Whether It’s the New NAFTA or the Old NAFTA, It Serves the 1 Percent

By Leo W. Gerard, the international president of the United Steelworkers Union (USW). Produced by the Independent Media Institute

Mick Mulvaney, a millionaire who is President Trump’s acting chief of staff and director of the Office of Management and Budget, awarded himself another job last week: spokesman for labor.

Referring to the proposed new NAFTA, he told the Wall Street Journal, “We know that labor supports it.”

That, right there, is the problem with NAFTA, old and new. One percenters like Mulvaney, self-dealing corporate honchos and fancy-pants corporate lobbyists negotiated the deals. Those fat cats claimed they spoke for labor. But when they opened their mouths, only the word profit emerged.

They didn’t give a damn about jobs or wages or workers’ welfare. The ravages NAFTA inflicted on the non-rich prove that. The proposed new NAFTA is barely different. Mulvaney, though he tried to usurp labor’s voice, is far from labor’s mouthpiece. Labor speaks for itself. And it is railing against NAFTA, old and new.

The United Steelworkers (USW) union opposed NAFTA from the outset and even filed suit in an attempt to prevent it from taking effect. Like 1992 independent presidential candidate Ross Perot, the union knew NAFTA was a giant vacuum that would suck American and Canadian factories and jobs south of the Mexican border, where wages were, and remain, untenably low and environmental laws unenforced.

In the quarter-century under NAFTA, more than 1 million American jobs were lost, U.S. wages stagnated and U.S. trade deficits with Mexico increased. That 1 million is a 2013 number and does not include untold thousands of U.S. jobs lost more recently at the likes of Carrier furnace, UTC electronics and Rexnord bearings factories, all in Indiana, and General Motors’ Lordstown assembly plant in Ohio. Rexnord told its 350 Indianapolis workers they could keep their jobs if they’d work for Mexican wages—that is, for less than U.S. minimum wage.

That’s what NAFTA did: It pitted U.S. and Canadian workers earning family-supportive wages against Mexican workers subsisting on pathetic pay and mostly denied the right to form independent labor unions that would help raise those wages. At the same time, NAFTA displaced 2 million Mexican family farmers as U.S. agricultural products, sometimes subsidized, flowed tariff-free south of the border. Workers in all three countries suffered.

Corporations like Carrier and Rexnord that had perfectly profitable factories in the United States ginned up revenues by moving to Mexico and paying workers there a pittance. The minimum wage in Mexico is $5.10 a day—yes, a day—for most workers and $8.79 a day for those in factories near the U.S. border. Corporations also profited by skipping off to a country that turned a blind eye toward pollution.

The promise was that a new NAFTA would fix all that, disengaging the vacuum that pulled factories south and upgrading environmental enforcement.

Some of the new provisions seem, on the surface, like they could help. The proposed deal requires that workers earning an average of $16 an hour produce 40 percent of car and truck parts by 2023 to get tariff-free treatment. There is some evidence, however, that this requirement may already have been met. And the auto companies have refused to release data to support the claim that this would be an important provision. It may help retain jobs in higher wage countries like the United States and Canada but is unlikely to increase wages or move jobs there.

In addition, under the proposed new deal, to be tariff-free, 75 percent of vehicle components would have to be produced in one of the three countries. That’s significantly higher than the current 62.5 percent and would reduce importation of parts from countries that illegally subsidize their industries like China. But a good portion of the jobs that might result will probably be created in Mexico.


Also, while these changes may help autoworkers, they do nothing for furnace workers and those in a multitude of other industries.

More significant to preventing a new NAFTA from failing workers like the old NAFTA would be enforcement of Mexico’s new labor laws. As it is now, labor unions in Mexico frequently are fakes, created and controlled by corporations. The new laws, passed in April, empower Mexicans to form their own worker-controlled labor unionsthat could negotiate for higher wages and exercise the right to strike without workers suffering violent attacks by authorities.

Realistically, however, free unions aren’t going to pop up overnight in hundreds of thousands of Mexican workplaces. Unions must be formed, voted in and certified, and then would have to successfully negotiate labor agreements at factories where owners will dig in their heels to remain in control.

For workers to get real unions and labor agreements, the Mexican government will have to actively assure workers’ rights. But right now, Mexico has no budget for implementation and has not even started to hire the hundreds of judges and inspectors that the new law requiresor to review some 700,000 current labor agreements to determine their validity. The structure to eliminate fake unions and certify worker-controlled organizations is supposed to be phased in over four years, but corporatists and other opponents already are attempting to thwart the labor reforms with lawsuits and other actions. For Mexican workers, nothing has changed.

Based on the long history of labor suppression in Mexico, organized labor in Canada and the United States legitimately fears free unions won’t emerge in Mexico without swift and certain enforcement mechanisms written into the text of the new NAFTA.

Speaker of the House Nancy Pelosi said it best: “If you don’t have enforcement, you’re just having NAFTA again with sprinkles on top.”

Bad experience jaundiced labor toward ethereal enforcement—that is, enforcement based on nothing but sleight of hand and empty promises. In 2008, the AFL-CIO and six Guatemalan trade unions filed a formal complaint that Guatemala had failed to enforce its labor laws as required by the Central American Free Trade Agreement, known as CAFTA and similar to NAFTA.

The allegations included that Guatemala failed to register unions, neglected to implement minimum wage regulations and refused to investigate or prosecute violence against trade unionists, including murders intended to intimidate workers.

Nine years later, after inquiries, failed settlements and formation of a CAFTA arbitration panel, next to nothing was done. Particularly galling was the official U.S. position that the assault and murder of Guatemalan trade unionists was a domestic criminal matter, not an issue to be resolved by CAFTA labor law requirements.

