In an era of global supply chain volatility, from pandemics to geopolitical conflicts, having secure North American sources for rail equipment and steel, for example, is invaluable.

USMCA adds to this security by locking in duty-free trade and common standards among friendly neighbors, thereby making us collectively less dependent on hostile imports.

Inter-country operability:

• Thousands of railcars and locomotives move daily  across U.S., Canadian, and Mexican borders  under seamless common interchange standards. Manufacturers in the U.S. depend on North American demand, and U.S. railroads rely on Canadian and Mexican partners to interchange equipment and freight. The freight rail supply chain is inherently continental in scope.
• The USMCA ensures uniform rules of origin, standards, and dispute mechanisms across all three countries, providing our industry with a stable environment in which to invest and plan. A fragmented framework risks creating divergent rules, raising compliance costs, and sowing industry-wide uncertainty for rail suppliers and operators.
• Through the USMCA’s railcar exemption provisions and also through the long-standing authority which treats all railcars as instruments of international traffic (IIT), the North American freight rail network relies upon the exemption of North American-made freight railcars from formal entry rules and accompanying duties and entry fees. In this way, the USMCA railcar exemption and IIT rules are a natural safeguard for free trade between the U.S., Canada, and Mexico.
• Conversely, China unfairly leverages trade loopholes. Given that, a directive issued by U.S. Customs and Border Patrol in 2000 addressed this issue in its “Instructions for Handling the Entry of Locomotives, Railcars, and Other Railroad Equipment into the U.S.” The aim: prevent other foreign railcar builders and parts suppliers, including those from China, from taking advantage of the IIT provision.

 

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