AMLO Does Trump’s Bidding on USMCA; Pressure on to Tweak Corporate Trade Agreement

IN THIS DOSSIER:

(1) Presentation: Stop the USMCA!

(2) Mexican President to Appeal to Pelosi for USMCA’s Ratification — by Inside U.S. Trade (forwarded by Citizens Trade Campaign)

(3) The USMCA and Mexico’s Oil Resources — by Alan Benjamin

(4) AFL-CIO Executive Council Statement — Chicago September 12, 2019: “Without Fixes, We Must Oppose the New NAFTA!”

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(1) Presentation: Stop the USMCA! — by Alan Benjamin

While the nation is focused on the crisis at the highest levels of State surrounding the impeachment proceedings of Donald Trump, behind the scenes wheels are turning in the effort to obtain adoption by the U.S. Congress of a very destructive “free trade” agreement: NAFTA 2.0 — officially known as the US-Mexico-Canada Agreement, or USMCA.

Earlier this week, we learned in the business press that Speaker Nancy Pelosi has announced that “we are making progress with changes to NAFTA 2.0, but we need more assurances that the deal will be fixed before Congress votes on the agreement’.” The corporate media has reported repeatedly Pelosi’s commitment to “get to a yes vote on USMCA.”

Yesterday [October 9], we were informed by the Citizens Trade Campaign that “a group of nine House Democrats appointed by Pelosi has been working with the Office of the U.S. Trade Representative on the deal’s labor, environment, pharmaceutical and enforcement provisions before the administration sends an implementing bill to Congress.”

We also learned that Mexican President Andrés Manuel López Obrador announced on October 8,  just prior to meeting with a U.S. Congressional delegation, that he is sending a letter to Speaker Pelosi urging her support for USMCA “so that the agreement is approved soon.” [See article below on AMLO and the U.S. Congressional delegation to Mexico.]

Much of the discussion between the Mexican government officials and the U.S. Congressional delegation, it appears, revolved around the issue of labor rights and environmental rights in Mexico and whether or not AMLO’s new Republican Austerity Budget would provide sufficient funds to oversee the enforcement of these rights. While the Mexican president insisted that there would be such funding, the U.S. labor movement, echoing the views of its Mexican labor counterparts, is far from convinced. [See AFL-CIO Executive Committee Statement on USMCA below.]

But this is not just an abstract question: Labor rights are under increased assault in Mexico today, largely by U.S. transnational corporations — and the Mexican government has remained conspicuously silent on the matter.

  • Six thousand workers in the maquiladora industries of Matamoros, Tamaulipas, have been fired and black-listed for taking part in a two-month strike and organizing a new independent union: the SNITIS.
  • More than 20 workers at the Rockwell Automation plant in Tecate, Baja California, were fired for participating in a SNITIS union-organizing drive.
  • Twenty-seven workers at the GM plant in Silao, Guanajuato, were fired recently for organizing a new independent union in their plant.
  • The main organizers of the farm-workers’ union in San Quintin, Baja California, have been black-listed by Driscoll’s corporation and impeded from working in the fields.

“Assurances” by Mexican government officials that labor rights will be enforced in Mexico under USMCA mean absolutely nothing from the moment these workers have been fired, and their families devastated, by the continued anti-worker attacks promoted by NAFTA — be it versions 1.0 or 2.0.

True labor rights enforcement would require that the Mexican government intervene immediately to insist that the U.S. corporations rehire immediately all fired workers with back pay, that they respect the right of workers to form the union of their choice (as stipulated in Mexico’s Federal Labor Law), and that they sign a collective-bargaining agreement with the independent unions. (In fact, the U.S. labor movement as a whole should be raising these demands!)

But that is not all.

From all the reports we have received on the official discussions between U.S. and Mexican officials, it is clear that no one is talking about removing  the Investor State Dispute Settlement (ISDS) clause — a clause that remains in USMCA in relation to Mexico’s huge oil and energy resources.

