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Mexico and Canada together account for half of the world’s auto exports shipped to the United States, according to data from the Commerce Department.
From January to October 2021, the automotive sales of both countries to their common neighbor totaled 141.591 million dollars, which was equivalent to 49.2% of total sector imports to the United States.
Over the past decade, that combined share has fluctuated between 47.4 and 52 percent.
The positions of Mexico and Canada are relevant to the extent that they face common challenges, as now occurs in relation to the controversies they have with the United States on how to quantify the value of regional content within the framework of the trade agreement between the three ( T-MEC) and on an initiative linked to US subsidies for the sale of electric cars.
In force since 1994, the North American Free Trade Agreement (NAFTA) phased out tariffs on motor vehicles and auto parts over a 10-year period.
This trade agreement, which was replaced as of July 1, 2020 by the T-MEC, and the elimination of Mexican trade barriers were fundamental in the initial integration of the North American automotive industry.
More importantly, of all tariff-free US auto imports, Mexico and Canada account for 97% for motor vehicles and 70% for auto parts, according to an analysis by the US Congress.
Vehicle and parts production expanded significantly as major automakers in the United States, Asia, and Europe developed supply chains in the region.
The largest growth occurred primarily in Mexico, which now accounts for 23% of total continental vehicle production and a significant portion of the duty-free auto parts trade.
Within the United States, auto parts and final assembly account for a large portion of that nation’s manufacturing employment: more than 900,000 jobs in 2021, with 712,000 in parts manufacturing and 188,000 in vehicle assembly. .
The same analysis shows that average production wages at General Motors in the United States range from $ 16 per hour for temporary workers to $ 32 for permanent employees who assemble vehicles, for a weighted average of about $ 21 per hour.
At Toyota, the hourly production worker’s wage is around $ 20.
Hourly production wages in Canada are similar to Detroit 3 (GM, Ford, and Stellantis’ Chrysler unit).
In Mexico, average hourly wages for auto assembly workers are much lower. It is challenging to compare Mexican and American wages due to differences in the way Mexican plants compensate their employees.
roberto.morales@eleconomista.mx
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