US workers score win with USMCA
Martha Newton, Guest columnist
The U.S.-Mexico-Canada Agreement (USMCA) is now in force. Completing a long-time objective of President Trump, the USMCA changes the dynamic in trade by bringing manufacturing jobs back to America and leveling the playing field for U.S. workers and businesses. The USMCA is a win for the American worker.
The USMCA means creation of up to over half a million jobs and increase in wages of up to around $500 per year. Provisions that help the U.S. auto industry will help create 76,000 additional U.S. automotive jobs, according to the Office of the U.S. Trade Representative, over the next five years. To enjoy the tariff benefits of the agreement, automakers will assure 40-45 percent of auto content is made by workers in the U.S., Mexico or Canada earning on average $16 an hour. This compares to typical manufacturing wage in Mexico, which is up to four times less. Under NAFTA, only 62.5 percent of a vehicle’s content needed to originate in North America, but the USMCA increases that threshold to at least 75 percent, far surpassing what has been negotiated under previous U.S. trade agreements.
Mexico will now abide by the same labor standards as the U.S., including requiring Mexico to abandon a labor system that suppressed wages through sham collective bargaining agreements and adopt a new model with an independent labor court system fostering real collective bargaining between truly representative unions and employers.
In a change from NAFTA that will dramatically benefit American workers and businesses, the USMCA’s labor chapter prioritizes labor obligations by including them into the core of the agreement and making them fully enforceable. The White House has asked the U.S. Department of Labor and USTR to make sure provisions are vigorously enforced. The Department and USTR will co-chair the Interagency Labor Committee for Monitoring and Enforcement, coordinating all U.S. efforts of implementation and maintenance of USMCA labor obligations, monitor Mexico’s historic labor reforms and enforce USMCA labor provisions where necessary.
A new and powerful tool for enforcement is Rapid Response Labor Mechanism, which we’ve not seen in past trade agreements, allowing the U.S. to take enforcement action against individual Mexican factories failing to comply with Mexico’s revised freedom of association and collective bargaining laws. Enforcement actions may include suspension of preferential tariffs, imposition of penalties or even denial of entry of goods into the U.S.
The Department will support this enforcement function with technical assistance to build the capacity of the Mexican government and stakeholders to comply with labor obligations of USMCA: $32 million already has been dedicated to innovative projects, with another $180 million coming over the next four years. These funds will help the Mexican government implement historic 2019 labor reforms enacted in part to meet the new USMCA labor commitments to promote democratic unions and collective bargaining. USMCA funds will also help increase awareness of new labor law requirements, provide training for workers and employers to improve labor relations, combat child labor and engage with civil society organizations to promote acceptable conditions of work.
The Department also will soon have eyes and ears on the ground. USMCA implementing legislation calls for the Department of Labor to post up to five attaches to the U.S. Embassy and/or consulates in Mexico. So far, the Department’s Bureau of International Labor Affairs has worked with the U.S. Department of State to establish three attache positions at the Embassy in Mexico City. The attaches will monitor implementation of the USMCA labor obligations and support the close bilateral cooperation that exists with the government of Mexico on labor and employment matters.
This is a banner day for American trade and American workers. The USMCA is a promise to American workers that they will be able to compete on fair playing fields with our trading partners in North America, and the Trump Administration is keeping that promise.
Martha Newton is deputy undersecretary of International Affairs for the U.S. Department of Labor.