With Congress expected to pass the United States-Mexico-Canada Agreement (USMCA), the North American Free Trade Agreement (NAFTA), this summer, U.S. Trade Representative Robert Lighthizer is seeking support for the new agreement. He’s scheduled to meet with the United Auto Workers union Tuesday to earn its backing, according to a new report from Reuters, to further ensures its passing.
While President Trump, former Mexico President Enrique Peña Nieto, and Canadian Prime Minister Justin Trudeau have each signed the NAFTA replacement last year, implementation of the new agreement is far from secure. Each country’s legislature will have to approve USMCA, which does add some uncertainty about its passing. If Mexico and Canada fail to pass USMCA, then the U.S. could withdraw from NAFTA—a threat made by U.S. President Donald Trump.
USMCA negotiations come at a time when General Motors is restructuring its business model that’s designed to save the company $6 billion by 2020. That includes closing five North American factories—four in the U.S. and one in Canada. The closures have caused some politicians to take a pause with USMCA, especially after GM announced it’d produce the new 2019 Chevrolet Blazer in Mexico. Last year also saw GM become Mexico’s largest automaker, and some members of Congress, such as Rep. Debbie Dingell, D-Mich., who feel USMCA fills to address the core problems of NAFTA.
The core of USCMA is a mandate that says 75 percent of a vehicle’s value comes from member nations, up from 62.5 percent under NAFTA, and that 40 percent of that comes from factories playing at least $16 an hour. This is a ploy to raise wages in Mexico while giving workers there more collective bargaining power.
While the American Automotive Policy Council, which represents General Motors, Ford, and Fiat Chrysler Automobiles, supports USMCA, some farm groups, companies, and Republicans want to see the administration agree to drop tariffs on steel and aluminum imports from Canada and Mexico. For some, the tariffs need to be addressed before voting for the legislation.