Interim Final Rule on High-Wage Components of the Labor Value Content Requirements Under the United States-Mexico-Canada Agreement Implementation Act

On January 29, 2020, the United States-Mexico-Canada Implementation Act (USMCA) was signed into law.  On July 1, 2020, the Department of Labor’s Wage and Hour Division released an Interim Final Rule (IFR) implementing a portion of the USMCA, which is effective immediately. To support North American jobs, the USMCA contains trade rules of origin to drive higher wages requiring that after a phase-in period, beginning July 1, 2023, at least 25-30 percent of vehicles be made by workers earning at least USD $16 per hour.  This percentage will increase to 40-45 percent within three years.  These impacts are limited to producers that import covered vehicles into the United States and parts manufacturers in America supplying parts to Canadian and Mexican producers for use in vehicles imported to the United States. They do not include, for example, the costs for U.S. vehicle exporters to comply with Mexican and Canadian USMCA regulations, which are outside the scope of this IFR.  DOL has certified that this rule will not have a significant economic impact on a substantial number of small businesses.   The Department estimated there are 4,835 small affected firms (97 percent of the total affected) and 5,218 small affected establishments (85 percent of the total) in the motor vehicle manufacturing, tire manufacturing and vehicle parts manufacturing industries.  DOL does not have enough data to estimate producer adjustment costs, such as employer costs in some of these establishments if companies increase employee pay to meet these requirements.  Comments are due to DOL by August 31, 2020. 

Comments are closed.