or mistakes when filing the document.

Volkswagen halts production of Jetta and Taos models in Mexico

Due to shortages of semiconductor chips, Volkswagen recently announced it has stopped production of its Jetta and Taos vehicles at its plant in Puebla, Mexico.

From last Monday through Dec. 23, employees of the Jetta lines will not work in any of the shifts but will be paid between 71.42% and 77.1% of their salaries.

For the Taos line, the work stoppage will be applied only on the second shift of production until Dec. 23.

Approximately 2,500 units of Jetta and Taos vehicles will not be produced during the work stoppages.

Volkswagen has about 7,000 workers at the Puebla factory in central Mexico.