Is new deal bet­ter or worse than NAFTA?

The Saratogian (Saratoga, NY) - - FRONT PAGE - Es­ther Cepeda’s email ad­dress is es­ther­j­[email protected]­post. com or fol­low her on Twit­ter @ es­ther­j­cepeda. Es­ther J. Cepeda Colum­nist

The newly signed U.S.Mex­ico-Canada Agree­ment (USMCA) has one claim to fame: It’s bi­par­ti­san leg­is­la­tion that was passed while the pres­i­dent is fac­ing im­peach­ment.

Aside from that, the tepid leg­is­la­tion’s big­gest his­tor­i­cal ac­com­plish­ment might only be not get­ting con­stantly re­ferred to as “NAFTA 2.0” — if, in fact, it can get away from its das­tardly pre­de­ces­sor.

There are things to like in the new USMCA trade deal. But they could be over­shad­owed by not-so-great un­in­tended con­se­quences.

For in­stance, the­o­ret­i­cally, the new pact will re­sult in more car and truck parts be­ing man­u­fac­tured in North Amer­ica. To qual­ify for zero tar­iffs, a car or truck would have to have 75% of its com­po­nents man­u­fac­tured in Canada, Mex­ico or the United States, in­stead of the cur­rently stip­u­lated 62.5%.

But there’s al­ways the chance that such re­quire­ments will drive up the cost of smaller cars, and their man­u­fac­tur­ing will be shipped off to Asia, where it would be tough to com­pete with their low wages.

And speak­ing of wages, the new trade deal re­quires that Mex­ico change its laws to make it eas­ier for work­ers to union­ize. This (BEG ITAL)should(END ITAL) in­crease wages for Mex­i­can work­ers, mak­ing it less ap­peal­ing for com­pa­nies to move jobs from the U.S. to Mex­ico. The Trump ad­min­is­tra­tion, Democrats and U.S. la­bor unions even pushed for a for­mal com­mit­tee to mon­i­tor Mex­ico on la­bor is­sues, cre­at­ing po­si­tions called “la­bor at­tachés” for peo­ple who would be based in Mex­ico to mon­i­tor bench­marks that could trig­ger penal­ties if wage in­creases aren’t met. This strikes me as fan­ci­ful. Our neigh­bor to the south has the la­bor-friendli­est pres­i­dent in decades. But the unions and la­bor courts in Mex­ico have the rep­u­ta­tion of be­ing as cor­rupt as the gov­ern­ment they no doubt col­lude with to keep wages low enough to lure the U.S. and other man­u­fac­tur­ers to re­lo­cate their op­er­a­tions to the bor­der.

Part of the rea­son is that, for ev­ery­one, but es­pe­cially for the Mex­i­can peo­ple who live in the direst poverty you could imag­ine, low wages are in­fin­itely bet­ter than no wages.

In 2015, I was in Juarez tour­ing fac­to­ries and the shan­ty­towns where the work­ers live. I vis­ited a plant that boasted $16 bil­lion in rev­enue per year, but the work­ers there av­er­aged $200 per month, with pos­si­ble cash bonuses for at­ten­dance, punctualit­y and pro­duc­tiv­ity to­tal­ing maybe an­other $140 per month. Su­per­vi­sors and other high­er­paid work­ers could make any­where from $430 to $600 per month.

Think about what kind of eco­nomic and liv­ing con­di­tions make a job that pays roughly $300 a ra­tio­nal choice for peo­ple try­ing to feed their fam­i­lies.

At the time, economists had con­cluded that NAFTA’s orig­i­nal prom­ises of clos­ing the wage gap be­tween Mex­i­can and U.S. work­ers never panned out and that in­equal­ity in Mex­ico had ac­tu­ally gone up.

Today, some ob­servers say that there is new en­ergy in Mex­ico’s in­de­pen­dent union move­ment — thanks to a younger, more so­cial­me­dia savvy crowd em­bold­ened by left­ist pres­i­dent An­drés Manuel López Obrador. But let’s face it, the av­er­age cit­i­zen has never been the odds-on fa­vorite to win any­thing when fac­ing the in­tractabil­ity of the Mex­i­can gov­ern­ment’s cor­rup­tion.

And can we say much dif­fer­ent when it comes to the lit­tle guy in the U.S.?

Cit­ing re­cent his­tory in both the U.S. and Mex­ico, econ­o­mist Robert E. Scott isn’t su­per sunny:

“The USMCA will in no way off­set or re­verse the mas­sive dev­as­ta­tion caused by the orig­i­nal NAFTA agree­ment. Nor is the deal a ‘model for fu­ture trade agree­ments,’” wrote Scott, se­nior econ­o­mist and direc­tor of trade and man­u­fac­tur­ing pol­icy re­search at the left-lean­ing Eco­nomic Pol­icy In­sti­tute (EPI), on the EPI blog. “It may re­sult in sig­nif­i­cant im­prove­ments in la­bor rights for Mex­i­can work­ers, which could help them in the long-run. But those changes will have vir­tu­ally no mea­sur­able im­pacts on wages or in­comes for U.S. work­ers . ... At the end of the day, the USMCA is the best of a set of bad choices. And only con­ces­sions ob­tained through tough ne­go­ti­a­tions by la­bor, en­vi­ron­ment, and con­sumer ac­tivists made it any bet­ter than the sta­tus quo. As a re­sult, it is bet­ter than the al­ter­na­tives.”

Con­sid­er­ing the times we’re liv­ing through, this may be a ma­jor ac­com­plish­ment in and of it­self. But only time will tell if the USMCA will ac­tu­ally help work­ers on both sides of the bor­der or merge easily into the legacy of the lit­tle-guy-crush­ing NAFTA.

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