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Trump’s new trade deal gets a few things right while falling short

October 1, 2018

Donald Trump on Monday announced a new NAFTA draft treaty, renamed for showtime as the U.S.-Mexico-Canada Agreement.

Canada, ignoring Trump’s insults and gibes, threats and posturing, joined Mexico in making a deal. The new pact contains some much needed reforms — and falls glaringly short in critical areas. Auto workers and truckers get some relief. Big oil and Big Pharma get paid off. The prices of prescription drugs will go up in Canada and Mexico.

For Trump, the agreement is about politics. He set the arbitrary deadline for signatures so that he might have a revised draft agreement to trumpet during the run-up to the November elections. For working people, particularly manufacturing workers and farmers, the show is less important than the substance. And the substance is a very mixed bag.

Trump is to be applauded for forcing the renegotiation, despite the hand-wringing of the corporate trade advocates in both parties. In many ways, he had little choice.

Working people had paid a huge price under the original NAFTA and demanded change. Labor unions built a large coalition against NAFTA and future agreements like it, including the Trans Pacific Partnership.

Sen. Elizabeth Warren led the assault on the outrageous private legal system that NAFTA and other agreements set up for corporations, giving them the right to sue the U.S. before private tribunals with corporate lawyers acting as judges.  Sen. Sherrod Brown and Rep. Rosa DeLauro built the coalition that made it clear that the TPP would never gain approval from the Congress.

By the time of the 2016 election, every major candidate — Hillary Clinton, Bernie Sanders and Donald Trump — announced their opposition to the TPP and criticized NAFTA. Trump was savvy enough to make trade and NAFTA a centerpiece of his economic argument in the campaign.

Trump’s deal makes some significant reforms that should be applauded. It reins in the outrageous Investor State Dispute Settlement, curbing the ability of corporations to use private tribunals to collect millions and attack environmental and health policies. It raises safety standards on trucks coming from Mexico, a significant concern for citizens across the country.

It increases the North American (read Mexico, Canada and U.S.) domestic content for tariff free automobiles and auto parts from 62.5 percent to 75 percent, which should help retain some jobs from being shipped to low wage producers across the seas.

It contains a truly innovative provision requiring that 30 percent of work done on automobiles be carried out by workers making at least $16 per hour. That helps protect workers in the U.S. and Canada, since it is three times the prevailing wage in Mexico.

It is, however, truly deplorable that the floor on autoworkers wages is $16 an hour, in contrast with the wages that they used to get before NAFTA.

But there is much in Trump’s new trade deal that reflects the corrupt corporate dealings of the old NAFTA. Big oil won the ability to sustain the private tribunals for its operations in Mexico. Big Pharma won increased monopoly protections. The price of drugs will go up Canada and Mexico and stay up in the U.S. as a result of this agreement.

More work remains to be done. As Lori Wallach of Citizen Trade Watch notes, “Unless there are strong labor and environmental standards that are subject to swift and certain enforcement, U.S. firms will continue to outsource jobs to pay Mexican workers poverty wages, dump toxins and bring their products back here for sale.”

Worse, Trump’s agreement waives buy American protections for U.S. procurement, leading to the continued outsourcing of U.S. jobs created from taxpayer’s money.

Canada and Mexico are our largest trading partners, with $1.2 trillion in trade between the three nations. Canada is the largest recipient of U.S. exports, our second largest trading partner and our second largest investor. Canada is a NATO ally whose soldiers have fought and died at our side.

We also have a huge stake in Mexico’s economic welfare. Part of the horrors of the first NAFTA was that it disrupted peasant agriculture in Mexico, forcing many workers to head north to care for their families. The resulting tensions from immigration — legal and illegal — have had a poisonous effect in our politics, with Trump and others profiting from an ugly, racialized posturing.

Getting this right is important.

Sadly, the deal, while an improvement over the old one, doesn’t get it right. Labor rights and environmental protections still lack serious enforcement. Mexico’s ability to pursue a clear economic course is circumscribed by protections of Big Oil and Big Pharma, among others.

Trump deserves credit for renegotiating NAFTA, something that his Democratic and Republican predecessors failed to do. Trump will no doubt use the new agreement as a centerpiece of his claim of “Promises made, promises kept.” A more accurate description would be “Promises made, performance lacking.”

 

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