Ternium’s Bold Proposal: Emphasizing Origin Rules Over Tariffs in North American Trade
Ternium, a prominent player in the steel industry, is pushing for a shift in how North America manages its trade policies with Asian nations under the framework of the USMCA. Instead of relying on traditional tariffs, Máximo Vedoya, the global president of Ternium, is advocating for a more effective solution—the strict enforcement of origin rules within the agreement.
Vedoya’s suggestion comes as a direct response to increasing competition from Asian countries, particularly China and India, whose low-cost products are seen as a threat to North American steel producers. As part of this proposal, Ternium is calling for a greater emphasis on origin rules that would ensure that only products manufactured within North America qualify for preferential trade treatment under the USMCA. This would create a stronger, more competitive regional market by ensuring that North American industries are not undercut by cheap imports from other regions.
The Shift from Tariffs to Origin Rules: Why the Change?
The primary issue driving Ternium’s proposal is the ongoing challenge of Asian competition in North American markets. Tariffs, which have traditionally been used to protect local industries, have often been viewed as a temporary measure that can disrupt global trade and increase costs for consumers. Instead, Vedoya argues that by focusing on origin rules, North America could establish a more sustainable and fair trade policy.
Under origin rules, products must meet specific criteria to qualify for preferential treatment within the USMCA. This ensures that goods traded within the region are genuinely produced within North America, preventing imports from low-cost Asian markets from flooding the market at unfairly low prices. By tightening these rules, Vedoya believes that Ternium and other North American manufacturers would have a better chance of competing against Asian producers who benefit from government subsidies, lower labor costs, and less stringent environmental regulations.
In essence, origin rules would act as a quality control mechanism, ensuring that the products traded within North America reflect the region’s high standards of production while also protecting jobs and industries across the US, Canada, and Mexico.
How Origin Rules Benefit North America
The USMCA already includes provisions on origin rules, but Ternium’s proposal seeks to strengthen and enforce them more strictly. By doing so, the region can:
• Combat unfair competition: Imports from Asian countries could be subjected to higher scrutiny, ensuring that they meet regional production standards before receiving preferential treatment in trade.
• Protect jobs and industries: A stronger focus on origin rules will ensure that North American manufacturers remain competitive, maintaining local jobs and reducing the outsourcing of production to lower-cost countries.
• Encourage investment in North America: Stricter origin rules will incentivize companies to invest in local production facilities rather than relying on offshore manufacturing. This can lead to the creation of new industries and higher-quality products within North America.
• Foster regional collaboration: By aligning on trade rules that prioritize local production, the US, Canada, and Mexico can work together to build a more robust, self-sufficient industrial base, free from the pressures of unfair external competition.
Ternium’s Vision for a Unified North America Against Global Competition
Ternium’s proposal goes beyond just the steel sector—it’s a strategic vision for a more integrated and competitive North America. The company recognizes the challenges posed by global trade imbalances and is seeking a more coordinated regional approach to combat the growing influence of Asia in key sectors.
Vedoya believes that by using origin rules as a trade defense tool, North America can stand united against external pressures and create a level playing field for local industries. The USMCA is already a powerful framework for North American trade, and by reinforcing the rules of origin, the three countries can ensure that their economies remain competitive and resilient in the face of rising global competition.
The Ongoing Negotiations: A Shift in Trade Dynamics
Negotiations on the matter are expected to extend beyond April 2, as Ternium and other stakeholders in North American manufacturing seek a more permanent solution to combat the unfair trade practices of Asian countries. The focus will likely be on finding a compromise that strengthens the USMCA’s trade mechanisms without disrupting the overall trade flow between North America and Asia.
The discussions are critical, as they will set the stage for future trade relations within North America and potentially influence global trade policies as well. By pushing for origin rules instead of tariffs, Ternium is advocating for a long-term, sustainable strategy that could benefit not only the steel industry but also a wide range of manufacturing sectors across the region.
Key Takeaways:
• Ternium proposes strict origin rules under USMCA to counter Asian competition, advocating this as an alternative to tariffs.
• Máximo Vedoya, Ternium’s president, emphasizes that origin rules would create a unified North American front against unfair competition.
• Origin rules would ensure that only locally produced goods benefit from preferential trade treatment, supporting regional manufacturers.
• The goal is to strengthen the North American manufacturing sector, protect jobs, and maintain fair trade practices.
• Ternium’s proposal is part of a broader strategy to reduce reliance on imports and encourage domestic production within North America.
• Negotiations are expected to continue beyond April 2, as Ternium works with other stakeholders to shape the future of USMCA trade policies.
