Labor Unions, Automakers Support Trump on NAFTA 2.0

Some of the nation’s largest labor unions are celebrating the United States-Mexico-Canada Agreement (USMCA) as a major win for the working class.

“Because of our patience and perseverance, the USMCA now includes strong labor rights and a viable mechanism to enforce them,” said AFL-CIO President Richard Trumka.

“We also secured a separate enforcement mechanism that allows for inspections of factories and facilities that don’t live up to their obligations. This was an important priority for the labor movement because it ensures that working people in all three countries have greater protections under this new agreement.”

The USMCA will replace the North American Free Trade Agreement (NAFTA), a trade deal said to be responsible for the loss of nearly 1 million American jobs. House lawmakers approved the latest version of the USCMA earlier this month, meaning the deal is almost certain to be ratified and signed into law soon.

The compromise includes provisions to protect American workers from lower-paid Mexican nationals, but won’t stop American companies from outsourcing, says United Steelworkers President Thomas Conway.

“The fight for fair trade won’t end with this agreement, but it’s an agreement worth passing,” he said.

Among the USMCA’s most-touted provisions are its rules for the auto industry. To avoid tariffs, 75% of the parts used to build a vehicle must be produced in North America and 40% of those parts must be made by workers earning at least $16 per hour. 

The Trump Administration claims the USMCA will bring 76,000 jobs back to the auto industry, but critics worry the deal will drive up the price of vehicles (leading to decreased demand and fewer jobs).

“Based on our previous analysis, [the] USMCA is a solution searching for a problem in regard to auto trade,” wrote Brian Reinbold, a research associate at the Federal Reserve Bank of St. Louis. “It also could make North American automakers less competitive in a global marketplace.”

In its report, published April 2019, the United States International Trade Commission predicted the USMCA would create 28,000 auto jobs but decrease the number of cars sold by 140,000.

Other provisions included in the USMCA: 

• Expanded access for US dairy and poultry producers
• Removal of protections for foreign investors
• New rules to prevent currency manipulation
• Requirements forcing Canada to grade US wheat like it grades domestic product and preventing Canada from creating barriers to trade for alcohol
• Rules allowing the free flow of data across borders
• Removal of patent protections for biological drugs (making it easier for competitors to produce cheaper, generic options)

The USMCA also blocks all three countries from taxing digital products (a major win for Netflix) and prevents them from asking companies to store data locally. The deal includes environmental rules, but does not address climate change.

“The unusually large, bipartisan vote on the revised [USMCA] shows that to be politically viable, US trade pacts no longer can include extreme corporate investor privileges or broad monopoly protections for Big Pharma,” says Lori Wallach, Founder and Director of Global Trade Watch, “and must have enforceable labor and environmental standards, in contrast to the 2016 Trans-Pacific Partnership, which never got close to majority House support.”

Editor’s note:  Trump has been accused of being “protectionist” but this is a much more complex issue.  The theory says that free trade is the best and most productive situation for everyone.

But with which companies do we actually have “free trade”?? As far as I know, we have no such agreements which anyone(especially China!).

The strategy with previous U.S. presidents has been to be generous in order to get ANY kind of trade agreement. And in most cases, our trading partners have been eating our lunch. Trump has backed away from these sweetheart deals, resetting them to the point where they are almost fair, abeit with higher tariffs and stricter, less “free” terms.

If our trading partners want to work toward free trade, they are welcome to do so, but not at our expense. Trump is negotiating terms more advantageous to America. As he promised.

And now the Unions are realizing that Trump is not giving away our advantages just to prove the magnanimity of America at the expense of American workers.  This is a new thing and may very well soften the hardcore stance of unions against the Republican Party.