No to the new NAFTA
On, Sept. 30, Canada agreed to changes in NAFTA pushed by the Trump administration following an earlier agreement by Mexico. The New NAFTA still needs to be approved by the legislators of all three countries, and a vote is not expected in the U.S. Congress until early next year. Wall Street seemed satisfied with the agreement, with most U.S. stock market indices going up the next day.
The Trump administration has been bragging about how the New NAFTA, officially called the United States Canada Mexico Agreement or USCMA, will bring more jobs to the United States. The New NAFTA does raise the North American content for car parts rule and requires 40% of the labor in making the cars be paid $16 an hour, which is well above the wages paid to Mexican auto workers. But cars that don’t meet these new standards will only have to pay a 2.5% tariff, which is what all cars coming from Europe, Japan and South Korea already pay.
But even if the New NAFTA does boost auto manufacturing in the United States, it likely won’t help U.S. auto workers. Just look at what happened following the Trump administration’s tariffs on steel. U.S. steel prices rose 33%, U.S. steel companies’ profits soared, and U.S. steel workers got…nothing. In fact, the unionized steel workers at ArcelorMittel, the world’s biggest steel producer have authorized a strike against the company’s proposed contracts that would increase the cost of health care for its workers.
Less talked about, but important, are other changes made to the old NAFTA. Two changes refer to so-called “intellectual property” or the ability of corporations to make even more profits off of new ideas. The New NAFTA extends copyrights from 50 to 70 years beyond the death of the author. It also extends the patent period for new drugs to ten years, which will raise drug prices in Canada, where prices are often half that of the United States.
The New NAFTA also makes it harder for Canada and Mexico to restrict the use of GMOs (genetically modified organism) produced by large agribusinesses like Monsanto. The New NAFTA also paves the way for the use of new synthetic or man-made pesticides. Many of these synthetic pesticides have ended up being banned because of their effects on both animals and human beings, the most famous of which was DDT.
The New NAFTA is also an attempt to bind the Mexican and Canadian economies closer to the United States. One the changes is meant to prevent either country from signing a free trade agreement with China.
The Trump administration used a major threat of putting 25% tariffs on cars made in Mexico and Canada to extract some concessions for U.S. dairy farmers from Canada in the New NAFTA and then declared a great victory. Trump hopes to use the same method on the European Union and China. But both are much larger economies than either Canada or Mexico and are much less entwined with the U.S. economy. Both the EU and China have said that they are not going to be bullied by the Trump administration and retaliated to earlier Trump tariffs on European steel and aluminum and tariffs on almost half the goods that China exports to the United States.
The New NAFTA is good for big corporations, and bad for workers in U.S., Canada, and Mexico. It should be opposed and rejected.