Energy

Big Labor Wants A Sneak Peek Of Trump’s New Trade Agreement With Mexico

Reuters

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Tim Pearce Energy Reporter

Some of the largest unions in the U.S. are trying to involve themselves in negotiations between Canada, Mexico and the White House over a new trade agreement to replace the North American Free Trade Agreement.

The presidents of the AFL-CIO, United Steelworkers, UAW, Communications Workers of America, and the Machinists union issued a joint statement over ongoing NAFTA talks Tuesday, demanding that they be allowed “to review the full and final text” of any agreement.

“NAFTA has had a devastating impact on workers for more than 25 years. We are aggressively engaged in pursuing an agreement that works for working people in all three countries,” the statement said. “Any new deal must raise wages, ensure workers’ rights and freedoms, reduce outsourcing and put the interests of working families first in all three countries.”

The statement comes after the Trump administration announced a new deal between the U.S. and Mexico. No deal has been announced yet for Canada. (RELATED: Trump Administration Hails ‘Terrific’ NAFTA Replacement Deal With Mexico, Turns Up Pressure On Canada)

Preliminary reports of the deal are favorable for labor unions in both the U.S. and Mexico. The Trump administration has touted heightened trade barriers that will cut down on auto manufacturers outsourcing production to Mexico.

The new deal’s labor provisions are better than NAFTA’s “by a mile,” one senior U.S. trade negotiator said. “There’s never been a trade agreement as [good] from the point of view of organized labor,” the official said.

The new auto industry provisions mandate that 75 percent of a vehicle’s value must be manufactured in the U.S. if the manufacturer wants to escape import duties. The rate was raised from 62.5 percent.

The deal also institutes a limited minimum wage policy across the auto manufacturing sectors of both countries to cut down on Mexico’s labor advantage over the United States. Around 40-45 percent of a vehicle’s value must come from the workers earning at least $16 an hour, about double the average wage of Mexican employees of U.S. auto manufacturers.

The U.S.-Mexico agreement is designed to reverse the flow of job opportunities out of the U.S. to Mexico, however, the deal may not accomplish that goal. Ratcheting up trade barriers between the neighboring countries may push automakers to find other sources of cheaper labor, rather than deal with increased domestic costs. Also, U.S. automakers may still opt to pay the tariff rather than pay Mexican employees $16 an hour.

“If U.S. automakers do not rely on Mexico, they will find other sources for low-cost automotive parts; in 2017, 31 countries each imported more than USD 100 million in automotive parts to the United States,” an April report by the Center for Automotive Research said.

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