New York, July 1 (Jiji Press)–An official of the Japan Auto Parts Industries Association has slammed the new U.S.-Mexico-Canada trade agreement, or USMCA, which took effect on Wednesday, replacing the North American Free Trade Agreement, or NAFTA.
The USMCA is “the worst-ever agreement,” Tetsunori Kawashima, head of the association’s North American office, said in a recent interview.
“It’s nothing but a ‘bad law’ that includes place-of-origin and wage clauses designed for automobiles and auto parts to be manufactured in the United States,” Kawashima argued. The deal could be “detrimental to consumers if a rise in production costs in North America is reflected in prices,” he added.
Kawashima said that with the new rules finally set, makers are now able to consider their responses. He suggested, however, that most makers are unlikely to transfer production bases to the United States.
“Building an automobile supply chain is a huge project that extends over decades, whereas the U.S. presidential term is four years and the president’s tenure is no longer than eight years even if re-elected,” the Japanese industry official said.
Kawashima noted that there are some moves to relocate factories and jobs to the United States, but he stressed that it would be beneficial for most vehicles to continue to be produced in Mexico, as production in the United States will certainly involve higher costs.
He suggested that the new trade agreement is partly aimed at curbing Chinese exports. China had been using backdoors in NAFTA to ship Chinese products to the United States via Mexico and Canada, he claimed.
“As the U.S.-China competition for hegemony intensifies, moves to shut out China could grow stronger,” Kawashima predicted.