Q&A: Levin on labor, TPP, NAFTA

Rep. Sander Levin (D-MI) was in Mexico City over the weekend for the seventh round of NAFTA talks, and he didn't hear what he wanted to hear from the U.S. negotiators there, as Inside U.S. Trade reported.

“The negotiators who were here on the labor chapter left before we even arrived,” Levin told reporters. “So we had a briefing by phone and the briefing by USTR labor people was totally inadequate. It did not touch the key issues involved in this central point and that is Mexico is a democracy with an authoritarian-type labor structure.”

Inside U.S. Trade's Brett Fortnam sat down with Levin, a House Ways & Means Committee member and a former chairman of the trade subcommittee, after that briefing for a wide-ranging discussion. What follows is a lightly edited transcript.

Q: You mentioned this morning the U.S. approach so far has not been what you would have hoped. The understanding is they’ve tabled the TPP text on labor, and I’ve heard they’re developing a new text to be tabled at the next round that at least addresses the issues that led to the U.S. losing the Guatemala case. How would a labor text address some of the key issues for you -- low Mexican wages, the collective bargaining agreements and promise contracts?

A: USTR needs to put forth new text and it has to address the basic issues of Mexico with an industrial policy that was built for keeping wages drastically low and making sure workers have no rights whatsoever. Mexico has a unique structure for democracy.

They have an authoritarian-type structure where workers have no voice and where the organization that says it represents them doesn’t negotiate by talking with the workers, and the workers don’t have a chance to approve or disapprove what the organization signs with the employer. There are thousands and thousands of these and most of them are with an organization, CTM [a confederation of labor unions], which is connected to the government. That’s an anti-democratic structure that has resulted in wages like those of the two workers [I] met yesterday. One of them makes 75 cents an hour – this is in an auto parts company. The other makes $1.15 take-home pay.

Q: Is this a matter you think can be appropriately addressed in a labor chapter or does Mexico have to undertake certain reforms before there can be a free trade agreement with the U.S.?

A: They have to make changes before. It has to be laid out in a labor chapter, but they have to carry out dramatic changes before there would be presentation of a renegotiated NAFTA. That’s been our position all along with these trade agreements. Not only in words, but also in practice.

Q: Even if Mexican law reflects those reforms, there’s an issue with enforcement. Are you confident that Mexico would live up to those laws?

A: It’s not just enforcement. It’s changes in the laws and changes in the practices. There has to be a clear path for the elimination of protection agreements. There has to be movement on that path right away.

Q: Are you expecting USTR to address your issues?

A: [U.S. trade representative] Bob Lighthizer talked a lot [about it]. I have been told there’s agreement that this has to be addressed, but the proof will be in the pudding.

Q: You sound a bit skeptical.

A: I just want to see it in real life.

Q: In terms of the Guatemala labor case –

A: Let me say a word about that. It’s a mistake to spend a lot of time on that. It was an erroneous decision. They interpreted language that I wrote incorrectly. I wrote some of the language. And so, when NAFTA’s renegotiated, there will have to be some review of that language, but that isn’t the basic issue. That isn’t the basic issue. It was erroneous, but that wasn’t the basic issue. The decision was totally wrong.

Q: And how will NAFTA address that?

A: We’ll have to work with the language. I don’t think – there has to be some relationship of practices to trade because it’s a trade agreement. The exact language we’ll look at. It’s not the major issue.

Q: I’ve heard there is some division on how that will be addressed and whether the term “in a manner affecting trade” will be broadly defined or narrowly defined.

A: That decision is wrong in all respects, including its interpretation of “affecting trade” and the other term. It’s just wrong. So we’ll have to look at the language so no one else makes the same mistake. I read it and I couldn’t believe the decision. It’s not what was intended when we wrote the language.

Q: Mexico and Canada are negotiating on ISDS bilaterally. How do you view that development?

A: ISDS is an issue and it was in TPP and I said this to the business community here twice. We proposed specific reforms to ISDS. Unfortunately, the Obama administration only adopted a few of them. I think we need to look at ISDS, but in my judgment, it isn’t the major reason why companies have moved to Mexico. It isn’t that Mexico is cracking down on investment. What it’s doing is it’s incentivizing by proposing major economic benefits – like subsidies. So I think it’s an issue that needs to be addressed, but it doesn’t get to the heart of the issue with the movement of production [and] jobs to Mexico, taking advantage of the exploitation of workers.

Q: Are you in favor of not having ISDS or are you pushing those reforms with the Trump administration?

A: We’ve had some discussions, but our major focus has been addressing Mexico’s industrial policy based on the lowest common denominator in terms of working conditions. And so, I think as the ISDS discussion continues, I hope the administration will consult us, but that hasn’t been our major focus.

Q: Are you confident Mexico will address its industrial policy and get rid of the promise contracts?

A: If they don’t, I think as evidenced by the letter 183 Democrats signed, there will not be any Democratic support. There will be virtually no Democratic support. I prefer there be a renegotiated NAFTA, but it has to address this issue. Otherwise I think the vast majority of Democrats will not support it. And the more the people, the public, in the U.S. hear of these problematic issues, the more unlikely it is that there will be Democratic support as well as public support. It’s just so clear when you say to industry, ‘you can pay one-seventh or one-eighth of the wages you now pay where you are. Come to that very low wage place.’ The temptation becomes irresistible. This is part of the more basic issue of as trade expands, it needs to be shaped so that its benefits are widely shared. So this is part of the larger issue some of us have been working on for a long time. This battle has been going on for a long time.

Q: It also sounds as if you are dissatisfied with how Canada has relayed its ideas for a progressive trade agenda so far.

A: As I said to the Canadians, they need to emphasize at this point the third leg of their progressive agenda and that is labor conditions and standards in Mexico because it affects jobs and wages in Canada. When we were in Ottawa, there was a GM strike and the GM strike was over the shipping of production of one of the SUVs to Mexico. So Canada needs to really sharpen its focus and I’ve discussed that with the Canadians.

Q: Is this administration approaching the negotiations appropriately? Are your priorities getting a fair shake?

A: The administration has to make sure [it is] getting a fair shake, but a major shake, or else there won’t be Democratic support, or else there won’t be public support. And it would also be contrary to the language of the president. On the campaign, he talked about sweatshops in Mexico. The problem is that most of them are modern facilities with 19th-century wages.

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INSIDE TRADE: Q&A: Levin on labor, TPP, NAFTA