Trump Trade Deficit 6.5% Higher than Obama’s Last Year, Not Eliminated as Then-Candidate Trump Promised

Trump Trade Deficit Increases Even as Trade Flows Show COVID-19 Effect, Dropping 15% in First Six Months of 2020 Compared to Same Period in 2019

The U.S. trade deficit in the first half of President Donald Trump’s fourth year in office remains 6.5% higher than in the same period in President Barack Obama’s last year, despite a 15% overall fall-off in trade flows related to the global pandemic, new trade data released by the U.S. Census Bureau shows.

“Worldwide COVID-19 has reduced trade flows, so the fact that Trump’s trade deficit is larger than  the same period in the last year of the Obama administration shines a big fat spotlight on Trump’s failure to ‘eliminate’ the trade deficit, which he promised endlessly as a candidate in 2016,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

Even as trade flows overall dropped 15%, the U.S. trade deficit in the first six months of 2020 was only down 9% relative to the same period in 2019. This is in part because imports from Mexico have begun to rise significantly. 

The new U.S. Census Bureau trade data showed that:

  • The effects of the COVID-19 pandemic on commerce in general and trade in specific are evident in the six-month 2020 data: Comparing the trade flows in the first 6 months of 2019 to the same period in 2020, U.S. trade has decreased 15%.
    • Total U.S. goods and services exports in the first half of 2020 were $1,066 billion relative to $1,266 billion  in 2019. Imports in the first half of 2020 were $1,341 billion versus $1,563 billion  in 2019.
  • The six-month 2020 trade deficit is 6.5% higher than the deficit for 2016, the year before Trump took office, even as the COVID-19 effect reduced the deficit 9% compared to the first six months of 2019. Comparing the first half of Obama’s last year in office (January to June 2016), the overall trade deficit increased 6.5% rising from $257 billion to $274 billion in inflation-adjusted terms. (The unadjusted figures provided in the government data base show a rise from $238 billion to $274 billion.)
    • The overall U.S. goods and service trade deficit with the world dropped 9% in first half of 2020 relative to the same period in 2019 from $301 billion to $274 billion in inflation-adjusted terms (The unadjusted figures provided in the government data base show a drop from $297 billion to $274 billion.)
    • The U.S. trade deficit in goods decreased 7.5% in inflation-adjusted terms from $446 billion in the first six months of 2019 to $412 billion in the same period of 2020. However, the trade deficit in goods during these months is still 3% higher than the one experienced in the same period of 2016, rising from $399 billion to $412 billion (inflation-adjusted dollars).
  • The China deficit is down relative to Obama’s last year, but there is “trade diversion” effect of imports increasing from other countries. 
    • The trade deficit with China decreased 22% in inflation-adjusted terms going from $169 billion in the first half of 2019 to $132 billion in the first half of 2020. It is also smaller compared to 2016, when in inflation-adjusted dollars, it was $173 billion for January to June.
    • In inflation-adjusted dollars, the goods trade deficit with the rest of the world (excluding China) increased from $277 billion to $280 billion in the first half of 2020 relative to the same period in 2019.
  • The deficit with North American Free Trade Agreement (NAFTA) partners is 11% higher in the first half of 2020 relative to the same period in Obama’s last year in office but down relative to 2019 even as Mexican exports to the U.S. began to expand significantly in June.
    • The NAFTA deficit in the first six months of 2020 was $97 billion, 11% higher than the same period in 2016 when it was equivalent to $88 billion in inflation-adjusted dollars. (In nominal terms the goods trade deficit with NAFTA parties increased by 18%, or $15 billion.)
    • The goods trade deficit with NAFTA parties decreased by $19 billion in inflation adjusted terms compared to the same period in 2019, largely because of measures taken to prevent the spread of COVID-19.
    • Even as the COVID-19 pandemic narrowed the trade deficit with NAFTA parties during the first half of 2020 compared to 2019, the reduction was not as large as expected given the jump of Mexican exports in June. According to the data released by Mexico’s statistics authority Mexico’s statistics authority (the National Institute of Statistics and Geography), Mexican exports, of which more than 80% are destined to U.S. markets, grew 75.5% in June relative to May. This resulted in Mexico posting a six-month January to June surplus of $2.6 billion even as Mexican exports decreased overall 12.8% compared to June 2019, Mexican imports dropped almost 10% more in the same period (22.2%).
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Hyperglobalization Undermines Response to COVID-19 Crisis

Latest Data Reveal Growing U.S. Trade Deficits in Ventilators, Masks and Other Coronavirus-Related Gear as Shortages Reemerge, Reflecting U.S. Overreliance on Imported Goods to Battle Pandemic

Public Citizen's Global Trade Watch released an updated series of trade flow and country-of-origin data infographics on medical goods used to battle COVID-19 ahead of tomorrow’s U.S. House Ways & Means Committee hearing on critical supply chains, trade and manufacturing.

