Press Conference: Labor Activist Susan Prieto and U.S. Rep. Jesús “Chuy” García (D-Ill.)
USTR Says No ISDS in US-UK Free Trade Agreement

Rethinking Trade - Season 1 Episode 12: The New NAFTA: Only Improvements on Paper or Real Change?

Last week we discussed the new North American Free Trade Agreement and some of the key improvements we won after years of organized public pressure. The new NAFTA took effect on July 1st. The text requires significant new labor rights and includes strong enforcement. But corporations paying Mexican workers starvation wages are conspiring with right wing Mexican state officials to thwart any real change. The Mexican national government is not stepping up, and the new Mexican labor law is pinned down under a barrage of legal attacks.

In this episode, we breakdown some of these hurdles and discuss how political pressure, grassroots campaigning, and civil society monitoring efforts are needed to translate the new NAFTA’s improvements on paper to real material differences in workers’ lives.

Transcribed by Kaley Joss


You're listening to rethinking trade with Lori Wallach. 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 once again by our in-house trade expert Lori Wallach. 

So, Lori, last week, we discussed the new North American Free Trade Agreement, the USMCA, and talked about the campaign to improve it. Anyone who follows the campaign knows that there's a lot that still needs to be done to make some of the deal’s improvements real, especially on the labor front. So, for starters, maybe you could just give us an overview of what some of those changes are, and then we'll get into how they might happen. Lori:

So the new NAFTA can be looked at as having two sets of changes: bad things that were in there that got whacked, like investor-state dispute settlement, and then potentially useful things that got added, like the new labor standards and perhaps most importantly their enforcement through a system called the “rapid response enforcement mechanism” on paper.

Those new labor standards and enforcement mechanisms are definitely an improvement over the old NAFTA, which had non-binding labor-side agreements that, even if they were ever used properly, couldn't result in any real enforcement. The trick is going to be the enormous amount of pressure, campaigning and monitoring that will be necessary to translate these improvements on paper into real improvements for workers' lives in Mexico or in the U.S..

So you know, the first thing to think about is what actually has to be done to set up this new mechanism and whether it's on track. Then second of all, what are the cases? How are we actually going to see things change on the ground? 


So while we're on the topic of things on the ground, let's talk about two of the elephants in the room—that's the case of Susana Prieto Terrazas and also the onslaught of lawsuits challenging Mexico's labor law reforms that are now moving. 


So, you know the way these things work together is that the new NAFTA required certain changes in Mexico's domestic labor law that basically implemented changes made to Mexico's constitution in 2017. Among those things were guaranteed reviews of all existing contracts made by unions, because of existing, corrupt employer-protection unions who are hired to protect the boss. They've registered contracts that lock in low wages and bad working conditions. So, under the new Mexican labor law that the new NAFTA requires in four years, every one of these old contracts has to be reviewed, and either voted by the workers in a secret ballot vote to be continued or replaced by a real contract that represents workers interests. And, the new labor law requires the right to see the contract before there's a vote, which was not the case in the previous law. Now, the workers who are going to live under the contract take it to approve it, which was not the case before. A lot of these old protection contracts are completed before the first workers are even hired. And then finally, the ability to have accountability over the union officials that workers are represented by with respect to budgets of the Unions, etc.. The thing that's very worrisome is there are now over 600 challenges in the Mexican court system against implementation of that new labor law. And they're almost all filed by these corrupt protection unions, who cynically, disgustingly are claiming it violates basic workers rights and the ILO (International Labour Organization) conventions to make these reforms efforts effect fully the ILO conventions. The cases have been working their way up towards the Supreme Court of Mexico. At a certain point a few months ago, a body that is part of the federal judiciary system in Mexico concentrated all the cases in particular courts. The Supreme Court, who knows when though, but they will decide in the interim. The law is kind of on hold. It definitely doesn't apply to a bunch of the fake contracts that have effective injunctions against them, but it could be all thrown out as unconstitutional.

