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Lara: Labor provisions in NAFTA re-negotiation should be truly enforceable

Mark Maldonado
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Lara told the Committee on International Trade and Intergovernmental Affairs, however, that labor could support NAFTA if the needs of working people are met.

While economists argue whether NAFTA has been even slightly better than a wash with regard to the U.S. economy, it is abundantly clear the treaty has created winners and losers since its enactment 25 years ago. Moreover, it set the standard for other international trade deals that have steered categories of work out of the U.S., quashed worker voices and threatened U.S. and other nations' sovereignty by occasionally overriding duly adopted laws.

The AFL-CIO has long said it is not automatically against NAFTA so long as a revised treaty makes adequate provision for the rights of working people. The national labor federation is in the midst of current negotiations seeking to do just that, even as President Trump threatens to scuttle what he has called a "bad deal" for American workers.

The Texas border economy has grown in the era of NAFTA, but we would argue strongly that growth is tied to other far more significant factors than one trade treaty. At the top of that list of factors, we would place the skill, drive and resilience of working people. And we would also argue strongly that the "losers" under NAFTA include not just American manufacturing workers, but Mexican ones as well, who found out in too many cases that even maquiladora wages were too rich for the blood of multinational corporations. IInternational trade treaties can take a high road or a low road. Too often, treaties encourage a "race to the bottom" that secures the lowest wages and benefits, least restrictive environmental regulations and absence of independent trade unions.

Lara's testimony touches on NAFTA and on recent tariffs imposed by the White House on steel and aluminum, which the AFL-CIO strongly supports:

Good morning, Chairman Anchia and members of the committee. Representative Ortega, thank you for hosting us in the beautiful City of El Paso, which is my hometown as well. We appreciate the opportunity to present our case on the issues of NAFTA and the proposed steel and aluminum tariffs. As you know, trade is generally a matter deliberated at the federal level, where the national AFL-CIO represents us. Nevertheless, it is an issue that affects us at all levels of government and in all sectors of the economy. We are primarily concerned about working people who also happen to be the end-consumers of the products traded and sold by industry.

A quarter million working Texans have joined our affiliated unions in Texas in the private and public-sector. Today, I represent them as well as the position of our state AFL-CIO President Rick Levy, and our Secretary/Treasurer Montserrat Garibay. And, as best as I can, I'm also relaying the views of our national organization, which counts over twelve million members nationwide. Some of our labor affiliates have been extremely involved in trade issues. For example: the United Steelworkers (USW), the Communications Workers of America (CWA), the United Auto Workers (UAW), and the International Association of Machinists and Aerospace Workers (IAMAW). The members of these unions, throughout American history, helped make this country the strongest, industrial powerhouse in world history.

International trade is not an easy and simple subject. We've said this before and it may sound trite, but it's true: we are not against trade; we are against "unfair" trade. And, by "unfair" we mean "unfair to the worker." Our national trade expert, Celeste Drake, whose testimony you heard last year, has stated that we do not oppose trade but rather the current rules that govern trade. We also urge you to make the distinction between "trade" and "outsourcing," which is when a U.S. company moves production to another country for the purpose of paying lower wages.

Another way of evaluating trade agreements is looking at their outcomes. It is true, that, since the enactment of NAFTA in 1994, three quantifiable factors have had positive outcomes: trade (or outsourcing), productivity and profits. At the same, time, however, U.S. workers have lost hundreds of thousands of jobs, our manufacturing sector has declined, and wages have remained stagnant. On the Mexican side, you can cross over the border a few miles from here and see that the maquiladora workers are paid a pittance--about $6 a DAY. In other words, NAFTA and other free trade agreements have created an environment in which workers create wealth, but do not share in that prosperity.

The national AFL-CIO has submitted over 50 pages of recommendations to the Office of the United States Trade Representative relating to the NAFTA re-negotiation. The points are summarized as follows:

First, we recommend that a new NAFTA eliminate the "investor-to-state dispute settlement" provisions that provide foreign investors a private justice system composed of corporate lawyers to enforce trade provisions. One of the problems with creating an extra-judicial body where companies can seek private-sector justice is that workers do not have a similar, efficient and favorable body to hear their grievances.

In 2007, Congress added "enforceable" labor chapters in trade agreements, known as the "May 10th agreement." However, the first-ever dispute case brought under these provisions took NINE years to be decided. The national AFL-CIO and six Guatemalan labor unions brought that case against the Guatemalan government. It involved claims related to freedom of association, collective bargaining and rights to acceptable conditions of work. It was decided in favor of the Guatemalan government, setting a standard too-high to meet for future cases, and, again, the decision from the arbitrators came down in 2017-NINE years after it was initiated.

