U.S.-Mexico-Canada Free Trade Deal Could Unravel

Leaders of Mexico, the USA and Canada sign the USMCA deal in principle. From left: Mexico's then President Enrique Pena Nieto, U.S. President Donald Trump, Canada's Prime Minister Justin Trudeau, Nov. 30, 2018, Buenos Aires, Argentina (Photo by Steve Mnuchin)


WASHINGTON, DC, September 16, 2019 (ENS) – Before Congress took its six-week August recess, the U.S. Chamber of Commerce sent a letter to every U.S. senator and representative urging swift approval of the U.S.-Mexico-Canada Agreement, USMCA, this year. The letter was signed by 600 national, state and local trade groups, but labor and environmental interests have major problems with the deal.

Thomas Donohue, CEO of the U.S. Chamber of Commerce, says it was easy to convince more than 600 organizations to sign on. “That’s because support for USMCA across the business community is wide and deep. From automotive and aerospace to tech and tourism, companies in all 50 states and every industry agree on one thing: Congress must approve USMCA this fall,” Donohue wrote on the Chamber’s website.

Donohue said that getting lawmakers to approve the USMCA, which covers almost $1.2 trillion in trade, is “critical to our broader economy and to the long-term prosperity of our country.”

Leaders of Mexico, the USA and Canada sign the USMCA deal in principle. From left: Mexico’s then President Enrique Pena Nieto, U.S. President Donald Trump, Canada’s Prime Minister Justin Trudeau, Nov. 30, 2018, Buenos Aires, Argentina (Photo by Steve Mnuchin)

He said that businesses large and small “stand only to gain” from the deal, which was signed by the three countries on November 30, 2018, at the G-20 Leaders’ Summit in Buenos Aires, Argentina.

Now, the trade agreement must be ratified by lawmakers in all three countries. Mexican lawmakers have already ratified it. Canadian lawmakers started the ratification process in May, but it was not completed when Parliament was dissolved on September 11 as Canada prepares for a federal election in October.

Speaking for U.S. business interests, Donohue said the agreement is good for business. “It will ensure that U.S. manufacturers, farmers, and service providers can continue to do business with our North American neighbors, guaranteeing that virtually all U.S. exports will enter these markets tariff-free,” he said, adding that the USMCA will “grow the digital economy, protect intellectual property, and strengthen American agriculture.”

The letter sent to members of Congress states, “More than 12 million American jobs depend on trade with Canada and Mexico. U.S. manufacturers export more made-in-America manufactured goods to our North American neighbors than they do to the next 11 largest export markets combined, and the two countries account for nearly one-third of U.S. agricultural exports. They are also the top two export destinations for U.S. small and medium-size businesses, more than 120,000 of which sell their goods and services to Canada and Mexico.”

To persuade members of Congress, the Chamber and its partners launched a digital campaign to mobilize supporters of the deal.

President Donald Trump, Vice President Mike Pence, Adviser to the President Ivanka Trump, and Senate Finance Committee Chairman Chuck Grassley all threw their weight behind this effort by using the hashtag #USMCAnow, which attracted 250 million people on social media, Donohue claims.

Senator Grassley, an Iowa Republican, warned July 30, “Trying to reopen the whole of USMCA could risk unraveling the deal altogether, which would benefit nobody. I, therefore, urge House Democrats and Ambassador Lighthizer to focus on their specific concerns and to propose solutions in short order, so that we can pass USMCA. Doing so will provide much-needed certainty to American workers, businesses, farmers, ranchers and families, and will enhance the credibility of our ambitious global trade agenda.”

Until the USMCA is either approved or rejected by Congress, the previous North American Free Trade Agreement, NAFTA, remains in effect. But NAFTA is out of date. For instance, when NAFTA was negotiated a quarter-century ago, there was no e-commerce, and the agreement did not address this sector, which is covered in the USMCA.

USMCA Criticized for Lack of Environmental Protection

Nevertheless, campaign groups from Greenpeace to the Sierra Club have criticized the new U.S.-Mexican-Canadian trade deal for its weak provisions on environmental issues.

Not only does the new agreement not mention climate change, but it also extends the group’s contribution to the climate crisis, the Sierra Club said in a statement.

Radiant Refinery, Rundle Heights, Alberta, Canada, Aug. 25, 2017 (Photo by Kurt Bauschardt)

When the draft text was released on October 1, 2018, Sierra Club Executive Director Michael Brune said, “Trump’s version of NAFTA would encourage further outsourcing of pollution and jobs, offer special handouts to corporate polluters like Chevron and ExxonMobil, and cement Trump’s polluting legacy for years after he has left office.”

