Keeping promise of May 10 key to new NAFTA

May 9, 2017 Issues: Trade

If President Trump wants a coherent path to fixing the North American Free Trade Agreement (NAFTA), he should start with the May 10 Agreement written by House Democrats and agreed to by President George W. Bush 10 years ago.

For the first time, U.S. trade agreements were changed to include the five basic internationally recognized labor principles as stated in the Declaration of the International Labor Organization. At the core of these principles is the right of workers to associate and bargain collectively. Importantly, these new provisions would be enforceable like every other commercial provision in the agreements.

Without a real focus on labor standards, any renegotiation of NAFTA will fail to produce a better deal for the American worker.
Unfortunately, when asked about their commitment to May 10, Trump administration officials raise the specter of “sovereignty” and how it might be difficult to get another country to change its labor laws.

These comments are déjà vu to a time — like the early 1990s, when NAFTA was negotiated — when Republicans were calling labor standards “social issues” and denying their very economic nature. Republicans never raise this concern when our trade agreements require countries to change their intellectual property rights, food safety or government procurement policies.

The Trump administration would do well to remember that NAFTA was opposed by Democrats because of its lack of labor and environmental standards. We were right.

There is no denying that the job loss caused by NAFTA is in large measure because of the huge wage differential between our two countries.

In the automotive sector, Mexican workers are paid 19 percent as much as their unionized U.S. counterparts, and auto parts workers earn even less: about $2.40 an hour.

Automation is not the driving force; it is depressed wages and working conditions. Auto sector employment in Mexico rose by 45 percent between 2007 and 2015, adding more than 200,000 hourly jobs, while the U.S. auto industry dropped 90,000 hourly jobs during the same period.

The number of auto jobs in the two countries is now converging: 620,000 in Mexico and 715,000 in the U.S. And with Mexico’s auto output projected to double to more than 5 million vehicles annually between 2010 and 2020, more U.S. jobs are at risk.

To change this imbalance, May 10 must be a reality on the ground in Mexico. That means more than ensuring the language is in the newly renegotiated NAFTA.

We have seen the shortcomings of that approach with the Colombia Free Trade Agreement, where labor conditions remain horrendous, and in the backsliding by Peru in adhering to the environmental provisions in the Peru agreement.

We must insist that Mexico break down its current labor regime immediately and rebuild it. This should start now and finish before the re-negotiation concludes and Congress considers the legislation implementing the agreement.

The Mexican system is built around a government policy of suppressing workers’ rights to encourage investment.

The government, the union which is an arm of the majority political party, and often the employer are in collusion so there is often a sham protection contract in place before a single worker is hired. And then the government and employers dominate the labor board structure, which oversees and enforces labor laws.

It’s a cycle that only serves to keep workers down, and it is working. Mexican manufacturing productivity increased 80 percent while real compensation — wages and benefits — slid 20 percent between 1994 and 2011.

The best way to link productivity to wages is to ensure workers have their rights in the workplace to bargain for better wages and working conditions. While the wage differential between U.S. and Mexican workers will narrow over time, the impact will be felt immediately in the equation companies consider in moving to Mexico.

May 10 was a groundbreaking achievement. It changed the strangle-hold that outdated economic theory and free trade ideologues had over U.S. trade policy. It said that we were going to engage with globalization by insisting that it would not be a race to the bottom.

For any NAFTA re-negotiation to truly benefit the American worker, it must elevate the promise of May 10, not turn its back on it.

Levin represents Michigan’s 9th District. He is a member of the Ways and Means Committee.

To read the op-ed as originally printed, click here.