Mex­i­can work­ers are du­bi­ous of trade deal

Chicago Tribune (Sunday) - - INVESTING - By Justin Vil­lamil

On paper, Mex­i­can work­ers should be big win­ners from the new NAFTA. They’re not hold­ing their breath.

Stronger unions and higher pay south of the U.S. bor­der are a key part of the re­vamped trade deal, which the U.S. House of Rep­re­sen­ta­tives ap­proved Thurs­day. The mea­sures are sup­posed to bring knock-on ben­e­fits for the U.S. and Canada too — by eat­ing into a wage gap that’s lured fac­to­ries and jobs away.

The worry is that any new rules in Mex­ico will largely re­main on paper. Mex­i­can work­ers, who watched their pay fall even fur­ther be­hind dur­ing a quar­ter-cen­tury of the North Amer­i­can Free Trade Agree­ment, say there’s rea­son to doubt if its suc­ces­sor will be much dif­fer­ent.

“I don’t think there will be any change,” said Lud­wing, a se­cu­rity guard at a Gen­eral Mo­tors plant in the in­dus­trial cen­ter of Toluca who asked to be iden­ti­fied only by his first name. “I’ve seen my friends fired as plants close down.”

GM Mex­ico spokes­woman Teresa Cid said the com­pany will honor the changes to Mex­ico’s la­bor rules as they are im­ple­mented.

The United States-Mex­ico-Canada Agree­ment, as the trade deal is known, re­quires that 40%-45% of auto con­tent be made by those earn­ing at least $16 an hour — a move aimed at re­duc­ing Mex­ico’s low-wage ad­van­tage in the re­gion. It also guar­an­tees the right of Mex­i­cans to choose their la­bor unions and con­tracts.

The prob­lem is that Mex­ico’s unions have a his­tory of cozy­ing up to bosses, rather than fight­ing for the work­ers they’re sup­posed to rep­re­sent — and new la­bor rules can’t change that cul­ture overnight. Unions are vig­or­ously fight­ing the new rules on sev­eral fronts, in­clud­ing fil­ing hun­dreds of law­suits, which is fan­ning fears that the pace of re­forms could stag­nate.

That con­cern trig­gered a last-minute row on the week­end, when Mex­ico ac­cused the U.S. of in­fring­ing on its sovereignt­y by dis­patch­ing in­spec­tors to en­force Mex­i­can la­bor re­forms.

The is­sue was chalked up to a mis­un­der­stand­ing and re­solved quickly. But Mex­ico’s la­bor prac­tices were a key hur­dle in the fi­nal ne­go­ti­a­tions last week for the White House to get Democrats — and al­lied U.S. unions wor­ried about job losses — be­hind the deal.

Vazquez, a shelf stacker at a Wal­mart in Mex­ico City for 16 years who asked to be iden­ti­fied by his last name for fear of ret­ri­bu­tion, said he’s skep­ti­cal the deal will ben­e­fit him.

“I don’t think we’ll see any pay raise,” said Vazquez, who earns $300 a month. “It’s been so long and noth­ing has changed.”

At home, Mex­i­can Pres­i­dent An­dres Manuel Lopez has promised to in­crease fund­ing for la­bor re­forms and he’s boost­ing the min­i­mum wage. In May, the gov­ern­ment en­shrined the rights of work­ers to de­cide on union lead­ers and con­tracts by se­cret bal­lot.

While the changes would ap­pear to be a ba­sic func­tion of unions the world over, they rarely oc­cur in Mex­ico. The sys­tem re­mains rife with com­plaints about con­tract mis­rep­re­sen­ta­tion.

At the first such vote over a la­bor con­tract ne­go­ti­ated at a fac­tory owned by ce­ment gi­ant Ce­mex, some work­ers didn’t know what they were be­ing asked; oth­ers said their union made false claims that they would lose their ben­e­fits if they re­jected the con­tract.

While Lopez Obrador has also made root­ing out graft a key pri­or­ity since he took of­fice a year ago, it will be a dif­fi­cult task to take on the pow­er­ful unions, said Ro­ge­lio Aguilar Men­doza, a worker at an­other Wal­mart in Mex­ico City.

“There’s a lot of cor­rup­tion in unions,” he said, while also voic­ing hope that the USMCA, if im­ple­mented well, could be a pos­i­tive step for the econ­omy.

The new trade pact will al­low the U.S. to take a stricter view of com­pli­ance over Mex­ico’s la­bor re­forms. La­bor-re­lated dis­putes will be re­solved by a newly cre­ated U.S.-Mex­ico Rapid Re­sponse Mech­a­nism, a panel made up of rep­re­sen­ta­tives ap­pointed by Mex­ico and the U.S.

Mex­ico’s eco­nomic re­liance may also give the U.S. some lever­age. The U.S ac­counts for about half of Mex­ico’s for­eign-di­rect in­vest­ment and buys 80% of all Mex­i­can ex­ports.

More broadly, work­ers have rea­son to be wary of USMCA de­liv­er­ing on its ad­ver­tised ben­e­fits.

In 1994, NAFTA was billed as a way to pull up Mex­ico’s econ­omy through deeper in­te­gra­tion. But since then, in­comes in Mex­ico — which as an emerg­ing mar­ket is sup­posed to grow faster — have fallen, to about a fifth of those in the U.S.

“Look, if it hap­pens and wages rise, it would be good ob­vi­ously. But I don’t know,” said a sub­con­trac­tor at the GM fac­tory in Toluca — about 50 miles west of Mex­ico City — who asked to be iden­ti­fied only by his first name, Luis. “We haven’t had any dis­cus­sions in the plant about what could hap­pen.”

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