‘New NAFTA’ may be same old story

Bill Knight column for Oct. 15, 16 or 17, 2018

If you took a 24-year-old, leaking trash can, hosed it out and called it your new “garbage receptacle,” it would still hold rubbish. Badly.

That reflects some of the skepticism about the United States-Mexico-Canada Agreement (USMCA) President Trump intends to get signed by the three heads of state within weeks.

Trump’s re-branding of the North American Free Trade Agreement (NAFTA) does have a few potential positives, but the renegotiated pact has profound problems.

The AFL-CIO issued a statement saying, “There is headway on certain issues, such as improved labor rules and a reduction of special privileges for global companies. [But] the USMCA goes in the wrong direction on other issues such as affordable medicine, the privacy of personal data, and financial practices to rein in Wall Street. Working families deserve a better, finalized agreement that creates high-wage jobs, protects our environment and safeguards our democracy.”

Days before Trump’s announcement, the administration’s own Labor Advisory Committee, chaired by Steelworkers president Leo Gerard, issued an 88-page analysis of USMCA, noting its many holes.

“The effort to achieve the goal of a fair-trade agreement that protects workers in the United States, Canada and Mexico is far from over,” Gerard said.

Indeed, settled too late for Congress to take action on it, the USMCA was rushed through by Trump so Mexico’s lame-duck, conservative president Enrique Pena Nieto could sign it before the Dec. 1 inauguration of the more progressive Andres Manuel Lopez Obrador.

“More work remains to be done,” said AFL-CIO trade policy specialist Celeste Drake. “Unless there are strong labor and environmental standards that are subject to swift and certain enforcement, U.S. firms will continue to outsource jobs.”

The midterm elections could be a factor, too.

“The heavy lift is going to be getting a trade deal through the next Congress in 2019 as well as ratification by Mexico’s new Congress and in Canada during a federal election year,” trade attorney Dan Ujczo of the Dickinson Wright told the Washington Post.

Trump inflated the USMCA’s significance as a ground-breaking deal although it’s a slight change to an existing agreement. That’s Trump’s pattern: He blasts something (North Korea, NATO, the U.S. economy), threatens people and makes demands, gets minor changes, and triumphantly announces “the best ever.”

NAFTA was never good; Trump’s accurate about that. Pushed by George H.W. Bush and Bill Clinton, it was a bill of goods sold to a compliant, bipartisan Congress and took effect in 1994. The Economic Policy Institute said it resulted in the loss of more than 680,000 U.S. jobs, so it was assumed a wholesale revision was in order. Instead, here are some of the pluses and minuses of the proposed USMCA.

Possible positives are: The corporate-controlled Investor State Dispute System was eliminated; U.S. agriculture could get more markets; autos must be built with a minimum of 75 percent North American parts (up from 62.5 percent) and come from factories where 40-45 percent of workers are paid at least $16 an hour

the right to unionize and right to strike are enshrined in the document; pharmaceutical corporations would get 10 years of marketing exclusivity for drugs before generic equivalents can enter the market and patent monopolies extended beyond 20 years; there are no auto tariffs; and safety standards on trucks coming from Mexico are improved.

However, there are negatives: Secret panels remain for Big Oil and government claims; dairy farmers’ access to Canada’ market increases just 3.5 percent; the “minimum wage” for autoworkers is still a fraction of what U.S. autoworkers earn – and there’s no adjustment for inflation; enforcing labor rights is unclear at best; prescription medicine prices would go up; steel tariffs remain in force; and it would waive “Buy American” protections for U.S. procurement.

“The outcome could have been worse,” wrote Chicago Tribune columnist Steve Chapman. But “most of what the administration got would impede commerce, restrict businesses and harm consumers.”

On Capitol Hill, the Ranking Member of the Senate Finance Committee agreed.

“The crucial test for a new NAFTA, or any new trade agreement, is whether it is enforceable, particularly with respect to promises to protect worker rights and the environment,” said U.S. Sen. Ron Wyden (D-Ore.). “Americans are sick of hearing speeches about the benefits of new trade agreements when the agreements in place aren't even enforced and their opportunities don't materialize.”