[CTC] Lighthizer floats changes to NAFTA labor proposal

Thu Mar 1 07:53:07 PST 2018

Politico Pro 
Lighthizer floats changes to NAFTA labor proposal

By ADAM BEHSUDI <https://www.politicopro.com/staff/adam-behsudi> 

02/28/2018 06:20 PM EST

The Trump administration is considering revising its NAFTA labor proposal to tweak language derived from earlier agreements that it believes led to a crushing defeat for the U.S. in a trade dispute over Guatemala’s labor laws, congressional and labor sources briefed on the proposals told POLITICO.

The Office of the U.S. Trade Representative is still developing the new language through a consultative process involving labor unions and congressional offices, and it does not expect to put a revamped labor proposal on the table during the seventh round of talks this week in Mexico, the sources said.

USTR’s initial labor proposal, introduced early during the renegotiation, hewed closely to what the Obama administration put forward in the Trans-Pacific Partnership talks. It requires countries to have minimum wage laws and to protect workers' right to organize — reforms aimed largely at Mexico. Similar to the TPP, the Trump administration is also vowing to use the renegotiation to make NAFTA’s labor rules enforceable for the first time under the pact’s labor dispute-settlement procedures.

But critics of the administration’s proposal said the initial effort and the planned revisions would do little to ensure that Mexico will make major improvements to its labor and wage standards, which organized labor and congressional Democrats have faulted as being the driving force for companies to move U.S. jobs south of the border. 

USTR has been circulating revisions to its proposal that would alter only language that was viewed as the central reason the U.S. lost a yearslong labor dispute against Guatemala. The Central American country was accused of violating labor rules under the separate Central American Free Trade Agreement, but a tribunal ultimately ruled <https://www.trade.gov/industry/tas/Guatemala%20%20%E2%80%93%20Obligations%20Under%20Article%2016-2-1(a)%20of%20the%20CAFTA-DR%20%20June%2014%202017.pdf> in Guatemala’s favor because it held that the country's actions didn’t meet a legal threshold that requires a violation to occur in a “manner affecting trade.”

USTR is trying to find a way to modify that language, which has become standard in subsequent U.S. trade deals, to avoid a similar ruling in the future, according to the sources POLITICO spoke to for this story, who were given anonymity to discuss the sensitive talks freely.

"Not all stakeholders were happy with the breadth" of the planned revisions, said one labor source familiar with the text.

A congressional aide said the planned changes don’t address the basic concerns that most of the House Democratic caucus laid out in a letter <https://delauro.house.gov/sites/delauro.house.gov/files/USTR%20NAFTA%20Letter%201.23.2018.pdf> to U.S. Trade Representative Robert Lighthizer in late January. In that letter, the lawmakers blamed Mexico for failing to proceed with constitutional labor reforms and criticized the country’s “authoritarian-style labor structure, stacked labor boards and government-aligned unions.”

The aide wasn’t aware of any new, broader U.S. proposals for the labor chapter.

Still, the effort to tweak the language that played a role in the Guatemala case shows that Lighthizer is being responsive to Democratic concerns over Mexico’s labor standards as he tries to build a bipartisan consensus for a reworked NAFTA 

Lighthizer spearheaded a White House meeting last week that brought together U.S. labor leaders to discuss NAFTA with President Donald Trump, according to sources familiar with its planning.

The discussion during the meeting in many ways pushed back against the work of Trump’s top economic adviser, Gary Cohn, who has arranged for the president to speak with a series of representatives from the agriculture industry and the greater business community as well as lawmakers to defend NAFTA’s status quo.

Cohn was at last week's meeting, said one labor source familiar with how things went down. Cohn “was put on the spot; he was put on the defensive,” the source added. “It was a win for Bob Lighthizer.”

The meeting gave Lighthizer the room to maneuver that he needed to seek improvements to the U.S. proposal to make it capable of picking up Democratic support, the source said.

"Bob was seeking to make clear that if you do, quote unquote, the right things, labor and their supporters in Congress will support this," said another labor source briefed on the meeting.

But even as Democratic lawmakers have said they trust that Lighthizer understands their core complaints over Mexico’s labor and wage standards, the proposed revision and criticism of it highlights an unanswered question: Is the Trump administration willing to go far enough on its labor proposal to make possible the sea change in labor policy in Mexico that some believe will be necessary to secure Democratic support for a deal.

Earlier this month, Lighthizer said <https://www.politicopro.com/trade/whiteboard/2018/02/brown-says-hell-deliver-democratic-votes-for-nafta-20-on-one-condition-616647> that getting 20 to 25 Democrats in the Senate and a large number of Democrats in the House to back a revamped agreement is something "that's very much in reach."

Democratic lawmakers were expected to travel to Mexico City during the seventh round of talks to renew their effort to persuade negotiators on the issue. A delegation traveled to the last round, in Montreal, to press their case <https://www.politicopro.com/trade/article/2018/01/nafta-labor-talks-could-open-fresh-conflict-in-the-negotiations-314808> with Lighthizer and with negotiators from Canada and Mexico.

The Democratic push in Montreal came at the same time as Mexican labor unions and the AFL-CIO filed a joint complaint <https://www.politicopro.com/f/?id=00000161-2df8-da2c-a963-effbb5710001> under NAFTA’s nonbinding labor provisions that detailed how a pending bill in the Mexican Congress could derail progress on the country's labor laws. The bill would implement constitutional labor changes, but it is seen as backtracking on intended improvements to the labor arbitration process and to strengthening the ability of company-controlled unions to negotiate "protection contracts" that favor employers 

Mexican Economy Secretary Ildefonso Guajardo has signaled <https://www.politicopro.com/trade/article/2018/01/guajardo-says-mexico-will-handle-labor-reform-in-nafta-like-it-did-in-tpp-315654> his government won't be pressured into adopting labor reforms as part of the NAFTA renegotiation — which is the same position it took under the TPP talks.

"From the very beginning in the TPP negotiations, we made clear that Mexico had its own labor reform agenda, and that started back in 2014 with a national consultation," Guajardo said at a press briefing at the close of the sixth round.

However, Rep. Bill Pascrell <https://cd.politicopro.com/member/51559>, ranking Democrat on the Ways and Means Trade Subcommittee, and Rep. Sandy Levin <https://cd.politicopro.com/member/51482>, a leading Democratic voice on the issue, warned last week that labor rights in Mexico "is not an issue that can be sidestepped."

"It is the central issue that must be addressed in any rewrite of NAFTA," the lawmakers said in a statement. "Failure by Mexico to stop suppressing its workers’ wages will not only be an obstacle for a new NAFTA, it will be a death knell for any deal passing Congress."

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

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