Renegotiating NAFTA

A Progressive Agenda for Renegotiating NAFTA

Here's what President-elect Drumpf should do to make trade deals better for US workers.

By Timothy A. Wise

During the campaign, President-elect Donald Drumpf pledged to renegotiate the North American Free Trade Agreement (NAFTA) with Mexico and Canada, or withdraw the United States from the pact.

Although no one at Drumpf Tower so far has asked me for advice (and I’m not waiting by my phone for a call), I know a little bit about this subject: Eight years ago I helped convene a panel of experts to make recommendations to another president who promised to rewrite NAFTA.

That would have been Barack Obama, who, as a candidate in 2008, was clear on the issue: “NAFTA’s shortcomings were evident when signed and we must now amend the agreement to fix them.”

Alas, as president, he did no such thing, which is of course one of the reasons we find ourselves with a right-wing president who rode popular dissatisfaction with globalization into the White House.

A progressive agenda for renegotiating NAFTA

The president-elect seems serious about renegotiating the agreement, so it is worth revisiting some of the concrete reforms our Task Force on North American Trade Policy recommended in our policy report, “The Future of North American Trade Policy: Lessons from NAFTA.” Many accuse progressives of having lots of criticisms but no concrete proposals. Here is a set of concrete proposals to reform NAFTA.

President-elect Drumpf’s agenda for renegotiating NAFTA looks nothing like our panel’s. And if he gets his way, the results will be a disaster for the working class Americans who gave him their votes.

Our starting point was entirely different from his as well. Rather than treating Mexico as the enemy in a deal that simply sent US jobs south, we followed the more accurate critique Obama made as a candidate for the White House: “While NAFTA gave broad rights to investors, it paid only lip service to the rights of labor and the importance of environmental protection.”

Our experts, from the United States, Canada and Mexico, identified ways in which different parts of the agreement favored multinational firms at the expense of labor and the environment. The panel recommended a wholesale revision of the investment chapter of the deal, which was the first to allow corporations to sue governments over measures that impeded their profits. In other words, long before Sen. Elizabeth Warren (D-MA) campaigned against the so-called Investor State Dispute Settlement system as a rigged deal that favored big money over workers, we recommended the special courts be scrapped.

That objectionable provision is now part of the template for US trade agreements, including the seemingly defunct Trans-Pacific Partnership. It is very unlikely President-elect Drumpf is prepared to remove that provision from NAFTA, though Sen. Sherrod Brown (D-OH) has called on him to do just that.

Nor is he proposing the kind of coordinated set of industrial policies on the part of the NAFTA countries to reverse the collective loss — by the US, Canada and Mexico combined — of 25 percent of their manufacturing base to China and other Asian countries. That is what our task force called for. Such policies could include currency measures to ensure fair pricing, identification of potential high-wage industries in which to invest, strategic government incentives and investment in the early stages of those industries, and some limited protection from import competition.

You don’t hear Drumpf talking about any such thing — just punitive tariffs, walls and declarations of China as a currency manipulator, which does nothing for jobs going to Mexico and fails to acknowledge our own overvaluation of our currency.

Drumpf no defender of labor 

The yawning gap between rhetoric and reality in Drumpf’s trade proposals may be largest on labor provisions. Any sane review of NAFTA has to recognize that industries fled to Mexico in part because of that country’s low wages and its hostile atmosphere to union organizing. As long as Mexicans’ wages are one-tenth of US manufacturing wages, multinational firms will continue moving south of the border, and the race to the bottom will continue.

That makes the starting point of any NAFTA rewrite worker protections, on all sides of all borders. Those would include protections for the right to organize unions as well as a guarantee of a living wage, decent benefits and safe working conditions. It would involve enforceable sanctions against firms — US and Mexican — that do not comply.

This would stop the race to the bottom, ensuring the agreement instead results in “harmonization upward,” to decrease wage competition by raising all trading partners toward the wage levels and benefits US workers fought for most of the 20th century to win. These were battles waged by unions.

Have you heard anything pro-union from candidate Drumpf? Of course not. He was infamous for his exploitation of workers at his own projects, especially immigrants.

Our expert panel also took on the third-rail issue of migration, recognizing that US immigration policies have abetted one of the most wage-depressing aspects of US-style globalization: An underclass of workers vulnerable to massive discrimination.

Undocumented workers have few rights in the workplace. Rather than deport them, as Drumpf is proposing to do, give them legal status so they are free to join unions and demand their rights. The AFL-CIO has advocated just such policies for years, precisely to prevent multinational firms from callously exploiting workers on both sides of the US-Mexico border.

Our expert panel got one thing very wrong. We thought the Democrats were serious about renegotiating NAFTA. If Obama, when he had a strong majority in Congress, had made good on his promise we might not be where we are today.

As Jared Bernstein, a former chief economist to Vice President Biden, and others have pointed out, Drumpf’s nationalist agenda fails to address the causes of working-class distress, or even its most far-reaching symptoms. Higher tariffs on manufactured goods from Mexico will only come with some concession at the bargaining table. The US trade deficit will come down only with strategic investments in key manufacturing industries and reductions in our overvalued currency.

President-elect Drumpf must not be allowed to renegotiate NAFTA by scapegoating Mexico and imposing a nationalist version of an anti-worker, pro-corporation trade deal.