WASHINGTON -- President Donald Trump insists his new North American trade deal will deliver a victory for U.S. factory workers by returning many high-paying jobs to the United States.
A review of the agreement suggests that it could also mean higher prices for consumers and more inefficiencies for businesses. And the biggest winners might end up being robots and the companies that make them.
As Americans vote in the midterm elections, Trump is heralding the U.S.-Mexico-Canada Agreement as a triumph for his antagonistic trade policy -- an approach that he says will usher in "a new dawn for the American auto industry and the American autoworker."
The pact, unveiled Sept. 30, could shift more factory production to the United States, thereby reversing a long-standing flow of jobs to lower-wage Mexico. And it could result in better working conditions and perhaps higher pay for Mexico's long-suffering laborers.
But shifting away from a business model that relies on Mexican labor would likely mean higher-priced cars for American consumers. And North America's automakers could become less competitive compared with rivals in Europe and Asia.
What's more, much of the manufacturing work that does return to the United States would likely be done by robots in America's increasingly automated plants.
The U.S.-Mexico-Canada Agreement is meant to replace the North American Free Trade Agreement.
NAFTA had erased most trade barriers separating the United States, Canada and Mexico. Trade among the three surged. But many U.S. manufacturers moved factories and jobs to Mexico to capitalize on cheaper labor. Those manufacturers could then ship cars and other goods back to the United States and Canada, duty-free.
The new trade agreement isn't a done deal. It has yet to be signed by the leaders or ratified by the legislatures of the three countries. Some Democrats have expressed support for the pact. But if their party regains control of the U.S. House in Tuesday's elections, it's far from clear that its leaders would want to hand Trump a victory.
What's more, Canadian and Mexican lawmakers might think twice about ratifying the deal unless Trump frees them from the import taxes he's imposed on steel and aluminum in a separate dispute.
To qualify for duty-free benefits, the U.S.-Mexico-Canada Agreement requires carmakers to acquire 75 percent of auto content from within North America -- up from 62.5 percent under NAFTA. That means more content would have to be homegrown in higher-wage North America, not imported more cheaply from elsewhere.
At least 40 percent of vehicles would also have to originate in places where workers earn at least $16 an hour. That would likely benefit the United States or Canada -- but not Mexico, where auto assembly workers earn an average of just $7.34 an hour and parts workers $3.41 an hour.
Tony Payan, director of the Mexico Center at Rice University's Baker Institute for Public Policy, noted that for years Mexican governments sought to keep wages low to give their country a competitive edge.
"Most American leaders understood that," Payan said. "They simply didn't address it because it was good for business. Cheap labor was good for business."
But President-elect Andres Manuel Lopez Obrador, who takes office Dec. 1, wants to overhaul Mexican labor practices and raise wages.
Under the new trade agreement, Mexico is supposed to formally authorize workers to form independent unions. Mexican unions have traditionally been co-opted by employers and the government and done little for workers. Laborers have been fired for trying to bargain on their own for better pay and working conditions.
A Section on 11/05/2018
Print Headline: NAFTA's successor draws look