The American steel industry hopes the entry into force of the agreement between the United States, Mexico and Canada will boost steel demand in North America, steel industry groups said on July 1, when the new trilateral trade agreement went into effect.
“For US steelmakers, Canada and Mexico are our two most important export markets, together accounting for nearly 90% of all US steel exports,” said Kevin Dempsey, interim CEO of the American Iron and Steel Institute. "By encouraging the use of North American steel through its improved rules of origin, this agreement will help maintain strong manufacturing supply chains for products made primarily of steel."
The US, Canada and Mexico reached an agreement for the first time to replace the former North American Free Trade Agreement in November 2018. American steel companies supported the renewed trade deal as it seeks to stimulate the use of North American steel in automotive production. addition to strengthening rules of origin and regional content requirements.
“The USMCA contains significant improvements and modernized approaches to rules of origin, vehicle maintenance requirements, and health and safety for North American workers,” Steel Manufacturers Association President Philip Bell said in a statement. “These and other provisions represent the culmination of efforts to renew 25-year-old NAFTA and will help create jobs and expand market access for steel producers in the region.”
The most significant change in the USMCA is new requirements for rules of origin, which stipulate that 75% of vehicles that will be produced in North America will be eligible for duty-free handling, up from 62.5% in the original NAFTA.
The rules for the content of regional values will be introduced in stages over several years, depending on the car model. The US Sales Office has accepted some proposals from companies that could give them two more years to achieve full compliance.
The USMCA also includes a new labor cost maintenance rule that requires companies to pay a percentage of their workforce of $ 16 per hour to qualify for a reduced wage rate.
Along with provisions that are seen as favorable to steel demand in North America, the USMCA also includes provisions to enhance cooperation, transparency, and information sharing among the three governments.
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