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NAFTA Negotiations Could End Era of Mexico Exports

Mark Stevenson - The Associated Press
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August 13, 2017
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The Week Ahead | Nafta re-negotiations, Walmart results (Financial Times)

Update: On Day 1 of NAFTA Talks, Lighthizer Tears Into Agreement Trump Style: 'This Agreement Has Failed' (CNNMoney)

President Donald Trump's push to renegotiate the North American Free Trade Agreement is putting Mexico in a tough spot, threatening the system that has helped turn the country into a top exporter through low wages, lax regulations and proximity to the United States.

With talks set to start on Aug. 16, the Trump administration is targeting the massive U.S. trade deficit with its southern neighbor and the weakly enforced labor, environmental and manufacturing rules that for 23 years have drawn American assembly plants to Mexico and launched a flood of televisions, cars and appliances across the border.

"Mexico was resting on its merits and has been in a comfort zone, and now we have to leave it," Economy Minister Ildefonso Guajardo told a business group recently. "The alarm clock has rung for us to wake up."

A key draw for foreign assembly plants and investment has been Mexico's low wages. While average manufacturing wages in China had risen to $3.60 per hour by 2016, Mexico's had shrunk to $2.10 - a level some economists say is artificially low. With many workers unable to afford the vehicles Mexico produces, the country exports about three times as many cars as are purchased domestically, most to the United States.

"It is a very serious problem," Alex Covarrubias, a labor professor at Mexico's Sonora College, said of the country's wage policy. "Almost all the (labor) contracts that are signed in Mexico are unlawful, which means that they are company contracts, which the workers aren't aware of."

The Trump administration is pressing to bring labor and environmental regulations — originally contained in weakly enforced "sidebar" agreements — into the main body of NAFTA's text, and to require that Mexico's government ensures the "effective recognition of the right to collective bargaining."

Read the rest at ABC News

Related: Mexican Official Says Migration, Security at Stake in NAFTA Talks: Report (Reuters)

Related: The New NAFTA Must Crack Down on Criminal Industries (Postmedia Network)

Related: Mexico Interested in Increasing Trade Turnover with Russia - Mexican Ambassador (Sputnik)

Related: The Big Challenge of the NAFTA Renegotiations: Dispute Settlement (The Conversation)


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