Looks like it’s back to the drawing board for NAFTA aka USMCA.
House Democrats, who will be in charge of the new Congress that convenes in January, have made it clear that they won’t accept the NAFTA revision that President Trump forced on Canada and Mexico in its present form. Among other things, they want stronger, more enforceable labor standards.
NAFTA labor standards are addressed in a side agreement and aren’t fully enforceable. In the revised NAFTA, which Trump renamed the U.S. Mexico Canada Agreement, labor standards, including new ones, are in the body of the agreement and are fully enforceable. But there’s a big difference between “enforceable” and “enforced.”
For example, the new deal requires that 40-45% of a car built in North America be built by workers earning at least $16 per hour. This is aimed at Mexico, because American and Canadian auto workers already earn more than that.
It’s hard to imagine how anyone could enforce a rule like that.
Also, U.S autoworkers earned between $19.31 and $29.73 per hour in September, according to the U.S. in Mexico and paying the 2.5% tariff to import them into the United States.
USMCA’s labor chapter also requires Mexico to enact laws or regulations mandating the “effective recognition of the right to collective bargaining,” and “the elimination of discrimination in respect of employment and occupation.”
However, a June 2018 report on employment discrimination against Mexican women, prepared for the Office of the UN High Commissioner for Human Rights, said, “Although employment discrimination can be legally punished through many different means in Mexico, according to available data, it is rarely actually punished. . . between 2013 and 2017, not one single employer in all the country was fined for employment discrimination or harassment.”
This is one of many problems with employment discrimination against women the report described.
The United States or Canada could file complaints against Mexico for employment discrimination under one of USMCA’s dispute resolution chapters. But the process for doing so would be long and complicated and winning would affect little if any change on the ground in Mexico.
Sex discrimination is rampant there, although it’s not as bad as it used to be. As recently as the mid-1990s, Mexican businesses placed want ads in newspapers specifying that applicants must be young, female and attractive. Women who didn’t fit that description had a hard time finding work. This led many of them to immigrate to the United States.
If the Trump administration put stronger labor standards in USMCA to get Democrats to support it, it didn’t work.
“Right now, it’s a work in progress,” said Rep. Nancy Pelosi, D-Calif., who will probably be the speaker of the House in the next Congress. “Without enforcement you don’t have anything.”
Rep. Richard Neal, D-Mass., who probably will be chairman of the House Ways and Means Committee, said in a statement, “ we will need to assess whether this agreement makes real improvements to the terms of the existing NAFTA . . . especially when it comes to the enforcement and enforceability of the agreement’s provisions, including the provisions that have always been critical to Democratic support – the ones that provide for worker rights and environmental protections.”
Trump has two choices.
If he wants to put USMCA into effect, he’s going to have to do the hard work of making it acceptable to House Democrats. That will mean, among other things, making sure the labor rights provisions aren’t just enforceable, but enforced. That, in turn, will mean more negotiations with Canada and Mexico, neither of which will be keen on going at it again with the Trump administration.
Or, he can walk away from the deal, leaving NAFTA in place. In that event, he might make good on his threats to withdraw from NAFTA, leaving the United States even more isolated than it already is. Commerce Secretary Wilbur Ross suggested that Trump would do that if Congress doesn’t ratify USMCA.
“The president can revoke the old NAFTA deal by simply giving six months’ notice,” he said in an October 1 interview with Fox Business News. “The old NAFTA deal is not going to be a realistic alternative.”
And, of course, Trump views NAFTA as “perhaps the worst trade deal ever made.” So, why wouldn’t he withdraw from it if he doesn’t get USMCA?
Taking the United States back to 1989, when it had no trade agreement with either Canada or Mexico, is not a realistic alternative, either.