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NAFTA 2.0 Does Little to Reverse the Damage of Its Predecessor

The United States–Mexico–Canada Agreement appears to be a victory for Trump and the “moderate” Democrats.

U.S. President Donald Trump puts on a hard hat as he addresses the National Electrical Contractors Association convention on October 2, 2018 in Philadelphia, Pennsylvania.

On Tuesday morning, House Speaker Nancy Pelosi announced that Democrats had reached a deal with the Trump administration to advance the United States–Mexico–Canada Agreement (USMCA), also referred to as “NAFTA 2.0.” In explaining the deal, she said: “There is no question of course that this trade agreement is much better than NAFTA.”

Progressives have criticized Pelosi for potentially handing President Trump a political victory during both an impeachment process and an approaching election. After all, Trump ran on the promise that he would renegotiate NAFTA and now it seems that, with help from the Democrats, he will. That could mean more GOP votes in swing states that have been wracked by the damage of the original NAFTA deal. “It does appear that if Trump gets a win on this new NAFTA, his chances of reelection go up considerable,” wrote The Intercept’s Ryan Grim. “He can say he delivered on his promises, and that Democrats don’t really think he’s that corrupt after all, or they wouldn’t have delivered him such a major victory.”

For her part, Pelosi appears to believe that the deal might ultimately be beneficial for moderate Democrats at election time, and many House Democrats certainly seem happy with the final version of the agreement. “You know what I’ve said: These have been the fights,” Pelosi reportedly told party members during a caucus meeting after the agreement was secured. “And we stayed on this, and we ate their lunch.”

The political implications of USMCA remain to be seen and, since the final text of the agreement hasn’t yet been released, it’s hard to assess its full impact. But we already have a pretty good idea of what kind of relief it will supply for workers: not much. A report by economists Thea M. Lee and Robert E. Scott at the Economic Policy Institute concedes that USMCA is a big improvement from the 2017 version, but concludes that it ultimately adds up to “Band-Aids on a fundamentally flawed agreement and process.”

Using statistics from the U.S. International Trade Commission, Lee and Scott point out that, at best, the deal will only create about 51,000 jobs over the next six years and could raise the GDP by a few tenths of a percentage point. These potential jobs would come in farming, manufacturing and mining. The report cites an International Monetary Fund (IMF) working paper which predicts nothing but bad news for the (already beleaguered) auto-industry. That same paper concludes that, “At the aggregate level, effects of the USMCA are relatively small…effects of the USMCA on real GDP are negligible.”

Trump continually referenced the devastating impact of NAFTA on the campaign trail, while arguing that it desperately needed to be renegotiated. However, the new agreement does nothing to reverse the damage. While USMCA might generate 51,000 jobs, NAFTA eliminated over 680,000 of them.

Still, USMCA was ultimately endorsed by the AFL-CIO, which also infamously supported the construction of the Keystone pipeline and has criticized the Green New Deal. Not only did the AFL-CIO back the agreement, its President Richard Trumka was instrumental in securing an agreement between Democrats and Republicans.

A piece detailing the negotiations by Politico’s Megan Cassella reveals that Pelosi refused to move the agreement forward unless Trumka signed off on it. She knew that an endorsement from the group would give pro-labor Democrats enough cover to come out in support of it. “I think everyone would acknowledge that Trumka is key,” working group member Rep. John Larson (D-CT) admitted during the process.

Cassella reports that Pelosi ultimately had Trumka come to Congress to assure lawmakers that he was on the verge of supporting the deal. Ultimately, he got on the phone with Trump and after the president agreed to think about moving a pension bill forward, Trumka slapped the deal with an AFL-CIO endorsement.

At least one AFL-CIO member isn’t waiting for the final text to decide whether or not the agreement is worth supporting. The International Association of Machinists and Aerospace Workers (IAM) released a statement declaring its opposition to the agreement, citing the fact that it does nothing to stem the outsourcing of jobs abroad. “Our ability to comment in detail on this agreement is impaired because in the rush to consider such a proposal, we have not even been given the opportunity to review the full agreement in writing,” said the group’s International President, Robert Martinez Jr. “U.S. workers have been waiting for over 25 years for a responsible trade deal that puts their interests ahead of corporations who are fleeing our shores. They are still waiting. The IAM will oppose NAFTA 2.0.”

Robert E. Scott, co-author of the aforementioned EPI report, told In These Times that IAM’s opposition to the deal wasn’t surprising based on what NAFTA has done to the industry. “The aerospace has been hard hit by outsourcing to Mexico,” said Scott, “Their members are very concerned. I don’t think there’s anything in there for them. Very transactional deal.”

While Pelosi worked diligently to pass USMCA, she’s failed to move a robust pro-labor bill forward in the House. The Protecting the Right to Organize Act (PRO Act) was introduced in May by Sen. Patty Murray (D-WA) and Rep. Bobby Scott (D-VA). The bill would make it easier for workers to join unions, extinguish right-to-work laws, crack down on union-busting, address employee misclassification and provide new protections for collective bargaining. The bill already passed the House Committee on Education and Labor earlier this fall.

“I don’t know exactly what the holdup is—it is taking longer than it should given the number of co-sponsors that we have,” Rep. Pramila Jayapal (D-WA) told The Intercept’s Rachel Cohen earlier this month, “Many other bills have come to the floor with fewer co-sponsors than this one.”

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