Reopening of the automotive sector in North America

As reported by the Economy Ministry through the press release number 36, Mexico, the United States and Canada, seeking the reopening of some productive sectors, are working jointly to set forth the criteria, guidelines, protocols and conditions for the restart in the region some productive activities of the automotive industry, which in 2018 represented, 2.9% of the Mexican GDP and 18.3% of the manufacturing sector from January to March of the same year, which places the industry only below the food industry.

A few days ago, the major automotive associations, addressed a letter to the Health Ministry, requesting a prompt reopening of the sector to keep the jobs it generates, which are approximately 1.9 million in México and arguing, among other things, that the return of their activities is essential for the value chains throughout the North American region.

The Mexican Government has emphasized that it will protect health and will ensure that the operations reopening are carried out in an orderly, gradual and cautious manner and that, until an agreement is reached, the industry and its supply chains shall continue to comply with the activities suspension agreed by the General Health Council (Consejo de Salubridad General).

In the following days the governments of Mexico, Canada and the United States will release more information on the plan to reopen the industry, which represented, from 2012 to 2017, 12% of the foreign direct investment received in Mexico, i.e a total of 60,677 million dollars.

The analysis being carried out for this reopening by the three countries will serve as a background to determine the reactivation of other non-essential economic activities in Mexico.

The relevant reactivation seeks to boost the economic recovery of Mexico and the North American region after the health emergency caused by COVID-19 in addition to the upcoming entry into force of the USMCA on July 1, 2020.

In relation to the foregoing, it will be important to consider the implementation of the applicable procedures for producers of passenger vehicles or light trucks to apply for the authorization of the alternative transition regime included in Article 8 of the Appendix on Product-Specific Rules of Origin for Automotive Goods to Annex 4-B on the Product Specific Rules of Origin of Chapter 4, Rules of Origin of the T-MEC.

For any questions or comments that may arise in relation to the information provided above, please feel free to contact any of our partners or associates.

Yours sincerely,

Cannizzo, Ortiz y Asociados, S.C.