Before a replacement deal for Nafta takes effect, Mexico needs to prove it will enforce labor reforms that it’s enacting, said AFL-CIO President Richard Trumka on Tuesday, detailing a key objection to the new U.S.-Mexico-Canada Agreement.
He said Democratic lawmakers who control the House of Representatives are in alignment with his union on this matter. He described the Mexican legislature’s push this month to enact the labor reforms as just a first step.
“What we want to see is that they have — one, the infrastructure to be able to enforce the bill, and two, the resources to do it,” Trumka said at an Economic Club of Washington event. “Because we’re talking a low-wage system that’s been in effect for a long time, with over 700,000 protectionist contracts, illegitimately negotiated and put in place, designed specifically to keep wages down in Mexico.”
Mexico would have four years to eliminate the contracts made with “sham unions” over the years, so 175,000 such contracts would have to go each year, Trumka added. He said it’s not impossible for Mexico to meet the AFL-CIO’s demand on USMCA: “Some of it can be done in the implementing language. Some of it will have to be done by reopening [the USMCA].” Trumka said the North American Free Trade Agreement’s successor won’t get ratified by Congress this year without that change, in a comment that dovetails with what House Speaker Nancy Pelosi, the California Democrat, said earlier this month.
Related: Trumka warns America’s capitalist democracy is ‘in jeopardy of imploding’
Independent analysts are doubting whether this key Trump administration deal will ever take effect.
The pact looks unlikely to win approval this year from Congress, according to Henrietta Treyz, director of economic policy research at investment adviser Veda Partners. “If it’s going to pass it all, the most likely time is lame duck 2020,” she said, referring to the period after the November 2020 elections. President Donald Trump’s administration has pressed for the deal to be passed by the summer.
A business alliance that supports the deal — the Pass USMCA Coalition — is still sounding optimistic about its chances, even as a provision on drug prices also raises concerns among some Democratic lawmakers. Drug makers have been viewed as a key USMCA winner, as the agreement currently includes protections for them from generic competition.
“There are going to be people who have issues on labor, environment, the issue that you mentioned, tariffs. There’s going to be a lot of noise on a lot of different issues,” Richard Dearborn, Pass USMCA’s executive director, told MarketWatch. But when people “look at it in total, I think they’re going to agree that it’s an excellent agreement,” he said.
The Pass USMCA Coalition’s members include the Pharmaceutical Research and Manufacturers of America, the National Association of Manufacturers, a number of agricultural trade groups, chemicals company Dow DOW, -0.43% , Schneider Electric SU, +0.08% SBGSY, -1.56% and Domino’s Pizza DPZ, +1.58% .
USMCA has a very good chance of getting Congressional approval this year, according to Dearborn. He said a key International Trade Commission report on the agreement was better than expected. He added that most members of Congress don’t have much experience with this type of pact, so they’re taking time to talk with the U.S. Trade Representative’s office.
Related: Key report on NAFTA successor finds deal would give only a slight boost to economy
“They’re still probably making up their minds,” Dearborn said. “What I think is positive is that members and their offices are requesting meeting after meeting after meeting with the folks in USTR to get more information about the deal.”
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