NAFTA negotiations’ latest target: Higher credit for higher wages

Fresh optimism about NAFTA negotiations
There's major progress at the NAFTA negotiations as the head of Canada's largest union says the contentious proposal on country of origin for auto parts has been withdrawn by the U.S. As Mike Le Couteur reports, that has given all three countries a new sense of optimism.

Here’s an idea that has shaken up the NAFTA negotiations: Crediting countries for higher auto wages.

It’s at the heart of the latest proposal from the United States.

READ MORE: Canadians believe U.S. could be ready to accept NAFTA compromise

Several sources in different countries say the U.S. has offered to drop its controversial demand for 50 per cent U.S. content in every car — but it comes with conditions attached.

Sources say the U.S. still wants a higher level of North American content in vehicles, and is also demanding rules that reward jurisdictions for offering salaries beyond a certain level.

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One American source familiar with the proposal says the level in question involves a range between $13 and $17 an hour — which is several times higher than the current average hourly wage in Mexico.

The proposal was first floated several days ago, and appears to have kick-started the negotiations: Canada says it’s pleased by some of the latest developments, and the U.S. says all three countries are finally converging on a common vision.

READ MORE: ‘Fiendishly complex’ auto sector still the hardest NAFTA hurdle to clear: Freeland

U.S. trade czar Robert Lighthizer told a congressional committee in his country last week that he also wants rules that guarantee Mexican workers the right to vote for collective agreements by secret ballot.

The idea of driving up wages in Mexico is designed to reduce the gap in costs of production between the countries, and lessen the incentives for companies to shift jobs there.