On April 29, 2019, Mythili Sampathkumar writes on Fortune:
As workers’ rights have become a focus for the 2020 presidential campaigns, Senator Bernie Sanders has called on President Donald Trump to protect those rights in the deal to replace the North American Free Trade Agreement (NAFTA), but whether that can happen and if it will be a boon for agricultural and auto workers in the U.S. remains to be seen.
Sanders was speaking at Macomb Community College in Warren, Mich., at a campaign rally on April 13 when he said “the NAFTA treaty that Trump re-negotiated with Mexico will still allow companies like General Motors to send our jobs to Mexico.”
Sanders issued a challenge to the president: “For once in your life, keep your campaign promises…go back to the drawing board.” He implored the president not to send the U.S.-Mexico-Canada Agreement (USMCA) to Congress without ensuring there are “strong and swift” measures to keep jobs from leaving the country.
In October 2018, Trump announced the new agreement after a year of several rounds of talks between the parties to replace the estimated $24.8 trillion NAFTA. The talks were not without their problems as Trump was publicly tweeting statements like: “Trade Wars are good and easy to win.”
CBC News had even reported at the time that the negotiations were tense, to the point of making the Americans “uncomfortable” with the demands they were being asked to put forward by the administration.
Those tense talks may have played a role in leading to an agreement which would only have a small increase—.35%—to U.S. economy and an even smaller one to the labor market, per a report by the independent International Trade Commission.
Though the report said the new USMCA would “have a positive impact” for manufacturing and services industries and there would be some extra production in the auto industry, U.S. production is set to be more expensive and wages are set to drop. The real opportunity for growth in the agreement would lie in removing “uncertainty” in “cross-border e-commerce, services and investments,” according to the Washington Post.
Part of that involves job security and protections for American workers, particularly those in the agriculture and auto sectors, like those in Michigan which Sanders actually won against Hillary Clinton in the 2016 primary.
However, Trump ultimately won Michigan later that year, partly due to the fervor over the president’s repeated comments labeling the free trade agreement as “unfair” to Americans. He later repeatedly called NAFTA the “worst trade deal ever made.”
Sanders’ comments and his previous statements on the matter appear to be more about holding the president accountable on his many campaign trail promises to bring “hundreds of thousands of jobs” to American workers.
Josh Orton, senior adviser and policy director for the Sanders campaign, told Fortune, “Washington has tried to sell corporate-written trade deals like NAFTA to American workers, making false promises of jobs and economic growth for all” for decades and the candidate wants to end that with the USMCA.
He said Trump has only “pretended to be a fighter for workers…and his attempts to renegotiate NAFTA, which contains giveaways to pharmaceutical corporations and still lacks real enforcement of worker protections, shows that he’s rolled over to corporate outsourcers and pharmaceutical corporations.”
But there may be procedural limitations to take into account.
Eric Farnsworth, vice president of the Washington, D.C.-based think tank Council of the Americas and Americas Society, told Fortune Sanders’ call may not even matter. Canada, Mexico, and the U.S. Trade Representative (USTR) have said “publicly and repeatedly that the negotiated text is closed.”
Farnsworth noted there may be some room to change the way the legislation is implemented or to amend with certain “side understandings…but efforts to re-open the text itself would be strongly resisted and likely end in frustration.”
Karen Hansen-Kuhn, director of trade and global governance at the Institute for Agricultural and Trade Policy, told Fortune it is actually possible to re-open the USMCA negotiations and that Sanders’ call out of the president “echoes” that of labor unions, environmentalists, and members of Congress.
She contended the changes these groups and lawmakers have asked for would not just protect American workers but also those in Mexico and would “raise environmental standards and ensure that the new agreement doesn’t lock in high prices for biologic medicines.”
Coupled with changes lobbied for by consumer protection activists on labeling meat products falling within the agreement, Hansen-Kuhn said “these changes would reduce incentives for companies to outsource jobs.”
However, she also noted none of the push for changes in labor protection language mean anything if strong enforcement of the terms are not built in as well. Both she and Dr. Shannon K. O’Neil, vice president and senior fellow for Latin America Studies at the Council on Foreign Relations, agreed: Mexico has been setting a good example for that.
