The Mexican government’s decision to gradually reopen the country’s auto sector was made in part because of the U.S.-Mexico-Canada Agreement’s looming entry-into-force date, Mexican Economy Minister Graciela Márquez Colín said on Tuesday.
The Mexican Health Ministry, in a May 14 notice, deemed auto manufacturing an “essential activity” amid the coronavirus pandemic, meaning auto production in plants that were shut down to enforce social distancing measures can resume.
“The auto sector is so important because USMCA enters into force July 1,” Márquez Colín told reporters. “The auto sector is probably the sector that will have the most adjustments to make because of the regional and labor value content rules — two new characteristics of the agreement. So we needed it to start reopening because it will soon have to face USMCA rules. We’ve agreed with the U.S. to have transition regimes, but there are new rules and these new rules enter into force on July 1.”
The Health Ministry, in its notice, established a reopening “preparation period” from May 18 to June 1. During that time, “the process of establishing the protocols and mechanisms of health safety in companies will be carried out in accordance with the guidelines for health safety in the workplace published by the Ministry of Health” in coordination with various other Mexican federal agencies, it said.
An auto company can resume operations before June 1 if it completes the health safety process and receives approval by the government. “In the case of companies in the automotive industry and auto parts dedicated to export, in addition to what is stated in the previous factions, they must apply the protocols required in the countries of their origin,” the notice adds.
Reopening the auto sector was also important for keeping North America’s highly integrated supply chains intact, Márquez Colín added. U.S. lawmakers have expressed concern about supply chain disruptions caused by differing definitions of “essential businesses” adopted by the U.S. and Mexico in response to the coronavirus. In the U.S., auto workers began returning to work last week, according to press reports.
Source: Inside Trade