The newest feature is:

In addition, the web feature includes updated data showing:

Decades of hyperglobalization have undermined our resilience against the COVID-19 crisis. Even into summer 2020, the U.S. still cannot make or get critical goods people need with shortages again emerging of personal protective equipment (PPE) as infection rates rise. More than 40,000 U.S. manufacturing facilities have been lost to 25 years of corporate-rigged trade policies that made it easier and less risky to move production overseas to pay workers less and trash the environment.

Having the world’s largest trade deficit year after year means the U.S. is extremely reliant on other countries to provide essential goods. As the COVID-19 crisis emerged in early 2020, U.S. government officials urged U.S. firms to expand exports to China of the limited U.S. domestic production of key medical goods instead of considering U.S. residents’ needs. Effective implementation of the Defense Production Act (DPA) to purchase and domestically allocate PPE, ventilators and more would have preempted the export frenzy we see in the data. Unfortunately, Americans are still in the dark about the extent to which these critical emergency powers have been used to control exports of critical supplies.

After decades of outsourcing and corporations buying up competitors to consolidate control of production sectors and shuttering “redundant” production facilities, many critical goods are now mainly made in one or two countries. When workers there fall ill or governments prioritize their own peoples’ needs before exporting goods away, a worldwide shortage of masks, gloves, medicine and more can quickly develop.

And, under current practices and policies, it’s hard to quickly increase production. Long, thin globalized supply chains mean parts needed to make any one product may come from dozens of countries. If one link in the chain breaks because it is difficult to source inputs and components from a specific country or region, it becomes impossible to scale up domestic production during a crisis. And, monopoly patent protections in many trade agreements expose countries to sanctions if they produce medicine, ventilators and more without approval by and payment to pharmaceutical and other firms.

With policymakers and the public distracted, corporate lobbyists are pushing for more of the same trade policies that hatched the unreliable supply chains now failing us all. Instead, we must fundamentally Rethink Trade. The goals should be healthy, resilient communities and economic well-being for more people – not the current priority of maximizing corporate profits.

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House Trade Subcommittee Chair Blumenauer Shines Light on Consumer, Environmental, Animal Welfare Threats in U.S.-UK Pact

By Melanie Foley

The June 17, 2020 House Ways and Means Committee of the U.S. House of Representatives hearing with U.S. Trade Representative (USTR) Robert Lighthizer featured a very important exchange on trade pacts and regulatory standards. Ways and Means Trade Subcommittee Chair Earl Blumenauer (D-Ore) said to the USTR:

 

Currently, the United States spends too much money subsidizing large corporations and doesn’t adequately help the majority of small and mid-size farmers. And it subsidizes manufactured food at the expense of fresh, healthy food. We’ve entered into phase two of our agreements with the United Kingdom. I hope that our negotiators can focus on tearing down protections and barriers to trade, like quotas and price control measures, and spend less political capital on areas where our countries may have reasonable policy differences.

I think too often we hide behind requiring “science-based” justifications for other nations’ sanitary or phytosanitary measures without allowing flexibility on values and public inquiry. Many large agricultural interest folks point to scientific studies on pathogen rinses for poultry. You know, maybe we should be asking about our production process that requires us to wash chickens in chlorine in the first place. Can’t reasonable people have concerns about slaughterhouses in the United States? Anybody who has watched the news recently understands that the United States policy on slaughterhouses needs a much closer review.

With pesticides, our regulations do not set a high enough standard to determine their effects on our environment, and how those environmental effects impact our health. Should we really export our weak standards to another country, who has legitimate public policy concerns and may provide better protection? For genetically modified wheat or meat, altered by growth hormones, is it possible in a democracy where consumers have input might choose to restrict these practices other than interfering with American commerce?

As with all negotiations, there are some priorities that we will push harder than others, but I would hope you will focus your attention and that of your team on protectionist hurdles for our farmers, rather than areas of legitimate policy differences. American families need national and international agricultural policies that address our common welfare and allow for targeted regulations that promote health, address climate change, and put people ahead of corporate interests. I would hope that you and your staff would be willing to help us explore these differences to determine where there are legitimate policy differences, rather than simply protectionist impacts. Would it be possible for us to work with your team to explore this?

