AUTOMOTIVE RULES Sample Clauses

AUTOMOTIVE RULES. The importance of the automobile industry to the economies of Canada, Mexico and the United States has resulted in special rules for automotive products. NAFTA Section 403 establishes special origin requirements. Under Article 403, the net cost test is used to determine if the North American origin requirement is satisfied. NAFTA requires that automobiles, light trucks and engines must have new cost basis of 56% starting in 1998 that increases to 62.5% in 2002. For other vehicles and automotive parts the percentages are 55% and 60% respectively. The percentage of North American content is higher than the percentage under CFTA. Under CFTA, the local content was only 50%. The higher limits under NAFTA will now control automotive imports between Canada and the U.S. In order to spur the construction of new automotive manufacturing facilities, NAFTA reduced the North American origin requirement to 50% for the first five years of production. For plants refitted for the production of a new series or line of vehicles, the North American content requirement is reduced to 50% for the first two years of production.
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Related to AUTOMOTIVE RULES

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