Irony has taken center stage at the NAFTA renegotiation
talks.
Throughout the primaries and the 2016 general election, President
Trump made his disapproval of the North American Free Trade Agreement a
centerpiece of his campaign, arguing that free trade agreements like NAFTA hurt
American working people while enriching the elite. [1]
It was hard to argue with him on that point. As Robert E. Scott, and economist
with the Economic Policy Institute, wrote in 2003,
“Since the North American Free Trade Agreement (NAFTA) was
signed in 1993, the rise in the U.S. trade deficit with Canada and Mexico
through 2002 has caused the displacement of production that supported 879,280
U.S. jobs. Most of those lost jobs were high-wage positions in manufacturing
industries. The loss of these jobs is just the most visible tip of NAFTA’s
impact on the U.S. economy. In fact, NAFTA has also contributed to rising
income inequality, suppressed real wages for production workers, weakened
workers’ collective bargaining powers and ability to organize unions, and
reduced fringe benefits.” [2]
None of this should have come as a surprise, of course. Free
trade encourages manufacturers to locate their plants where labor is cheaper,
and enables them to threaten domestic workers with just such a move. With free
trade amounting to a religious tenet for both major political parties, Donald
Trump was able to present himself as a champion for working people, a strategy
that paid off handsomely.
But Mr. Trump also expressed his appreciation of
right-to-work laws during the 2016 campaign. He said he favored “states with
right-to-work laws because ‘it is better for the people’ to not have to pay
union dues if they don’t want to.” [3]
Of course, right to work laws can only be said to be “better”
for working people in the extreme short term. To be sure, an individual worker saves
the money that he would otherwise pay in dues if he so chooses. But
right-to-work laws weaken labor unions by depriving them of funding, and it
cannot be denied that union workers are better compensated than their non-union
counterparts. [4]
[5]
Interestingly, right-to-work laws have nothing to do with the
right to work. They are laws that impose a specific restriction on contract
terms between a labor union and an employer. That restriction is that a company
and a union may not enter into a contract whereby all of the company’s
employees must become union members. They may not enter into such an agreement
even if both sides want to do so. Right now, twenty-eight U.S. states, and
Guam, have right to work laws. [6]
Now it is obvious that since right-to-work laws weaken
unions, and unions increase compensation for working people, that a country
with right-to-work laws will have an advantage under a free trade agreement
over a country that does not. That is because the companies will be encouraged
to locate their facilities in countries where they can find the cheapest labor.
Thus, in the NAFTA renegotiation talks, while the United States tussles with
Mexico over its cheap workforce [7],
“Canadian negotiators are demanding the United States roll back” its
right-to-work laws. “The request is part of a push by Ottawa to get the U.S.
and Mexico to adopt higher labour standards under the deal.” [8]
According to The Globe and Mail,
“One source familiar with the discussions said Canada wants
the United States to pass a federal law stopping state governments from
enacting right-to-work legislation; the source said the United States has not
agreed to such a request. Canada believes that lower labour standards in the
United States and Mexico, including right to work, give those countries an
unfair advantage in attracting jobs.”
So the Canadian negotiators believe that the United States
has achieved an unfair competitive advantage because we treat our workers so
poorly. When it comes to depressing wages through the artifice of right-to-work
laws, their point is hard to argue with, though it is doubtful that our current
national leadership will engage in that much self-reflection.
And we thought it was only Mexico that was trying to start a
race to the bottom.
