Tuesday’s deal securing a congressional vote on President Trump’s United States-Mexico-Canada Agreement on trade was made possible by a late-in-the-game compromise between Mexican officials and U.S. unions on how to protect labor rights south of the border.
Intense last-minute talks led to the accord, according to Mexico Deputy Foreign Minister Jesus Seade, the country’s lead negotiator. The deal would replace the 1993 North American Free Trade Agreement.
“I cannot say it was ‘a pleasure’ because you are TOUGH my friend. But it surely was a very great honor to work with you in many meetings,” Seade said in a tweet to AFL-CIO President Richard Trumka.
The compromise is that Mexico would allow monitoring of its factories for labor rights violations but also wiouldbe permitted to appeal complaints to arbitration panels. In addition, both the U.S. and Canada would contribute funds to help Mexico uphold the deal’s labor standards. The U.S. would contribute $45 million over four years to Mexico for the purposes of building up its legal system’s labor rights enforcement.
“This has higher labor standards and tougher enforcement. So, it’s a kind of belts and suspenders approach,” said Sen. Rob Portman, an Ohio Republican and a former U.S. trade representative during the George W. Bush administration. Portman was briefed on the deal by current U.S. Trade Representative Robert Lighthizer on Tuesday.
The final version of the deal’s labor rights language won Trumka’s support, which proved critical for getting Democratic backing for the USMCA. Many lawmakers previously feared that unions would abandon them in primaries otherwise.
“For the first time, there truly will be enforceable labor standards, including a process that allows for the inspections of factories and facilities that are not living up to their obligations,” Trumka said.
Labor enforcement was a contentious issue during negotiations, which dragged on for a year after the U.S., Canada, and Mexico agreed to the underlying deal. Democrats and their union allies argued that Mexico made it easy for businesses to interfere in labor elections, resulting in sham unions that supported management over workers.
Mexico passed new labor laws to comply with the deal, and Mexican President Andres Manuel Lopez Obrador vowed in writing to enforce the provisions. Democrats, backed by organized labor, nevertheless contended that enforcement fell short. Trumka demanded that the estimated 700,000 existing labor contracts in Mexico all be renegotiated over the next four years. Mexican officials countered that their legal system could not handle that many contracts that quickly.
After many long months of negotiations, a deal on USMCA appeared to be close in November, with House Speaker Nancy Pelosi at one point saying it could be “imminent.” Shortly afterward, however, Pelosi pulled back after a Democratic caucus meeting in which Trumka warned Democrats against supporting it, saying it still wasn’t acceptable.
A rewritten version of the deal meant to get labor on board then prompted a backlash from Mexican officials, who called a proposal for expanded factory inspections by U.S. officials a violation of their country’s sovereignty.
The compromise involved creating rules of evidence for labor rights violations and establishing “an interagency committee” to monitor them in Mexico as well as special “labor attachés” that will be permanently located in Mexico. However, verification of compliance at the factories will be done by “independent experts,” not official inspectors, a solution meant to address concerns over Mexico’s sovereignty.
Once a complaint is filed against a factory for a rights violation, the USTR must respond within 30 days. Mexico then has 45 days to look at the complaint and either work out a solution or request arbitration. If the latter, then the arbitration panel has 60 days to decide if a violation does exist. If it does, the panel assesses a penalty, such as tariffs on that factory’s products.
“Labor is covered without inspectors: It will be via panels, normal in commercial agreements,” Seade tweeted.
Portman called the final result a major rewrite of NAFTA. “There’s so much trade between our countries that any change to the terms and tariffs is significant,” he said in an interview with the Washington Examiner.
