Reform NAFTA? We hafta!

Bill Knight column for Thursday, Friday or Saturday, Sept. 21, 22 or 23

This month, low wages in Mexico and Right To Work laws in the United States became obstacles in ongoing talks to re-negotiate the North American Free Trade Agreement (NAFTA), and reforms there would be most welcome if they happen.

Discussions are rotating between the United States, Mexico and Canada, with hopes of reaching a new deal in the next few months. The third round of five days of talks is scheduled to start Saturday in Canada.

It’s a sad indictment of the notorious trade pact when U.S. negotiators are supposedly pushing for better pay for Mexican workers even as Canadian officials criticize U.S. Right To Work laws (which prohibit contracts requiring workers covered by a collective bargaining agreement to share in the costs of achieving and maintaining its benefits).

But the larger picture is that reform is sorely needed.

“The North American Free Trade Agreement has been an unequivocal failure, sending jobs abroad, holding down wages and devastating communities,” commented AFL-CIO president Richard Trumka. “Only the Wall Street and Washington elite can claim NAFTA is ‘yesterday’s war.’

“The reason to rewrite NAFTA is not to turn back the clock,” he continued, “but to save the jobs we have and build a fairer economy for the future.”

Labor advocates from all three countries say Mexico's low pay (the minimum wage is $4.50 a day) means Mexico offer operations there at lower costs built on workers’ backs, while also hampering Mexico's own economy. So trade officials from both the United States and Canada say they’re urging Mexico to improve pay there and strengthen labor standards overall.

When NAFTA began 23 years ago, labor standards were only “side agreements” that weren’t really enforced, and while some Mexican officials claim they might agree to better enforcement of labor laws, they don’t want wages covered.

“Higher wages in Mexico are in the interests of Mexico and the U.S.,” economist Peter Navarro, a trade adviser to President Donald Trump, told the Wall Street Journal. “Without this adjustment, Mexico will never have a robust middle class, and our middle class will wither, if not die.”

American and Canadian negotiators also seem to be seeking better Mexican labor standards such as ensuring Mexican workers are free organize unions and go on strike without losing their jobs.

“Low labor standards are an unfair advantage,” U.S. Trade Representative Robert Lighthizer conceded in testimony to the House Ways and Means Committee.

Mexican officials have argued that wages are part of the free market and they want to keep it relatively unregulated, but the failure of Mexican wages to increase substantially contributes to U.S. wages stagnating.

Meanwhile, Canadian negotiators want the United States to drop Right To Work laws, which, again, permit workers who benefit from union-negotiated wages, hours and working conditions to not pay their share of the costs of bargaining and enforcing contracts. RTW laws in dozens of states essentially rob unions of dues or fees to cover the costs of operations, taking unions’ property and diminishing their resources.

Canada wants the United States to pass a federal law stopping state governments from enacting Right To Work laws. Canada believes that such anti-union laws in the United States and Mexico create unfair competition.

Jerry Dias, president of the large Unifor union – formed in a 2013 merger between the Communications, Energy & Paperworkers Union of Canada and the Canadian Auto Workers union – said Canada’s negotiators are also pressing Mexico on its employer-controlled unions and pushing for all three countries in the agreement to offer workers a year of paid family leave, as Canada does.

“I'm very pleased with the position the Canadian government is taking on labor standards,” Dias told reporters. “Canada's got two problems: The low wage rates in Mexico and the Right-To-Work states in the United States.”

At a bargaining ssession in Mexico City earlier this month, thousands of supporters of a presidential candidate critical of NAFTA demonstrated to improve the trade deal. Former Mexico City Mayor Andres Manuel Lopez Obrador is leading in the polls and could defeat President Enrique Pena Nieto of the ruling Institutional Revolutionary Party next year. His backers expressed frustrations with Trump, with some suggesting Mexico might be better off leaving the talks rather than appeasing the Trump administration.

“We have an opportunity to fix NAFTA so it works for working people,” Trumka said. “Refusing to do so would constitute a moral and economic abdication.”