Rep. Blumenauer described in detail how this FTA could lock in lax U.S. food safety standards — on massive agribusiness subsidies, pesticides, slaughterhouses, chlorinated chicken and more — and export these to the United Kingdom.

This position reflects decades of trade policy that preceded the World Trade Organization (WTO). Namely, if a domestic regulatory policy does not discriminate against foreign goods – by providing less favorable treatment to imports relative to domestic goods – why should trade agreements meddle with that domestic standard?

To put it another way, if citizens in a democratic process decide that they want laying hens or livestock treated humanely or want genetically-modified and non-GMO goods separated and labeled so consumers can choose, why should trade agreements label such policies illegal and require their elimination in the face of trade sanctions?

Lighthizer’s response was unfortunate:

On this issue of agriculture, I’ll repeat what I’ve said before. Number one, agricultural policy is set by the United States Congress, not by the U.S. trade representative. So, the issues you raised I know are difficult issues and are being fought out in Congress. And Congress will come to some conclusion and I’ll be guided by what Congress says. For right now, the reality is that for what we want and what we insist from our trading partners is equal access, fair access based on science. The difference between big and small corporate farmers, I don’t know much about that. I would say that the United States has the best agriculture in the world. It has the safest, highest standards. We shouldn’t confuse science with consumer preference. If consumers have a preference for one thing or another, they should certainly exercise their preference, but it is not the role of the U.S. trade representative to change agriculture policy. I am dictated that by the agriculture department, but mostly by the United States Congress. So, what I’m going to do is try to insist on science-based restrictions and to the extent there are restrictions that are not science-based we will object.

At a Senate Finance Committee hearing later that same day, Lighthizer doubled down on his commitment for so-called “science-based” standards, saying:

They now, in terms of some maximum [pesticide] residue levels, they actually have: if there’s any detection at all, the product is unacceptable. To me, that is just plain protectionism. And making every regulation science-based is the equivalent of getting rid of protectionism. It’s the equivalent of getting rid of any other non-tariff trade barrier, and it's something I’d wish, if anything, I would say Europe is going in the wrong direction, not in the right direction. They’re being controlled by protectionist interests, and well, let me just leave it at that. Protectionist interests.

In my judgement, we have to insist on science-based standards, for our farmers, and I would say this, this standards thing is not just an ag issue, right. I mean they’re using standards in industry too. It’s a higher art in ag, but they use it in industry too. We have to insist on it, and to the extent people deny us access, we shouldn’t give them a trade agreement, and if we don’t have a trade agreement, in my judgment, we ought to be taking trade actions against them. And I’m looking right now at whether or not right now some of these actions, I want to consult with you and your staff, whether or not right now we shouldn’t be looking at a 301 on some of these things. It’s getting so far out of control where they say, literally, if there’s any detectable residue, the product is unacceptable. That’s just nothing to do with science…

One of the things, on the UK, you know on this rinse on poultry, this so-called chlorinated chicken, that these people have, it’s going to be a huge problem. And I’ve made it clear that this is not going to be an agreement, that I’m bringing back an agreement to the United States Congress that excludes our agricultural products on a nonscientific basis.”

Lighthizer’s perspective represents U.S. agribusiness. Blumenauer’s perspective has a much larger base of support – not just his constituents in Oregon, but many U.S. and UK consumers.

In a recent joint letter, dozens of U.S. and UK labor, environmental and other organizations expressed their concerns that an FTA could pose risks food safety, digital privacy, animal welfare, financial regulation and much more.

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No ISDS in U.S.-UK Free Trade Agreement

By Melanie Foley

At a June 17, 2020 hearing of the Ways and Means Committee of the U.S. House of Representatives, Rep. Lloyd Doggett (D-Texas) asked the U.S. Trade Representative Robert Lighthizer an important question. Doggett, one of Congress’ leading critics of the controversial Investor-State Dispute Settlement (ISDS) regime, inquired: 

Do you envision in the agreements that you're currently negotiating to maintain the progress that we made in the USMCA with regard to dispute resolution so that when we're dealing with a developed country like the United Kingdom, we rely on a mature legal system rather than a closed dispute resolution system following the precedent that you set in Canada and which is applied successfully in Australia?

The reply from Lighthizer, the administration’s top trade official, was one word: “Yes.”

