Coronavirus flattens workers and business as government expands
New trade agreement is a victory for American workers and the economy
Today will go down as an important event for workers and the economy as the United States Mexico Canada Agreement, or USMCA, will replace the decades old North American Free Trade Agreement, or NAFTA.
President Trump was determined to replace NAFTA from the day he took office. It reflected the old way of trade deals in which our partners shirked labor protections while American companies shipped operations and jobs to cheaper foreign locations. Our factories shuttered, our manufacturing shrank, and we grew more dependent on foreign suppliers.
Before Trump, trade policy ceded our manufacturing strength to foreign nations. In the early days of the coronavirus outbreak, we had to turn to China for medical supplies to contain the pandemic that it unleashed on the world. The USMCA ushers in a new era for trade policy. Between labor protections and support for the American automobile industry, it places our manufacturers at the center of a blue collar comeback.
One key provision of the USMCA requires 40 percent to 45 percent of automobile content be made by North American workers earning, on average, at least $16 an hour, which is a rate that is multiple times the typical manufacturing wage in Mexico. Another critical rule requires at least 75 percent of vehicle parts originate in the continent, which is a threshold significantly higher than the mandate in NAFTA.
The Office of the United States Trade Representative expects the USMCA to create as many as 76,000 new automotive jobs over the next five years. Altogether, the nonpartisan International Trade Commission estimates the agreement is expected to create as many as 500,000 new American jobs and add as much as $235 billion to the domestic economy.
The USMCA breaks additional ground with what the director general of the International Labor Organization has called the most comprehensive labor chapter ever included in a trade agreement. Under NAFTA, Mexican companies undercut American prices in part because they were not held to the same labor standards we have for American workers. The USMCA changes this with high standards that are now fully enforceable. It puts American workers on a level playing field with our neighbors.
All three signatory countries have agreed to maintain the fundamental labor rights recognized by the International Labor Organization and to enforce their own labor laws. We have already seen these promises turn into action last year by Mexico, which has enacted the most sweeping changes to its national labor laws in more than a century.
The changes prohibit those sham labor contracts that have long boosted Mexican companies at the expense of American manufacturers. The new provisions protect collective bargaining, secret ballot elections of union leaders, and the right to challenge union leaders. The United States can challenge those labor practices in specific Mexican factories through an expedited process when necessary under the agreement.
The Labor Department is working closely with Mexico to make sure these protections are faithfully implemented. The USMCA is certainly a historic bipartisan achievement by Trump, whose determination produced a trade deal supported by both labor unions and business along with Democrats and Republicans. Before the coronavirus outbreak, seven million new jobs had been created under Trump. The USMCA is one critical part of how the administration will rebuild that economy stronger than ever.
Eugene Scalia is the secretary of the United States Department of Labor.