Big Pharma and labor rights are, of course, vital issues — but so too is the ISDS clause. If Mexico is not able to reclaim its oil resources, as AMLO promised back in 2014 (and again in the early days of his election campaign), Mexico will not be able to develop its economy, and wages will not be able to rise. Poverty and slave-labor wages will remain the order of the day. And U.S. jobs will continue to cross the border, where lower wages will prevail. [See article below on USMCA and Mexico’s oil resources.]

Tweaking USMCA will not fix what is essentially a corporate agreement.

A far better approach is the one contained in theresolution adopted on November 26, 2018, by the San Francisco Labor Council,AFL-CIO. This important S.F.Labor Council resolution concludes as follows:

“The San Francisco Labor Council opposes the ratification of USMCA and urges the labor movement in all three signatory countries to mobilize to stop the approval of USMCA by the legislative bodies in the three countries, and calls on all U.S., Mexican, and Canadian trade unions, along with community organizations and human rights organizations, to insist on a comprehensive NAFTA replacement that improves the rules of trade;ensures the enforcement of trade union rights and collective-bargaining;creates good, high-wage jobs; protects our environment; safeguards our democracies; and benefits our members and all workers in the United States,Mexico and Canada.”

Stopping USMCA, as the San Francisco Labor Councilresolution put it, “is the necessary first step, the very pre-condition, toopening new negotiations — with the full input of trade unions, environmentalgroups, and other community organizations in all three signatory countries —that could lead to a trade deal that benefits working people in all three countries.”

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(2) Mexican President to Appeal to Pelosi for USMCA’s Ratification

reprinted from Inside U.S. Trade

By Maria Curi 10/08/2019 (forwarded by Citizens Trade Campaign)

Mexican President Andrés Manuel López Obrador on Tuesday will send a letter to House Speaker Nancy Pelosi (D-CA) urging her to put the U.S.-Mexico-Canada Agreement to a vote, he told reporters this week.

A group of nine House Democrats appointed by Pelosi has been working with the Office of the U.S. Trade Representative on the deal’s labor, environment, pharmaceutical and enforcement provisions before the administration sends an implementing bill to Congress. The Mexican Senate ratified the agreement in June; Canada has yet to do so, suggesting it is waiting to see what the U.S. does.

“I’m going to send a letter [to Pelosi] today describing where we stand [on USMCA] and asking for her contribution and support so that the House of Representatives approves the agreement,” López Obrador told reporters on Tuesday. The Mexican president said the letter would ask in a “respectful way that the agreement is approved soon … so that it is not mixed and contaminated with the” 2020 presidential election. Pelosi has repeatedly said she is committed to “getting to yes” on USMCA, even amid an impeachment probe into President Trump’s actions.

However, many Republican lawmakers have accused the speaker of stalling. Rep. Darin Lahood (R-IL) on Tuesday told The Hill that USMCA would receive “over 300 votes” if it were put to a vote in the House “tomorrow.” Lahood is a member of the House Ways & Means Committee and the Republican’s USMCA “whip team.”

López Obrador’s remarks came before he met with a delegation of House Democrats sent to Mexico City to discuss outstanding issues with USMCA. Democrats and U.S. labor groups continue to express concern that Mexico’s recently passed labor reform laws, required by USMCA, might not be fully implemented. Suggested cuts to Mexico’s Labor Ministry in the government’s 2020 budget proposal have exacerbated those concerns. Mexican officials have been making rounds on Capitol Hill to clarify what the 2020 budget proposal actually does for labor reform implementation. The Mexican government hopes this week’s trip to Mexico will help ease Democrats’ concerns.

All Ways & Means members were invited on the trip, a congressional staffer told Inside U.S. Trade. The delegation includes Ways & Means Chairman Richard Neal (D-MA) and Democratic Reps. Bill Pascrell (NJ), Dan Kildee (MI), Jimmy Panetta (CA) and Jimmy Gomez (CA). Neal is leading the nine-member USMCA working group; Gomez is a member and is taking a lead role in addressing labor issues. In addition to López Obrador, the congressional delegation met with Mexican Labor Secretary Luisa María Alcalde Luján, Mexican Finance Secretary Arturo Herrera Gutierrez, Mexican Foreign Affairs Secretary Marcelo Ebrard and local workers.