In layman’s terms, this exchange confirms that ISDS will NOT be part of the U.S.-United Kingdom Free Trade Agreement (FTA) that is currently being negotiated!

ISDS grants rights to multinational corporations to sue governments before a panel of three corporate lawyers. These lawyers can award the corporations unlimited sums to be paid by taxpayers, including for the loss of expected future profits, on claims that a nation’s policy violates their rights. Their decisions cannot be appealed.

With ISDS included in many trade and investment agreements, more than 1,000 ISDS attacks have been launched against climate, financial, mining, medicine, energy, pollution, water, labor, toxins, development and other non-trade domestic policies. Taxpayers have shelled out millions or even billions of taxpayer dollars to corporations in individuals ISDS awards. Some countries have revoked democratically enacted policies in order to reduce their payouts or settle a case. 

ISDS being off the table in U.S.-UK trade talks is a major victory for the vast, international movement that has been fighting ISDS for decades. It reinforces that the U.S. rollback of ISDS in the revised North American Free Trade Agreement (NAFTA) represents a new U.S. policy that will carry forward. ISDS was largely eliminated in the new NAFTA. (The original 1995 NAFTA was the first trade pact to include ISDS.)

The United States has historically been a leading proponent of this system and forced it on its trading partners.

But public outrage over ISDS has been growing for years and was a significant reason why the Trans-Pacific Partnership (TPP) could not get close to majority support to pass the U.S. Congress. The unusually large, bipartisan votes in the House and Senate for the new NAFTA set a new standard that to be politically viable, U.S. trade pacts can no longer include extreme ISDS terms.

One important part of Doggett’s question was that he specifically mentioned the ISDS provisions of the new NAFTA with respect to Canada. The new NAFTA totally eliminates ISDS between the United States and Canada, a change that goes into effect on July 1, 2023, three years after the new NAFTA went into effect. Between the United States and Mexico, ISDS is significantly scaled back. The revised pact eliminates the extreme investor rights relied on for almost all payouts, but allows a small group of U.S. oil and gas companies that have contracts with a specific Mexican government agency to still make claims related to those contracts using the most dangerous ISDS rights. Doggett clarified, and Lighthizer confirmed, that this will not be the approach with the United Kingdom.

Lighthizer did not comment on whether ISDS would be a part of ongoing trade negotiations with less developed countries. This is of note because Kenya started FTA talks with the United States just last week. Nearly 7,500 public comments were submitted to the U.S. government urging an approach to Kenya trade talks that puts people and the planet first, including by excluding ISDS.

And, the ISDS threats still looms large because there are thousands of existing agreements that include the corporate-favoring tribunals. Indeed, countries around the world are under a potentially devastating new ISDS threat. The law firms that profit enormously from the ISDS system have been advertising to multinational corporations about the lucrative opportunities to use ISDS to attack government actions to address the COVID-19 pandemic.

The law firms have specifically targeted pandemic policies such as restrictions on business activities to limit the spread of the virus and protect workers, requirements for manufacturers to produce ventilators, mandatory relief from mortgage payments or rent for households and businesses, measures to ensure access to clean water for hand washing and sanitation, and more.

Specialist law journals have speculated that “the past few weeks may mark the beginning of a boom” of ISDS cases.

That’s why more than 600 labor, consumer, environmental, development and other civil society organizations from around the world are sounding the alarm. These groups sent a letter in July to heads of government worldwide urging action to avoid this new ISDS threat. They outlined an array of practical steps governments could take to immediately suspend the use of ISDS over pandemic response measures, as well as to put an end to the risks of all ISDS cases forever.

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Press Conference: Labor Activist Susan Prieto and U.S. Rep. Jesús “Chuy” García (D-Ill.)

Press Conference: Mexican labor activist Susana Prieto joined U.S. Rep. Jesús “Chuy” García to demand an end to ongoing labor abuses that undercut the U.S. and Mexican presidents’ celebration of the new NAFTA.


