The Office of the U.S. Trade Representative has announced a public hearing on February 7, 2024, to inform its biennial review of trade in automotive goods, including rules of origin, under the U.S.-Mexico-Canada Agreement (USMCA). The mandated review will result in a report delivered to Congress by July 1, 2024.
The rules of origin requirements under USMCA have been the subject of disagreement since the deal between the three countries went into effect. A USMCA dispute settlement panel determined in January 2023, that the United States’ interpretation of the deal’s rules of origin for automotive vehicles was inconsistent with the U.S.’ obligations under the agreement. The panel found that the deal’s rules of origin do not include a “separate, self-standing” origination requirement for certain core auto parts. The panel also concluded that the U.S. had breached several commitments under the deal, including Article 3 of the Autos Appendix and Article 4.5, which set out rules for calculating regional value content. In addition, the panel wrote, the U.S. violated Article 8 by conditioning approvals of so-called “alternative staging regimes” on “a requirement apart from those listed in Article 8.2 and in Section 19(4) of the Uniform Regulations, one that falls outside the scope of what was intended by the Agreement.” ASRs, upon approval, allow automakers additional time to adjust to new requirements imposed under USMCA.
In addition to the February hearing, USTR is also accepting public comments “concerning the operation of the USMCA with respect to automotive goods, including the implementation and enforcement of the USMCA rules of origin for automotive goods, as well as whether the automotive provisions of the USMCA are effective in light of technological and production advances.” The agency is also seeking comments on “the impact of the Inflation Reduction Act and other recent legislation on automotive trade under USMCA, as well as updates on supply chain challenges identified in its 2022 report, including the war in Ukraine and semiconductor shortages, and USMCA’s impact ‘on overcoming those supply chain challenges,’ among other issues.”
Comments are due on January 17, 2024.
The USTR review comes on the heels of the announcement by the U.S. International Trade Commission (USITC) of its investigation of the “economic impact and operation” of the U.S.-Mexico-Canada Agreement’s automotive rules of origin. The USITC report is expected to be finalized and submitted to the President, the House Committee on Ways and Means, and the Senate Committee on Finance by July 1, 2025.
White House Creates Supply Chain Council
The Biden administration announced on November 27, 2023, the creation of a Cabinet-level Council on Supply Chain Resilience. The Council will advise the administration on President Biden’s long-term, government-wide strategy to strengthen U.S. supply chains and build supply chain resilience.
The Council is co-chaired by National Security Advisor Jake Sullivan and National Economic Advisor Lael Brainard. It includes nearly every member of the cabinet including the Secretaries of Agriculture, Commerce, Defense, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, the Interior, Labor, State, Transportation, the Treasury, and Veterans Affairs, and the Attorney General as well as the Administrators of the Environmental Protection Agency and the Small Business Administration; the Directors of National Intelligence, the Office of Management and Budget, and the Office of Science and Technology Policy; the Chair of the Council of Economic Advisers; the U.S. Trade Representative; and other senior officials from the Executive Office of the President and other agencies.
The Council is tasked with undergoing a quadrennial supply chain review, to be completed by December 31, 2024. As part of the review, the council will update key criteria on critical industries, sectors, and products.
The Commerce Department has continued the agency’s focus on supply chains as well, with the renewal of the charter for the Advisory Committee on Supply Chain Competitiveness (ACSCC), the Secretary’s advisory body that provides recommendations to support U.S. supply chain and economic competitiveness.
The ACSCC was formed to advise the Secretary of Commerce on the necessary elements of a comprehensive policy approach to supply chain competitiveness designed to support U.S. export growth and national economic competitiveness, encourage innovation, facilitate the movement of goods, and improve the competitiveness of U.S. supply chains for goods and services in the domestic and global economy.
The charter for the ACSCC was renewed on November 9, as the agency determined that renewing the committee was “necessary and in the public interest.”
EPA Announces Oil & Gas Methane Rule
The Environmental Protection Agency (EPA) released a new final rule targeting methane emissions from the oil and gas sector on December 2, 2023, which aims to limit emissions from new and existing oil and gas production, processing, transport, and storage facilities. The announcement comes as the U.S. has joined other world leaders in the United Arab Emirates for the United Nations Climate Change Conference (COP28). EPA unveiled its initial methane emissions proposal during the November 2021 U.N. climate conference in Scotland, while the agency also released its supplemental proposal at the 2022 conference in Egypt.
Under the final rule, oil and gas facilities will be required to eliminate routine flaring of associated gas produced by new oil wells, require monitoring of methane leaks at well sites and compressor stations, and establish standards requiring emissions reductions from high-emitting equipment, such as controllers, pumps, and storage tanks. The final rule also includes a Super-Emitter Program, under which the EPA will certify third parties to detect and report large methane releases from oil and gas sites through remote sensing devices.
The final rule, which was officially signed by EPA Administrator Michael Regan on November 30, 2023, is currently awaiting formal publication in the Federal Register. The rule will be effective 60 days after it is published.
Treasury & IRS Release EV Rules
The Biden administration has released long-awaited rules regarding electric vehicle eligibility under the Inflation Reduction Act (IRA) consumer clean vehicle tax credits. The proposed rule, published by the Internal Revenue Service (IRS) and the Department of Treasury on December 4, 2023, addresses the “foreign entity of concern” requirements for EV tax credits created under the IRA.
Treasury’s proposal would require that starting in 2024, consumer vehicles must be FEOC-compliant to be eligible for up to $7,500 in tax credits. According to the Notice of Proposed Rulemaking, “a battery component (other than a battery cell), with respect to a new clean vehicle placed in service after December 31, 2023, is FEOC-compliant if it is not manufactured or assembled by a FEOC.”
While battery cells must be manufactured or assembled by a non-FEOC entity and contain only FECO-compliant battery components beginning in 2024, starting in 2025 battery cells also cannot contain critical minerals extracted, processed, or recycled by FEOC entities to be eligible. Comments on the proposed rule will be accepted through January 18.
In a related move, also on December 4, 2023, the Department of Energy (DOE) released a proposed interpretive rule defining FEOCs for eligibility requirements for the department’s grants for domestic battery manufacturing, under the 2021 Bipartisan Infrastructure Law (BIL). The interpretive rule would define several terms included in the BIL, which specifies an entity would be a FEOC if it is “owned by, controlled by, or subject to the direction of a foreign country that is a covered nation.” The rule proposes interpretations of “government of a foreign country”; “foreign entity”; “subject to the jurisdiction”; and “owed by, controlled by, or subject to the direction” of a relevant country. DOE developed the proposed rule in conjunction with Treasury to ensure that DOE’s interpretation supports the implementation of the IRA’s consumer vehicle tax credit.
2022 EEO-1 Filing Due
The deadline for filing 2022 EEO-1 Component 1 data with the U.S. Equal Employment Opportunity Commission (EEOC) is Tuesday, December 5, 2023. Employers must file their information through the EEO-1 Component 1 Online Filing System (OFS).
The EEO-1 is a mandatory annual survey requiring all private employers with 100 or more employees and federal government contractors or first-tier subcontractors with 50 or more employees and a federal contract, sub-contract, or purchase order amounting to $50,000 or more to file the EEO-1 report which summarizes employee headcount by sex, race/ethnicity, and job category.