“The best way forward is the labor reform Mexico is in the process of passing through their legislature,” O’Neil told Fortune. “It will do much of what Democrats have been demanding. And it has a high chance of happening as it fits with President [Andres Manuel] Lopez Obrador’s own domestic plans and priorities.”
She said the most effective way for Sanders and others to really protect American jobs and the worker is to make U.S. companies more competitive through investments in infrastructure, education, and research and development, citing the independent report showed the real advantages in the new USMCA only occur when there is confidence and certainty in American companies’ competitiveness around the world.
But Hansen-Kuhn said there need to be more significant changes to the new USMCA if Americans do not want to see “transnational businesses continue to pit workers in each country against each other—as they have during the 25 years since the original NAFTA was passed.”
She argued changes to sections on patents of medications, “giveaways to the fossil fuel sector,” and increasing consumer protections across the board are continuing to be called for as well.
Alyshia Gálvez, Ph.D, a Latin American studies professor at City University of New York, said she is not very optimistic about having these changes taken into account for a more “human-scaled trade deal that takes into consideration the needs of families and communities,” particularly for farmers in all three countries.
But she said there is some hope, since Democrats, who control the U.S. House of Representatives, seem unwilling to put the agreement up for a vote without these changes.
It may just be a question of timing.
Should the USMCA negotiations be re-opened for better job protections and other matters, Farnsworth said it could push ratification of the agreement well into 2020 and possibly too close to the November elections—“never an optimal time to pass any trade legislation much less any as politically complicated as USMCA.”
Senator Bernie Sanders Comments:
Trump’s own Labor Department certified that 185,000 American jobs have been shipped overseas since he became president. And the NAFTA treaty he renegotiated with Mexico will still allow companies like General Motors to send American jobs to Mexico. So today, I challenge Donald Trump: For once in your life, keep your campaign promises. Do not send the NAFTA treaty to Congress until it includes strong mechanisms to raise the wages of workers and to prevent corporations from outsourcing American jobs.
Gary Reber Comments:
The U.S.-Mexico-Canada Agreement (USMCA) does not ensure there are “strong and swift” measures to keep jobs from leaving the country. Increasingly, American automative manufacturers, for example, are sourcing their supply chain parts and finished components and vehicles from Mexico’s strong automative clusters, all built up over decades through the NAFTA trade agreement. These agreements are not working in making Americans economically better off except for the wealthy capital asset owners who own America’s automative manufacturers.
Tariffs are the only way to effectively stop the gutting of our manufacturing capabilities and the elimination of millions of American jobs. It is also the only way to stop the devaluation of the worth of American workers who are pitted against far lower-wage workers in foreign countries, such as Mexico with 33 percent of their population earning less than $5.00 a day.
Of course, de-incentivizing American corporations from producing in Mexico and Canada will mean that our production will become more expensive along with a drop in wages for those not well educated with skills and thinking abilities in demand. As the article states, “transnational businesses continue to pit workers in each country against each other—as they have during the 25 years since the original NAFTA was passed.”
While globalization is and has been the trend in taking advantage of low-cost-of-production countries with no or little protections against environmental damage caused by manufacturing, the only way to make American corporations more competitive is through technological innovation and invention, along with continual research and development conducted by well educated Americans. But as the technology further develops, job opportunities for the masses will continue to lessen and the masses will find it harder and harder to earn a decent income, nevertheless one that can support affluence.
Our nation has made a serious error in incentivizing American corporations to invest in Mexico and Canada, as we have with investing in Communist China, Communist Vietnam, etc. by co-operating factories in those low-wage and low-cost-of-production countries that substitute American supply chain parts and finished product manufacturers for foreign made supply chain parts and finished products. The impact over the course of decades has been to gut large segments of our manufacturing capabilities, eliminate millions of jobs that Americans held, and make us more dependent on foreign countries, rather than self-dependent.
Self-dependency as related to our manufacturing capabilities should be the aim as far as is possible, not trashing our manufactory prowess by outsourcing supply chains and finished goods and products and off-shoring our productive capabilities by investing in countries with low labor costs and other low costs of production. Instead, we should be investing in the building of a future economy in our homeland that can support general affluence for EVERY citizen.
