Snapshot of U.S.-Mexico agreement
Auto parts, workers’ wages, six-year reviews included
WASHINGTON — When President Donald Trump celebrated on Monday the workings of a new deal with Mexico that would replace the North American Free Trade Agreement, numerous questions were left unsettled.
No full text has yet been provided. On Friday, the Trump administration plans to send Congress a formal notice of the trade agreement. Not until 30 days after that would lawmakers likely receive a text of the deal.
But based on what is already known, here is a snapshot of key changes in the agreement so far:
More auto parts must be made in North America: Of the $149 billion worth of auto parts imported into the United States last year, 48 percent came from Mexico and Canada, according to the U.S. International Trade Administration. The proposed deal would likely increase that figure.
It would require that 75 percent of autos contain parts made in North America, up from 62.5 percent now required by NAFTA. And 70 percent of the steel, aluminum and glass used to make a vehicle must also originate in North America. These requirements could possibly lead to fewer imports from Asia, Europe and South America.
Forty to 45 percent of vehicles would be made by workers who earn at least $16 an hour: A major wage gap separates autoworkers in the United States and Mexico. An average Mexican autoworker earned $5.21 an hour, and auto parts workers make even less than that, according to a 2016 analysis by the Center for Automotive Research. That is about one-fourth the average hourly earnings of $21.68 for a U.S. autoworker, according to the Bureau of Labor Statistics.
Trump can say that the wage requirement will preserve factory jobs in the United States, while the Mexican government can say it will boost incomes in that country.
The pact would expire in 16 years, but the two countries could review it every six years and renew it for 16 more: The agreement would force countries to update the trade pact. One of the criticisms of the 24 year-old North American Free Trade Agreement was that it no longer applies to the economy as it exists today. It was forged before the internet, smartphones, social media or China’s entrance into the World Trade Organization — transformations that leave parts of NAFTA woefully outdated.