The delegation is expected back in Washington, DC, on Tuesday. Lawmakers also reportedly met with Under Secretary for North America Jesús Seade. After the meeting, Seade said he expected Pelosi to take up USMCA by early November, while Ebrard said the next three weeks would be a “decisive phase” — and that U.S. lawmakers next week would be sent a document outlining the issues discussed during the trip, including labor reform, Reuters reported.

“Our meeting with President López Obrador shed further light on the Mexican government’s desire and intentions to carry out its labor justice reform, but the United States needs to see those assurances put into action,” Neal said in a statement after the meeting. Pascrell on Tuesday tweeted that during his meeting with López Obrador he “made clear to [the Mexican president] that a new deal must protect US & Mexican workers. Anything less will be a dead letter in Congress.”

In a statement after the meetings, Pascrell said “This quick trip was a success.” He added, however, that he would “continue to closely monitor the Mexico’s budget process to ensure they are seriously investing in implementation of their new labor laws. We must know that Mexico is serious about beginning a new chapter before we rush to judgement on a new agreement. We’ll have a suitable agreement only when the hard terms match that aspiration.”

“As part of Congress’ consideration of USMCA, it’s important that we hear directly from Mexican government officials on whether Mexico will actually implement the substantial reforms necessary to comply with its obligations under the agreement,” Panetta told Inside U.S. Trade in a Monday email, adding that he also sought “to advocate for the strongest possible deal … that gives certainty to our farmers and agriculture industry in my district on the central coast of California.”

Kildee’s office said the Michigan lawmaker approached the meetings in Mexico hoping “to learn more from the Mexican government about their resources and plans to follow through on promised labor reforms and other obligations in the agreement.” Kildee also “wants to ensure that the USMCA boosts American manufacturing, has strong labor enforcement provisions, lowers prescription drug costs and protects the environment,” his office said in an email to Inside U.S. Trade.

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(3) The USMCA and Mexico’s Oil Resources

by Alan Benjamin

On February 5, 2014, Andrés Manuel López Obrador filed legal charges against Mexican President Enrique Peña Nieto on the grounds the president’s “energy reform” law and other counter-reforms — all implemented to conform to the terms of the NAFTA agreement — were the actions of a “traitor to his country.”

In a speech to the press conference held immediately after filing the charges against Peña Nieto with the Attorney General’s Office (PGR), AMLO, as he is widely known, stated the following:

“The people should have been consulted on the ‘energy reform.’ … Enrique Peña Nieto conducted negotiations with U.S. government officials in which he agreed to hand over our oil resources to foreign oil companies.

“The decision to ‘reform’ Articles 25, 27 and 28 of the Mexican Constitution was agreed to outside the borders of our country. Article 27 of the 1917 Constitution very clearly established the ownership and control by the Mexican people over our natural resources, especially our oil.”

AMLO went on to pledge what he and his newly formed Movement for National Renovation (Morena) would set out to accomplish once their movement took power in the presidential election of 2018. He stated, in part:

“When our movement [Morena] triumphs, we will reaffirm and reclaim what since 1917 has been established in Article 27 of the Constitution, namely, the ownership and control by the nation over our natural resources, over our oil.

“We will reverse all the anti-popular, country-selling measures. This is the goal of our movement.

“When our movement triumphs, we are going to cancel, we are going to repeal, the so-called ‘labor reform’ law. We are also going to do the same with the ‘education reform’ law and with the ‘fiscal reform’ law.”

And he concluded:

“Of course, we are going to repeal the ‘energy reform’ law. We take this opportunity to remind the owners of Exxon, Shell, and Chevron that they cannot expect to do good business in our country — because our oil belongs to the people, it belongs to the nation.”

