Inside U.S. Trade: USMCA working group receives labor proposal requiring preratification actions by Mexico

October 4, 2019
In The News

October 04, 2019 at 12:04 PM

Key House Democrats have received a new proposal crafted by Rep. Andy Levin (D-MI) that would address labor concerns with the U.S.-Mexico-Canada Agreement in part by requiring Mexico to implement labor reforms in at least 500 workplaces before the trade deal is ratified, Inside U.S. Trade has learned.

House Speaker Nancy Pelosi (D-CA) appointed a nine-member working group earlier this year to resolve her caucus’ outstanding USMCA concerns with the Office of the U.S. Trade Representative. One of the thorniest issues under discussion is the enforceability of the deal’s labor provisions. Democrats and U.S. labor groups worry that Mexico will not follow through on a slew of labor reforms that are called for in the agreement, which were approved by the Mexican government earlier this year.

Levin’s proposal -- obtained by Inside U.S. Trade this week -- was sent on Sept. 26 to Pelosi, House Ways & Means Committee Chairman Richard Neal (D-MA) and Ways & Means trade subcommittee chair Earl Blumenauer (D-OR). All other working group members have also received the proposal, which is billed as “an action plan for the initial verification of free and fair elections under Mexico’s new labor laws for the purpose of ensuring the law’s implementation and enforcement as we consider ratifying the USMCA.”

Neal is the leader of the USMCA working group; Blumenauer is a member. Levin is not part of the working group; however, the Michigan representative has long been involved with the labor movement, having served as assistant director of organizing for the AFL-CIO for more than 10 years.

Levin’s proposal contends four steps must be taken before ratification.

For one, “the U.S. Congress must actually see Mexican workers in key export sectors begin to exercise the ability to select their own representatives and negotiate their own contracts democratically,” it states. Seeing the labor reform laws work in a “representative sample of workplaces” before ratification would help assure members that the laws will work nationwide, Levin contends.

According to Levin’s plan, the representative sample of workplaces should include at least 500 facilities. The sample should encompass sectors key to U.S.-Mexico trade, such as auto assembly, auto parts, aerospace, industrial bakery, electronics and call centers, “in numbers roughly proportional to their size in the Mexican export economy.” The sample should also cover existing protection contracts, first-time union elections and bargaining for unrepresented workers, Levin says.

“The beauty of it is, it doesn’t have to go in the trade agreement,” Harley Shaiken, a professor at Berkeley specializing in labor, Mexico and globalization, told Inside U.S. Trade. “The Mexican government simply has to demonstrate before ratification that workers can vote freely in plants in the export sector and form independent unions and bargain with their employers. That in fact would be the quickest route to reform because if employers really want a free trade agreement, they’re going to have to do this.”

Shaiken said he has served as an unpaid adviser to Levin, and previously assisted Levin’s father, former Rep. Sandy Levin (D-MI), as well as former congressional leaders including House Majority Leader Richard Gephardt (D-MO) and House Majority Whip David Bonior (D-MI).

Shaiken contended “you could very well get the support” of U.S. labor groups for USMCA with Levin’s “sample of workplaces” approach.

Congress should also not vote on USMCA until an “adequate” budget for implementing labor reform is in place, Levin’s proposal states.

Mexican President Andrés Manuel López Obrador sent his 2020 budget proposal -- which includes the funding details for labor reform implementation -- to Mexico’s Congress last month. U.S. labor groups, including the AFLCIO, were not pleased, contending not enough resources were being dedicated to the effort. In particular, Democrats and U.S. labor groups have flagged as worrisome a 33.5 percent proposed cut to the Mexican Labor Ministry.

In his proposal, Levin acknowledges that most of that proposed cut is to a national youth employment program unrelated to labor reform. However, “the total amount available” for the labor secretariat’s “regular policy functions was also reduced by 8.73 percent, although some line items, such as prosecution, were increased,” he writes.

Overall, Levin concludes that “In view of the massive labor enforcement challenges … the government’s failure to allocate any significant resources for implementation of the reforms and other enforcement challenges raises serious questions about its ability and even its intent to meet the law’s goals.”

Before Congress ratifies USMCA, Mexico’s labor reforms must also “survive” various “obstacles preventing their proper implementation” and “a myriad of attacks,” the proposal states. For example, the proposal notes, hundreds of employer-dominated unions are challenging the constitutionality of labor reforms.

Finally, Levin says enforcement mechanisms must be enshrined in the USMCA text, including language stating that “a body of inspectors” from “the U.S. and or Canada (depending on who has an interest in the facility in question) and Mexico must be able to investigate and audit any facility covered” by USMCA. A mechanism should be provided for U.S. and Mexican inspectors to examine any goods crossing the southern border, the proposal says.

Levin’s inspections idea is similar to a “labor cooperation mechanism” pitched in April by Democratic Sens. Ron Wyden (OR) and Sherrod Brown (OH). The Wyden-Brown proposal would allow the Mexican and U.S. governments to “audit and inspect facilities suspected of violating labor standards.”

“The reality is, I think it is a very well-intentioned proposal but the proposal itself hasn’t been tried and how that would work on the ground is unclear,” Shaiken said of the inspections approach. “The reality is if you want to see real change in Mexico it’s going to have to primarily be done by the Mexicans themselves.”

Mexican officials, including Under Secretary for North America Jesús Seade and Foreign Affairs Secretary Marcelo Ebrard, have rejected the idea of U.S. inspectors in Mexican facilities. Ambassador to the U.S. Martha Bárcena has said such an approach would have to be reciprocal, with Mexican inspectors allowed in U.S. facilities as well.

Mexican inspectors in U.S. facilities suspected of labor rights violations “would be hard for a lot of members to accept,” a congressional staffer told Inside U.S. Trade, adding that “maybe there could be a scenario where the U.S. makes a different concession.”

With Trump administration officials and prominent Republicans on Capitol Hill pushing for USMCA's approval this month, or at least by the end of the year, Levin’s proposals for pre-ratifcation actions could be problematic for some.

House minority leader Kevin McCarthy (R-CA) has asserted that if USMCA is not brought to a vote by Thanksgiving, the deal will not be ratified. White House trade adviser Peter Navarro this week suggested an even tighter deadline. If Congress doesn't take up USMCA this month, Navarro said he did not think it would be passed. Meanwhile, Pelosi said this week that she hoped to finish work on USMCA “soon,” but she added that Democrats were not bound to any specific deadline. -- Maria Curi (