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The US government looks set to press ahead with the July 1 implementation date of the United States-Mexico-Canada Agreement (USMCA), despite calls for its postponement amid the Covid-19 pandemic.

The USMCA replaces the 27-year old Nafta agreement, which US President Donald Trump has variously referred to as “unfair” and “the worst trade deal ever made”. After the last signatory, Canada, ratified the new pact in March, USMCA’s implementation date was set at July 1, with Trump calling it “the largest, most significant, modern, and balanced trade agreement in history”. However, lawmakers and industry groups now say that the coronavirus pandemic and its related confinement measures mean that crossing that finish line will be difficult – if not impossible.

“Even absent the pandemic, the deadline would be highly aggressive, and raises questions as to whether businesses have the information they need to adjust to the new rules and comply by that date,” say senators Chuck Grassley and Ron Wyden, members of the US Senate Finance Committee, in a letter to US Trade Representative Robert Lighthizer. “Entry into force should only happen after all necessary regulations are in place and our industries have had an opportunity to understand and implement them effectively.”

The key differences between the new and old deal primarily affect the automobile sector: under USMCA, the proportion of automobile components that must be manufactured in any of the three signatory nations in order to qualify for zero tariffs will be 75%, up from 62.5% previously. Meanwhile, 40-45% of automobile parts will have to come from factories where workers earn at least US$16 an hour – a measure which aims to put an end to labour arbitrage between the US and Mexico. But with automakers still in the dark as to the exact wording of the regulations they’ll have to follow, they, too, are throwing their weight behind calls for a postponement.

In a joint press release, the Motor & Equipment Manufacturers Association (MEMA), the American Automotive Policy Council (AAPC), the American International Automobile Dealers Association (AIADA), Here for America, and the National Automobile Dealers Association (NADA), say: “We are in the midst of a global pandemic that is significantly disrupting our supply chains, and the industry is throwing all available resources into managing production through this crisis for our employees and for the broader US economy. Even if it were reasonable to divert our attention to USMCA compliance, the United States, Canada and Mexico have yet to issue, even in draft form, the uniform automotive rules of origin regulations. Without them, many questions remain unanswered regarding how to interpret the new rules.”

The associations add that, while the industry is doing as much work in advance as it can, it will still need additional time to ensure the vehicles it produces qualify under USMCA. Therefore, they seek either to postpone the implementation of USMCA entirely, or at least hold off on the entry into force of automotive rules of origin regulations.

It is not just US automakers who are worried. Three Mexican industry bodies have warned that the Mexican car industry faces a “possible scenario of non-compliance”, saying in a letter to foreign secretary Marcelo Ebrard that “there is still a lack of clarity on the rules of content, which means that automakers cannot adjust their production chains”.

So far, though, the US government appears to have turned a deaf ear to calls for a delay. “Right now, the feeling is that the administration doesn’t want to budge. The auto industry in particular is very unified, and they are really making a strong case, but so far, the administration is pretty fixed on this hard date,” says Welles Orr, international trade advisor with law firm Miller & Chevalier, who served as assistant US trade representative in the George HW Bush administration, when the original Nafta deal was struck.

“I don’t know why, given the circumstances of the coronavirus and the lockdown with people in the government and trade negotiators staying at home, there can’t be some wiggle room to get more time to do this and do it right,” he tells GTR. “The auto industry wants to do it. They support this agreement. But the rules of origin requirements need to be written in a way that they can be implemented. Implementing them in practical terms within the timeframe has been objected to because they have not been finalised. That is really the conundrum that the auto industry is facing, and the administration knows it. It could all work well, but why force it now if it is half baked?”

But with silence from the United States Trade Representative (USTR) on its plans for USMCA during the lockdown, Orr is pessimistic about the auto industry’s fortunes. “It is a bit of a stand-off and I think the administration is pressing hard on this because they want this to go into place as scheduled,” he says. “The modus operandi of this administration from day one has been: ‘Let’s get it done and call it a win.’ The president is pushing his agenda, and industry is pushing back.”

Usually, issues such as this are solved on Capitol Hill via so-called “shoe-leather lobbying” – personal contact by corporate representatives with members of the administration in order to better get their points across. Under lockdown, however, the normally crowded hallways of power are now deserted, making buttonholing a lawmaker impossible.

“This is a reasonable request, and the administration just needs to be convinced of this. If by chance something comes together and everything is freed up and people get back to desks to hammer this out and get it done, great,” says Orr. “But that doesn’t look like that is going to happen, because the mayor of the District of Columbia and the governor of Maryland have extended our stay at home policies until at least May 15, and everybody expects that this is going to creep into June. We will have to find a reasonable outcome here, and if need be, extend the deadline.”