Moving on to USMCA (aka NAFTA 2.0) 

During his election campaign and once he took office, Donald Trump railed at the NAFTA agreement, under which all these dictates detrimental to Mexican sovereignty were implemented. He said that NAFTA  was a “very bad deal” for the United States, and for U.S. corporate interests in particular. He insisted that NAFTA must be re-negotiated to put “America First,” and that Mexico and Canada needed to open their markets even further to U.S. corporations.

Throughout the entire NAFTA re-negotiations process, U.S. Trade Representative Robert Lighthizer insisted that one of the provisions of NAFTA dear to U.S. Big Business interests absolutely had to remain in the new agreement; namely, the Investor-State-Dispute Settlement provision, or ISDS.

Under ISDS, U.S. investors can sue the Mexican governments should the government maintain or promote policies deemed “barriers to trade.” This includes restrictive regulations on corporations, “excessive” taxes on corporations, monopolies (national enterprises or services), protectionist laws, etc.

Under NAFTA, Peña Nieto began the privatization of Pemex, Mexico’s oil corporation, as Pemex was considered a “barrier” to U.S. investment in Mexico’s oil resources. It was precisely this privatizing “energy reform” law that AMLO denounced so forcefully in his speech in February 2014. U.S. oil corporations were worried that if AMLO were to win the July 2018 presidential election, he would move, as pledged, to repeal the “energy reform” law of Peña Nieto and renationalize Pemex.

An oil industry daily publication, the NGI Hale Daily, noted this concern: “The oil and gas industry was eager to preserve ISDS protections, which shield U.S. investors, including oil and gas companies, from unfair treatment or asset seizures by host nations.” (October 2, 2018)

Trump and his trade representative therefore were greatly relieved to learn that AMLO’s trade representative, Jesus Seade, who was present in the final rounds of the negotiations as an “observer,” was unreservedly supportive of the new US-Mexico-Canada Agreement, which retained the ISDS clause with Mexico.

“We applaud and support this agreement,” stated Seade. “It will provide security and stability to Mexico’s trade with its partners.” Soon after, AMLO also spoke out in favor of this agreement, reversing the stance he had taken in 2014. “The USMCA is a good agreement,” he stated, “as it establishes favorable conditions for investment and employment, as well as stability for the national economy.”

Is this why millions of Mexican workers, peasants, and youth voted massively for López Obrador on July 2? Absolutely not, according to hundreds of Mexican unionists and activists who endorsed an “Open Letter to Andrés Manuel López Obrador and the Legislators of Morena,” urging them not to sign the USMCA on the grounds that it will only deepen Mexico’s loss of sovereignty and its subordination to U.S. foreign policy dictates. Uniting workers and their organizations from Mexico, the United States. and Canada can only be forged on the basis of the rejection of this USMCA treaty, the refusal to accept the looting by the U.S. transnational corporations, and the fight against the Wall of Shame and for workers’ rights for all.

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(4) AFL-CIO Executive Council Statement — Chicago September 12, 2019: “Without Fixes, We Must Oppose the New NAFTA!”

When the new NAFTA was signed, the AFL-CIO warned that we would oppose the agreement without major changes. As we said in our March 2019 Executive Council statement, the labor movement will mobilize to defeat the new NAFTA if it is not changed to “meaningfully address what is wrong with the original NAFTA.” We urged the Trump administration to incorporate the changes we have insisted must be made to reverse a legacy of lost jobs in the United States and lower living standards for working people throughout North America.

Unfortunately, to date, the administration has failed to offer sufficient workable solutions to fix the significant weaknesses we identified. We are hopeful that the current engagement with the House Democrats’ Trade Working Group will lead to progress, but we will oppose any agreement that undermines the interests of working people. In light of the administration’s plan to submit the new NAFTA for a vote this fall, we reiterate that if changes are not made, the labor movement will do everything in our power to defeat it.

In our March statement, we laid out a specific list of concerns we have repeated numerous times in both public statements and in private meetings with the Office of the U.S. Trade Representative. The list begins with the need to strengthen NAFTA’s labor standards and include new tools to facilitate their swift and effective enforcement. The agreement’s labor standards should be based explicitly on the relevant International Labor Organization Conventions, which include the freedom of association, collective bargaining, equal remuneration, prohibitions on child labor, forced labor and discrimination, rather than vague references to the principles that underlie those rights.

