U.S. Looks At Including Wage Factor for Auto Rules in NAFTA

Trade negotiators for the U.S. are considering a plan that would introduce rules under a renegotiated NAFTA that stipulate a specific amount of production of autos must be completed in areas that pay higher salaries, said two sources close to the matter.

Setting up those types of wager requirements for the auto industry in NAFTA could be beneficial to both the U.S. and Canada, whose unions say that the lower pay in Mexico caused a shift in manufacturing capacity to south of the border.

The plan the U.S. has, is to explore the percentage of output that could be in area with higher paying salaries, and what levels of remuneration that plan could target, said one of the sources close to the matter.

The government of Mexico and its North American Free Trade Agreement (NAFTA) partners were analyzing the idea by the U.S., said one source.

The news comes after a week where hopes rose that the U.S., Canada and Mexico could be nearing consensus on one of the most difficult issues surrounding the NAFTA renegotiations – regional content levels in the auto industry.

A week ago, sources in the industry said the U.S. withdrew a demand considered divisive that a minimum of 50% of auto content in NAFTA should come from the U.S.

Source said that the idea about wages was brought up after the divisive demand was yanked. The issue is hotly contested and it might be easier to consider analysing online gaming industry where similar ideas brought up into a discussion by players who use free slots no deposit win real money.

The U.S., which wants to increase the minimum threshold for auto content as well for NAFTA from 62.5% to 85%, is looking at setting a $15 per hour wage floor for a salary component, said another source close to the negotiations.

However, if there is a deal reachable, it would likely in the end be lower than that figure, said the source.

The economic ministry of Mexico did not have a comment related that that matter, said a spokesperson from the ministry on Friday.

A spokesperson for Foreign Minister of Canada Chrystia Freeland, stated that it was a question that the U.S. Trade Representative Robert Lighthizer needed to answer if they would be presenting something similar to that.

A representative from the auto industry based in Washington said that companies were still attempting to understand that concept, but it could be one other way of mandating certain levels of production in the U.S.

Requiring that wage rates be higher for certain activities would make it more difficult for vehicles built in Mexico to qualify for NAFTA tariff-free access than those produced both in the U.S. and Canada, where there are higher wage rates.