Don’t tweak NAFTA, fix it
President Trump has opened a renegotiation of the North American Free Trade Act with the aim of reducing the United States’ trade deficit and creating better-paying jobs. We, as the presidents of the two unions representing 245,000 workers in the North American auto assembly and parts supply industry, support the concept of meaningful NAFTA renegotiation.
But we are concerned that the summary of objectives released by the Trump administration this week is vague and could fall far short of what American and Canadian workers had hoped NAFTA renegotiation would achieve in restoring balanced trade, job security and fair wages.
NAFTA has failed autoworkers in all three countries it covers: Canada, the United States and Mexico. No amount of spin can erase the fact that the agreement caused the closing of thousands of American and Canadian plants and the hemorrhaging of thousands of jobs.
The auto industry is one of the world’s most valuable, reaching US$ 1.3 trillion in total global exports in 2015, and representing eight per cent of all global exports. Trade rules shape where, and how, the industry develops. NAFTA has made things worse across the continent.
In 1993, the United States had an automotive trade deficit with Mexico of US$ 3.5 billion. By 2016 that deficit had grown to US$ 45.1 billion. For auto parts, the United States’ deficit with Mexico was US$ 100 million in 1993; by 2016, it was 200 times larger, at US$23.8 billion. In terms of Canadian trade with Mexico, the overall automotive deficit has increased fourfold under NAFTA, to US$ 8.7 billion from US$1.6 billion.
Yet Mexican workers have not benefited from this bad deal. Mexican wages have stagnated in real terms since NAFTA was enacted in 1994. The average autoworker in Mexico makes US$3.00 an hour or less, despite healthy industry profits. Labour standards continue to be dismal, since Mexican workers are prevented from exercising their rights and bargaining for better wages and working conditions. The government, employers and the main Mexican autoworkers union, the Confederation of Mexican Workers, frequently collude to maintain a system of “protection contracts” without workers’ consent. At the Honda plant in El Salto, Jalisco, the company fired the leaders of an independent union, and locked union members out of the plant.
In 2011, PKC, a Finnish auto parts company in Ciudad Acuña, Coahuila, thwarted its employees’ efforts to choose their own union to negotiate a collective bargaining agreement. The company interfered with a union election and terminated employee labour activists. BMW pledged in July 2014 to spend US$1 billion to build a factory in the northern state of San Luis Potosí days after signing a protection contract with the Confederation of Workers of Mexico notarized by a labour ministry official. They will be paid slightly over a dollar an hour and wages will top out at US$2.50. To this day workers at both plants continue to be denied the right to freely negotiate with automakers.
These common abuses have had a lasting economic impact as companies move from Canada and the United States to take advantage of workers who lack basic rights and are underpaid. Mexico has yet to develop a free and democratic trade union movement, and that’s at the heart of the problem.
This has created an uneven playing field. Since NAFTA went into effect, the United States has experienced a net loss of 10 vehicle assembly plants and Canada has lost four plants; Mexico nearly doubled its number of factories, gaining eight. Mexico now has nearly half of North America’s auto jobs, but Mexicans buy less than eight per cent of all vehicles sold in North America.
Modern trade agreements pit workers against one another by design. Autoworkers in the United States, Canada and Mexico must collaborate to ensure that the renegotiation of NAFTA delivers gains for all.
Despite NAFTA, t he North American auto industry remains a powerhouse of advanced manufacturing, innovation and economic activity. Directly responsible for two million jobs across the continent, the industry serves as the anchor for supply chains including auto parts producers, suppliers of raw materials and service providers. For every auto assembly job, there are at least nine to 10 other jobs created — these are often good jobs with above average wages.
Meaningful NAFTA renegotiation must comprehensively focus on balanced trade that provides real wage growth for American, Canadian and most especially Mexican workers, whose suppressed wages are harmful for all three countries.
A proper t rade agreement should eliminate sweetheart provisions that allow corporations to sue governments in secretive tribunals over regulations that protect workers and the environment. It must tackle unfair trade practices like currency manipulation by countries seeking to lower the cost of their exports. Finally, all three countries must step up to the plate and make lasting commitments to invest in infrastructure, crack down on corporations that manipulate tax laws to send jobs overseas and commit to immigration laws that stop businesses from exploiting immigrant workers.
The renegotiation of NAFTA offers an opportunity for real progress that must not be squandered with minor tweaking. We must not let this opportunity to fix the broken NAFTA legacy slip away.
MEXICO NOW HAS NEARLY HALF OF NORTH AMERICA’S AUTO JOBS.