Changes to the text must also include the elimination of loopholes, which provide that a party must demonstrate a violation was committed through a “sustained or recurring course of action or inaction” and “in a manner affecting trade or investment between the parties.” This requirement has proved insurmountable in the only case ever to be arbitrated under the labor chapter of a U.S. free trade agreement, and it must be removed. In addition, the provisions on forced labor, discrimination and migrant workers are intentionally weak and must be strengthened. Specific language also should be added to ensure nondiscriminatory consumer information laws, such as Country of Origin Labeling, are not considered trade violations.

The agreement itself must contain effective enforcement tools, including the ability of the United States to deny entry of any goods produced in violation of the new labor standards. There is ample precedent for this in the Peru Free Trade Agreement, which permits the United States to block the importation of illegally harvested lumber. This would match the relief afforded to businesses that find their intellectual property rights violated. Without this enforcement tool, companies will continue to exploit workers and treat any lesser penalties, such as fines or the loss of tariff-free entry, as a cost of doing business.

The proposed labor chapter of the new NAFTA also includes important provisions that require Mexico to end corporatist unions and their protection contracts, recognize independent unions, and establish independent labor courts. We have made it clear that Mexico must demonstrate both the political will and the capacity to implement these reforms before it enjoys any benefits under the deal. Without these changes, the new NAFTA, like its predecessor, will continue to give global firms free rein to exploit workers in a race to the bottom.

Measurable progress must be made in all these areas before the agreement takes effect. Unfortunately, there are early indications that progress in Mexico will be slow or halted altogether. For example, incumbent protection unions have filed hundreds of constitutional challenges against the recent labor reforms, and injunctions have been granted in several cases already.

Another glaring failure of the new NAFTA is its treatment of pharmaceuticals. Under the agreement, the monopoly power of Big Pharma is further enhanced, harming consumers in the United States, Mexico and Canada. We have said from the beginning that this provision must be dropped, but to date we have seen no evidence that the administration intends to do so.

The administration also has exaggerated the benefits of its proposed rules of origin, which will need to be strengthened and applied to sectors beyond autos if they are to have any positive effect at all. For example, while the content requirement rises from 62.5% under the existing NAFTA to 75% under the new agreement, the details of the new calculation are unclear. Further, the proposed rules only require that products be produced in North America, not in the United States, thus limiting the promised job benefits to America’s workers.

The new NAFTA does include a provision requiring that a percentage of content be produced by workers making $16 an hour — but requires that level be an average rather than a minimum, with the calculation including highly paid engineers and assembly workers. Many autos produced in Mexico already meet that threshold, as do most made in the United States, so the benefits may be limited. In addition, while the agreement covers steel and aluminum in autos, it does not require that all of the core components be produced in North America. As a result, auto parts produced from Chinese steel slabs could qualify for benefits.

Although the Mexican government prevents American rail employees from working in Mexico, U.S. officials last year allowed Mexican rail crews who do not meet U.S. safety rules to provide rail service 10 miles past our border. A new NAFTA must end this double standard and provide the same protections for American rail workers that their Mexican counterparts enjoy.

While President Donald Trump claims that the new NAFTA will stop outsourcing and create hundreds of thousands of jobs in the United States, the administration has provided no credible evidence to back that up. We are reminded that similar baseless claims were made when the original NAFTA was first negotiated and that other administrations have made the same empty promises when they presented similar FTAs to Congress. America’s workers are tired of being misled when it comes to the so-called benefits of corporate trade agreements.

Without incorporating the changes we have been advocating for all along, the new NAFTA would do little to stop the continued outsourcing of jobs in a wide range of industries, from aerospace and autos to food processing and call centers. As we said in March, it is possible to negotiate a trade agreement that lifts wages and living standards in all three countries. The agreement we have before us will not get us there. If the new NAFTA is not dramatically improved along the lines we have suggested, we will have no choice but to forcefully oppose it.

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