Canadian aluminium producers are worried about the ambiguity in the definition of rules of origin for aluminium auto components in the newly signed US-Mexico-Canada free-trade agreement (USMCA). Leading trade body, Aluminium Association of Canada (AAC) expressed concerns over the clauses of USMCA signed on Dec 10 which excludes the definition for aluminium rules of origin for autos. Such an exclusion allows continued import of aluminium from China into Mexico, which would harm the balance of the North American automotive value chain, according to AAC.
Mexico sources most of its primary and secondary aluminium from the US, China and Canada. In Jan-Sep period, Mexico imported 619,482mt of aluminium from the US; 316,165mt from China and 119,375mt from Canada, accounting for 38pc, 19pc and 7pc, respectively of its total aluminium needs.
Under USMCA, at least 70pc of a producer’s steel and aluminium purchases must originate in North America. USMCA also requires 75pc of auto parts to be manufactured in North America, which has increased from 62.5pc required as per the original 25-year-old North American Free Trade Agreement (NAFTA).
Mexico’s automotive production fell by 16.3pc in October from prior year as the country manufactured 311,150 vehicles in October. From Jan-Oct, Mexico produced 3.2mn cars, down by 2.5pc from prior year.
AAC is a non-profit organisation that represents Alcoa, Alouette, and Rio Tinto, few of the world’s largest aluminium producers operating nine smelters in Canada. Jean Simard, President and CEO of AAC expressed concern over the new deal’s consequences on Canada’s value chain, its competitiveness and more directly on US customers.