The Inflation Reduction Act creates opportunities for more North American economic integration, according to a Mexican diplomat and a top General Motors official.
USMCA
The U.S.-Mexico-Canada agreement is a free trade agreement between the three countries, also known as CUSMA in Canada and T-MEC in Mexico. Replacing the North American Free Trade Agreement (NAFTA) in 2020, the agreement contains a unique sunset provision where, after six years (in 2026), any of the three parties may decide not to continue the agreement in its current form and begin a period of up to 10 years where USMCA provisions may be renegotiated.
Rep. Kevin Brady, R-Texas, the former House Ways and Means Committee chairman who is retiring from Congress at the end of the month, told reporters in a farewell press conference that he thinks, with divided government, the administration will not be able to impose its will in trade and international tax policies by avoiding tariff reductions.
As carmakers, battery companies and critical minerals supply chain players await news from the Treasury Department on the details of how vehicles and batteries will become eligible for electric vehicle tax credits, a major South Korean carmaker sounded the alarm that the new Inflation Reduction Act could make its planned Georgia plant unprofitable.
Two former government officials, one a leader at a think tank, the other a lawyer at Akin Gump, acknowledge that even as businesses continue to believe quitting the Trans-Pacific Partnership was a tactical error, "there is no conceivable scenario in which the United States could sign onto the [Comprehensive and Progressive Agreement for] TPP as it exists today. Strong opposition from both sides of the political spectrum to key elements of the deal would prevent congressional approval."
CBP issued the following releases on commercial trade and related matters:
CBP will in 2023 begin testing two projects under the DHS Silicon Valley Innovation Program (SVIP) “that will connect CBP with trade users,” the agency said in a document released ahead of an upcoming meeting of the Commercial Customs Operations Advisory Committee. The projects are being used to “verify some ACE 2.0 concepts” to inform CBP’s development of ACE 2.0, “which could begin as early as 2025,” CBP said.
CBP reminded importers that the second phase of the pocket bag fabric rule for apparel will take effect under USMCA on Jan. 1, extending the rule to apparel made from blue denim, in a CSMS message. “This provision applies to woven apparel goods of [Harmonized Tariff Schedule] Chapter 62 that are made of blue denim fabric of HTS subheadings 5209.42, 5211.42, 5212.24 and/or 5514.30, which contain a pocket or pockets,” CBP said. “If applicable, the pocket bag fabric must be formed and finished in the territory of one or more of the USMCA countries,” from yarn that “was wholly formed and finished in the territory of one or more of the USMCA countries.” The first phase of the rule -- which applies to apparel goods under chapters 61 and 62 of the tariff schedule that contain a pocket, but not to apparel of blue denim -- has been in effect since Jan. 1, 2022.
Lawyers from BakerHostetler that represent the Conseil de l’industrie forestière du Québec and the Ontario Forest Industries Association are using a Commerce Department comment process for softwood lumber subsidies to argue once again that the countervailing duty case against Canadian lumber exports contradicts the USMCA Environment Chapter commitments and Biden administration environment and social justice priorities.
CBP's Commercial Customs Operations Advisory Committee (COAC) will next meet Dec. 7 in College Park, Maryland, CBP said in a notice. Comments are due in writing by Dec. 2.
If the U.S. position on calculating the regional content of automobiles prevails in a USMCA state-to-state dispute, Baker McKenzie associate Eunkyung Kim Shin predicted, companies would be likely to import more parts used to assemble the automobiles. Shin, who spoke at a Baker McKenzie webinar Nov. 15, said that when the entire value of a part counts toward the vehicle regional content threshold once that part meets its own rule of origin, it makes sense to build the part in Mexico, the U.S. or Canada. But if the non-local content of those parts is not disregarded when doing vehicle-level calculations, it might be cheaper just to import the parts from a lower-cost country, she said.