The New NAFTA Has an Interesting Rule In It

Matthew McMullan

Matthew McMullan Communications Manager, Alliance for American Manufacturing

A NAFTA renegotiation has been completed. Go put your transition shades on and head out to the Rose Garden to join President Trump for a victory lap!

It’s not a done deal, of course. Legislatures in all three countries will need to approve the United States-Mexico-Canada Agreement (USMCA), and, given the complicated politics of trade in this country, that is no sure thing.

But, as we said on Monday, there’s a lot that stands out in the text, including: stronger rules of origin for auto manufacturing, side letters on steel and auto tariffs, and improved labor protections for Mexican workers that could ultimately help workers in America. Vox explains:  

One of the biggest complaints against Mexico right now is that labor unions are largely controlled by employers, and workers are not even part of contract negotiations. So it’s no wonder why Mexican factory workers are earning so little. The average hourly wage for factory workers in Mexico is just over $2 an hour, and the country’s minimum wage is roughly $4.15 for a full day’s work. These low wages attract US companies to operate in Mexico.

The new labor rules in Trump’s pact with Mexico are supposed to remove the incentive to keep Mexican workers living in poverty. Under the new deal, the United States can use the same dispute system to resolve labor complaints that NAFTA previously allowed only for commercial trade violations (such as exceeding trade quotas).

So that’s cool. But there’s other interesting stuff in there, too. What’s this new clause all about?

To answer the reporter's question in her tweet: Yes! yes it is.

Article 32.10 of the new deal stipulates that “entry by any Party into a free trade agreement with a non-market country , shall allow the other Parties to terminate this agreement on six-month notice and replace this Agreement with an agreement as between them (bilateral agreement).”

In short: If Canada, Mexico, or the United States were to individually join a trade agreement with China (a non-market country), either of the other two parties could scuttle USMCA. That makes for a pretty good incentive not to sign an agreement with China.  

Between that, the stronger rules of origin for auto parts, and the provision that bars members from devaluing their currencies to boost competitiveness, it kinda looks like the Trump administration is going to start focusing more of its trade attention on Beijing.

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Reposted from AAM

Posted In: Allied Approaches, From Alliance for American Manufacturing

Union Matters

Federal Minimum Wage Reaches Disappointing Milestone

By Kathleen Mackey
USW Intern

A disgraceful milestone occurred last Sunday, June 16.

That date officially marked the longest period that the United States has gone without increasing federal the minimum wage.

That means Congress has denied raises for a decade to 1.8 million American workers, that is, those workers who earn $7.25 an hour or less. These 1.8 million Americans have watched in frustration as Congress not only denied them wages increases, but used their tax dollars to raise Congressional pay. They continued to watch in disappointment as the Trump administration failed to keep its promise that the 2017 tax cut law would increase every worker’s pay by $4,000 per year.

More than 12 years ago, in May 2007, Congress passed legislation to raise the minimum wage to $7.25 per hour. It took effect two years later. Congress has failed to act since then, so it has, in effect, now imposed a decade-long wage freeze on the nation’s lowest income workers.

To combat this unjust situation, minimum wage workers could rally and call their lawmakers to demand action, but they’re typically working more than one job just to get by, so few have the energy or patience.

The Economic Policy Institute points out in a recent report on the federal minimum wage that as the cost of living rose over the past 10 years, Congress’ inaction cut the take-home pay of working families.  

At the current dismal rate, full-time workers receiving minimum wage earn $15,080 a year. It was virtually impossible to scrape by on $15,080 a decade ago, let alone support a family. But with the cost of living having risen 18% over that time, the situation now is far worse for the working poor. The current federal minimum wage is not a living wage. And no full-time worker should live in poverty.

While ignoring the needs of low-income workers, members of Congress, who taxpayers pay at least $174,000 a year, are scheduled to receive an automatic $4,500 cost-of-living raise this year. Congress increased its own pay from $169,300 to $174,000 in 2009, in the middle of the Great Recession when low income people across the country were out of work and losing their homes. While Congress has frozen its own pay since then, that’s little consolation to minimum wage workers who take home less than a tenth of Congressional salaries.

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A Friendly Reminder

A Friendly Reminder