Last week something revolutionary happened in the history of American trade policy. The government has used trade law to help labor, not to help capital.
Changing sides gives a whole new political meaning to globalization. Global trade, with the right policies and policies, doesn’t have to be a race to the bottom. He can even start a race to the top. Who knew?
The specific case involved an auto parts company called Tridonex, located in the border town of Matamoros, Mexico. Tridonex is owned by a Philadelphia company called Cardone Industries, which in turn is owned by a Canadian hedge fund! Tridonex makes things like refurbished used brakes. It sends most of its products to the United States and is a classic case of job offshoring to Mexico, as allowed under NAFTA.
But in 2019, Democrats in Congress and Trump’s Commerce Chief Robert Lighthizer rewrote NAFTA. The successor agreement, called the USMCA, includes strict and enforceable labor rights provisions, guaranteeing workers in the United States, Mexico and Canada the right to organize and join unions without harassment.
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As part of an ingenious rapid response mechanism, devised by Senator Sherrod Brown (D-OH), if the rights of workers at a factory in Mexico are denied, the United States may impose tariffs on exports from the factory and U.S. Customs can prevent them from entering entirely into the United States.
Here is how the rapid response was used in the Tridonex case. Mexican laws guarantee workers the right to join unions, but this right is effectively denied through the use of corrupt corporate unions known as “protection unions”. If a company has a protection union, it nominally satisfies Mexican law, and workers are out of luck, until the USMCA changes that.
At Tridonex, workers had been trying for two years to join one of the real Mexican unions, the Sindicato Nacional Independiente de Trabajadores de Industrias y de Servicios (SNITIS), roughly the counterpart of the SEIU. More than 600 workers have been made redundant. The company used the excuse of a COVID downsizing to get rid of workers supposed to favor the independent union.
The United States-Mexico-Canada trade agreement includes strong and enforceable labor rights provisions.
In May, the AFL-CIO, SEIU, and Public Citizen filed a complaint under the USMCA’s early response provision. The US trade representative confirmed the validity of the complaint, threatened with reprisals, and in less than three months, they and the company designed a regulation.
Under the deal, 154 workers will receive a total of $ 600,000 in back wages (about $ 4,000 each), and the Mexican government is committed to overseeing an honest election. This was a far from ideal case, as the COVID-related layoffs made it difficult to request reinstatement of the laid-off workers. The backlog was less of a remedy. Susana Prieto, the famous Mexican labor lawyer who was jailed for representing unions and self-employed workers, called the settlement a first step.
These regulations are also tricky because Mexican state governments along the US border tend to be in bed with corrupt bogus unions. Mexico’s national government, led by progressive President Andrés Manuel López Obrador, is responsible for Mexico’s honoring of its commitments with the USMCA, but in practice it shares jurisdiction with states.
In another, clearer case, the Biden administration did not wait for a union complaint, but took action directly. (Previously, complaints that alleged violations of workers’ rights were usually filed by unions.) This case, also filed in May, concerned a General Motors factory in the city of Silao that manufactures light trucks for export. to the United States.
In the case of GM, in which workers managed to win an election to vote on their membership in a real union, the bogus union in place was caught literally stuffing the ballot boxes. In this case, where USTR investigators had a stronger hand, the remedy agreed upon by GM and the Mexican government is an election to be redone with international observers from the International Labor Organization.
The new election must take place before August 20. GM must be scrupulously neutral. Yes the election is not considered fair, the Silao GM plant faces tariffs or refusal of entry for its trucks.
Connoisseurs of trade policy may recognize the rapid response mechanism as the old overturned investor-state provision. Under the investor-state regime, which was part of NAFTA but explicitly withdrawn from the USMCA, investors or companies could sue in special NAFTA courts if they argued that domestic regulations violated their trade rights. . It was always an absurd statement and good riddance. But outsourcing to Mexico has really been used to undermine workers’ rights – and now workers have real recourse.
This 180-degree shift shows what could have been done – but was not done – in recent decades, a period when presidents of both sides used trade deals to undermine capital regulation and protection of capital. workers at home. And again, the staff are political.
For those of us who care about using the law and trade policy to advance rather than delay workers’ rights, the government is finally in friendly hands.
The USTR works closely with the Department of Labor, which in turn is in close contact with US and Mexican unions to identify abuses. The Department of Labor’s main liaison with USTR is the Assistant Under-Secretary for International Affairs, Thea Lee.
Perspective readers can recognize the name. Thea Lee was president of the Economic Policy Institute, and for 20 years previously she was a senior executive at the AFL-CIO.
At USTR, agency director Katherine Tai is an enthusiastic supporter of the rapid response program, as is Labor Secretary Marty Walsh. Tai’s own chief of staff is Nora Todd. Previously, as Sherrod Brown’s chief economic and trade policy adviser, Todd worked out the details of the rapid response mechanism. And USTR’s assistant for labor is Josh Kagan, who previously held senior positions in the Department of Labor’s office of trade and labor affairs.
Is it improving? For those of us who care about using the law and trade policy to advance rather than delay workers’ rights, the government is finally in friendly hands. Some of these international labor rights could even spill over to the national level, where workers’ rights to choose unions are respected if violated.
Note to my cranky left-handed friends: this sort of thing is why some of us are really excited about the Biden administration, not because we’re captured. The American Chamber of Commerce has followed all of this very closely and is extremely upset, having long been used to USTR as a pocket dog.
Of course, two cases do not make a revolution. Details of the Tridonex settlement were insufficient. But the battleship of US trade policy has been pointed in a different direction, and there will be many more cases. The government is finally playing hard trade on the safe side.
At a trade roundtable hosted on June 4 by Sherrod Brown, U.S. Trade Representative Tai, referring to the GM case, noted: “This was the first time the USMCA’s new rapid response tool has been used. And it was also the first time in history that the United States had proactively enforced the labor provision of a free trade agreement. Strict enforcement of labor laws is good for Mexican workers. But it’s also good for American workers because it helps stop the race to the bottom.
In fact, it’s not quite the first time, but previous efforts were few and far between. In the late 1990s, the United States proposed a labor provision in a trade agreement to help unions gain a foothold in Cambodia. During these years, textiles and clothing exports were allocated to developing countries under what is known as the Multifiber Arrangement (MFA).
Under the US-Cambodia trade agreement, Cambodia would get an increase in its export quota to the United States if it verifiably met a commitment to allow unions to organize, as monitored by the ILO. This worked well until the MFA itself was abolished as part of the creation of the World Trade Organization. This was an instructive contrast to most of the labor “side deals” in other trade agreements, including NAFTA, which were largely an unenforced facade.
But come back to this quote from Katherine Tai. Can you imagine one of his Democratic predecessors as a US trade representative saying something like that? Obama’s trade chief Mike Froman was a pure Wall Street guy. The Labor Party of that time fought a bitter battle against the USTR. Today, the USTR is an ally.
To go back even further, it should be remembered that the original conception of an international trade organization, envisaged at the Bretton Woods conference of 1944, when the progressives ruled the American government, proposed to link trade rights to human rights. job. An ITO charter was in fact negotiated and drafted in 1948 but never ratified by the USA
So there is more than one mark of globalization. The government just needs to be in good hands.