Strengthen labor, environmental rules to improve NAFTA
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President Trump recently called for the renegotiation of the North American Free Trade Agreement (NAFTA), the much maligned deal that governs 30 percent of total U.S. trade.

The White House stated that it wants “fair” deals that “crack down on those who violate trade agreements.” The precise details of Trump’s plan, however, remain unclear.

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The president is right that NAFTA can be improved, but doing so means deepening international rules and regulations, not retreating from them. 

Like all modern trade agreements, NAFTA contains much more than a list of tariff reductions. It also includes provisions relating to labor regulations, environmental protections, and migration. Renegotiation represents an opportunity to deepen regional cooperation in these key areas. 

NAFTA was once unique in its scope and ambition. It created bureaucracies dedicated to managing labor rights (NAALC) as well as trade’s environmental impact (CEC). Now, more than 20 years later, these efforts should be redoubled.

For one thing, NAFTA’s labor standards have not gone far enough. Assessments of labor regulations find little evidence that conditions have improved either in the U.S. or Mexico.

Meanwhile, the strength of organized labor, which would normally lobby for better conditions, has declined due to the threat of outsourcing. 

The record is equally mixed for the environment. Advocacy groups criticized NAFTA’s environmental regulations for failing to prevent deforestation and pollution. While USITC reports some advances, there’s a broad consensus that more remains to be done.

This isn’t a knock on NAFTA’s bureaucrats. One of the core problems is that NAFTA’s labor and environmental regulations are fundamentally undermined by other sections of the agreement, namely, the investor-state dispute system (the heavily criticized Chapter 11).

Moreover, countries were largely allowed to retain their own standards, creating inconsistencies in policies among the members.

Given NAFTA’s performance, negotiators should work toward the fuller policy harmonization and the creation of stronger enforcement tools. A recent Labor Advisory Committee to Obama agreed, stating that American trade policy should seek reforms in both labor and environmental standards.

It called for a comprehensive re-evaluation of trade agreement rules and calls for the expansion of these trade-related policies. Unfortunately, this seems doubtful under the new president.

Trump is likely to push in the opposite direction, prioritizing U.S. sovereignty over interstate cooperation. His inaugural speech called for an “American First” strategy — an approach that will do very little to advance an effective, rules-based system of regional governance.

But if Trump needs more convincing, he should consider how NAFTA affects one of his other core concerns — immigration.

Some argue that NAFTA helps drive illegal immigration precisely because rapid industrialization adversely affects working conditions and the environment in Mexico. If that’s true, Trump has all the more reason to embrace and strengthen NAFTA’s regulations.

First, better living standards would go at least some way toward reducing incentives to cross borders. Second, NAFTA already provides a system for the migration of skilled workers. This program provides a built-in opportunity for regulated immigration.

Currently, the number of people on NAFTA visas is small. In fact, they represent less than 2 percent of the total nonimmigrant visas awarded to citizens of Mexico and Canada in 2015.

There’s significant room to expand this program. Doing so would provide easier access to skilled employees who contribute positively to the U.S. economy. 

Taken together, there are clear incentives to reform regional trade laws in key areas. The problem is one of political will.

Given Trump’s attitude toward labor, the environment, and immigration, he is unlikely to bolster these regulations. That’s an economic and political mistake. Negotiators should seize the opportunity to advance reforms that improve conditions in the U.S. and in the region.  

Of course, none of this ignores the economic costs of liberalization. No one would argue that trade agreements are cost-free or that job losses are unimportant. But the best solution is not a full-scale retreat from global or regional markets.

“Fair” trade doesn’t mean constructing a protectionist wall around America. Trade can be done more responsibly within existing frameworks.

The best response is to reform NAFTA in ways that advance labor standards and environmental regulations, and that provide legal channels for the movement of workers.

For this to work, reforms shouldn’t be punitive, as Trump threatens. The solution to NAFTA’s problems is deeper regional cooperation.   

  

Jeffrey Kucik is an assistant professor in the Colin Powell School at the City College of New York. He holds a PhD in political science from Emory University and was previously a research fellow at the Niehaus Center for Globalization and Governance at Princeton University.


 

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