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Law360 (April 13, 2020, 4:50 PM EDT) -- Thirty-one members of the House of Representatives have pressed the Trump administration to delay implementing automotive regulations under its new trade deal with Canada and Mexico, saying domestic industry is being devastated by the coronavirus pandemic.
Led by politicians representing constituents in Michigan, Indiana and Alabama — states with a significant auto industry presence — a bipartisan group of lawmakers told U.S. Trade Representative Robert Lighthizer that domestic automotive manufacturers can't simultaneously deal with the coronavirus fallout while meeting the USMCA's new country-of-origin regulations.
"This targeted extension is necessary to allow the auto industry an appropriate adjustment period and account for delays caused by the COVID-19 pandemic," the lawmakers said in a letter to Lighthizer Friday.
The global health emergency has forced some automotive companies to completely shut down their North American facilities, while others have begun shifting production to medical equipment for the U.S.'s public health response, the lawmakers added.
Barring a delay, the lawmakers asked Lighthizer to work out accommodations so automakers aren't penalized for not meeting the deal's new requirements in time.
The lawmakers on Friday focused on the auto industry's plight, as opposed to a group of senators who begged the USTR to consider "a more feasible" deadline to implement the entire trade deal in mid-March.
However, becoming compliant with new USMCA regulations is a particular challenge for automakers, who must grapple with the deal's rewrite of NAFTA's automotive rules of origin.
To incentivize more U.S. car and truck production, the USMCA tightened its predecessor's rules of origin for cars, which laid out the percentage of a car or truck that must be made within a NAFTA region in order to earn a tariff cut. NAFTA set that threshold at 62.5%, but the USMCA hikes it up to 75%.
Automakers have already begun revamping manufacturing processes to meet that target, but lawmakers stressed there's a "substantial lack of clarity" around U.S. regulations governing domestic manufacturers' compliance with the deal.
"It is crucial that industry stakeholders have the opportunity to understand these details and ensure full compliance," the members of Congress said in their letter Friday.
The USMCA will enter into force on the first day of the third month after all three governments notify that they have aligned their rules to match the terms of the deal. The U.S. has not issued that notification, missing last month's deadline to implement the deal by June 1. The earliest the deal can now enter into force is July 1.
Representatives from the U.S. Trade Representative didn't immediately respond to requests for comment.
--Additional reporting by Alex Lawson. Editing by Adam LoBelia.
For a reprint of this article, please contact reprints@law360.com.
