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The USMCA, Good, Bad, Ugly?

from the March 10, 2021 Bulletin

unions economy & economic reform foreign relations

Daniel Rangel practiced global trade and antitrust law in his native Colombia before going abroad to study international economic and legal policy in France and the US. Wanting to play an active role in the struggle for a fair and sustainable international economic order, Rangel would then find his perfect fit and become research director for Public Citizen’s Global Trade Watch.


A few months ago, Global Trade Watch decided to focus on monitoring trade with México in particular. Why?


Through the efforts of Democrats in Congress, the new NAFTAthe US-Mexico-Canada Agreement, the USMCAhints at key concepts that a pro-worker, pro-environment trade agreement should include. I’m referring, in particular, to the agreement’s enhanced labor and environmental obligations and to enforcement mechanisms that could help improve the lives of working people in all of North America.


In addition, México under Andrés Manuel López Obrador who is more pro-labor than past Mexican presidents may provide us the opportunity to test the agreement’s pro-labor terms, to help us assess whether trade policy and trade agreements can be an effective tool to further a model of economic globalization that gives most people the opportunity to live a decent life. The current model has primarily benefited transnational capital.


But what do you say to those in the US labor left who feel that the new labor provisions amount to no more than window dressing?´


The revised NAFTA’s labor terms no longer sit in a side agreement, as they did in the original 1993 deal. They sit in the core text of the agreement, subject to a special labor enforcement system that allows cases to be brought directly against specific companies, with penalties imposed on firms found in violation. The test will be in the implementation.


Do you see other positive changes?


The elimination of the old Investor-State Dispute Settlement rules rates as a significant change. This old system empowered multinational corporations and wealthy individuals to put the “right” to private profit ahead of the right of nations to protect the interests of their people. Under this system, multinationals and the rich could challenge policies enacted by the governments of NAFTA’s signatory countries. Their subsequent frivolous claims made all three nations want to get rid of NAFTA’s dispute settlement rules.


But many of the old problems with NAFTA do remain in the new agreement. And we also see some new issues of concern.

You recently wrote a report that shows how NAFTA delivered Mexican workers a double whammy. NAFTA hit them hard both in México and as US workers! How did that come about?


During the last several years, media reporting about US manufacturing job and wage losses from trade liberalization and offshoring focused on white workers and suggested that they fared the worst.


This idea quickly evolved into conventional wisdom, one of the reasons for the ascent of the far-right populist Donald Trump. But when you look at US government data more closely, you see a quite different picture. Black and Latino workers have been overrepresented in the industries most affected by import competition since NAFTA. Our report details this harsh reality and explores how underlying racist structures left Black and Latino workers less able to weather the globalization storm.


How do you think the relationship between Biden and AMLO will go in terms of trade? 


Both presidents have an interest in reshaping the bilateral relationship. USMCA’s labor and environmental obligations could be a tool to increase cooperation on issues crucial for Biden’s agenda. Or the agreement could become a point of contention, depending on whether Mexico thoroughly implements the labor and environmental terms the new agreement requires and on how the first labor cases launched by the U.S. administration get handled and decided. We have yet to see which scenario plays out.