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Mexican Labor Activist Susana Prieto, on Eve of Possible Reimprisonment, and U.S. Rep. Chuy Garcia (D-Ill.) Call on Mexican President AMLO and President Trump to Remedy Ongoing Worker Abuses and Low Wages

Celebration of New NAFTA Premature: It Won’t Help Workers Absent Action to Translate the Labor Rights in the Text into Change on the Ground

 

WHAT:     On Weds., July 8th at 11 a.m. EDT/10 a.m. CDT, Mexican labor activist Susana Prieto will be joined by U.S. Rep. Jesús “Chuy” García (D-Ill.) to demand an end to ongoing labor abuses that undercut the U.S. and Mexican presidents’ celebration tomorrow of the new North American Free Trade Agreement (NAFTA). Prieto, a prominent labor lawyer representing exploited workers in Mexico-Texas border maquiladora factories, was released on July 1 after being held without bail for three weeks on trumped-up charges of “mutiny, threats and coercion” after trying to register an independent union to replace a corrupt “protection” union. Her case reflects myriad labor abuses throughout Mexico, where workers fighting for independent unions, better wages and COVID-19-safe workplaces face ongoing abuse and resistance. The conditions for Prieto’s release, including a 30-month internal exile, are designed to end her representation of Matamoros workers seeking independent unions and intimidate workers nationwide seeking to exercise their labor rights. She must end her Matamoros labor organizing, not leave Mexico, and relocate to the state of Chihuahua, where a prosecutor issued new warrants for her arrest. Prieto helped workers win higher wages last year while fighting for independent labor representation that the new NAFTA is supposed to promote. Recently she helped workers demand COVID-19 safety protections after many died from workplace coronavirus exposures. After decades of worker intimidation, Mexican manufacturing wages are now 40% lower than those in China. More background on Prieto is available, here.

WHEN:    11 a.m. EDT/10 a.m. CDT/9 a.m. Juarez time, Weds., July 8

 

WHO:       Susana Prieto Terrazas, Mexican labor lawyer

U.S. Rep. Jesús “Chuy” García (D-Ill.)

Lori Wallach, director, Public Citizen’s Global Trade Watch (moderator)

 

WHERE:  To register for the press conference: https://cutt.ly/koN4s49

                  (You must register in advance to get the zoom link for the event)

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Law Firms Are Recruiting Corporations to Attack COVID-19 Policies in ISDS ‘Corporate Courts,’ Warn 600-Plus Civil Society Groups From 90 Nations

Corporations Could Claim Billions From Taxpayers in ISDS Cases Against Pandemic Protections

The threat of Investor-State Dispute Settlement (ISDS) claims from multinational corporations for compensation from taxpayers for governments’ COVID-19 responses is dire, warned more than 600 labor, consumer, environmental, development and other civil society organizations today in a letter to heads of government worldwide.

In the letter, the groups revealed that numerous law firms specializing in ISDS lawsuits attacks are trolling for multinational corporations to attack government actions, such as restrictions on business activities to limit the spread of the virus and protect workers, requirements for manufacturers to produce ventilators, mandatory relief from mortgage payments or rent for households and businesses, measures to ensure access to clean water for hand-washing and sanitation, and more.

Specialist law journals have speculated that “the past few weeks may mark the beginning of a boom” of ISDS cases. As governments are taking urgent actions to stem the COVID-19 pandemic, save lives, protect jobs, counter economic disaster and ensure people’s basic needs are met, some law firms are advertising about the opportunities to use ISDS to profit from these necessary government actions.


The controversial ISDS mechanism is written into many trade and investment agreements and grants rights to multinational corporations to sue governments before a panel of three corporate lawyers. These lawyers can award the corporations unlimited sums to be paid by taxpayers, including for the loss of expected future profits, on claims that a nation’s policy violates their rights. Their decisions cannot be appealed.


The 630 organizations are calling on governments to take practical steps that would immediately suspend the use of ISDS over pandemic response measures, as well as to put an end to the risks of all ISDS cases forever. Organizations signing the open letter include:

  • Major U.S. labor and civil society groups, including the AFL-CIO, Sierra Club, Public Citizen, United Auto Workers (UAW), NRDC, United Brotherhood of Carpenters, Communications Workers of America (CWA), Methodist Board of Church and Society and the Presbyterian Church USA;
  • International and regional union confederations including the International Trade Union Confederation, Public Services International, IndustriALL, the Trade Union Confederation of the Americas, and the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF);
  • International environmental and development groups such as Oxfam, Greenpeace, Friends of the Earth International, Action Aid, Third World Network, the European Environmental Bureau, the Asian Peoples’ Movement on Debt and Development and the Arab NGO Network for Development; and
  • Global health networks such as the Médecins Sans Frontières (Doctors Without Borders), Peoples’ Health Movement, Access Campaign and the International Treatment Preparedness Coalition.

View the letter and the full list of signatures.

