President Trump’s United States-Mexico-Canada Agreement on trade is one thing the White House would rather not see stuck at the southern border, yet it’s been trapped there for months. Ratification of the deal to replace the 1993 North American Free Trade Agreement is being held up by liberal Democrats who argue that Mexico cannot be trusted to hold up its end of the bargain.
The specific issue is whether Mexico will fully enforce the labor reforms that it adopted as part of the USMCA deal. Mexico passed the law in May, and its president, Andres Manuel López Obrador, a leftist, insists he will follow through. “Of course we will comply with enforcing this law,” he said at an October press conference.
The same day López Obrador made that statement, a delegation of Democratic lawmakers who traveled to Mexico to meet with him said they still weren’t convinced. “Our meeting with President López Obrador shed further light on the Mexican government’s desire and intentions to carry out its labor justice reform, but the United States needs to see those assurances put into action,” said Ways and Means Chairman Richard Neal of Massachusetts.
As it stands now, a House vote on USMCA isn’t likely to take place until November, congressional sources say, a delay that puts at risk the possibility of a significant bipartisan accomplishment, especially given that Trump now faces impeachment proceedings in the House. Democrats insist they want to pass a deal and are careful to avoid directly accusing Mexico of not wanting to enforce its reforms, but they remain adamant that an acceptable deal doesn’t exist yet.
“We must know that Mexico is serious about beginning a new chapter before we rush to judgment on a new agreement. We’ll have a suitable agreement only when the hard terms match that aspiration,” New Jersey Democrat Bill Pascrell said after the Mexico trip.
The fundamental underlying problem, according to U.S. unions and their allies, is that Mexico’s labor law system has been corrupt for decades. The government made it easy for businesses to interfere in labor elections, resulting in sham unions that support management over workers.
The labor reforms Mexico passed in May as part of the USMCA deal were intended to end this problem. The reforms include a requirement that union representatives be elected by secret ballot, a policy that is designed to ensure that workers vote free of management influence or coercion.
Democrats and their allies believe the reforms are already getting undermined. Within a month of the law’s passage, more than 100 lawsuits were filed against it in Mexican state courts. That stalled the reforms in court, and Democrats fear they could be reversed after the ratification of the USMCA. It was a “major topic” of Neal’s meeting with López Obrador, an individual with knowledge of Democrats’ deliberations said. “It is really unclear if and when the new law will go into effect.”
Another issue is that even if the reforms go into effect, they don’t immediately change things. Richard Trumka, president of the AFL-CIO, the U.S.’ largest labor federation, has repeatedly said that the new elections and new contracts for all existing Mexican unions must be held.
That’s a tall order. There are an estimated 700,000 existing labor contracts in Mexico that must be addressed. Under the terms of the USMCA, Mexico will have to oversee 175,000 new agreements and new elections a year over the four years.
“In order to change the culture, you have to get rid of all 700,000 of those,” Trumka said in September. He warned that if Mexico “can’t enforce the laws, if they’re going to keep that old model of artificially low wages, it will never change, and no agreement will work.”
The sheer weight of the labor contracts is expected to be crushing for Mexico’s Labor Ministry, which is widely seen as lacking the judges or other infrastructure to handle it following years of neglect.
The Democrats want to see Mexico put that reform infrastructure in place right now, said Inu Manak, trade policy analyst for the free-market Cato Institute. “They don’t want to accept promises that things will be different in future. One of the main areas of contention was that Obrador’s 2019 budget did not include sufficient funds to cover his labor reforms,” she said.
Mexican officials have told Democrats they want to fix the unions and renegotiate the contracts, but doing so would be budget-busting for them. One part of the mission by Neal’s delegation was to examine López Obrador’s proposed budget and determine if it allocates the funds needed for reforms. Pascrell said after the trip that he would “closely monitor” Mexico’s budget.
“The reality is that there’s no way for the reforms to be put in place before a USMCA vote. It’s not easy to expand a court system in particular,” said Manak. “So these calls are really not pragmatic, and certainly holding up USMCA on this issue will not force Mexico to do anything sooner, it’s just not possible.”