Economic growth of the past that has been claimed to have resulted from increased trade and investments has only served a small minority of wealthy corporate capital asset owners and driven a widening wedge between rich and poor of both developing and industrialized countries. It’s interesting, how nobody ever talks about the internal distribution of Gross Domestic Product (GDP) growth—the ownership distribution of corporations’ productive capital assets in which the owners of multi-national corporations are being enriched at the expense of ordinary citizens.
The reality is if we continue to outsource and rely on “Made In Mexico,” “Made In Canada, “Made In China” and “Made In Wherever”, etc. for finished goods and as parts supply chains, the United States will fall as a production economy, which will increase significantly the number of Americans in poverty, as good-paying manufacturing jobs will no longer exist, nor opportunities to broaden ownership of those corporations abandoning the United States. This will be the fate of any “developed” economy who is putting reliance on low-cost-of-production foreign countries to source their supply chains and finished goods.
If we do nothing and continue to accept the “free trade/non-tariff” status quo, such countries will become far more stronger economically, as a result of our investment and consumer adoption of foreign-made partial or finished goods and products, rather than competing with us fairly.
Tariffs are essentially taxes paid on foreign-made supply chain and finished goods exported to the United States to even their “cost to build” factor with our homeland “cost to build” factor (fair trade). The reality is Americans are paid more as workers and our environmental and worker safety and conditions regulations add to the cost of production. Thus, our own “Made In The USA” supply chain and finished goods will carry a higher price tag than those supply chain and finished goods made in low-wage, low-cost-of-production, non-regulated countries.
Think about this. The disparity in income levels is EXACTLY why we in the United States can not compete with essentially slave labor! WE MUST stop dealing with, trading with low-cost-of-production countries or institute effective tariffs to de-incentivized American corporations producing in such countries. How can an American corporation producing wholly in the United States pay workers $15 to $30 per hour when the American corporations who outsource their supply chain parts and finished products or completely off-shore production pay $1.10 a day in Communist China or $5.00 a day in Mexico for workers?
At present there are literally thousands of corporations in the United States, plus North America and Europe, that have opted to outsource their supply chains and off-shore part or all of their manufacturing to foreign countries with lower standards of living by either establishing their own facilities or acquiring existing enterprises to establish operations and contract services in low-cost-of-production countries. Our presence in low-wage, lower-living-standard countries has enabled those countries’ people to learn and re-learn how to interact and meet the needs of foreign corporations and clients and manage projects and quality control, upgrade language skills, meet quality product global standards and establish global brands of their own.
When Americans act in the role of consumers instead of producers of goods, products and services, they demand lower and lower prices. (And in the role of producers, they demand higher and higher wages.) By doing so as consumers, we encourage American corporations to outsource/off-shore. This results in the requirement for every corporation within the same sector to also outsource/off-shore to stay competitive. The result is the jobs associated with producing at home are eliminated and shifted to jobs the corporations create in low-wage countries. Displacing Americans, often thousands at a time, from their jobs is disastrous to their financial well being and creates hard times for those displaced and their families, and their communities. And the workers who lose their jobs are often the people who have helped grow the business into what it is, though they are not the owners of the business (which is a serious problem that needs to be addressed).
As the job attrition expands, Americans will have less opportunity to produce and therefore consume. (To consume one must produce and we are doing less and less.) Thus, outsourcing/off-shoring increases unemployment and underemployment, while enriching the owners of the corporations outsourcing/off-shoring as it makes American corporations more competitive in the global marketplace in which other foreign corporations are doing the same thing—outsourcing/off-shoring production to competitively sell their goods and products globally. As a result, these low-wage countries and the elites who control their economies and governments become stronger economic and political forces.
Technology is a huge factor in producing at less cost and technology can be adopted by manufacturers in any country at any stage of their development. Low-cost-of-production countries have benefited immensely from learning the technologies of American corporations who have outsourced, and building upon them to advance further, as well as from their youth who are being educated in American universities, or immigrant specialized workers who are living here on H-1B visas. At our stage of development, only through employing the non-human factor—technology and all the non-human things that are means of production—can our corporations produce high-quality, low-priced goods, products and services to be competitive in the global marketplace.
