NAFTA Talks Shift to Mexico’s Lower Wages

The head of Unifor, Canada’s largest private-sector union, tells reporters the North American Free Trade Agreement should be abandoned if Mexico doesn’t agree to reduce the pay gap between its workers and those in the U.S. and Canada.

“If labor standards aren’t a part of (NAFTA), then there shouldn’t be a trade deal,” Jerry Dias declared on Sunday. He describes the 23-year-old pact “lousy” for working-class people.

Negotiators are meeting in Mexico City this week in a second round of talks about updating the trade deal. Negotiations began last month in Washington, D.C., with the U.S. demanding the ability to impose import taxes on vehicles made in the other two countries if U.S. content isn’t high enough.

Reuters cites an analysis by the Center for Automotive Research in Ann Arbor, Mich., that estimates auto workers in Mexico earn an average of less than $6 per hour, excluding benefits, compared with about $28 for U.S. workers. Mexico’s minimum wage is 80 pesos ($4.50) per day.

Last month Moody’s Investors Service said Mexico’s higher inflation rate makes real wages in the country lower than they were when NAFTA took effect in 1994. The credit rating agency reports says average hourly wages in Mexico expanded only 9% between 2001 and 2015.

Mexico contends that its relatively modest wage structure has helped make the three-country NAFTA territory more competitive on a global scale. The country also tells its critics that the country’s labor market is its own concern and not those of Canada and the U.S.