The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) advocates every day for a global economy that benefits workers everywhere, protects a livable planet, and strengthens democracy. But that is not possible without a fairer global business model. Signed into law on January 29, 2020, the United States-Mexico-Canada Agreement (USMCA) is such a model and the first major trade agreement the AFL-CIO has supported in nearly 20 years.
As President of the AFL-CIO, I am often asked how we came to support the USMCA after opposing the North American Free Trade Agreement (NAFTA) and many subsequent trade agreements. .
Simply put, NAFTA was drafted without any real input from workers or their unions. As a result, labor standards have been relegated to an unenforceable side agreement. The USMCA, on the other hand, contains strong and enforceable labor provisions, the result of sustained and genuine dialogue that we helped shape.
Importantly, as a precondition to the deal, the USMCA required Mexico to pass a package of labor law reforms aimed at strengthening the virtually non-existent rights of workers to organize independent unions and bargain collectively. Together, these reforms seek to tackle Mexico’s corrupt system of “protection contracts,” where employers sign bogus collective agreements with illegitimate and undemocratic unions that serve corporate interests. Over the past few decades, the protection contract system has played a fundamental role in keeping the wages of Mexican workers artificially low, encouraging the relocation of jobs from the United States, and lowering wages and standards across the country. ‘North America.
[The USMCA] represents a major improvement over NAFTA and points the way to a more balanced, worker-centric trade model capable of generating broad-based economic growth that advances workers’ rights.
Recognizing the real damage the protection contract system has caused workers across borders, the USMCA contains a new rapid-response enforcement mechanism that allows the U.S. government to bring trade suits directly against employers. workers in Mexico accused of depriving workers of their basic human rights. freedom of association and collective bargaining. Under the new mechanism, Mexican facilities that violate workers’ rights must take effective corrective action or face significant financial penalties, including, for repeat offenders, potential loss of access to the US market. The Biden-Harris administration has already used the mechanism twice, resulting in quick settlements that advanced workers’ rights.
The USMCA has also raised the bar for other important labor standards. For example, it demands that all three countries adopt and implement import bans on goods made with forced labor. Additionally, it contains strict rules of origin, particularly in the automotive sector, which will require companies to use more North American content in order to qualify for tariff reductions under the agreement. All of these commitments are underpinned by a series of monitoring and enforcement mechanisms to ensure that all trading partners adhere to the terms of the agreement.
More generally, the USMCA eliminated various special interest gifts to multinational corporations, including excessive patent protections that would have made prescription drugs even more expensive for North American workers. In addition, it severely restricts access to investor-state dispute settlement (ISDS), which companies have used to challenge fundamental environmental, public health, and labor protections in all three countries.
Despite these advances, the USMCA is far from perfect. This in itself will not end outsourcing, growing economic inequality or climate change. However, it represents a major improvement over NAFTA and paves the way for a more balanced, worker-centric trade model capable of generating broad-based economic growth that advances workers’ rights.