A NAFTA Renegotiation Game-changer, Until the Trump Administration Squanders It

Josh Bivens

Josh Bivens Economic Policy Institute

Since the beginning of his presidential campaign, Donald Trump has railed against the North American Free Trade Agreement (NAFTA) as being a bad deal for working Americans. He promised that if he was elected, he would renegotiate NAFTA and secure a “much better deal for all Americans.”

So it’s not surprising that earlier this week, the leader of a prosperous country engaged in NAFTA renegotiations demanded changes to increase workers’ leverage, provide a bulwark against downward wage pressure, and prevent his country’s manufacturing sector from being undercut by weak labor standards. But was this leader Donald Trump? Nope. It was Justin Trudeau of Canada.

Even more striking, the reported change that Trudeau’s government has requested to stem downward pressure on Canadian wages is one that beefs up American labor standards. Yes, the low-wage, low-standard country that Trudeau’s government is correctly concerned about as they renegotiate NAFTA is the United States.

The requested change is ambitious: Trudeau’s government wants an end to so-called “right to work” (RTW) laws in American states. This would clearly be good for American workers. In a nutshell, “right to work” laws have nothing to do with helping people find work—instead they simply ban contracts requiring that workers benefiting from labor union representation pay their fair share for this representation. This ban makes it extraordinarily difficult for workers to join together and form unions in RTW states. As a result, these states have substantially fewer union members and less collective bargaining. The economic evidence shows that RTW laws do not boost employment or economic growth, but do suppress wages.

Why does Canada care about laws in American states that suppress American wages? Most generally, in a global (or even regional) labor market, if your neighbors’ wages are being pulled down, you can be sure that yours will be soon. More specifically, Canada has a large automotive production sector, and auto producers often choose between the United States, Canada, and Mexico in regards to where to open new facilities. In recent years many of these facilities have been opened in RTW states in the American south. From the perspective of a profit-maximizing company looking to keep labor costs as low as possible, the wage suppression resulting from RTW laws may provide an inducement to open new factories in RTW U.S. states rather than Canada.

So Canada has a legitimate stake in requesting this change, and indeed just the request itself is extraordinarily useful. Besides being both ambitious and good for both Canadian and American workers, the Canadian request is clarifying about two vital issues: (1) the historical use of trade agreements to further rig the rules of the economy against workers (in all countries), and (2) Donald Trump’s commitment (or lack thereof) to un-rigging those rules.

Some casual observers of these policy debates might think that it’s odd that any country would ask for a change in a trading partner’s domestic labor law during negotiations about international trade. But NAFTA already does require each country to undertake a host of changes to domestic policies, in ways that tilt in the direction of increasing protection for corporations’ profits. For example, NAFTA extends more-stringent protection of intellectual property claims of software and pharmaceutical firms to all three countries. And NAFTA provides a private forum to entertain and adjudicate claims from private corporations that they should be compensated for government policy changes that harm their profits. So at the same time that NAFTA exposes workers in all three countries to fierce competition with each other in a common labor market, it provides greater protection for the incomes of owners and managers of multinational corporations. All in all, the rules of trade treaties are some of the most blatant rule-rigging that exists in economic policy.

The recent Canadian request is quite radical in that it takes as given that trade treaties are used all the time to leverage big changes in country’s domestic policies, but then demands that these changes actually benefit workers rather than corporate owners and managers.

And it’s a potential game-changer for the NAFTA renegotiation process. If the U.S. agreed to it, lives for tens of millions of American workers would get materially better. Will the Trump administration crow about the better deal they struck and accept this proposed change?

I’ll bet my house that they won’t. Despite their repeated claims to care about the plight of working-class Americans, some of the only substantial policy changes that the Trump administration has achieved so far have been a systematic attack on policies or regulations that give these workers any economic leverage or protection.

In short, Prime Minister Trudeau has called President Trump’s bluff. Trump has claimed he hates NAFTA because it’s bad for American workers. He has been handed a chance to effect a change in it that would actually benefit the entire American working-class. He will pass on this chance and this should tell us a lot about him and who he really cares about.

***

Reposted from EPI

Posted In: Allied Approaches

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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