In America, while the national focus is always on job creation (yet we displace jobs through outsourcing/off-shoring) instead of ownership creation, our scientists, engineers, and executive managers who are not owners themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital “worker” owner more productive. How much employment can be destroyed by substituting machines for people is a measure of their success—always focused on producing at the lowest cost. Only the people who already own productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital ownership in their stationary 1 percent ranks. Yet the 1 percent is not the people who do the overwhelming consuming. The result is the consumer populous is not able to get the money to buy the goods, products, and services produced as a result of substituting “machines” for people, as well as outsourcing/off-shoring to reduce the cost of production. And yet you can’t have mass production without mass human consumption made possible by “customers with money.”
We have two choices for our future. Either we cede our manufactory and intellectual property development to low-cost-of-production countries and cease to produce goods and products, and eventually services in our homeland with the result of a significant deterioration of middle-class living standards and an increase in poverty—and dependence. OR we halt the influx of “cheap” and cheeper supply chain goods and finished products, “Made In Mexico” and elsewhere, by imposing tariffs to incentivize our corporations to discontinue outsourcing/off-shoring and return to investing and building a technologically advanced, environmentally enhanced future economy here that can support general affluence for EVERY citizen.
But for the latter to be successful, there must be a significant reform to our monetary, financial and capital credit systems and our planning for long-term results, with a focus on engineering educations to innovate and invent new technologies. We need tuition-free public colleges and universities, and trade schools to provide higher education opportunities for our children. We can no longer ignore the ever more concentration of ownership of the non-human productive capital means of production—all manner of technology, robotics, AI, automation, etc.—among a tiny wealthy capital (asset) ownership class, who seek to OWN the world and hoard all capital asset wealth.
Primarily, we must provide equal opportunity for EVERY child, woman and man to become an owner of future productive capital asset formations and eliminate barriers to using insured, interest-free capital credit, repayable solely from the earnings of the investments, without the requirement of past savings by citizens (which only the already wealthy have). It is this collateralization barrier that excludes the non-haves from access to wealth-creating, income-producing productive capital.
We need to lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. Removing barriers that inhibit or prevent ordinary people from purchasing capital that pays for itself out of its own future earnings is paramount as an actionable policy. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the federal government or raise taxes on ordinary taxpayers. We need to free the system of dependency on Wall Street and the accumulated savings and money power of the rich and super-rich who control Wall Street. The Federal Reserve System has stifled the growth of America’s productive capacity through its monetary policy by monetizing public-sector growth and mounting federal deficits and “Wall Street” bailouts; by favoring speculation over investment; by shortchanging the capital credit needs of entrepreneurs, inventors, farmers, and workers; by increasing the dependency with usurious consumer credit; and by perpetuating unjust capital credit and ownership barriers between rich Americans and those without savings. The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each capital formation transaction, determined by the same expertise that determines it today—management and banks—that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk could be taken by the commercial credit insurers, backed by a new government corporation—the Capital Diffusion Reinsurance Corporation (CDRC)—through which the loans could be guaranteed. The CDRC could reinsure any portion of any financing risk assessed as reasonable and insurable but not already insured by the commercial capital credit insurance underwriters. In establishing the CDRC, the federal government would not be undertaking a new responsibility but merely simplifying and rationalizing an existing one. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.
These reform policies are what is addressed in the proposed Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/. And The Capital Homestead Act brochure, pdf print version at http://www.cesj.org/wp-content/uploads/2014/11/C-CHAflyer_1018101.pdf and Capital Homestead Accounts (CHAs) at http://www.cesj.org/learn/capital-homesteading/ch-vehicles/capital-homestead-accounts-chas/
Also support Monetary Justice at http://capitalhomestead.org/page/monetary-justice and the all-encompassing agenda of the JUST Third WAY (not “Third Way”) Movement (also known as “Economic Personalism”) at http://foreconomicjustice.org/?p=5797, http://www.cesj.org/resources/articles-index/the-just-third-way-basic-principles-of-economic-and-social-justice-by-norman-g-kurland/ and http://www.cesj.org/resources/articles-index/the-just-third-way-a-new-vision-for-providing-hope-justice-and-economic-empowerment/.