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As Mexican President Comes to D.C., Abuse of Mexican Labor Activist Susana Prieto Escalates, Casting Pall on New NAFTA

Prieto’s July 1 Prison Release Conditioned on 30 Month Internal Exile, End of Her Matamoros Labor Organizing, Not Leaving Mexico and Relocation to Chihuahua Where Prosecutor Has Issue New Warrants for Her Arrest

The extreme conditions imposed in exchange for Mexican labor lawyer Susana Prieto Terrazas’ July 1 release from jail after three weeks of imprisonment on trumped-up charges undermine the labor rights guaranteed by the new North American Free Trade Agreement.

Prieto revealed the conditions imposed on her for the next two and a half years:

  • Banishment to the state of Chihuahua, meaning the end of her labor activism in Matamoros, which is in Tamaulipas;
  • A ban on visiting the Labor Court where independent unions would be certified;
  • A ban on leaving Mexico; and
  • Payment of “reparations” for emotional suffering by government officials who were present when workers protested outside the Labor Court.

Additionally, on July 4, Prieto announced that two arrest warrants had been issued for her by a prosecutor in Chihuahua, where her release order required her to relocate on July 5. “Confirmado. Tengo dos ordenes de aprehension en Chihuahua. La Carcel que me impone ilegalmente la jueza de Tamaloupis,” she posted on Facebook. [Confirmed. I have two arrest warrants in Chihuahua. The prison that the judge of Tamaloupis illegally imposes on me.]

The legal process that resulted in her release – called a suspensión provisional del proceso (provisional suspension of the process) – has never been used in Mexico in the context of labor rights or human rights advocates. Its use in this context sets an extremely dangerous precedent for labor rights and human rights in Mexico. The process is akin to a plea bargain, and in the past has been used to suspend criminal charges pending completion of probationary terms and payment of restitution.

Prieto , a key advocate for exploited workers in border maquiladora factories in Matamoros and Juárez, was held without bail for three weeks on trumped-up charges of “mutiny, threats and coercion” after trying to register an independent union to replace a corrupt “protection” union in Matamoros. Growing outrage about a jailed Mexican labor activist, bogged-down labor reforms and threats to Mexican workers pressured to return to factories plagued by COVID-19 was not the scenario the U.S., Mexican or Canadian governments imagined for July 1, the date the revised North American Free Trade Agreement (NAFTA) went into effect.

U.S. fair trade activists delivered the letter to Mexican consulates nationwide on July 1. After decades of worker intimidation, Mexican manufacturing wages are now 40% lower than those in China.

Prieto became well-known in Mexico for helping maquiladora workers win higher wages in factories along the Texas border last year as part of a growing independent labor movement. Recently, she supported workers demanding COVID-19 safety measures after dozens of maquiladora workers died from workplace coronavirus exposure. Wildcat strikes and mass protests have grown throughout the border region as U.S. companies and officials push for plants to reopen without safety measures. At June 17 hearings, members of Congress raised concerns about Prieto’s arrest with the U.S. Trade Representative, who confirmed he was closely following her case and found it a “bad indicator” of compliance with NAFTA’s revised labor standards. Prieto livestreamed her arrest as she tried to register the Independent Union of Industrial and Service Workers “Movimiento 20/32,” chosen by workers to replace a “protection” union. Last week, Prieto’s daughter delivered a letter from U.S. unions and civil society groups to the Mexican National Human Rights Commission seeking help on Prieto’s release.

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Launch of New NAFTA Marred by Detainment of Mexican Labor Activist, Hundreds of Court Challenges Against New Labor Law

Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch

Note: The revised North American Free Trade Agreement (NAFTA) goes into effect today, July 1. The U.S. Senate passed the new NAFTA in January 2020 by a margin of 89 to 10 after the U.S. House of Representatives voted by a margin of 385 to 41 in December 2019.

On paper the new NAFTA –with improved labor terms added and extreme Big Pharma monopolies and ISDS investor rights removed – is better than the original, but it won’t benefit people unless it’s effectively enforced.

It’s a terrible start that on Day One of a deal Trump said would transform trade, a leading Mexican labor lawyer has spent weeks in jail on trumped up charges for helping workers use USMCA’s labor rights and Mexico’s new USMCA-compliant labor law is bogged down by hundreds of lawsuits aimed at derailing it.

