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Canada Surrenders; Agrees to All Trump Demands - NAFTA Dead

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Canada Surrenders; Agrees to All Trump Demands - NAFTA Dead

Postby saxitoxin on Mon Oct 01, 2018 9:12 am

The President has fulfilled, yet another, campaign promise and officially declared NAFTA dead last night.

Trudeau extended his dainty little hand to Trump and capitulated to all American requirements.

Image

The soiled corpse of NAFTA is replaced - with immediate effect - by USMCA. Among the benefits to the United States:

    - U.S. access to the Canadian dairy market increases from 3.2% to 3.6% [MAGA WIN WISCONSIN 2020]
    - The "Class 7" pricing system for supplementary dairy ingredients is eliminated, allowing U.S. farmers greater access to Canada [MAGA WIN WISCONSIN 2020]
    - Requires 40% of all new auto production in the U.S. or Mexico be done by workers earning at least $33,000 per year [MAGA WIN MICHIGAN 2020]
    - Increases requirement that all auto content in North American cars be produced 75% in the U.S. or Mexico, up from 63% [MAGA WIN MICHIGAN 2020]
    - Eliminates the private sector dispute resolution system by which Canadian companies can sue the U.S. government for American market access
    - Canada increases its border duties threshold from $20 to $150 and Mexico from $50 to $100
    - Sets a 16 year expiration date if the U.S. later decides it no longer likes this arrangement
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Re: Canada Surrenders; Agrees to All Trump Demands - NAFTA D

Postby Neoteny on Mon Oct 01, 2018 10:38 am

Montreal named Shea Weber captain, so I think they're taking this pretty hard.
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Re: Canada Surrenders; Agrees to All Trump Demands - NAFTA D

Postby armati on Mon Oct 01, 2018 1:43 pm

Canada negotiated- Requires 40% of all new auto production in the U.S. or Mexico be done by workers earning at least $33,000 per year [MAGA WIN MICHIGAN 2020]
Did Trump do what he could to keep the other 60% of employees wages lower than 33k?
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Re: Canada Surrenders; Agrees to All Trump Demands - NAFTA D

Postby armati on Mon Oct 01, 2018 1:48 pm

- Increases requirement that all auto content in North American cars be produced 75% in the U.S. or Mexico, up from 63% [MAGA WIN MICHIGAN 2020]

This looks like it could be good for whichever country has the most auto employees earning less than $33k.

On the surface it looks good for Mexico.
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Re: Canada Surrenders; Agrees to All Trump Demands - NAFTA D

Postby armati on Mon Oct 01, 2018 1:58 pm

Michigan minimum wage is $9.25, Mexico minimum wage is $4.71.
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Re: Canada Surrenders; Agrees to All Trump Demands - NAFTA D

Postby saxitoxin on Mon Oct 01, 2018 2:22 pm

armati wrote:Canada negotiated- Requires 40% of all new auto production in the U.S. or Mexico be done by workers earning at least $33,000 per year [MAGA WIN MICHIGAN 2020]
Did Trump do what he could to keep the other 60% of employees wages lower than 33k?


There was no minimum wage requirement under NAFTA. This means auto manufacturers will have to move assembly jobs back to the U.S. from Mexico to make the 40%/$33k threshold.

However, even though Mexico will lose assembly jobs they'll gain parts production jobs due to the increased component requirement of 75%. So the U.S. wins big and Mexico also wins a little. The only one who loses is China where a lot of the components are currently being made. They'll have to go back to growing rice in their backyards which will tighten the economic gorratte Trump has around their neck.
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Re: Canada Surrenders; Agrees to All Trump Demands - NAFTA D

Postby HitRed on Mon Oct 01, 2018 2:27 pm

Paragraph 16

Mexico builds the wall.
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Re: Canada Surrenders; Agrees to All Trump Demands - NAFTA D

Postby armati on Tue Oct 02, 2018 1:28 am

I guess Im missing something.

How does no minimum wage requirement under NAFTA equate to auto manufacturers having to move assembly jobs back to the U.S. from Mexico to make the 40%/$33k threshold?

Either country simply has to pay 40% of their people a minimum of 33K, 60% can make minimum wage, mexico 4.71 michigan 9.25

Looks like Mexico should be able to produce more cheaply.
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Re: Canada Surrenders; Agrees to All Trump Demands - NAFTA D

Postby patches70 on Tue Oct 02, 2018 7:18 pm

armati wrote:I guess Im missing something.

