NAFTA talks move forward as US, Mexico find common ground on wages

NAFTA renegotiations showed progress last week after Mexico accepted the United States’ proposal to include set minimum wages for the automotive industry as part of a modernized deal.

“What we’re talking about now is that a percentage of vehicles made in North America be made in a high-wage area,” Economy Secretary Ildefonso Guajardo said in a radio interview as reported by El Economista.

“What does that mean? Of 100% of cars made in NAFTA, it could be around 35% or 40% are made in a high-wage area,” he added.

In order to qualify for tariff-free status in the North American market, the United States is pushing for 40% of the content of cars and 45% of the content of pickup trucks to be made by workers who are paid at least US$ 16 per hour. That’s more than five times the US$ 3 per hour that many auto sector workers in Mexico currently earn.

Regarding the so-called rules of origin, the United States is asking that cars made in NAFTA countries have at least 75% local content in order to be exempt from duties while Mexico has offered to raise locals content levels to 70%. The current rate is 62.5%.

With regard to steel, aluminum and glass content, Guajardo ruled out that a 70% North American content rule could be applied — as proposed by U.S. Trade Representative Robert Lighthizer — but suggested that bonuses could be offered to manufacturers who met those levels.

MexicoNow

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