Rethinking Trade - Season 1 Episode 6: As U.S. Pressures Mexico to Re-open NAFTA Factories, Workers Protest

COVID-19 deaths are still on the rise across Mexico. Despite government orders to close all non-essential firms, some U.S. factories have continued operating–with little consequence. Now the U.S. ambassador and hundreds of multinationals are demanding the country prioritize corporate interests over the safety of Mexican workers – by reopening factories now.

With the new NAFTA going into effect on July 1, how will the COVID-19 crisis impact the deal’s new worker-protection requirements and Mexico’s related labor reforms?

Transcribed by Lauren Martin

RYAN HARVEY: Welcome back to Rethinking Trade where we don’t just talk about trade policy, we fight to change it. I’m Ryan and I’m joined by our in house trade expert, Lori Wallach. Lori, we’ve all been seeing and consuming tons of news about the coronavirus, but one thing we’re not hearing too much about is Mexico. A lot of the products we use everyday are made in Mexico. What’s been going on in Mexico?

LORI WALLACH: Well, there is considerable spread of coronavirus there and COVID illness. It started a little bit later than the U.S. but there was widespread community spread by the beginning of March, on March 30th the progressive president of Mexico, AMLO, called for a basically shelter at home order and shut down all non-essential businesses. The sort of really gruesome story is that a lot of U.S. corporations that are producing in Mexico, many brand name companies that left the U.S. under NAFTA, have stayed open and particularly in the northern part of Mexico what’s often known as the maquiladora. So, in the border cities across from Texas and California and Arizona there have been considerable horrible outbreaks in factories where social distancing wasn’t respected, where personal protective equipment wasn’t given to workers, and where clearly the work was not essential. So, one of the stories that has gotten into the U.S. press (because most of it hasn’t) is the Lear company, they’re making car seats- obviously not essential- over a dozen workers there died after workers started showing up at the infirmary at the plant saying they had symptoms and they were sent back to work, etc. Unfortunately that is not unique, there have been in Honeywell plants, in [can’t tell what company she’s referencing 2:30] Motors plants, there have been a variety of episodes like that and there’s been a lot of activism which is, you know, powerful, inspired, where really workers saw the situation basically corporate greed, NAFTA corporate greed, versus their health and life. And a lot of workers-against really hard odds in Mexico because you can get beaten up at least, if not worse, for exercising your labor rights- workers protested. An inspiring story but unfortunately not the norm is workers at a factory called TPI Composite, they make the wind blades for electric generating windmills, five hundred workers went out on strike as someone in the plant had died and people were sick, and they got the company to basically furlough them all at full pay. And that is not typical- most of the places that are closing, it’s a struggle to get paid. And also, companies keep popping back up, they’re ignoring the order or they have sort of complicity with local officials. And if that weren’t enough, the U.S. and U.S. corporations have launched this really, really, intense pressure campaign for the Mexican government and those plants, the Mexican workers, to basically put these corporations interests ahead of the life and health of these Mexican workers. And the National Association of Manufacturers sent a letter, the U.S. ambassador to Mexico has just played a really evil role, he has been pressuring the  government with threats that the U.S. companies will just take off and produce elsewhere if they don’t reopen those companies regardless of the health complications. And maybe one of the most outrageous things he said was in a tweet: “There are risks everywhere,” said Chris Landau, “but we all don’t stay at home for fear we’re going to get in a car accident. The destruction of the economy is also a health threat.” As if somehow going to make non-essential goods, so a U.S. company can profit, at a time when the outbreak in Mexico is growing, growing, growing, is equivalent to the threat of a car accident. Versus industrial suicide by being forced into a dangerous situation. That is the situation of the Mexican government, it’s been uneven in it’s response in some respects it’s stood up to this pressure and in some instances it’s suggested that it will basically be reopening soon.

HARVEY: Speaking of labor laws in Mexico and labor standards in Mexico, one of the reasons we’re talking about this in our podcast about trade is because the new NAFTA is going into effect on July 1st, and in the new NAFTA there are new and somewhat significant labor standards that have also coalesced with a labor law reform in Mexico. Maybe you can talk about what those standards look like and what this current situation might mean for the new NAFTA’s implementation.

