For more than a quarter-century, North America’s working families have raised our voices for a better trade policy. The defenders of corporate-dominated trade rules too often portray trade as an end in itself. But trade is not an end, it is a means. Trade policy must be judged by whether it leads to a just, inclusive and sustainable economy. An economy that works for all, regardless of race, gender or national origin and that in particular lifts up the most vulnerable. By that measure, the North American Free Trade Agreement (NAFTA), which has driven the outsourcing of so many good jobs, has been a catastrophic failure.
We reaffirm our commitment to labor rights and decent work for workers in all nations. Economic justice cannot be achieved by continuing to give global firms free rein to abuse workers and exploit the environment in a race to the bottom disguised as “free trade.” Nor can we allow trade agreements to be vehicles to achieve other corporate agendas that undermine the interests of working people and our families.
This is nowhere more true than in North America, where trade relations are governed by NAFTA. Its key failure was built into its structure: setting up a system of rigged trade, in which global firms could increase profits by transferring production to Mexico where they could take advantage of systemic worker repression, exploiting both U.S. and Mexican workers in the process. By design, NAFTA distorted power relationships in favor of global employers over workers, weakened worker bargaining power and encouraged the de-industrialization of the U.S. economy. NAFTA contains not a single rule to ensure that working people and our employers prosper together, even though its proponents falsely claimed that was the inevitable outcome.
After a quarter-century of this race to the bottom, workers in all three NAFTA countries find it more difficult to form unions and negotiate collective bargaining agreements. We face greater inequality. We face ever more powerful monopolies. And the United States faces a growing trade deficit, despite promises by the administration to address this imbalance.
The NAFTA renegotiation requires strong labor rights provisions and strong enforcement provisions that as of today are not yet in the agreement. In addition, as the current draft of the new NAFTA recognizes, Mexico must enact and fully and effectively implement reforms to its labor law to end the race to the bottom for workers in all three countries. This will require the upfront guarantee of sufficient resources for enforcement. This must happen before Congress takes up any new NAFTA deal.
But if the administration insists on a premature vote on the new NAFTA in its current form, we will have no choice but to oppose it.
We measure the new NAFTA (also known as the United States–Mexico–Canada Agreement or USMCA) against three basic principles. First, the purpose of an economy is to raise living standards and improve the well-being of its citizens. Second, every country has legitimate national interests, and it is the appropriate role of public policy to pursue those interests while not imposing burdens on the people of other countries. Third, a new trade policy should prioritize the public interest, rather than allowing powerful private interests to achieve outsized gains at the expense of the rest of society.
The announcement that NAFTA would be renegotiated raised workers hopes and expectations of a new deal would be founded on these principles. The agreement to date does not meet those expectations.
Most importantly, the new NAFTA does little to stop the continued outsourcing of U.S. jobs to Mexico across all sectors, including aerospace, electronics, appliances, food processing, heating, ventilation and air conditioning (HVAC) products, paint finishing systems and booths, and other manufacturing. For example, it does not prevent U.S. corporations like General Motors or Carrier from closing plants and hurting workers and communities across the supply chain. Provisions like the auto labor value content requirement, which appear promising on the surface, are actually likely to be ineffective at addressing outsourcing. Nor does the deal address existing inequities, including permitting employees of Mexican railroads to operate trains within the United States while Mexico maintains a prohibition on the reverse scenario.
The new NAFTA includes some modest improvements. But its labor rules repeat the flaws of past trade agreements. The new NAFTA’s labor rules must be significantly strengthened. The new agreement must ensure that the labor rules will be swiftly and certainly enforced. While we have provided numerous recommendations for how that could be accomplished, none of them are included in the draft. Targeted improvement in labor enforcement is absolutely essential because without it, the agreement’s substantive provisions are of little value.
An effective enforcement mechanism must have mandatory monitoring and reporting, assurance that action will be taken promptly when violations occur, and, critically, an avenue by which workers can intervene when governments lack the will to act. Moreover, it must have a guaranteed funding stream to ensure that technical assistance, monitoring and enforcement occur. The new NAFTA has none of these. Simply put, without assurance that labor rules will be enforced, we have no confidence that the deal will change the terms of trade.
