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What Workers Need From the Revision of NAFTA

A successful trade agreement with Canada and Mexico depends on fair treatment for Mexican workers.

Orignally published in the American Prospect:

As negotiations with the Trump administration on a new North American Free Trade Agreement between the United States, Canada and Mexico approach their crescendo, Congress may soon have a once-in-a-generation chance to remake our nation’s core trade relationship.

A generation after its passage, NAFTA’s worst legacy remains its destruction of good-paying jobs for working men and women. House Democrats have made crystal clear that any new deal must undo this damage. But achieving this outcome depends most of all on the Mexican government, which historically has shown at best, apathy and, at worst, outright hostility to labor rights.

Why does Mexico’s treatment of Mexican labor impact American workers? Mexico’s repeated failure to impose vigorous labor standards has produced artificially low wages, which have attracted American jobs south like flies to a honeypot. Mexico’s lack of labor standards, failure of enforcement, and non-investment in strong unions have incentivized a generation of outsourcing. Absent real labor reform in Mexico, our middle-class positions will continue to mutate into sweatshop jobs.

Real reform requires Mexico to start looking at labor rights in a whole new way. Take Mexico’s treatment of unions: Fake contracts that fraudulent unions sign to protect the boss before workers are hired run rampant in Mexico. The results are hard to refute: since the passage of NAFTA, the gulf between Mexican and American wages has widened to Grand Canyon levels.

The revised NAFTA, known as the U.S.-Mexico-Canada agreement or the USMCA, includes a “Labor Annex” that rightfully compels that all fraudulent union pacts be replaced within four years. Unfortunately, Mexican employers and sham unions filed lawsuits against implementation of a new labor law Mexico passed in May, which established processes to replace protection contracts. Appellate courts have granted injunctions against the law and more than 200 cases are still pending. And even if the law survives legal scrutiny, the Mexican government has proposed funding that’s woefully inadequate to create and staff the labor courts and labor inspectors the law would establish.

When I traveled to Mexico City in October as part of a delegation to meet with President Andrés Manuel López Obrador, he assured me that he shares our broad concerns on labor standards. But in an official communication the following week to the House Ways and Means Committee (the congressional panel tasked with approving the USMCA), the president was more vague.

While noting that Mexico’s budget to effectuate labor reforms was significant, he did not promise that Mexico would ratify that funding. Furthermore, even if the promised funding is allocated, it is back-loaded, with only a small fraction of it earmarked for FY 2020, when any new institutions will be created and filled.

Just as important is enforcement. Even if Mexico swears on a stack of Bibles that its government will follow through on its labor promises, we will still need to follow Ronald Reagan’s famous axiom  on verifying those assurances. In practical terms this means the inspection of independent workplaces and it means being able to stop goods from entering the United States that originate from facilities and plants that break the rules.

Given the horrendous labor conditions still common in Mexico in 2019, conditions have not improved, even as trade talks have heated up. This augurs very poorly for a functioning agreement.

In fact, even basic tenets of Mexico’s current labor law are being systematically violated. Goodyear Mexico fired dozens of workers in 2018 after they attempted to unionize at a plant where workers are paid an hourly wage of $1.58 (as Goodyear simultaneously lays off working Americans who make its tires for real wages). Mexico has yet to reinstate the workers.

Since NAFTA renegotiations commenced, there has been direct violence against labor leaders. Three activists seeking to organize a gold mine in southwestern Mexico were murdered. Brothers Víctor and Marcelino Sahuanitla Peña were beaten and shot as NAFTA talks were happening in Mexico City. In 2018, union leader Quintín Salgado was killed, and organizer Oscar Hernández Romero has been missing for two months. Mexican authorities have shown no interest in solving these crimes.

The picture of labor in Mexico is bleak. But so too are the signals we’ve received from the Trump administration, which has rebuffed our demands for making true Mexican labor reform integral to a deal. It’s obvious that Trump does not care about fixing labor standards in a new NAFTA. All the while, corporations continue to shift more jobs to Mexico. Tellingly, just one year ago GM announced it was ramping up production in Mexico and would close five U.S. plants, laying off more than 5,000 American workers.

The Trump administration promised throughout the process that the interests of American workers is their top priority, but unless and until there is a real enforcement mechanism to ensure Mexico implements new labor policy, that promise is hollow as a drum. If Trump wants Congress to ratify a new NAFTA, Mexico must root out its corruption against workers, raise wages, and exercise real enforcement or else our workers and theirs too will be left holding the bag for another generation.


Representative Bill Pascrell represents New Jersey’s Ninth Congressional District and has served in the House of Representatives since 1997. He sits on the House Ways and Means Subcommittee on Trade.

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