Unions Focus on Labor Value Calculations in USMCA Comments
More than 80% of the comments submitted on USMCA product rule of origin were requests or demands for country-of-origin labeling (COOL) for beef, something that is not part of the treaty.
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The auto rules of origin, however, drew attention both from heavy truck manufacturers and unions. Daimler Trucks submitted the most detailed suggestions (see 2008280042), and the Truck and Engine Manufacturers Association said it fully endorses those 21 pages of comments. There were no submissions from any of the major passenger-vehicle companies, nor their Tier 1 suppliers.
Consultant Phillip Sutter had technical questions about core parts in autos and light trucks, noting that one of the tables that lists them does not include tariff numbers, but just descriptions, such as “steering systems,” which are not a single part “and they may not all be put together nor ever be a definable intermediate assembly. Similarly, other parts, though not described as systems may be a collection of components such as body and chassis or axles that also may not all be put together nor ever be a definable intermediate assembly.”
He said he's concerned “there would need to be a 'phantom bill' of materials to describe” some systems.
United Autoworkers President Rory Gamble included political views in his submission, such as: “It is clear the many [original equipment manufacturers (OEMs)] who were resistant to USMCA’s ROO will seek to delay implementation of ROO and kill it by a thousand paper cuts. Many of these companies are the same ones who closed factories in the U.S., while expanding operations in Mexico. It will take constant vigilance of the current and future administrations to fend off these attacks.”
He would like CBP to alter its interpretation of how to calculate the labor value content when a good is not considered originating from one of the three countries party to the agreement. The AFL-CIO's submission copied the labor value content section of the UAW comment.
Gamble complains that when a part is produced in a qualifying-wage-rate production plant, the full value of that part -- including materials from outside the region -- count toward the labor value content threshold. “This could make it substantially easier for OEMs to meet their LVC requirements, and perversely encourage some to source materials from non-originating countries to meet their LVC requirements. Instead, the CBP should provide a rule valuing material for LVC purposes using a value-added method. For example, if a supplier bought materials for production for $100, and sold its finished materials to the OEM for $115, the [high wage material (HWM)] for the facility would be $15. This modification would more accurately capture the amount of high-wage work allocated to build the motor vehicle, or auto part, in question,” he wrote.