Trump Touts New Trade Deal With Mexico And Canada

Oct 2, 2018
Originally published on October 2, 2018 8:31 am
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STEVE INSKEEP, HOST:

How much besides the title is really changing in the North American Free Trade Agreement?

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PRESIDENT DONALD TRUMP: Once approved, this will be a new dawn for the American auto industry and for the American auto worker.

INSKEEP: That is President Trump's view. Experts say the new NAFTA resembles the old one, although with some improvements. NPR's Yuki Noguchi reports.

YUKI NOGUCHI, BYLINE: Among other things, the new U.S.-Mexico-Canada Agreement would encourage regional auto parts production, open up Canadian dairy markets and set new rules for digital and intellectual property. Celeste Drake analyzes trade and globalization for the AFL-CIO, the largest union in the U.S. In her view, it could also address one big problem with NAFTA. It would require Mexico to allow its workers to unionize.

CELESTE DRAKE: That would make a meaningful difference for workers in Mexico and their ability to organize and get their wages up, which then, by the way, has a positive benefit on American workers and Canadian workers because now there isn't such a huge wage differential.

NOGUCHI: This is a big departure for unions, which have historically opposed trade deals. In the past, they argued globalized trade hurt their members' interests by offshoring jobs. So it's unusual to hear unions praising some facets of this new deal. But to be clear, the AFL-CIO teamsters and others say they remain undecided about whether to support the deal - mainly, Drake says, because it's not clear how the U.S. would be able to enforce the new labor provisions with Mexico.

DRAKE: Because if you don't have real effective enforcement, then you don't have anything changing.

NOGUCHI: Lori Wallach agrees. She's director of Global Trade Watch, a consumer advocacy group. She says, ultimately, support for the deal will depend a lot on details that have yet to be decided.

LORI WALLACH: And unless strong labor and environmental standards are subject to swift and certain enforcement, the outsourcing and race to the bottom in wages isn't going to stop.

NOGUCHI: She likes the fact that this deal would eliminate rules permitting companies operating in foreign countries to sue the host government, which Wallach says allows them to circumvent local labor and environmental laws. There are elements of the proposal Wallach decries. For example, the new deal allows a longer term on pharmaceutical patents, delaying the introduction of cheaper, generic drugs.

WALLACH: That could undermine the changes needed in our country to make medicine more affordable here.

NOGUCHI: But it's the auto industry that would be the most affected by the deal. It would require automakers to boost the percentage of parts made in North America to 75 percent in order to avoid tariffs. Chad Bown is a senior fellow at the Peterson Institute for International Economics. He says such new requirements would have ripple effects.

CHAD BOWN: There are some parts, too, that now have to be made with workers that are earning higher wages. And that just means that the cost for automobiles in North America are likely going to go up.

NOGUCHI: The big three U.S. automakers would benefit because many of their cars would be compliant with the new rules. But Bown says it makes the U.S. a less appealing place to make cars for foreign automakers.

BOWN: These rules don't apply if you're building a car in Asia or if you're building a car in Europe. And those are going to be relatively cheaper places to build automobiles to export anywhere around the world.

NOGUCHI: And that, he says, could offset some of the labor gains from the deal.

Yuki Noguchi, NPR News, Washington.

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