With the sun setting on the 1994 North American Free Trade Agreement, the three NAFTA pillars, United States, Mexico, and Canada are waking up to the newly agreed USMCA deal. Agreement for this revised trade deal, NAFTA 2.0 was secured on 30 September, and it will now go before US Congress. The deal lends a protective arm around the US auto sector by way of raising the proportion of ‘Made in the US’. Going forward, in order to be duty free, 75% of vehicles will have to have come from one of the three signatory nations. This clause covers steel, engines, and other auto equipment. In the 1994 NAFTA deal the equivalent percentage was 62.5%. The goal is to reduce low-cost Asian import volumes.
Bravo to the UAW members as Mexican autoworkers can look forward to better pay. From 2020, 30% of vehicles will be assembled by workers earning an hourly minimum rate of $16 and three years later the 30% will have increased to 40%. Mexican assembly line workers currently earn a third of this rate. By raising Mexican labor costs, US negotiator Robert Lighthizer is seeking to slow outsourcing flows towards Mexico. Cheap labor is a powerful argument and if automakers can no longer cheaply assemble
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