Canadian Minister of Foreign Affairs Chrystia Freeland, Mexican Economy Minister Ildefonso Guajardo and US Trade Representative Robert Lighthizer. Photo: AFP/Ronaldo Schemidt
Canadian Minister of Foreign Affairs Chrystia Freeland, Mexican Economy Minister Ildefonso Guajardo and US Trade Representative Robert Lighthizer. Photo: AFP/Ronaldo Schemidt

After the United States, Canada, and Mexico agreed to a new trade deal to replace the North American Free Trade Agreement (NAFTA) late on September 30, US President Donald Trump heralded the new deal as “truly historic news for our nation and the world.”

Yet many activists and environmentalists are already critiquing the new deal, dubbed the United States-Mexico-Canada Agreement (USMCA), calling it a victory for large corporations and polluters at the expense of workers and the planet.

“This deal is a giant step backwards for people, communities and the environment,” Wenonah Hauter, executive director of Food & Water Watch, said in a statement.

She explained that USMCA “would enshrine and globalize Trump’s deregulatory zealotry into a trade pact that would outlast the administration and imperil future efforts to protect consumers, workers and the environment.”

In many ways, the new deal promises to deepen NAFTA’s economic and environmental crises.

In the shadow of NAFTA

Trump famously critiqued NAFTA, implemented under US president Bill Clinton in 1994, calling it the “worst trade deal ever made.” And indeed for decades, activists across the hemisphere have denounced the agreement as terrible for workers, small farms, and the environment.

“Most people don’t know how bad a deal NAFTA was for Mexico,” Mark Weisbrot, co-director of the Washington-based Center for Economic and Policy Research, told Al Jazeera. “But a quarter-century after NAFTA, Mexican wages are about the same as they were in 1980, some 20 million more people are in poverty, 5 million were displaced from agriculture because of the NAFTA tariff policy, and economic growth in Mexico ranks about 15 of 20 Latin American countries.”

NAFTA has also had a devastating impact on workers in the US.

“Americans have suffered under NAFTA’s corporate-rigged rules for decades,” Lori Wallach, director of Public Citizen’s Global Trade Watch, said in a statement.

“Nearly 1 million US jobs have been government-certified as lost to NAFTA, with NAFTA helping corporations outsource more jobs to Mexico every week,” she said. “The downward pressure on US workers’ wages caused by NAFTA outsourcing has only intensified as Mexican wages declined in real terms since NAFTA, with Mexican manufacturing wages now 40% below those in coastal China.”

New deal a win for Monsanto and polluters

The new replacement for NAFTA is seen as a win for Trump and the various industries that are set to benefit from the agreement.

Mike Sommers, chief of the American Petroleum Institute, the largest oil and gas industry lobby in the US, supports the deal, saying it would “help ensure the US energy revolution continues into the future.”

Yet environmental activists and organizers were not so celebratory.

“The [USMCA] has giant giveaways to the agrochemical industry that paves the way for unregulated gene-edited GMOs [genetically modified organisms], rolls back Mexico’s regulation of GMOs, and lets chemical giants like Monsanto and Dow keep the data on the safety of their pesticides secret for 10 years,” Hauter of Food & Water Watch explained.

“The energy provisions will encourage more pipelines and exports of natural gas and oil that would further expand fracking in the United States and Mexico,” she continued. “The text also provides new avenues for polluters to challenge and try and roll back proposed environmental safeguards, cementing Trump’s pro-polluter agenda in the trade deal.”

Deeper trade policy changes needed

Other changes with the USMCA have drawn attention from the labor sector and advocates for progressive trade reform.

The USMCA notably scraps NAFTA’s widely criticized Investor-State Dispute Settlement (ISDS) process, which allows corporations to sue nations for discriminatory practices that infringe on company profits. (In the new agreement, ISDS has been removed between the US and Canada, but not between the US and Mexico.)

“This is a major change,” Wallach said. “The inclusion of expansive investor privileges and powers in the 1993 NAFTA hatched a new corporate-coup-d’etat-by-trade-agreement model that’s been followed ever since.

“That even this corporate-compliant administration whacked ISDS means a future Democratic president [of the US] cannot backslide and sends a powerful signal to the many nations worldwide also seeking to escape the odious ISDS regime,” she said.

Among other changes, the USMCA includes reforms in the auto industry. Beginning in 2020, to avoid paying tariffs, automotive companies will be required to produce at least 75% of a car in the US, Mexico or Canada, up from the current 62.5% requirement. The reform is meant to push production away from Asia and other parts of the world.

In addition, starting in 2020, 30% of the manufacturing of the car must be conducted by workers making a minimum of US$16 an hour – roughly three times the hourly wage of Mexican workers in the auto industry.

However, the deal will also extend patents on biologic drugs from eight to 10 years, resulting in a rise in the prices for customers and a win for the pharmaceutical industry.

After the heads of state from the three participating nations sign the USMCA, it will go to the US Congress for a vote early next year. Critics are urging Congress to reject the new deal, and work for deeper, structural reforms.

“Failed US trade policies that have dramatically boosted corporate power and harmed workers, consumers and the environment require a complete transformation,” Wallach said. “A final renegotiation package that stops NAFTA’s ongoing damage and begins the process of replacing the failed US trade agreement model could obtain broad support.”

This article was produced by Globetrotter, a project of the Independent Media Institute, which provided it to Asia Times.

Benjamin Dangl

Benjamin Dangl has a PhD in Latin American history from McGill University in Montreal and has worked as a journalist throughout Latin America for more than a decade, writing for outlets such as The Guardian, Al Jazeera, The Nation and Vice. He is the author of several books and edits, a progressive perspective on world events. He teaches journalism at Champlain College in Vermont.

2 replies on “NAFTA 2.0 promises to deepen economic, environmental crises”

Comments are closed.