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US wants NAFTA minimum wage thresholds

by Justin King

The latest proposal pushes for nearly half a vehicle\'s parts value to come from factories that pay workers at least $16 per hour.

The Trump Administration's NAFTA negotiators are reportedly pushing for new provisions that will address the extreme wage disparity between the US and Mexico.

A proposal reviewed by Reuters would require 40-45 percent of a vehicle's overall parts value to come from factories that pay workers at least $16 per hour. Higher salaries paid to product development and sales staff would be counted toward 15 percent of the threshold.

The provisions appear to address the root of the growing trade imbalance between the US and Mexico. Automakers and suppliers have flocked south to maximize profits from factories where some workers reportedly earn an average of just $3 to $6 per hour.

US negotiators are also said to have backed down slightly from their demand for 85 percent regional value content, dropping to a call for 75 percent -- halfway between the initial offer and the current rate of 62.5 percent.

If the latest proposals gain traction, automakers would have four years to accommodate the changes during a tiered phase-in transition.