California

New NAFTA pitting California exporters against labor, with Democrats in the middle

Trump announces USMCA deal to replace NAFTA

The United States, Mexico and Canada agreed on the United States-Mexico-Canada Agreement just ahead of the midnight deadline imposed by the U.S. The agreement gives U.S. farmers greater access to the Canadian dairy market.
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The United States, Mexico and Canada agreed on the United States-Mexico-Canada Agreement just ahead of the midnight deadline imposed by the U.S. The agreement gives U.S. farmers greater access to the Canadian dairy market.

Battered by foreign tariffs for the past year, California farmers now see a ray of hope for their operations in the United States-Canada-Mexico Agreement.

It’s an updated version of the North American Free Trade Deal, or NAFTA, that the White House is preparing to send to Congress for ratification.

But there is no guarantee it will pass once it gets there.

Labor groups are telling lawmakers that ratifying the deal in its current form will hurt workers in California and beyond. They’ve blamed the original NAFTA, which went into effect in 1994, for costing Americans jobs as companies moved operations to Mexico, where wages are lower and regulations more lax.

Stuck in the middle: California Democrats in Congress, particularly those from the Central Valley, where the agriculture industry looms large.

Not surprisingly, most Democrats have thus far refused to take a position on the deal, which the Trump administration inked with Canada and Mexico last fall.

“It is critical that we have trade agreements that provide long-term stability to America’s farmers and ranchers and allow us to access new markets overseas,” freshman Rep. T.J. Cox of Fresno said in a statement. At the same time, he said “It is important that we strive to address the legitimate concerns on labor and environmental protections abroad.” Cox urged President Donald Trump’s trade representative, Robert Lighthizer, to hold discussions with House freshmen to discuss their concerns about the deal.

Fresno Democrat Jim Costa praised Lighthizer for “making really a significant effort to reach out on a bipartisan basis” and said he is aware that there are a set of “critical steps” that need to happen before most Democrats will be comfortable voting for the trade agreement.

“The first milestone is Mexico taking action” to update its labor standards, said Costa, who represents an agriculture heavy district that includes Merced, Los Banos and northern Fresno. The Mexican legislature is expected to pass new labor legislation by the end of April.

American labor unions say the reform push in Mexico is important, but on its own, it won’t be enough to win their support for the deal. Absent significant (and unlikely) changes, they plan to launch a grassroots campaign like the one that scuttled the Trans-Pacific Partnership (TPP), the last major trade agreement the United States pursued.

“There are some elements of the current agreement that are even worse than the TPP,” said Steve Smith, spokesman for the California Labor Federation, one of the state’s largest and most influential unions. Smith and others in organized labor say there aren’t adequate enforcement measures to make sure Mexico lives up to new labor standards, even if they become law.

“Simply put, without assurance that labor rules will be enforced, we have no confidence that the deal will change the terms of trade,” the national AFL-CIO Executive Council said in a March 15 statement officially opposing the deal.

Smith also raised concerns about language in the deal to cement pharmaceutical companies’ exclusive marketing rights for prescription drugs, preventing competition from generic drugs for at least a decade.

That’s a deal breaker for organized labor, consumer rights advocates and many liberals in Congress. Rep. Ro Khanna of Fremont said the issue was his “biggest concern” when considering ratifying the deal, known by its acronym, USMCA. “It really would lead to long-term higher drug prices in the United States,” he claimed.

Leaders from the AFL-CIO and other labor unions are set to testify Tuesday in the House regarding their opposition to the updated NAFTA agreement. They also met with Lighthizer on Monday, which did not assuage their concerns, an AFL-CIO spokesman said.

The union and lawmakers like Khanna are now calling for the United States government to re-open negotiations with Mexico and Canada, something the administration and outside observers say is not going to happen. Among other reasons, Mexico has a new president who is a much bigger trade skeptic than his predecessor. Reopening the deal, supporters argue, would essentially mean restarting the negotiations from scratch.

A further delay in ratifying the new agreement with Canada and Mexico — California’s top two exports markets — would be a blow to the state’s agricultural industry and other exporters. One 2016 report from the Wilson Center, a D.C. think tank, estimated that more than a half a million jobs in California were supported by trade with Mexico.

Farmers are particularly desperate for some relief amid escalating tariffs in China, Europe, Turkey and India, a byproduct of the president’s confrontational approach with global trade partners.

California growers are hopeful that finalizing the new NAFTA deal with also end the tariff increases between the three North American countries, triggered by new U.S. tariffs on foreign steel and aluminum. Dairy farmers and nut growers have been hit especially hard by Mexico and Canada’s retaliation.

“Regaining the status for the U.S. as the preferred dairy supplier to Mexico would provide (an) economic shot-in-the-arm and is a top priority for California’s dairy farm families,” Western United Dairymen CEO Anja Raudabaugh wrote in a March 14 memo that was provided to McClatchy. “Ratification of the USMCA is critical to be completed before the end of this year.”

The Western Growers Association, which represents fresh produce farmers in California, Arizona, Colorado and New Mexico, is also pressing for Congress to ratify the deal by fall of 2019. “We are actively engaged with the Administration, our allies in agriculture and our representatives from our four home states ... to achieve that objective,” said Dennis Nuxoll, the group’s vice president of federal government affairs. Nuxoll acknowledged, however, that “ratification of this treaty will not be easy.”

Andrea Drusch contributed to this report

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Emily Cadei works out of the McClatchy Washington bureau, where she covers national politics and policy for McClatchy’s California readers. A native of Sacramento, she has spent more than a decade in D.C. reporting on U.S. elections, Congress and foreign affairs for publications including Newsweek, Congressional Quarterly and Roll Call.
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