Renegotiation must bring reform

While President Trump’s rhetoric on trade has at times given hope to those in the labor community, NAFTA presents an opportunity for him to put his money where his mouth is, so to speak.

Workers have struggled for too long under the pressure from foreign competition, often due to low wages, low labor standards, and lackluster enforcement of labor laws even when there are laws already on the books. 

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This problem is clearly on display in Mexico, our neighbor to the south and NAFTA partner for the past two decades. In fact, low wages, low labor standards and poor enforcement in Mexico were problems when NAFTA was originally crafted and 23 years of the enhanced trading relationship between the United States, Canada, and Mexico have not improved the situation. We see that the original predictions that poor labor conditions and the lack of worker rights in Mexico would exacerbate the pressures on U.S. workers and wages have been borne out by our NAFTA experience. 

Today, corporate-controlled, sham union contracts that depress wages and protect employers continue to be the norm in Mexico. Right now, when a manufacturer opens up shop in Mexico, it is still the practice for the company to sign a labor contract with representatives of a nonindependent, corporate-captured union before any workers have been hired. These “protection contracts” set wages and often do not provide for more than the minimum treatment of workers required by the law. They protect the interests of the company by preventing workers from having any real rights to bargain for fair wages or other improvements in working conditions. Experts say these agreements — and the lack of any effective means to challenge them — are the primary drivers of low wages in manufacturing industries in Mexico. The effect is particularly stark in the auto industry, where workers make 20 percent the wages of their American counterparts.

There have been recent labor law reform efforts in Mexico, both in 2012 and an ongoing effort to reform Mexico’s labor justice system. The devil is always in the details and the rubber meets the road in implementation. Meaningful implementation of Mexico’s labor reforms have not happened yet and must be undertaken to allow real collective bargaining or wages will remain low — and the incentives for U.S. manufacturers to move production to Mexico will remain in place, as strong as they have ever been. This is the real test for the administration’s renegotiation efforts to “fix” NAFTA. Tweaking tariffs, playing with rules of origin and adjusting the rules of investment arbitration, while potentially helpful, will not do enough to change this equation.

In looking at real modernization and improvement of NAFTA, any new NAFTA will have to have strong and enforceable provisions that address Mexico’s labor conditions. The May 10th Agreement of 2007 established strong and enforceable labor and environmental obligations in our international trade agreements. Unfortunately, an international panel reviewing a U.S. labor challenge against Guatemala under the Central American Free Trade Agreement recently issued a ruling that calls into question the enforceability of certain language that is included in the May 10 standard obligations. In order for labor commitments included in a new NAFTA to be strong and enforceable, they must address and remedy the questions raised by the Guatemala labor panel’s interpretations. 

Finally, Canada has proposed labor provisions that would force the United States to scrap our own “right to work” laws in states in which they have been enacted. We don’t have the credibility to point the finger at Mexico’s low standards when we allow right-to-work laws to run amok here at home.

NAFTA already has a track record. We know where the problems are, because they’ve been there from the very beginning. A new NAFTA must be judged on its impact on bringing more and higher-paying jobs to the United States. Absent these reforms the renegotiation will have been for naught. 

Pascrell represents New Jersey’s 9th District and is ranking member of the Ways and Means Trade Subcommittee.