Mechanisms embedded in trade deals to enforce labor provisions are crucial. But, ultimately, labor needs trade deals negotiated with workers at the table from the start to ensure that human well-being is the priority, not assuaging one percenter greed.

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  1. Sound of the Suburbs

    Maximising profit is all about reducing costs.

    In an open, globalised world, China was the big winner. It went from almost nothing to become a global superpower.

    It kept energy costs down with coal fired power stations; labour costs down with a low cost of living and taxes down with a minimal welfare state.

    Disposable income = wages – (taxes + the cost of living)

    The high cost of living in the West was always going to work against it in an open, globalised world.

    The developed Eastern economies are now off-shoring to cheaper places where they can make more profit.

    Richard Koo explains:

    Richard Koo found the assumption economists used when they said free trade would be beneficial, trade would be balanced. The US runs a huge trade deficit and this has done enormous damage over the years eventually bringing Trump to power.

    Higher returns on capital are affecting developed Eastern economies as they off-shore to places where they can pay lower wages for higher profits.

    China is now quite expensive as they have let their cost of living rise and the developed Eastern economies are off-shoring to places like Vietnam, Bangladesh and the Philippines causing wage stagnation.

    Richard Koo found American firms were looking to expand in Mexico, not the US, as they can pay lower wages and make more profit there due to its low cost of living.

    In an open globalised world a low cost of living is essential to make your economy competitive.

    1. Off The Street

      Economic Value Added, or EVA, was one mantra from the not-too-distant past. That value didn’t accrue to workers as they were anonymous and fungible (is that contagious?) parts of the production function.

      Perot was right about NAFTA. It was always a Three-Card-Monte game with the usual shills and thugs.

  2. cnchal

    What labor needs – trade deals negotiated with workers at the table from the start . . .

    What labor gets – trade deals negotiated with workers on the table from the start . . .

    Globalization is a disaster, no matter where one cares to look.

  3. JEHR

    As I understand the new NAFTA, its original provisions were decided by corporations, not governments, not unions and not the people. We should not be surprised that corporations will be the biggest beneficiaries.

  4. Susan the other`

    I have an excellent idea for a very long-term corporation which will hire lotsa people, pay them a living wage plus benefits; house them, feed them, provide good medical and transportation – all while cleaning up pollution and growing nutritious organic food. Ya think I could get that funded by capitalist investors? I mean, I’d have to confess that there’s no profit in it – just huge benefits to society and the environment. That prospectus won’t fly. Too bad. But at this point I’m almost enjoying watching capitalism fail so abjectly and disgracefully.

    1. mle detroit

      Would that very long term corporation be the United States of America, where everyone is born a shareholder?

          1. Susan the other`

            a new inequality might emerge – but not one based on monetary profits… maybe the new American apparatchik? I’ve been thinking the only other option to equalize things is just to do some serious helicopter money – to the poorest not the richest. When the money is spread evenly around then profit is of very little social consequence. And the money system is salvaged maybe.

  5. Robin Kash

    Unions in our area are compromised. They support the Dakota Access Pipeline. At a recent hearing for an electrical rate increase of 25%, building trades supported the utility because it provided safe jobs.
    At strikes of McDonalds for $15/hr and unionization only SEIU was on the line; no other unions showed. The local labor council leader agreed to notify members about the second strike only after learning that Bernie Sanders would be at there.
    Please don’t exaggerate the virality or independence of US unions in comparison to those in Mexico.

    1. Barbara White Stack

      In Mexico, most labor “agreements” are written by corporate executives with the help of their appointed labor representative — not a person elected by the workers. And workers don’t get to vote on whether to accept or reject these.
      In the U.S., labor agreements are written by elected representatives of workers and corporate officials, and workers get to vote on whether to approve them.
      These two things are NOT the same.

  6. Robin Kash

    This article focuses on the concerns of labor. Big ag fully supports the new NAFTA. In that cintest, big ag has the advantage. Nevermind that, for example, subsidized corn exports to Mexico and Central America have driven myriad families off the land, fostered violence, and created the waves of migrants that riles the Trump administration.

  7. rd

    My philosophy on global trade has been very simple over the years. Have lower tariffs the closer a country is to the US. Instead, focus on things like pollution controls since their air and water is often shared with us. A healthy Mexico and Central America economy means fewer illegal immigrants into the US.

    The part that always baffled me about our trade policies was giving China free rein. Three times as many people, very inexpensive labor, no pollution controls, and a global power competitor with significant national security concerns for the US. Any supply chain that relies on China or Far East countries could be cut off by China is a heartbeat in a global conflict.

    While the Trump trade war with China has been weird and with unclear objectives, I get why something needs to be done because it should never have been allowed to get to this point to begin with. Execution has been abysmal though and farmers have been paying a price. At this point, the tariffs should be more focused on things where there are actually American, Canadian, or Mexican companies that produce the things so that those companies can pick up the slack. Instead, we are just going to see price rises and new capacity will take a while to build anywhere else.

    Overseas, Taiwan, Japan and South Korea have been strategic partners since WW II and so should have some preferred status. We spent 15 years trying to destroy Vietnam on poor strategic rationale, so I don’t mind giving them a preferred status these days. Every body else needs to earn preferred status with specific policies.

    Oh, and the Trump Administration trying to start a trade war with Canada was bizarre to put it mildly. Were we actually just about ready to invade or some other action over a milk glut?

  8. Janet

    I also cannot wait for capitalism to fade and die. But in a larger sense, none of this probably matters since all economies have 10 years to save the entire planet and most of its species (including the human species) before it all just becomes uninhabitable and cannot sustain life — much less any economic systems.

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