Maybe Trump hoped to distract from myriad failures by spotlighting the new NAFTA on July 1, but it’s also the date that 100 of the 600 legal challenges against the pact’s labor rights rise to Mexico’s Supreme Court and Susana Prieto, a famous Mexican labor lawyer detained for weeks for helping workers organize a union, has a high visibility hearing.

Meanwhile, Trump’s claims that the new NAFTA will restore hundreds of thousands of manufacturing jobs have proved baseless as U.S. auto firms announced plans to increase production in Mexico from Ford’s Mustang electric SUV to GM closing U.S. plants and moving popular vehicle lines to Mexico. But the U.S. Department of Labor has certified more than 175,000 Americans as losing jobs to trade during the Trump administration’s first years while the NAFTA trade deficit jumped 88% under Trump.

The new NAFTA’s greatest impact may be that it began a long overdue rethink of the U.S. trade-pact model. The unusually large, bipartisan congressional votes on the new NAFTA showed that to be viable today, U.S. trade pacts no longer can include extreme corporate investor privileges or broad monopolies for Big Pharma and must have enforceable labor and environmental standards. The 2016 Trans-Pacific Partnership, which failed these tests, never got close to majority congressional support.

Renegotiating the existing NAFTA to try to reduce its ongoing damage is not the same as crafting a good trade deal that creates jobs, raises wages and protects the environment and public health. The new NAFTA is not a template, but rather sets the floor from which we will fight for trade policies that put working people and the planet first. Any new trade deals must include climate standards, stronger rules to stop race-to-the-bottom outsourcing of jobs and pollution, and enforceable rules against currency misvaluation and not limit protections needed to ensure our food and products are safe, our privacy is protected and big banks do not crash the economy.

BACKGROUND INFO

Susana Prieto Terrazas, a well-known Mexican labor lawyer, has been locked up since June 8 for trying to use the core labor right guaranteed by the revised NAFTA and Mexico’s new labor law; a July 1 hearing is scheduled after several punitive bail denials. Prieto, a key advocate for exploited workers in border maquiladora factories in Matamoros and Juárez, has been held without bail for three weeks on trumped-up charges of “mutiny, threats and coercion” after trying to register an independent union to replace a corrupt “protection” union in Matamoros. Prieto became well-known in Mexico for helping maquiladora workers win higher wages in factories along the Texas border last year. Recently, she supported workers demanding COVID-19 safety measures after dozens of maquiladora workers died from workplace coronavirus exposure. Wildcat strikes and mass protests have grown throughout the border region as U.S. companies and officials push for plants to reopen without safety measures. Dozens of members of the U.S. House of Representatives sent a letter yesterday demanding Prieto’s release. At June 17 hearings, members of Congress raised concerns about Prieto’s arrest with the U.S. Trade Representative, who confirmed he was closely following her case and found it a “bad indicator” of compliance with NAFTA’s revised labor standards. Prieto livestreamed her arrest as she tried to register the Independent Union of Industrial and Service Workers “Movimiento 20/32,” chosen by workers to replace a “protection” union. Last week, Prieto’s daughter delivered a letter from U.S. unions and civil society groups to the Mexican National Human Rights Commission seeking help on Prieto’s release. U.S. fair trade activists will deliver the letter to Mexican consulates nationwide on July 1. After decades of worker intimidation, Mexican manufacturing wages are now 40% lower than those in China. The Department of Labor has certified more than one million U.S. jobs (1,015,948) as lost to NAFTA just under one narrow retraining program called Trade Adjustment Assistance, which represents a significant undercount of total jobs lost.*

The first 100 of 600 challenges to Mexico’s new labor law will hit Mexico’s Supreme Court on its July 1 reopening. The new NAFTA requires that “protection” contracts signed by unions not elected by workers all be reviewed and that contracts be approved directly by workers within four years after the revised NAFTA goes into effect. This requirement is at the heart of the reforms to Mexico’s labor laws enacted on May 1, 2019. Under the new labor law, workers in Mexico could finally have legal protections to fight to raise abysmally low wages. This would also reduce incentives to outsource U.S. jobs to Mexico, benefiting U.S. workers. Within weeks of the new law’s enactment, hundreds of corrupt local “protection” unions and other interests opposed to reform began to file what are now more than 600 lawsuits, which both try to block the law’s application to specific union contracts and workplaces and to gut the law altogether on grounds that it is  unconstitutional. Mexico’s judiciary has been out of session since mid-March for COVID-19 precautions. On July 1, the court system goes back into operation, with the first 100 challenges hitting Mexico’s Supreme Court. If the court rules against the challenged terms, Mexico will be in violation of NAFTA labor obligations that are essential if the new deal is to slow U.S. job outsourcing. This memo has the latest updates on the cases

