For the first time in a generation, NAFTA is getting a re-write, and even America’s premier trade union federation has endorsed the final draft.
NAFTA, which took effect in 1994, eliminated tariffs on goods and services made and traded within the three nations of North America, and granted special rights to foreign investors. That made it easier for U.S. corporations to shift production to Mexico, where wages are lower and workers’ rights are weaker and environmental enforcement is more lax.
Donald Trump pledged in his 2016 campaign to renegotiate or pull out of NAFTA, and in September 2018, he announced a new deal had been negotiated. The proposed U.S.-Mexico-Canada Agreement (USMCA) contained a number of improvements over NAFTA:
- It committed Mexico to reform its labor law to guarantee workers right to choose their unions and approve union contracts via secret-ballot votes.
- It mandated that at least 40% of auto content be made by workers earning over $16 per hour, and that 75% of the value of materials within a car or truck be produced in North America in order to cross borders tariff-free (up from 62.5% under NAFTA).
- It scaled back NAFTA’s controversial Investor-State Dispute Settlement process, which allows foreign investors to sue governments in special trade tribunals if new regulations deprive them of opportunities for profit.
But national AFL-CIO President Rich Trumka—and top Democrats in Congress—said that wasn’t good enough. And they objected to a provision in the USMCA that would guarantee drug companies a 10-year patent monopoly on new drugs known as biologics. To win support in the Democrat-controlled House, Trump administration trade negotiator Robert Lighthizer went back to negotiate further with Mexico and Canada. The revised deal, announced Dec. 10:
- drops the drug patent extension;
- requires that Mexico’s compliance with newly beefed up labor standards be verified by independent labor experts; allows for inspections of Mexican factories and facilities that aren’t living up to agreed-upon labor standards; and penalizes goods and services that aren’t produced in compliance;
- allows the United States to impose quotas on imported cars from Canada and Mexico;
- requires that at least 40% of the steel used in auto production come from U.S. steel plants
AFL-CIO president Trumka called the revised USMCA “a vast improvement.”
“We demanded a trade deal that benefits workers,” Trumka said in a Dec. 10 press statement, “and now we have secured an agreement that working people can proudly support.”
Trumka commended Trump trade ambassador Lighthizer as a straight shooter, and thanked House Speaker Nancy Pelosi and Senate Democrats Ron Wyden (D-Ore.) and Sherrod Brown (D-Ohio) for their role in pushing for the USMCA to be revised.
“For the first time, there truly will be enforceable labor standards,” Trumka said, “including a process that allows for the inspections of factories and facilities that are not living up to their obligations.”
Not all the AFL-CIO’s fair trade coalition partners had the same reaction to the revised agreement.
Economic Policy Institute (EPI) president Thea Lee, who served as the AFL-CIO’s trade policy expert for 20 years, called it “weak tea, at best” in a statement co-authored by EPI trade expert Robert Scott. Lee and Scott agreed the revision may benefit workers in glass and steel — and significantly improve labor rights for Mexican workers. “But those changes will have virtually no measurable impacts on wages or incomes for U.S. workers,” they concluded. And overall, the USMCA “will in no way offset or reverse the massive devastation caused by the original NAFTA agreement,” Lee and Scott predicted.
Machinists union president Robert Martinez Jr. said his union will oppose the USMCA because it still doesn’t effectively address the continued outsourcing of jobs to Mexico “especially when it comes to aerospace and other manufacturing sectors.”
As of press time, House Speaker Nancy Pelosi was promising a vote on the USMCA by the end of the year, with a Senate vote to follow.