Second problem is that there is hands-on obstruction of these new rights, even when they are not under challenge, and that includes the case of Susanna Prieto. We've talked about the situation before she was arrested under trumped-up fake charges of causing a riot relating to her excellent work to try and actually file in the labor court, the certification of a new union that got rid of a fake old union. She's a lady who is very well known in Mexico, because she's the person who helped workers get real wage increases last year in the border maquiladora factories and Juarez, Matamoros. She also helped workers fight to get COVID protection safety in the workplace this year, and then she was swooped up in jail. She was denied bail punitively and repeatedly. It was not safe, obviously. Like in the U.S., Mexican jails have COVID issues. And then, her third bail hearing was July 1, the day the new NAFTA went into effect. And instead of having a bail hearing, the prosecutor said we have got a deal for you: We’ll let you out of jail, but only if you promise not to go back to the city where the workers you represent are and never go back to the labor Court. The labor court is where you would need to visit to file for workers’ rights and against this temporary suspension of her arrest. It's sort of like a plea bargain, how she is currently out of jail, but in a condition that is totally outrageous and undermines the ability for workers to have the basic labor rights, which are not just required in the new NAFTA, but provided for in Mexico's constitution and in their laws.


And can these labor abuses, in the case of Susanna Prieto, could those become a case under the new NAFTA? 


Well, it's worth understanding a little bit about how that rapid response system works, a little bit of nuts and bolts. The quick answer is yes, it probably could be, but the way this works under this system is that usually when you enforce a trade agreement, one country sues another country, it goes for tribunal and takes years to get to the end result. And then typically the enforcement is trade sanction tariffs against a country for violating a provision. The problem with that in the labor situation is that the actual companies who are doing the bad stuff are not feeling any pain directly. 

So, the rapid response system, basically, is set up so that if a country, say the U.S., files a complaint with Mexico saying “Hey, this situation with Susana Prieto is a violation of the following provisions of NAFTA,” and given a particular company has been involved, say there's a particular company for which she was trying to file this new Union, that company would be implicated. Then Mexico has a certain number of days to respond and they can either say “Hey, that's not what really happened” and try to make the U.S. back down, or they can cure it and fix the problem.

Then the U.S looks at the response and either says, “Okay, it's fixed” or, “I guess there's not a problem,” or the US can say, “No, not buying that” and file the next step (which is basically like a formal claim). It gets heard by a tribunal of Labor experts which is not the usual ‘trade lawyers make the decisions,’ which is good. It's much quicker—it's not quick, but it's much quicker than the normal years and years. And in the beginning this tribunal has the right to go to Mexico to investigate and interview in Mexico. The Mexican government's required to provide them access, and then this tribunal can order, in the first instance of a violation, that the company involved either directly be hit with trade sanctions or fines. And then if it's ongoing, they can have their products denied access into the U.S., just literally blocked on the border. So there is some real threat there. There are all kinds of curly cues of where things can go awry, and it’s not super speedy, but it's like a six-month process. So that could become one of the first tests of whether or not the new NAFTA’s labor standards and enforcement have teeth, outside of the sort of official response mechanisms and monitoring efforts. 


Maybe to close us out for this episode you could talk about some of the ways in which labor unions, civil society organizations and progressive groups here can play a role in making sure that some of these new standards and requirements are respected and enforced?


Well to quote Frederick Douglass, “Power concedes nothing without demand.” So we are going to have to keep a really bright spotlight on the situation and have continuous pressure on both the U.S. government to take the necessary actions, but also, with our partners in Mexico, on the Mexican Government to implement all of these commitments. And you know, our counterparts in Mexico are going to be doing their best to help these cases and fight for their rights, but it is only going to really be a successful use of the gains in the new NAFTA if workers and activists and frankly members of Congress in all of North America are united together trying to improve standards for workers throughout the hemisphere, which first and foremost starts with workers in Mexico finally having real rights to form a union and fight for better conditions and higher wages. 


That's all for today. Thank you all for listening. Rethinking Trade is produced by Public Citizen’s Global Trade Watch, where we don’t just talk about trade, we fight to change it. Visit today to get involved in our campaigns and help us fight for global economic justice.

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