The Biden administration changed U.S. trade policy significantly when it adopted a “worker-centered” trade policy that justified entering into “frameworks” and not trade agreements. That policy didn’t win many accolades from the trade crowd. Many critics felt that it forewent critical opportunities by refusing to discuss market access in new trade contexts. Without getting into that debate, this post discusses whether the Biden administration’s worker-centered trade policy – and notably, use of that policy under the United States-Mexico-Canada Agreement (USMCA) Facility-Specific Rapid-Response Labor Mechanism (RRM) – will outlive the administration.
I think it will, but it will look different. And some, including labor rights advocates like myself, might prefer the Trump administration’s approach.
Before delving into the Trump trade agenda, a recap of the Biden administration’s worker-centered trade policy is in order. I won’t go deeply into it because I’ve discussed it at length both here and here. Relevant for our purposes is how that administration used the USMCA’s RRM – negotiated by the Trump administration – to assure U.S. trade unions, concerned members of Congress, and influential non-governmental organizations (NGOs) that it took worker rights seriously. It did so by aggressively enforcing the labor rights stipulated in the USMCA’s RRM in Mexican auto sector facilities; well, at least in politically advantageous auto sector facilities.
At Cornell University, I partnered with Alex Covarrubias-V, an expert in the Mexican auto sector at El Colegio de Sonora, and Cirila Quintero Ramirez, a labor union and feminist scholar at Unidad Matamoros, to ask workers in the Mexican auto sector directly about their experiences under the USMCA and its RRM. Our report is forthcoming at Cornell, but it can be found here in the meantime. We asked 130 Mexican workers about what they knew of their labor rights, unions, election procedures, and the RRM’s petitions and hotline processes.
In a nutshell, our study (albeit exploratory in nature) failed to find evidence that working conditions had improved in the Mexican auto sector despite the hundreds of thousands of dollars of U.S. assistance in Mexico and dozens of RRM cases USTR launched. That general finding stood starkly against the enormous benefits that some workers had received through direct assistance from the U.S. government under the USMCA RRM and its extensive remediation plans. Notably, all facilities that faced RRM investigations and remediation plans had workers who were assisted by U.S. unions and NGOs. While that transnational solidarity is a welcomed development, the disparity in empowerment and working conditions between those workers who were at facilities investigated under the RRM and those at facilities that had not raises significant questions about the object and reach of Biden’s worker-centered trade policy.
At this point, you might be asking why we’re talking about empowering workers in Mexico in the wake of a second Trump term. Many assume that the Trump administration merely agreed to include the USMCA RRM to appease a progressive Congress. Tomorrow’s Congress will look quite different following recent elections. With a Republican Congress, and with U.S. union support of current USMCA RRM enforcement, why should the incoming administration worry about broadening enforcement to encompass additional workers in the Mexican auto sector (or other trade and service sectors, for that matter) who are not affiliated with U.S. unions and NGOs?
Having spent four years working for Lighthizer’s Office of the United States Trade Representative, I’ll provide you two reasons that the new Trump administration will, or at least should, be thinking about expanding USMCA’s enforcement under the RRM to encompass more Mexican workers in trade sectors.
First, the RRM was more than a political compromise. It fits squarely within Trump’s objectives to ensure Mexican facilities pay workers the same wages and offer the same types of (costly) workplace benefits as U.S.-based facilities. Think about it this way: So long as facilities in Mexico avoid unions, pay low wages, and mistreat their workers, they produce goods and services for less, creating a competitive advantage in Mexico and incentivizing offshoring.
Those effects in Mexico directly hurt workers in the United States.
When companies in the United States move to Mexico to save on production costs, U.S. workers lose their jobs. When companies in the United States threaten to move to Mexico if workers do not accept their demands, workers lose their salaries, benefits, and bargaining power in desperate efforts to keep their jobs. In other words, the costs of inadequate Mexican labor protections are born by the same U.S. workers that the first Trump administration cared deeply about.
Second, our report offers some evidence that the current scope of enforcement is inadequate to change those unfair competitive practices in Mexico. As I recently explained at a U.S. ITC hearing, by only protecting those workers in Mexico who are privileged to have an inroad to U.S. stakeholders, the Biden administration missed critical opportunities to disseminate information about grievance and election procedures more directly to workers in the trade sectors in Mexico. If the Trump administration wants fair competition, it needs to ensure, as it did when it negotiated the USMCA’s RRM, that workers throughout the trade sectors that compete with workers in the United States have protected opportunities to build their power and fight for better working conditions.
How should things improve under the incoming administration? The Trump administration must ensure that no companies we compete with profit from breaking the rules, including very basic rules governing workers’ rights to join and form the unions that will fight for higher wages and better workplace benefits. It should redirect federal funding to ensure that workers in trade partner countries know their rights and how to enforce them. It should also publicize all petitions filed by workers – not just those supported by U.S. stakeholders. If the administration decides, as is its right, not to pursue a petition, it should be prepared to explain why; otherwise, workers strapped for resources in Mexico and elsewhere may become disincentivized, and we need their participation on the ground to identify rule breakers. Transparency is critical to keeping any administration consistent, and when it comes to production costs and disincentivizing rule-breaking, consistency is key.
As a parting consideration, the trade community is spending a lot of time right now debating the utility of tariffs as a measure to protect U.S. businesses and workers. The USMCA RRM offers an alternative by addressing the root causes of unfair competition, the elimination of which could reduce the trade deficit. By focusing on the causes of unfair competition rather than its results, the Trump administration could attack the trade deficit without increasing the costs of goods on U.S. consumers – again, the same workers that the Trump administration pledges to fight for.
I look forward to hearing your thoughts. Feel free to write in the comments, which are always cause for joy and great amusement, or directly at [email protected].