“The proposal not only fails to mention climate change – it would prolong NAFTA’s contribution to the climate crisis. The proposal as a whole falls far short of the minimum changes that are essential to halt NAFTA’s threats to our air, water, and climate,” said Brune. “If this proposal – hastily sealed to score political points – remains as is, the Sierra Club will vigorously oppose it, while continuing to fight for a genuine replacement of NAFTA that puts people and the planet first.”

Canada’s Prime Minister Justin Trudeau went into the USMCA talks saying “…we’re going to have chapters on the environment. We’re going to have chapters on Indigenous rights. We’re going to have chapters on gender,” Greenpeace Canada spokesman Keith Stewart told the Canadian Press. “All of that has disappeared and the focus has been on trying to protect and preserve the economic status quo.”

The USMCA does have a chapter on the environment, but critics such as the Council of Canadians call it weak and unenforceable. It mentions pollution, marine traffic, endangered animals and ozone, but ignores the climate. “The deal doesn’t even mention climate change,” Stewart said.

When the U.S. House Ways and Means Committee considered the USMCA in April, Chairman Richard Neal, a Massachusetts Democrat, wrote in a letter to U.S. Trade Representative Robert Lighthizer, “We have serious concerns about ensuring effective implementation and enforceability of the environmental provisions. For too long, environmental-related trade enforcement needs have received less attention than other trade barrier cases.”

The letter was signed by 24 other House Democratic lawmakers.

The Trump administration on September 11 sent House Democrats its latest proposals for addressing legislators’ concerns about the new U.S.-Mexico-Canada trade deal. Democrats, who control the House, said they would review the administration’s response to their written recommendations submitted in July on how to strengthen the proposed trade pact before deciding on next steps.

U.S. Organized Labor Opposes the USMCA as Written

In a statement September 12, the AFL-CIO Executive Council said, “…we will oppose any agreement that undermines the interests of working people. In light of the administration’s plan to submit the new NAFTA for a vote this fall, we reiterate that if changes are not made, the labor movement will do everything in our power to defeat it.”

In a March statement, the AFL-CIO Executive Council laid out a list of concerns that have been repeated in public statements and in private meetings with the Office of the U.S. Trade Representative.

Ford workers at the UAW-Ford Technical Training Center, May 22, 2019, Lincoln Park, Michigan (Photo courtesy Ford Motor Company)

The list begins with the need to strengthen NAFTA’s labor standards and include new tools to facilitate their swift and effective enforcement. “The agreement’s labor standards should be based explicitly on the relevant International Labor Organization Conventions, which include the freedom of association, collective bargaining, equal renumeration, prohibitions on child labor, forced labor and discrimination, rather than vague references to the principles that underlie those rights,” the Executive Council states.

The Council wants changes to the text that include the elimination of loopholes, which provide that a party must demonstrate a violation was committed through a “sustained or recurring course of action or inaction” and “in a manner affecting trade or investment between the parties.”

“This requirement has proved insurmountable in the only case ever to be arbitrated under the labor chapter of a U.S. free trade agreement, and it must be removed,” the Council demanded.

The Executive Council said the provisions on forced labor, discrimination and migrant workers are “intentionally weak and must be strengthened.”

Specific language also should be added to ensure nondiscriminatory consumer information laws, such as Country of Origin Labeling, are not considered trade violations, the Executive Council said.

The agreement itself must contain effective enforcement tools, including the ability of the United States to deny entry of any goods produced in violation of the new labor standards.

For a precedent, the Executive Council points to the Peru Free Trade Agreement, which permits the United States to block the importation of illegally harvested lumber.

“This would match the relief afforded to businesses that find their intellectual property rights violated. Without this enforcement tool, companies will continue to exploit workers and treat any lesser penalties, such as fines or the loss of tariff-free entry, as a cost of doing business,” the Council said.

The proposed labor chapter includes provisions that the Council says, “…require Mexico to end corporatist unions and their protection contracts, recognize independent unions, and establish independent labor courts.”

“We have made it clear that Mexico must demonstrate both the political will and the capacity to implement these reforms before it enjoys any benefits under the deal. Without these changes,” said the Executive Council, “the new NAFTA, like its predecessor, will continue to give global firms free rein to exploit workers in a race to the bottom.”

To see the full text of the USMCA, click here.

Copyright Environment News Service (ENS) 2019. All rights reserved.


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