Launch of New NAFTA Marred by Detainment of Mexican Labor Activist, Hundreds of Court Challenges Against New Labor Law

Growing outrage about a jailed Mexican labor activist, bogged-down labor reforms and threats to Mexican workers pressured to return to factories plagued by COVID-19 was not the scenario the U.S., Mexican or Canadian governments imagined for July 1, the date the revised North American Free Trade Agreement (NAFTA) is to go into effect.

• A Mexican labor lawyer has been locked up since June 8 for trying to use the core labor right guaranteed by the revised NAFTA and Mexico's new labor law; a July 1 hearing is scheduled after several punitive bail denials. Mexican labor lawyer Susana Prieto Terrazas, a key advocate for exploited workers in border maquiladora factories in Matamoros and Juarez, has been held without bail for three weeks on trumped-up charges of "mutiny, threats and coercion" after trying to register an independent union to replace a corrupt "protection" union in Matamoros. Prieto became well-known in Mexico for helping maquiladora workers win higher wages in factories along the Texas border last year as part of a growing independent labor movement. Recently, she supported workers demanding COVID-19 safety measures after dozens of maquiladora workers died from workplace coronavirus exposure. Wildcat strikes and mass protests have grown throughout the border region as U.S. companies and officials push for plants to reopen without safety measures. At June 17 hearings, members of Congress raised concerns about Prieto's arrest with the U.S. Trade Representative, who confirmed he was closely following her case and found it a "bad indicator" of compliance with NAFTA's revised labor standards. Prieto livestreamed her arrest as she tried to register the Independent Union of Industrial and Service Workers "Movimiento 20/32," chosen by workers to replace a "protection" union. Last week, Prieto's daughter delivered a letter from U.S. unions and civil society groups to the Mexican National Human Rights Commission seeking help on Prieto's release. U.S. fair trade activists will deliver the letter to Mexican consulates nationwide on July 1. After decades of worker intimidation, Mexican manufacturing wages are now 40% lower than those in China. The Department of Labor has certified more than one million U.S. jobs (1,015,948) as lost to NAFTA just under one narrow retraining program called Trade Adjustment Assistance, which represents a significant undercount of total jobs lost.*
• The first 100 of the 600 challenges to Mexico's new labor law will hit Mexico's Supreme Court on its July 1 reopening. The new NAFTA requires that "protection" contracts signed by unions not elected by workers all be reviewed and that contracts be approved directly by workers within four years after the revised NAFTA goes into effect. This requirement is at the heart of the reforms to Mexico's labor laws enacted on May 1, 2019. Under the new labor law, workers in Mexico could finally have legal protections to fight to raise abysmally low wages. This would also reduce incentives to outsource U.S. jobs to Mexico, benefiting U.S. workers. Within weeks of the new law's enactment, hundreds of corrupt local "protection" unions and other interests opposed to reform began to file what are now more than 600 lawsuits, which both try to block the law's application to specific union contracts and workplaces and to gut the law altogether on grounds that it is unconstitutional. Mexico's judiciary has been out of session since mid-March for COVID-19 precautions. On July 1, the court system goes back into operation, with the first 100 challenges hitting Mexico's Supreme Court. If the court rules against the challenged terms, Mexico will be in violation of NAFTA labor obligations that are essential if the new deal is to slow U.S. job outsourcing. This memo has the latest updates on the cases.
• The Department of Labor has certified 176,982 trade-related job losses during Trump's presidency, and the manufacturing sector is hurting. Under the narrow Trade Adjustment Assistance worker training program alone, 176,982 workers have been certified as losing jobs to trade since the 2017 start of the Trump administration. The data mainly covers 2017-2018, as there is typically a 12-18 month gap between layoff dates and certification. Whether the new NAFTA can slow ongoing job outsourcing or the 88% increase in the overall NAFTA trade deficit during the Trump administration remains to be seen over time. What is clear now is that the U.S. manufacturing sector has been severely harmed by the ongoing COVID-19 pandemic, with 1.1 million manufacturing jobs lost in May 2020 compared with the same month last year.

This grim July 1 scenario was not expected when congressional Democrats forced improvements to Trump's initial NAFTA redo proposal and the pact passed by historically wide margins. The corporate-rigged original NAFTA 2.0 deal that Trump signed in 2018 betrayed his campaign promise to fix NAFTA and was "dead on arrival" in Congress. It included new Big Pharma giveaways that would have locked in high drug prices, making it worse than the original, and labor and environmental terms too weak to counteract NAFTA's outsourcing of jobs and pollution. Even with the improvements that Democrats, unions and consumer groups forced Trump to make to, the new NAFTA still won't restore the hundreds of thousands of manufacturing jobs, as Trump claims.

But the unusually large, bipartisan congressional votes for the "revised revised" NAFTA show that to be politically viable, U.S. trade pacts no longer can include broad monopoly protections for Big Pharma or extreme corporate investor privileges and must have enforceable labor and environmental standards. One important win for consumers, workers and the environment was the gutting of NAFTA's Investor-State Dispute Settlement (ISDS) regime. To date, corporations have extracted almost $400 million from North American taxpayers after attacks on energy, water, timber and toxics policies. Largely eliminating ISDS will foreclose numerous corporate attacks on environmental, health and other safeguards and bolster countries worldwide seeking to exit the illegitimate ISDS regime.

The new NAFTA is not a template for future agreements. Rather, it sets the floor from which we will continue to fight for good trade policies that put working people and the planet first. A deal with ISDS gutted and Big Pharma monopolies eliminated could make a real difference - but only if the serious labor rights problems outlined above are resolved.

*Data Note: The trade data is sourced from the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. We present deficit figures adjusted for inflation to the base month of May 2020. The overall percentage change in the U.S.-NAFTA trade deficit under Donald Trump represent the change in total goods and services trade deficit since 2016, Barack Obama's last year, and 2019, the last full year of data available during the Trump administration. Manufacturing job data is sourced from the U.S. Bureau of Labor Statistics. The government-certified job loss data is sourced from Public Citizen's Trade Adjustment Assistance (TAA) Database. The U.S. Department of Labor certified trade-impacted workplaces under its TAA program. This program provides a list of trade-related job losses and job retraining and extended unemployment benefits to workers who lose jobs to trade. TAA is a narrow program, covering only a subset of workers who lose jobs to trade. It does not provide a comprehensive list of facilities or jobs that have been offshored or lost to import competition. Although the TAA data represent a significant undercount of trade-related job losses, TAA is the only government program that provides information about job losses officially certified by the U.S. government to be trade-related. Public Citizen provides an easily searchable version of the TAA database. Please review our guide on how to interpret the data here and the technical documentation here.