How does no minimum wage requirement under NAFTA equate to auto manufacturers having to move assembly jobs back to the U.S. from Mexico to make the 40%/$33k threshold?

Either country simply has to pay 40% of their people a minimum of 33K, 60% can make minimum wage, mexico 4.71 michigan 9.25

Looks like Mexico should be able to produce more cheaply.


Labor is a cost. It is often the most significant cost in business. One must sell their products for a higher price than all their costs combined to produce the product. The problem with "free trade" is that it doesn't work between two parties with vastly different standards of living. There is no way, for instance, that American worker's costs can compete with Chinese labor which is practically slave labor. Thus, Chinese products are produced at a lower cost.

The US tends to be more mechanized, automated production, thus lower labor costs as compare to Mexico which is probably labor intensive. This was OK for Mexico because they didn't pay their labor equivalent wages compared to US workers, thus even though they are labor intensive their labor costs are still lower.

By increasing Mexico's labor costs it puts the costs of what they produce on a nearer level to US costs, thus price for products is closer to parity. This makes American products more attractive to buyers. For instance, the Mexican peso is worth .056636 dollars. The average Mexican construction worker makes about 300 pesos a day on average. About $15 dollars. Mexican manufacturing up until this point, which includes auto makers, is about equivalent to $3.60 an hour. By forcing Mexico to pay $16 minimum increases costs by over 5X. Still cheaper than US workers for the most part, but that's a hefty cost increase for Mexican labor. More than hefty actually.

Imagine the chaos if the USG came out tomorrow and ordered the increase in the minimum wage to be increased by 5X by the end of the year? That would absolutely crush a whole hell of a lot of business very quickly who wouldn't be able to afford such a cost increase.

free trade is only fair and only works between countries that have near parity in labor costs. There is a reason why Apple builds their crap in China because they can use practically slave labor to build those fancy phones and stuff and then bring them back here and sell 'em for $1000 a pop.


This is a good thing because it brings a closer parity in costs between the US and Mexico. This is good for free trade, it's good for the average Mexican worker (if he isn't laid off due to massive increase of labor costs), it's good for American companies who can now compete on a more level playing field with Mexico. It's good for societal progress because after all, which of you really wants to buy products made by virtual slave labor? I know I don't, at least not knowingly. That's what we do when we buy stuff built in China or some other country that absolutely takes advantage of their work force by having to only pay pennies on the day for labor. When you do that you merely increase the demand for more slave labor, which is a bad thing most wold agree.

Hopefully, as the situation gets more stable moving forward (a large increase in labor costs can be quite disruptive on business for obvious reasons and takes time to adjust), the greater pay will increase the standard of living in Mexico while at the same time making American products better able to compete with Mexican products. That's a good thing, and it promotes competition and leads to innovation, more incentive to develop best practices and provides opportunity for aspiring entrepreneurs willing to take risks in a more competitive environment.

Or so that's how the theory goes. We'll see in time I suppose. But I am definitely for improving a more level playing field with similar costs between trading partner and similar standards of livings between peoples. Whether or not Trump's deals will accomplish that, I have no idea. Time will tell like it always does in the end.
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Re: Canada Surrenders; Agrees to All Trump Demands - NAFTA D

Postby armati on Tue Oct 02, 2018 9:37 pm

Thats the theory alright.
Slave labor, hmmm, I wonder if purchasing power of the currency in each nation shouldnt be taken into account when determining wage parity.

Americans earning 10hr might be able to eat at fast food joints every day, but an asian person might be able to eat like a king at a dollar a day.
Im just after the idea not accuracy.
Its cost of living being different.

But there is one thing you left out, the employees not making the 33k......60% can earn the minimum wage in the respective countries.
That has got to bring costs down.

In my way of thinking, the edge goes to Mexico...unless Im missing something.

Taxes were not mentioned, I doubt those are the same in every country.
If one country is taxing less than the other, is that a government subsidy?

There is always more to whatever it is than we are told.

At least the deal is done, now we can get some different news.
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Re: Canada Surrenders; Agrees to All Trump Demands - NAFTA D

Postby HitRed on Tue Oct 02, 2018 11:50 pm

I'm a big fan of Mexico but they have issues that negatively effect business. Mexico is a ...hmmm...complicated place.
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Re: Canada Surrenders; Agrees to All Trump Demands - NAFTA D

Postby spurgistan on Thu Oct 04, 2018 1:19 pm

This is a little better for labor than NAFTA. It is a lot better for Mexican labor, but marginally better for US and Canada too. The push to make Mexico more amenable to labor unions is a big get.
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