Public Citizen | 10 December 2019
Redo of USMCA better than original NAFTA after yearlong effort to improve Trump’s 2018 deal
Note: Today, the administration and U.S. House Democrats announced they had reached an agreement on a redo of the U.S.-Mexico-Canada Agreement (USMCA) that Donald Trump signed last year. Lori Wallach, director of Public Citizen’s Global Trade Watch, issued the following preliminary statement about the revised revised North American Free Trade Agreement (NAFTA)
Thanks to congressional Democrats, unions and consumer groups fighting to remove Big Pharma giveaways and improve labor and environmental terms, the redo of Trump’s 2018 NAFTA 2.0 is better than the original NAFTA and could improve peoples’ lives, although it still includes problematic terms.
Trump failed to fix NAFTA with the deal he signed last year, betraying his promise to working people. It included new Big Pharma giveaways that lock in high drug prices and labor and environmental terms that were too weak to stop NAFTA’s original sin of job outsourcing.
Working people are the winners in the yearlong battle to force Trump to fix his NAFTA 2.0: The changes Trump was forced to make mean the final deal could counter some of NAFTA’s ongoing damage to working people and the environment. Although many NAFTA flaws were not fixed, the alternative is status quo NAFTA, not a more improved deal.
The best feature of the new NAFTA is the gutting of Investor-State Dispute Settlement (ISDS). Using this regime, corporations have extracted almost $400 million from North American taxpayers after attacks on environmental and health policies before tribunals of three corporate lawyers. That a U.S. pact largely eliminates extreme ISDS protections for foreign investors and anti-democratic tribunals sends a signal worldwide about the illegitimacy of the ISDS regime.
Trump’s claim that this new NAFTA will bring back hundreds of thousands of manufacturing jobs is absurd. However, over time, the labor and environmental standards and enhanced enforcement terms may help raise wages in Mexico, and this may also reduce U.S. corporations’ incentives to outsource U.S. jobs to Mexico to pay workers less.
Today’s deal shows that to be politically viable, trade pacts can no longer include extreme corporate rights like ISDS or new monopoly protections for Big Pharma that have been featured in past U.S. trade deals and that they must have enforceable labor and environmental standards. This is a significant shift after decades of U.S. trade pacts expanding corporate rights and Big Pharma monopoly protections.
Fixing the existing, damaging NAFTA is not the same as negotiating a truly progressive trade agreement from scratch, which would additionally require climate provisions, truly enforceable currency disciplines, and the elimination of limits on consumer protections for food, product safety, the service sector and online platforms. The new NAFTA is not the template for future agreements, but establishes the floor from which we will continue to advocate for a new model of trade and globalization that puts people and the planet first.