That is why, the national AFL-CIO is also asking that the NAFTA re-negotiation include labor provisions that are truly enforceable.

Third, we recommend strong sanctions on currency manipulation. While Mexico and Canada are not included in the list of nations under the U.S. Treasury Department's "monitoring list" on foreign exchange intervention, other nations have been cited. The national AFL-CIO believes that currency manipulation should be prohibited.

Fourth, we have recommended that rules of origin provisions be strengthened. Currently, almost 40 percent of auto components can be made in Asia, assembled in a NAFTA country and be considered made in North America.

Fifth, procurement obligations relating to Buy American and Buy Local policies should be eliminated. The Texas Legislature, last year, passed Buy American provisions in relation to U.S. steel and iron. Thank you.

Finally, our national affiliate has recommended that NAFTA negotiators think outside-the-box and address tax avoidance and the promotion of infrastructure investments.

Our position is that a trade framework can be developed in which everyone, not just a relative few, wins. In order for this to happen, the workers in all North American countries should be allowed some leverage to negotiate better wages, benefits and working conditions. The work of Americans, Mexicans, and Canadians, should be well-compensated.

It should be noted that the Canadian negotiators think U.S. workers possess inadequate labor rights. Last year, during NAFTA talks, they took the position that the U.S. Congress should prohibit so-called "right-to-work" laws that allow unionized workers to refuse to pay their union dues.

U.S. trade deals do not protect workers. Trade unionists in Latin American countries currently face intimidation when they organize for better wages and working conditions. In many cases, they have been murdered. According to our national affiliate, 39 petitions regarding labor rights cases have been filed under NAFTA. Only three remain pending. The others were dismissed or closed without fully addressing the violations.

Steel and Aluminum Tariffs

In February, U.S. Commerce Secretary Wilbur Ross released the Department's report on the investigations under Section 232 of the Trade Expansion Act of 1962. The report recommended a series of global tariffs on steel and aluminum imports. The United Steelworkers and the Alliance for American Manufacturing have long called for sanctions against China and other countries for the dumping of cheap steel on the U.S. market. This, we consider a matter of national security, as steel is critical in the construction of our national defense. And, just as importantly, the loss of jobs in the American Steel industry has hurt our workforce tremendously.

The leaders of the United Steelworkers' and the Machinists' unions have described China's trade activities as "predatory." That is why they have also supported the Administration's Report under Section 301 of the Trade Act of 1974. Section 301 allows the U.S. to address unfair acts, policies and practices of U.S. trading partners. Government economists and trade lawyers found that China's trade cheating costs American jobs and represents a serious "strategic threat" to the United States: economically, politically, and militarily."

It has been no secret that the Chinese government wants to dominate markets. They have every right to do so, but not if it means engaging in unfair trade practices, such as: forced technology transfers, discriminatory licensing restrictions, state-coordinated and supported acquisition of advanced technologies, unauthorized intrusions into computer networks and cyber theft.

The United Steelworkers personally experienced China's aggressive tactics when their headquarters' computers were hacked by China's People's Liberation Army in May 2014. An indictment followed from the U.S. Attorney for the Western District of Pennsylvania.

The national AFL-CIO, the Texas AFL-CIO, and many of our affiliates agree that we ought to stand up to the Chinese government through the imposition of tariffs, investment restrictions and the initiation of a World Trade Organization dispute by the US. Trade Representative.

While these issues are enough to consider for the moment, we ask this committee and the rest of the Texas legislature to anticipate an additional challenge that our workforce is experiencing: automation.

Recent advances in technology have displaced workers. Big retailers are developing robotics and other technologies that will eliminate many jobs. Truck and automobile drivers and even line cooks may be replaced someday soon. Corporate shareholders would certainly benefit from lower labor costs. But they will do so only in the short-term because an economy without workers is an economy without consumers. Technologies that displace workers is nothing new in our history. It's a common feature of trade markets. We, however, have not experienced the level of innovation that we see coming down the road.

The speed with which automation is progressing on both sides of the border will further increase worker productivity. But it will also lead to job loss in the manufacturing sector. If workers who become more productive, and workers who lose a job because of automation, do not share in the wealth created by those innovations, we will have failed, once again, to protect our people from another major economic shift.