The original NAFTA allowed a party being accused of violating the deal to block the dispute settlement process. This proved harmful to working people in all three countries. In subsequent trade agreements, the United States abandoned this failed notion. But the new NAFTA revives this failed idea. This means that outsourcing, downward pressure on wages and labor standards and growing inequality are likely to continue.
The new NAFTA will not end the race to the bottom in the workplace, but it is by no means the only failure of this deal. It will also keep drug prices high by expanding monopoly power for brand-name pharmaceutical companies. This provision will hurt workers in all three countries, but it will especially hurt Mexico’s workers. We cannot limit the future health policy choices for North American countries simply because Big Pharma seeks to use NAFTA to lock in and increase its profits.
The labor movement has made clear that we need a new deal that makes a real difference in stemming outsourcing and improving workers’ lives. Work on this issue is far from complete. Among the changes we have requested are:
- Strengthened labor rules, including explicit reference to International Labor Organization language that clarifies fundamental labor obligations and the elimination of footnotes that make the rules difficult to enforce;
- New and strengthened rules (including rules of origin) for all manufacturing sectors to promote more U.S. domestic content and high-wage production, including the strengthening of the $16 per hour labor value content rule, rules for rail cars, steel, aluminum and other manufacturing sectors, and appropriate floor wage provisions;
- Strengthened environmental rules and enforcement;
- The elimination of rules that allow foreign investors to continue to use a private justice system (ISDS) to challenge non-discriminatory public interest laws and regulations;
- The removal of rules that undermine strong public interest regulations and chemical safety;
- The removal of provisions that undermine income, health care and pension plans for creative arts workers (Articles 19.17 and 20.89);
- An assurance that the United States, Mexico and Canada may require government contractors to comply with the deal’s labor rules (Article 13.7.5);
- An assurance that food labeling (including country-of-origin labeling) that lets families know where and how their food is produced is not a trade violation; and
- The creation of additional tools to address outsourcing, including in the aerospace, auto, baked goods, HVAC, call center and processed meat industries.
We are eager to work with the administration and Congress to improve trade for working people. However, to support any final deal, we must be confident that it will reduce incentives to outsource, help Mexico eradicate systemic wage suppression and begin creating new, high-wage, high-road jobs in all three countries. We must be confident the final deal will not undermine our ability to protect working families or to reform the American economy, including with respect to health care. It also must strengthen our partnership with Canada to address global trade issues and not treat America’s partners as our enemies.
With respect to other trade relationships, including with China, Japan, the European Union and the United Kingdom, our standards remain the same. Trade that works for all must replace the current and ineffective trade rules written by and for global companies. While the administration has taken steps to begin addressing the untenable structural U.S. trade deficit with China, it is not at all clear that their approach will succeed. Steel and aluminum tariffs should be lifted from allies like Canada, so that we can work in coalition to confront predatory trade tactics.
Fairer trade must be part of a larger strategy to rein in decades of anti-worker economic rules written by global corporations. We need policies that will raise wages and make it easier for workers to form a union, both here and abroad. With respect to the aviation sector, open skies agreements must promote fairness and prevent the spread of flag-of-convenience operating schemes that undermine or otherwise violate established labor standards. With respect to China, a corporate approach focused on fulfilling the wishes of CEOs who seek to profit without concern for workers or human rights must end.
The labor movement rejects the proposition that we must choose between corporate-dominated trade rules on the one hand and xenophobic economic isolation on the other. Neither is remotely acceptable. It is possible to have trade rules that lift wages and treat all countries fairly.
The NAFTA renegotiation is a chance to improve the lives of working people in the United States, Canada and Mexico, but the AFL-CIO will not support a deal that fails to live up to that promise. The labor movement is united in our judgment that the new NAFTA does not yet meaningfully address what is wrong with the original NAFTA. As a threshold matter, any Congressional consideration of it must wait until Mexico has enacted and fully and effectively implemented labor law reform that ensures that working people are free to join unions and negotiate better wages.
The AFL-CIO commits to educating working people about what is happening in this process. And we commit to work with our brothers and sisters in Canada and Mexico and with the governments of all three countries to make the NAFTA renegotiation work for working people. However, the current effort by the business community to pass the new NAFTA is premature, and if it continues, we will be forced to mobilize to defeat it, just as we mobilized to kill the Trans-Pacific Partnership.