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The ‘new’ NAFTA

Commentary by Blair F. Bertaccini |
February 8, 2019
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New York, NY - On November 30, 2018, representatives of Mexico, Canada and the United States signed the U.S.-Mexico-Canada Agreement (USMCA) to replace the current NAFTA agreement governing trade between the three North American neighbors. Likes its predecessor, this “NAFTA 2.0,” as some refer to it, is not designed to help the workers in any of the three nations but rather to ease the flow of capital and help maximize profits of corporations.

During the 2016 presidential campaign, Trump attacked the current NAFTA for its deleterious effect on U.S. workers and their communities and pledged to negotiate a “better” deal. The new agreement has some improvements for workers, but still contains many harmful clauses contained in the first treaty.

One improvement that could help workers is the elimination (in the case of the U.S. and Canada), or significant change (in the case of Mexico) of how corporations and governments can challenge regulations in any of the signatory nations. The Investor-State Dispute Settlement (ISDS) panels are currently weighted heavily in favor of corporations and bypass each nation’s court system. But the new proposal has loopholes and is still weighted to corporations - for example it continues protections of U.S. companies that have contracts with Mexico’s National Hydrocarbon Commission, in case their contracts are cancelled by the recently elected government, which has pledged to keep the Mexican petroleum industry as property of the Mexican people.

One of the greatest problems with NAFTA is that it has allowed hundreds of U.S. companies to close their U.S. operations and move production to maquiladoras in Mexico where they can pay workers $1.50 per hour. These low wages have been often been locked in place because Mexican government has allowed yellow unions controlled by the Partido Revolucionario Institucional (PRI) to ink contracts with employers before plants even open that protect the employers, not the workers. The new agreement requires the Mexican workers be given secret ballot elections on contracts and to eliminate all current “in place” agreements over a four year period.

However, like many other labor provisions of NAFTA 2.0 there are no effective enforcement mechanisms for the changes.

Also, some commentators have noted that the new treaty uses the International Labor Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work, rather than the more stringent and exacting ILO Conventions. One reason for this may be that the U.S. often refuses to endorse these conventions.

There are also new wage standards for the production of some goods in which a certain percentage of a final product must be produced by workers earning a certain wage, for example $16 per hour. It also has new standards to prevent the tariff-free pass through of goods partially made outside the three nations, i.e. requiring a certain percentage of value be produced in North America.

All of the new treaty’s provisions that might protect or improve the lives of workers still need better and more effective monitoring and enforcement written into the agreement. With a now Democrat-controlled House of Representatives, organized labor and its allies have an opportunity to have significant changes made to the agreement as signed if it is to pass Congress. So far the AFL-CIO has communicated little about the USMCA to its members. Just defeating the new agreement leaves us with the current NAFTA. While fighting for improvements is still a defensive struggle, it could leave unions and workers in better position to organize and win better contracts.

But such a fight must involve rank-and-file workers, not just union lobbyists if it is to be effective. We should focus on key changes and not get lost in all the arcane minutiae of the treaty’s many pages. To not do this would be to miss an opportunity to improve the lives of workers.