In arguably the biggest test of the new NAFTA, Canada and Mexico have defeated the U.S. in a major dispute involving automobiles and calculating the origin of parts. It's seen as an early litmus test of the new trade pact.
TLDR; If a part is made of 85% parts that were made in North America, it would be duty free under NAFTA. The US was pushing for a car made of 85% North American parts to be 85% duty free, but Canada and Mexico say the terms of the new deal mean it is 100% duty free. The ruling favoured the 100% interpretation.
The dispute resolution was always the weakest link in NAFTA. This looks nice and all but as the panel stated the US just has to wait this out 6 years and rewrite the rules again like they always do. Till then they will just hold this up in the courts and ignore the ruling.
The dispute resolution was always the weakest link in NAFTA. This looks nice and all but as the panel stated the US just has to wait this out 6 years and rewrite the rules again like they always do. Till then they will just hold this up in the courts and ignore the ruling.