WASHINGTON—The “new NAFTA” the GOP Trump administration negotiated – Mexico and Canada would say Trump jammed it down their throats – has unknown enforcement strength. And that could negate its better-than-the-old-NAFTA worker rights provisions, the AFL-CIO says.
After all, “unenforced rules are not worth the paper they are written on,” the labor federation formally told the federal government.
For that reason and more, the AFL-CIO “is reserving judgment” on the pact right now, its trade specialist, Celeste Drake, told the U.S. International Trade Commission in November.
And unless the new NAFTA becomes stronger and pro-worker, she warned, the jobs drain the current NAFTA has caused over 25 years – a drain which the Economic Policy Institute now calculates at 851,700 factory jobs – will continue.
The ITC, which normally rules on tariff cases and unfair trade complaints, also prepares reports for the president and Congress on the impact of wide-ranging “free trade” pacts between the U.S. and various nations. The impacts it forecasts are both economy-wide and on specific sectors, such as auto trade. The ITC has yet to set a date for reporting to Trump on the new NAFTA’s impact.
The commission’s findings could become part of next year’s trade pact debate on Capitol Hill, where both houses of Congress – including what will be a Democratic-run U.S. House – must pass legislation to implement the new NAFTA, though not the pact itself, by majority votes.
All that led Drake, along with Teamsters Legislative Director Mike Dolan, to testify before the ITC on Nov. 15. They were the only worker representatives among a parade of business lobbyists to appear at the two days of hearings.
Drake, however, did not take the position, which some delegates at the Auto Workers convention took earlier this year: Dump NAFTA entirely, with no replacement.
Trump made a big deal about writing worker rights into the new NAFTA’s text. That’s unlike the 25-year-old so-called “free trade” NAFTA his pact would replace. And he demanded higher Mexican workers’ wages and got them, at least for part of the Mexican workforce that toils in “transplant” auto plants the Detroit 3 carmakers erected south of the border.
Drake lauded inclusion of worker rights in the new NAFTA, officially the U.S.-Mexico-Canada Agreement (USMCA), rather than an unenforceable side pact. But she noted USMCA’s worker rights mimic a weak bargain years ago under another “free trade” pact, with Central American nations.
That pact lacks enforcement teeth, practical evidence shows. Instead, Drake said, worker rights should be at least the stiffer standards included in International Labour Organization agreements, and enforcement should be tough.
“There are also provisions…that undermine the interests of workers and consumers, as a result of provisions including pharmaceutical monopolies, financial services, and regulatory practices,” she said.
“We urge the USITC to demonstrate improvement in rules regarding workers’ rights alone will have no impact without effective enforcement; to scrutinize the auto rule of origin to provide a reliable analysis of its potential impacts; and to examine the negative effects of locking excessive pharmaceutical monopolies into NAFTA,” her summary adds.
Drake and the AFL-CIO were even blunter in her 22-page formal statement.
“Simply put, NAFTA’s rules have not benefited working people,” she declared. “It is an inescapable fact that millions of workers across economic sectors regard NAFTA as a failure. They have been left behind and have not shared in the gains from globalization.”
That failure will continue, she stated, unless the U.S. shifts gears and puts workers, not corporations, first in bargaining such “free trade” pacts, including the “new NAFTA.”
“NAFTA and subsequent trade agreements contributed to stagnant wages, rising income inequality and increased outsourcing of jobs and production. Across the country, workers and communities lost confidence in the way the United States manages globalization.”
If, and only if, (her emphasis) the labor obligations of the new NAFTA are fully implemented” by the U.S., Canada and Mexico, “lend themselves to stronger interpretation, and are combined with swift and certain enforcement mechanisms — which we note do not yet exist in the current draft – (does) the new NAFTA have potential to alter this trend.”
Other specific problems the AFL-CIO pointed out in the new NAFTA’s labor sections alone – there are many others elsewhere — include:
- “The question of enforcement is paramount. In the current draft of the dispute settlement chapter, a party (country) may prevent a dispute from reaching the settlement stage by refusing to convene a meeting of the Free Trade Commission. This provision is contrary to the principle of swift and certain enforcement,” Drake warned.
- “Mexican industry has world-class productivity yet falling wages. Mexican manufacturing workers earn on average less than a fifth of manufacturing workers in the U.S., and that wage gap has remained steady for 30 years despite wage stagnation in the U.S…Low wages obviously hurt Mexican workers and their families. But they hurt American and Canadian workers, too.”
One big harm: More than half of Mexicans live below the nation’s poverty line and they can’t buy U.S.-made goods. And “Mexico’s low-wage strategy continues to encourage companies to move production and jobs from the U.S. to Mexico, devastating communities and undermining U.S. worker leverage to bargain for higher wages.”
- The new NAFTA demands detailed changes in Mexican labor laws to eliminate employer-dominated unions, which have persisted since at least 1929. But until Mexico enacts and implements those changes, “the U.S. should withhold trade benefits from Mexico,” the detailed statement stated.
Those unions, Drake said, sign “collective bargaining agreements” with firms “generally without the workers’ knowledge and sometimes before they have even been hired. Such “’protection contracts’ are a very effective way for companies to keep wages low and deny workplace rights.”
“Given the government of Mexico’s history of policies that purposely undermine wages and obstruct the rights of workers to organize and bargain collectively, the USITC should not assume the mere presence of such obligations will effectively promote changes to law and practice,” Drake’s detailed statement said.
- “Important weaknesses remain, including a footnote that makes it difficult to uphold international labor standards and the absence of rules prohibiting abusive labor recruitment practices or requiring the payment of living wages. Most importantly, there are no labor-specific monitoring or enforcement provisions — such as an independent secretariat or certification requirements — that would promote the rules and create greater confidence they will be swiftly or certainly enforced.”
“As a result, the AFL-CIO has serious doubts the improved rules will make a meaningful difference to North American working families without additional provisions, assured funding, and implementing language. Unenforced rules are not worth the paper they are written on. Therefore, we continue to push for improvements to the labor provisions within the text of the NAFTA. as well as in domestic law, in order to consider these gains meaningful.”
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