The General Motors plant in that Mexican city is vital for the success of USMCA and involves a lobbyist with direct access to the Oval Room.
USMCA overcame a harsh test last week at the General Motors plant in the state of Guanajuato when a union election was held displacing the Confederation of Workers of Mexico, a union historically linked to the Institutional Revolutionary Party.
The Democratic government has focused on complying with freedom of association in Mexico - which was stipulated in the new trilateral agreement reformed at the request of Donald Trump - as a way for improving wages in various sectors of the economy in order to prevent the flight of jobs from the United States. This was one of the issues that Kamala Harris addressed in her meeting with AndrĂ©s Manuel LĂłpez Obrador last June.
The new Treaty stipulates that employees of the Mexican automotive sector must earn U$ 16 an hour, the same as in the United States. Currently, the salary in Mexico barely reaches U$ 4 dollars per hour, with benefits included.
The abysmal difference lies, to a large extent, on the productivity and technology employed on both sides of the border. In the United States, innovation and technological development are contemplated, while those are merely labor functions in Mexico.
Silao, headquarters of the manufacturing process of 70% of the pick-up trucks sold by GM worldwide, is a meeting point for the respective ambitions of LĂłpez Obrador and Biden. The first, advised by his friend, labor Attorney Arturo Alcalde, wants more union democracy in Mexico and the displacing of PRI unions. The second, without euphemisms, aspires for GM to move part of its Mexican operation to the United States.
Union resources in the U.S. do not come from the salaries of employees, as in most of Latin America, but from company profits. Unions that support Biden and the Democrats view a move of GM's operations to their country as an opportunity that can't be missed.
This whole process is closely followed by lobbyist Jeff Richetti, who is Tom Richetti's brother, Biden's long-time friend and a senior adviser to the White House. In fact, Richetti's office is three meters from his friend, the president.
In July, journalist Julie Bykowicz reported in The Wall Street Journal that Jeff Richetti's firm has flourished and quadrupled its usual turnover since Biden won the Democratic nomination in 2020, reaching one and a half million dollars in just one semester. And one of his favorite customers is GM.
The volume of business and privileged access to the White House have cemented the mantra that is reiterated throughout Mexico's automotive sector: GM will not lose out from the process of union democratization. If the new union close to AMLO insists on the U$ 16/hour pay, the company will simply execute a forceful cut in labor positions at Silao, where 5,000 people are employed.
The other path to the wage raise would be for GM to move part of its technical processes from the United States to Mexico, which would be just the opposite of what the unions close to the Democrats are asking for. With 2022 just around the corner, those organizations would be vital for Biden to ratify his position in the midterm election.
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