Mexico City, Mexico — Some of Mexico’s automakers are asking for more to meet the stringent requirements set out in the new North American trade agreement.
The United States Mexico Canada Agreement (USMCA), which took effect in July 2020 and replaced the 1994 North American Free Trade Agreement (NAFTA), includes tougher rules on what contents automakers can use in manufacturing.
USMCA requires 75 percent North American vehicle content compared with a 62.5 percent threshold under NAFTA, as well as 40-45 percent content from-called “high-wage” areas.
However, the new trade agreement includes a provision to give flexibility to carmakers to be able to comply with the deal according to their production and investment plans in North America, according to Mexican Deputy Economy Minister Luz Maria de la Mora in an interview with Reuters on Dec. 21, 2020.
“Some companies in the automotive sector are requesting these alternative transition regimes to have this flexibility,” said de la Mora. “We are working with the United States and Canada to define those flexibilities, and among the three countries we have decided that perhaps some companies do require it to comply with the new rules of origin.”
The implementation of new labour standards in Mexico under USMCA has seemingly been an issue of conflict, according to the deputy minister.
An independent labor panel on Dec. 15 submitted a report to the U.S. Congress, which states that while Mexico has made significant progress implementing a 2019 labor reform, “many of the changes promised … in terms of union democracy, freedom of association and collective bargaining, remain to be implemented.”
De la Mora said the coronavirus pandemic had made things tougher, but that Mexico was putting into force its labor reform as well as meeting the terms of USMCA “so that the implementation takes place according to the schedule.”
Mexico has complied “with almost everything” it has needed to in terms of labor, she said.
Mexico’s labour minister has declined to comment on the matter.