T-MEC: What to Expect in the Future?

With the recent signing of the U.S.-Canadian-Mexican trade agreement, a precedent was set for future negotiations, as this agreement sets binding labor conditions, such as making exports subject to the payment of a minimum wage.

Friday, December 13, 2019

For example, one of the conditions of the Treaty between Mexico, United States and Canada (T-MEC), which was signed on December 10, 2019, is that vehicles exported from one state of Mexico to the other two countries "must come from plants that pay wages not less than $16 an hour.

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For Enrique Lacs, former minister of economy of Guatemala, "... the important and new antecedent that the United States has imposed is referring to the labor issue and to update the conditions of the sensitive issues for them. This mechanism can be replicated by that country with other trade agreements in each region."

Fanny D. Estrada, director of competitiveness of the Guatemalan Exporters Association (Agexport), told Prensalibre.com that "... in the labor area Guatemala is more advanced than Mexico because in the U.S. FTA, Central America and the Dominican Republic certain conditions already exist and what the United States is doing with the North American treaty is seeking to standardize it."

Exports of Guatemalan textiles to the U.S. are considerable and according to Alejandro Ceballos, president of the Clothing and Textiles Commission (Vestex), the country is well positioned in terms of employee compensation, as companies in Guatemala pay a higher minimum wage than in Mexico.

Employers agree that the new labor condition included in the treaty could set a precedent that will affect other sectors and agreements in the future.

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