USMCA and Shelmex
15
Mar

Manufacturing in Mexico with Shelmex and USMCA

Manufacturing in Mexico with Shelmex and USMCA

The new North America Free Trade Agreement (NAFTA) has taken shape in the form of the United States Mexico Canada Agreement (USMCA). The USMCA is the updated version of the trillion-dollar free trade agreement between the three countries that is 25 years old. The new deal includes big changes for the automotive industry and new policies and standards for the environment and, most importantly, labor. It provides better protection for intellectual property and some provisions for digital trade.

Here are some of the important changes in the new deal promised by President Donald Trump in his 2016 campaign:

Sunset After 16 Years
The new agreement includes a sunset clause after 16 years. The terms of the contract will have to be reviewed before that time, or the deal will expire. The agreement is also subject to review every six years. The deal can be extended during those review periods.

Intellectual Property and Digital Trade
The previous deal included copyright protection for 50 years beyond the life of the author. they new deal extends those copyrights to 70 years. There are also provisions to deal with the new digital economy. It prohibits duties on items such as music en ebooks. It also provides protection for internet companies that shields them from the liability of content produced by their users.

New Labor Laws
One of the most important provisions come into the pay required for workers in the automotive sector. The agreement requires that 40 to 45% of the automobile parts must be made by workers who earn at least $16 dollars an hour. This provision kicks-in on 2023. Mexico also agreed to pass new labor laws that provide greater protection for workers, including women and migrants. A significant shift comes in new rules for unionizing in Mexico. The new unionizing rules are meant to make it easier for Mexican workers to unionize, but they are also susceptible to corruption and abuse by union leaders.

Rules on Country of Origin
The new rules require cars to include at least 75 percent of their components manufactured Mexico, the United States, or Canada to qualify for zero tariffs. This number was only 62.5 percent under the previous North America Free Trade Agreement.

The Government of the United States first signed a bilateral free trade agreement with Mexico last August. This first deal excluded Canada. Canda had been reluctant to accept some points of the deal.

The new deal ratifies Mexico as an important business and industrial partner for the United States.

The new USMCA also positions Shelmex as a strategic partner for companies seeking to manufacture in a nearshore environment that takes advantage of lower costs without the intellectual property risks and logistics complexity of doing business with China.

Shelmex provides outsourced manufacturing solutions for companies that have decided to move operations to Mexico, but need a manufacturing partner. Under this solution, the customer provides the raw material, manufacturing equipment, and Shelmex takes care of the rest, including labor and plant management.

Shelmex also provides traditional contract manufacturing, providing customers with a singles source of responsibility that includes sourcing material sourcing, manufacturing, and logistics with a per-part cost.

Some of Shelmex customers operate under a dedicated facility to meet their specific needs where a build-to-suit lease option Available.

For more information on how to partner with Shelmex to take advantage of the new USMCA give us a call at (281) 916-8800 or
contact us at info@shelmex.com.