Members of Congress will soon face one of the most important decisions of their political careers -- whether to ratify President Trump’s new trade deal with Canada and Mexico.
The United States-Mexico-Canada Agreement, known as USMCA, isn’t perfect; but it’s far better than NAFTA.
USMCA would strengthen labor protections, create jobs, and discourage U.S. firms from outsourcing work abroad. Congress can do union members a favor by swiftly ratifying the new deal.
USMCA contains comprehensive, enforceable labor provisions. These protections will help prevent outsourcing, which costs American workers roughly 90,000 jobs each year.
NAFTA enabled giant corporations to outsource jobs, especially to Mexico. Auto companies were particularly egregious offenders. Back in 1994, when NAFTA went into effect, the average American autoworker earned about $36 an hour in today’s dollars. The average Mexican autoworker earned just $6.65 per hour.
U.S. auto companies shifted production to Mexico to take advantage of this cheap labor. In 1994, auto factories employed about 100,000 Mexicans. By 2016, that figure jumped to 767,000.
This growth came at the expense of American workers. The number of Americans employed at auto factories dropped from about 1.1 million in 1994 to 940,000 in 2016. And their average wages dropped to about $28 per hour, as companies used the threat of outsourcing to bully workers into accepting worse pay.
USMCA would combat this outsourcing. The deal requires that nearly half of all car parts come from factories paying employees at least $16 an hour by 2023. Cars that don’t meet this threshold will be slapped with tariffs.
This requirement will effectively force companies to keep jobs in the United States rather than shipping them south of the border.
USMCA also mandates that 75 percent of vehicle parts be made in the United States, Mexico, or Canada -- otherwise, companies will face tariffs. That’s up from NAFTA’s 62.5 percent requirement. Thanks to this provision, U.S. firms will have less incentive to source car parts from factories in Asia, where labor is cheap.
These provisions will boost demand for American-made car parts. USMCA will spur an estimated $34 billion worth of investments into the U.S. automotive sector within five years.
Those investments will create excellent opportunities for American workers. Over the next five years, USMCA is expected to create more than 76,000 U.S. automotive jobs.
USMCA wouldn’t just help autoworkers. It’d boost the fortunes of Americans laboring in multiple industries, especially manufacturing.
The pact gives Mexican workers the right to unionize and engage in collective bargaining. To ensure the Mexican government enforces these rights, USMCA requires Mexico to create independent legal bodies dedicated to settling labor disputes in a timely manner. The deal also forces Mexico to protect workers from exploitative business practices -- such as gender and racial discrimination and child labor.
As working conditions in Mexico improve and wages rise, multinational companies will have less incentive to outsource American jobs.
The deal also requires Canada and Mexico to grant stronger intellectual property protections -- such as trademarks, copyrights, and regulatory data protection -- to American innovators. These protections are critical for the nation’s high-tech manufacturers, which support many union jobs.
Unions have railed against NAFTA for three decades. Now, their allies in Congress finally have an opportunity to scrap that deal and replace it with a new agreement that protects American workers.
Deena Flinchum is an IT worker who was employed by the AFL-CIO for 25 years before retiring. She is now a community volunteer in southwest Virginia.