Canada's announcement follows Mexico's request for a panel pursuant to Chapter 31 of the USMCA on January 6, 2021, to resolve the dispute, after trilateral consultations initiated by Mexico on August 20, 2020, failed to reach a resolution.
The USMCA automotive rules of origin, intended to drive investment in North American production while maintaining the competitiveness of the industry, were controversial during the negotiations and continue to be a source of contention. The rules are new and untested, and other interpretative issues are likely to be uncovered in time.