WALLACH: So the new NAFTA is slated to go into effect on July 1st in all three countries, and there could not be a less auspicious time. Because the improved labor standards and the really landmark enforcement system on paper in the agreement that the Congressional House Democrats forced the administration to add, so folks will remember in 2018 the NAFTA 2.0 text came out and the Democrats said “no!” The labor and environmental standards aren’t sufficient, nor their enforcement to stop outsourcing, it will just get worse, plus, there are outrageous new giveaways for pharma. The House Democrats basically drew a line in the sand and there was almost a year long stare down and ultimately the administration backed down and renegotiated the renegotiated NAFTA. So, the deal that’s going to go into effect on July 1 now has some useful improvements. But, like everything in life, there’s what’s on paper and then there’s what actually happens. So, there are at least 3 factors. And when I say it’s really inauspicious this is happening during COVID it’s because some of it’s going to be disrupted by the priority necessarily on the COVID response. So, number one, there are a bunch of court challenges against a new Mexican labor law that was passed to basically bring Mexican labor law into conformity with the obligations in the agreement. So, under the current Mexican labor law, there is what’s called a tripartite system where there is a lot of power in the state level in each Mexican state so that, for instance, if there are conservative governments that support the business perspective the tripartite system is one sort of, the decision is about whether contracts are legit, etc, it’s one union person, one business person, and one government person. So already, you’ve got a prospect of the business people and the government people on the wrong side of the workers. But then, under Mexican labor law, there really has not been under the old law, a way to ensure Mexican workers are actually voting to elect their own unions. So there’s this plague of what are called protection contracts, which are contracts typically signed for the first worker enters into the plant, between the boss and these sort of racket unions that are paid to do a contract, to satisfy the requirements of Mexican law, but the workers don’t get to vote on it, the function is to protect the boss and to have low wages. So there are 700,000 of those protection contracts and one of the things that’s in the Mexican new reformed labor law is revoting those and the NAFTA requires they are all reaffirmed over the period of four years. So that the fake contracts get dumped and people get real unions. And then how is it going to be decided if the contract has really been revoted and there’s no real union contract there, it’s more of the same fake stuff, there’s a bunch of new institutions that have to be set up. So the new Mexican labor law sets up the institutions, sets up those new rights, and it’s been challenged over four hundred lawsuits, some have been dismissed but a bunch are still going forward and they're not getting decided. Because, just like in the U.S., the courts are basically shut down for anything but urgent criminal matters. So the labor law itself is still a little bit up in the air and that is necessary for the reforms to go into effect. But then the second thing is, a whole bunch of new institutions need to get set up. And that involves the U.S. coming through with the funding it promised to help do that, and some additional staffing support, but also the Mexican government which promised to increase funding and promised to establish a bunch of new really national labor relations board type institutions which replace these state level tripartite bodies. And so the national system is still plugging ahead but obviously in the way of every country plugging ahead with resources diverted to COVID, with priorities of everyone, I mean obviously with all the worker safety issues the labor department is just focused on emergency labor worker safety issues and COVID as they can be on trying to set up these new institutions. And then the third piece of it has to do with, really, the kind of oversight and political and press really, if you will, spotlighting of what’s going on and pretty much everything is COVID, COVID, COVID. So even some of the high profile labor disaster situations like at Goodyear where a lot of workers were locked out to try to have an independent union and members of Congress who wanted to investigate got locked out, that’s not been resolved. Some of the outrageous conduct in call centers has not been resolved vis a vis contracts at least there’s been now a criminal case filed against a call center in Mexico City that was staying open even as workers were getting sick. But there’s just not the level of focus or attention by civil society, by parliamentarians here or in Mexico, by the press. So all of those things leave a slightly, you know, less auspicious likelihood of the kind of improvements we were hoping for and we’re all going to have to stay on it. 

HARVEY: It’s interesting because we’re actually watching in real time a labor law reform through a trade agreement happening and it’s pretty compelling so why is this something, do you think, that people should be paying close attention to, and what does it mean for the future of North American work?

WALLACH: So, we keep hearing in the context of COVID “we’re all in this together.” And that is an entirely true slogan with respect to workers wages, conditions, futures, in North America. Because we are so integrated after 25 years of NAFTA, for U.S. workers and the recovery that’s going to have to happen economically, given the wreckage being caused by the COVID disaster, as we think about both how jobs are going to be restored, what wage levels will be available, but also, we think about how we rebuild our resilience, our ability to make the basic things we desperately need to be safe, both the medical goods that we found ourselves unable to make or get, but also thinking forward to the next potential disaster be it, you know, infrastructure related or weather related, we are, thanks to the system of hyperglobalization, really, really not resilient in the face of any crisis. Part of the answer to that is a North American answer, to move some of that production out of China, obviously a bunch of it needs to come domestically to the U.S., but also with respect to what’s going to happen with workers here, and wages here, this NAFTA rewrite experiment with improved labor standards and enforcement has got to be made to work. Because, unless wages rise in Mexico, the prospect for U.S. workers having decent wages and, or manufacturing being situated in the U.S. for that, two thirds of the workforce that does not have a college degree, that many of whom had previously a middle class union manufacturing job, it is not an either or, it is not the jobs are in Mexico or the jobs are here. As we’ve seen with this crisi, we don’t have any redundancy. Everything’s been moved to one plant far away, if that plant goes down or we need a bigger supply we’re just stuffed. So this is a moment to think about how we rebuild our manufacturing sector in the U.S., but in North America as well, with redundancy and resilience and distribution of jobs in more countries. And so making sure that those hard-fought labor standards in NAFTA and their enforcement actually make a difference, is every damn person’s business in the United States, not just in Mexico. 

HARVEY: That’s all for today, thanks for listening. Rethinking Trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit rethinktrade.org as well as tradewatch.org to educate yourself and to find out how you can get involved in the work we’re doing to fight for fairer and more equitable trade policies.