Tai Says New NAFTA 'Turns Criticism on Its Head' and Defends US Rejection of TPP
U.S. Trade Representative Katherine Tai said that NAFTA had to be renegotiated because it wasn't good for American, Canadian or Mexican workers. The traditional labor complaint about NAFTA is that Mexico gained jobs at America's expense, but Tai, in a talk at the World Economy Summit hosted by Semafor on April 12, said it wasn't good for Mexican workers "because workers in Mexico did not have the opportunity really to advocate for themselves and better their conditions."
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Through the rapid response mechanism, part of the USMCA that replaced NAFTA, Mexican workers or unions complain that a Mexican factory is suppressing an independent union, and the U.S. or Canada says that unless that employer can change how it's operating, they may withdraw tariff benefits for that factory's exports. So far, each case has been resolved without an effect on duties.
The rapid response mechanism has been used seven times, she noted, and when the complaints are resolved, "we have ... allowed for workers in Mexico to vote for a collective bargaining agreement ... that they agree represents their interests to secure higher wages and/or better benefits."
A recent example of this mechanism being used was at the Unique Fabricating, Inc. plant in Queretaro, Mexico (see 2303090038). Tai explained that this mechanism allows workers "to improve their livelihoods" for the "first time in our history." This also "turns the criticism of NAFTA on its head." She said that criticism was that trade agreements always pit workers from different countries against each other as corporations chase lower wages in developing countries.
"This is a guiding principle for us," Tai continued. "The winners and the people whose interest we're carrying in our trade agreement negotiations are not just the biggest of the big ... we bring it all the way down to the mediums, the smalls, and our workers and the environment."
The moderator also asked her if countries that are in the Indo-Pacific Economic Framework negotiations wouldn't have preferred for the U.S. to stay in the Trans-Pacific Partnership, a traditional free trade agreement that lowered tariffs for its participants. The TPP's negotiations were concluded during the Barack Obama administration, but the trade treaty was never presented for a vote in Congress because it was known that the votes were not there for passage.
"If you feel like something more that's not captured" should be in the current U.S. proposal, and is consistent with IPEF's goals to promote resilience, sustainability or inclusivity, Tai challenged trade negotiators: "come to the table with the ideas. But I would say that those ideas are going to need to respond to the challenges and opportunities we face today -- and clinging to things we have done in the past? There's really no reason why we should imagine that doing the things that we have always done will lead to different or better outcomes."