//Why the fight over Mexico’s labour reforms is the latest threat to new NAFTA deal

Why the fight over Mexico’s labour reforms is the latest threat to new NAFTA deal

Mexican lawmakers are expected to soon clear a key hurdle to the ratification of the new North American Free Trade Agreement by passing legislation enabling a major overhaul of the country’s labour laws.

But that might not be enough to win the support of skeptical Congressional Democrats.

Driven by a belief that the original NAFTA failed in its promise to narrow wide gaps in worker rights and wages between Mexico and the U.S., some are demanding to reopen talks in order to negotiate stronger enforcement provisions. House Speaker Nancy Pelosi says they’ll also seek proof that the reforms are being implemented.

Depending how hard the Democrats dig in, the demands could throw an already troubled ratification process completely off course this year — particularly now that Canada and Mexico have both said reopening the deal is a non-starter.

“There’s a lot of politics going on, of course,” said Lance Compa, senior lecturer in international labour law at Cornell University and a former research director at the NAFTA commission for labour co-operation.

“They don’t want to give Trump a victory lap, especially when it runs right into the 2020 elections. But I also think the Democrats and Pelosi are sincere in wanting to see these reforms really happen in Mexico. In the long run that’s what’s going to solve the differential problem.”

Facing pressure from Pelosi to speed up the legislation, Mexican President Andres Manuel Lopez Obrador has said a new bill to protect worker rights required under the trilateral pact should pass. His Morena party — which has a majority in both houses of Mexican Congress — is aiming to pass the laws this month, after missing a January 1 deadline.

Though U.S. Trade Representative Robert Lighthizer has suggested additional enforcement measures could be written into implementing legislation in the U.S., Congressional Democrats say the rules must be built into the treaty itself to ensure they are binding for all three countries.

That would mean reopening talks, they say, a step that’s been ruled out by officials in all three countries and could scupper plans to have the deal approved before the U.S. Congress rises for its August recess. That would likely push the deal’s ratification into 2020, where it risks getting lost in the politics of the presidential election.


Speaker of the House Nancy Pelosi.

AP Photo/J. Scott Applewhite

“My own feeling is it’s not going to go anywhere,” said Compa. “There are too many dissonant opinions in the room.”

An annex to the new NAFTA’s labour chapter calls for Mexico to pass laws ending employer interference in unions and establishing “independent and impartial bodies” to register union elections and resolve disputes. A system must be set up to verify that the election of union leaders and the approval of collective agreements occur through free and secret votes. Independent labour courts are to be created to handle disputes.

Among other things, the changes are intended to root out the widespread problem of so called “protection agreements” negotiated between union leaders and management without worker approval. They would also replace the current dispute settlement system managed by tripartite boards of government, employees and unions – widely criticized for favouring company-controlled unions over independent ones, said Alvaro Santos, a Georgetown University law professor and former deputy chief negotiator on NAFTA for Lopez Obrador’s government.

“It’s a complete overhaul in the labour relationship in Mexico for sure,” he said. “I don’t think people realize the full reach of this reform or how exceptional it was to have it in a trade agreement. It’s a big, big step.”

The deal isn’t the first to link trade and labour issues. That distinction belongs to the original NAFTA, which attempted to address worker rights through a side accord calling on all three countries to enforce their own domestic labour laws – including child labour rules and safety standards. But that agreement left out guarantees of free unions that might press for higher wages and the rights of workers to pick their own leaders.

And though increased trade enabled by the deal was meant to improve the well-being and wages of Mexican workers — thereby preventing jobs from being lured away from higher wage U.S. jurisdictions — many believe the opposite occurred, analysts say.

Indeed, though the extent to which labour intensive jobs left the U.S. due to NAFTA is a subject of heated debate among economists, the issue nevertheless looms large in Democrats’ thinking about the new NAFTA.

“The feeling is the promises were glorious on the eve of signing NAFTA but little of that took place,” said Harley Shaiken, a trade specialist and chair of the Center for Latin American Studies at the University of California, Berkeley.

What’s more, though the U.S. sharpened enforcement provisions in subsequent trade deals with Columbia, Peru and Central America, “the moment the ratification took place, things went back to normal. Around the edges a little improvement but not much beyond that,” Shaiken said.

It’s a complete overhaul in the labour relationship in Mexico for sure… It’s a big, big step

Alvaro Santos

“So for many Democrats they want to see the reform prior to signing this time. They want to see on the ground that workers can form independent unions in the export sector and they can bargain collectively.”

Pelosi has yet to indicate what sort of enforcement and evidence is required to win the necessary votes from Democrats. Establishing a system of labour courts would take two to four years, Compa says, and determining whether union rights are being enforced on the ground could also take time.


A worker, left, welds the chassis of a Honda Fit vehicle on the production line after the opening ceremony for Honda Motor Co.’s new plant in Celaya, Mexico.

Susana Gonzalez/Bloomberg

The pro-labour stance and power of Lopez Obrador’s administration suggests “a lot of goodwill on the part of the new government to see this through and make sure it’s effective,” said Santos of Georgetown University. “I think the questions that are coming up in the new house regarding enforcement and implementation are important. The question is how can they be addressed.”

But in the meantime, Pelosi has said that while the Mexican legislation is necessary for the pact to be considered, they don’t guarantee it will be ratified. Democrats are also pushing for changes to provisions in the deal that provide 10 years of patent protection for a class of drugs known as biologics. Those protections could raise costs by protect the drugs from competition from cheaper alternatives, they warn.

“’Unless’ doesn’t mean ‘if you do this, then we will support it,’” she told Politico. “Unless you do this we can’t even consider it.”

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