The Department of Labor has certified 176,982 trade-related job losses during Trump’s presidency, and the manufacturing sector is hurting. Under the narrow Trade Adjustment Assistance worker training program alone, 176,982 workers have been certified as losing jobs to trade since the 2017 start of the Trump administration. The data mainly covers 2017-2018, as there is typically a 12-18 month gap between layoff dates and certification. Whether the new NAFTA can slow ongoing job outsourcing or the 88% increase in the overall NAFTA trade deficit during the Trump administration remains to be seen over time. What is clear now is that the U.S. manufacturing sector has been severely harmed by the ongoing COVID-19 pandemic, with 1.1 million manufacturing jobs lost in May 2020 compared with the same month last year.

*Data Note: The trade data is sourced from the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. We present deficit figures adjusted for inflation to the base month of May 2020. The overall percentage change in the U.S.-NAFTA trade deficit under Donald Trump represent the change in total goods and services trade deficit since 2016, Barack Obama’s last year, and 2019, the last full year of data available during the Trump administration. Manufacturing job data is sourced from the U.S. Bureau of Labor Statistics. The government-certified job loss data is sourced from Public Citizen’s Trade Adjustment Assistance (TAA) Database. The U.S. Department of Labor certified trade-impacted workplaces under its TAA program. This program provides a list of trade-related job losses and job retraining and extended unemployment benefits to workers who lose jobs to trade. TAA is a narrow program, covering only a subset of workers who lose jobs to trade. It does not provide a comprehensive list of facilities or jobs that have been offshored or lost to import competition. Although the TAA data represent a significant undercount of trade-related job losses, TAA is the only government program that provides information about job losses officially certified by the U.S. government to be trade-related. Public Citizen provides an easily searchable version of the TAA database. Please review our guide on how to interpret the data here and the technical documentation here.

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Jailed Mexican Labor Activist’s Immediate Release Demanded by Major U.S. Unions, Faith and Civil Society Groups in Letter Delivered Today to Human Right Commission

June 8 Arrest and Detainment of Mexican Labor Lawyer Susana Prieto Threatens to Overshadow Planned July 1 Start Date for New NAFTA

A group of powerful U.S. organizations demanded the immediate release of imprisoned Mexican labor lawyer Susana Prieto Terrazas, who was arrested on June 8 on trumped-up charges for “mutiny, threats and coercion.” Prieto’s daughter delivered a letter from the groups to the Mexican National Human Rights Commission today.

Prieto, an advocate for labor rights of workers in maquiladora factories near the Mexico-U.S. border, has defended workers who are protesting for improved safety measures against COVID-19 in reopened plants. Dozens of maquiladora workers have died after being exposed to the coronavirus. She recently sought to register a new independent union to replace a company-connected “protection” union. This is a core protection guaranteed by the revised North American Free Trade Agreement (NAFTA) and Mexico’s 2019 revised national labor law.

The arrest of Prieto and punitive bail denials that threaten her life given the high incidence of COVID-19 in collective settings such as jails, spotlights the ongoing labor rights crisis in Mexico. Growing focus on Prieto’s detention is overshadowing the July 1 start date of the revised NAFTA.

Members of Congress raised concerns about Prieto’s imprisonment to USTR Robert Lighthizer during a congressional hearing on June 17. Lighthizer said he was closely monitoring the case, “take[s] this very seriously,” found it to be a “bad indicator” of compliance with the new labor standards, hoped “[Mexico] can work it out themselves” but that “we’ll take action if appropriate.”

As well as facility-specific rapid response labor enforcement cases, the revised NAFTA allows NAFTA governments to charge each other with violations of their obligations. The dispute resolution process in the pact could result in Mexican imports to the United States facing tariffs if a NAFTA tribunal determines Mexico is not meeting its labor rights obligations.

The letter, signed by the American Federation of State, County and Municipal Employees (AFSCME), Citizens Trade Campaign, Communications Workers of America, International Association of Machinists and Aerospace Workers, International Brotherhood of Teamsters, Maryknoll Office of Global Concerns,  NETWORK Lobby for Catholic Social Justice, Our Revolution, Presente.org, Public Citizen, Service Employees Union International, United Auto Workers, United Brotherhood of Carpenters, United Methodist Church Board of Church and Society and the United Steelworkers, is available here in English and Spanish.

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