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USMCA is Another Corporate Power Grab

Above: No New NAFTA protest from Green Watch.

We Need a Real NAFTA Replacement.

The path to creating a trade system that puts the necessities of people and protection of the planet before trade designed for transnational corporations begins with stopping Trump Trade, NAFTA 2.0, referred to as the US-Mexico-Canada Agreements (USMCA). Many of the shortcomings of the original NAFTA remain and the reforms made are inadequate to warrant support for those who believe in fair trade that puts people and planet before corporate trade. The path to a trade regimen we need begins by stopping Trump Trade.

Join the Popular Resistance trade campaign,
People and Planet Before Profits.

For 25 years, the US, Mexico, and Canada have been locked into the corporate-friendly North American Free Trade Agreement. Now, with NAFTA discussions re-opening, we have a chance to break out of this mold and develop a new model for an international agreement. Trump’s new NAFTA proposal, the US-Mexico-Canada Agreement (USMCA), is not the deal we’ve been fighting for. During negotiations, over 1000 civil society groups outlined objectives for a new NAFTA. Comparing the USMCA text to these demands, we see that the agreement falls far short.

Instead of making needed changes for the 21st century, USMCA preserves the outdated corporate agenda of NAFTA and locks us into a new era of deregulation. With its fake sunrise clause, we would be stuck under corporate rule for at least another 16 years, likely many more, stifling progress towards a real alternative. A grassroots movement stopped the Trans-Pacific Partnership. Now, it is time to stop NAFTA 2–which is very similar to TPP–and build the movement for a new model. This article reviews the USMCA, how to stop it, and alternatives to corporate trade.

NAFTA spurred a failed wave of corporate globalization around the world. Now it’s time for a new model, not Trump’s NAFTA 2. The USMCA must be defeated and replaced with a North American agreement that puts people and planet ahead of corporate profit. If you are involved with an activist or community group of any kind you can generate discussion and action around this. Call and email your representative now!

Congress and Beyond

The USMCA is full of corporate tricks and treats. It not only maintains the worst aspects of NAFTA, but it also includes new provisions to further empower transnational corporations. The new NAFTA would increase the cost of life-saving biologic medicines, roll back food safety and GMO regulations, and give new rights to the world’s biggest fossil fuel companies. It’s no surprise, then, that big pharma, agribusiness, and fossil fuel companies are lobbying for the deal. They spent $45 million to pass USMCA in 2018 and are now leading a $15 million lobby campaign to push USMCA through Congress.

The US, Mexico, and Canada signed the USMCA on November 30 of last year. To become law, USMCA must be approved by the congresses of all three countries. But, there are some major hurdles in the US. The most significant roadblocks come from House Democrats, but Trump’s border wall and insistence to maintain steel and aluminum tariffs on Canada and Mexico don’t help. For their part, Democrats have honed in on two of the worst aspects of the new NAFTA–rules that extend monopoly protections for big pharma and the lack of labor and environmental enforcement mechanisms.

The USMCA would increase the cost of prescription drugs through patent protections that go significantly beyond NAFTA. It would give pharmaceutical companies at minimum 10 years of market exclusivity for biologic drugs (including new cancer treatments and vaccines), protecting drug companies from cheaper generic medicines and driving up the price of medicine in all three countries. This is not in accordance with US law and is being opposed by unions, public interest groups, and citizens.

As the Washington Post points out, “working-class white voters who switched from Barack Obama to Trump are deeply angry about soaring prescription drug prices” and strongly oppose patent protections in Trump’s new NAFTA. When Trump puts on his populist cover, he too wants to lower the cost of medicine. With USMCA, his true stripes are revealed.  

This is a huge sticking point in Congress. Even free-trade-friendly Democrats are outraged by this handout to pharmaceutical monopolies. AP reports that this could be the “political bomb” that derails USMCA in the House. House Democrats are preparing a statement to U.S. Trade Representative Robert Lighthizer requesting changes to the data protection provisions in USMCA. Many say they will not vote in favor of the deal without this revision.

The other “political bomb” of USMCA is the lack of monitoring and enforcement for labor and environmental laws. Without enforcement, even the best public interest protections–which are few and far between in the new NAFTA–would be meaningless. The USTR Labor Advisory Committee highlights a few minor improvements in the USMCA regarding workplace violence, migrant workers, and wage-related benefit payments. But, they write, “unenforced rules are not worth the paper they are written on.”

NAFTA environmental enforcement mechanisms are so weak that the US government has never even used them against a trade partner, despite widely documented abuses. USMCA negotiators found a way to make this basically non-existent enforcement even weaker. How can this be? Three USMCA articles allow “a government that is committing environmental abuses to block a case from advancing,” thus eliminating the last possibility of government interference in environmental crimes.

Democrats say they won’t pass a deal unless it is renegotiated to remove pharmaceutical monopoly protections and include enforcement. But Canada, and especially Mexico, do not want to renegotiate. Mexican Trade Undersecretary Luz María de la Mora told reporters, “it’s take it or leave it…Mexico is not considering any renegotiation of anything.”

So, where will US Democrats stand if there is no renegotiation of these key provisions? Will they cave to the interests of big business and give Trump a political victory or listen to constituents and the movement calling for a new model of North American agreement?

Let’s Talk Strategy

We know that the USMCA is loaded with corporate giveaways. Big pharma monopoly protections and lack of enforcement are just the tip of the iceberg. But, the tip alone is tipping this deal to its demise. We need to keep pushing on these key issues from which USMCA may never recover. We also need to keep other issues and the bigger picture in mind. This will help to bring new people and organizations into the movement, creating new pressure points on members of Congress.

Many people yawn when they hear the words ‘international trade,’ ‘regulatory cooperation,’ or ‘investor rights.’ This language doesn’t say much about the living impacts of “trade” deals like the USMCA which impact virtually every regulation in North America. We can be more specific. One person may care about the price of a cancer medication or the ingredients in their children’s food. Someone else might care about how much they are paid at work or the water quality of a nearby river. To win in Congress, we need a strong movement outside of Congress that builds national consensus on what a better model looks like. The more voices the better.

Right now there must be two strategies. First, we need to keep the pressure on House Democrats who are the most likely to stop USMCA in Congress. We need to make sure they don’t yield to the interests of big business. Second, we need to build consensus on a new model and get this into the 2020 presidential election discourse.

Democratic Party presidential hopefuls have no need for Trump’s unpopular NAFTA 2. Even if Trump pulls out of NAFTA, as he is threatening to do if USMCA is not passed, the next president could negotiate an agreement that reflects what people across the continent are demanding. We have to start showing candidates now, that another model is possible.

Democratic Party presidential candidates like Senators Bernie Sanders, Elizabeth Warren and Sherrod Brown have consistently been opposed to corporate friendly free-trade agreements of the Clinton-Obama era. If we keep the pressure on them, they will lead the debate. Other potential candidates like former Rep. Beto O’Rourke and former Vice President Joe Biden support free-trade. Somewhere in the middle are Senators Amy Klobuchar, Cory Booker and Kamala Harris. In 2016, the movement to stop the TPP forced Hillary Clinton, who had supported the deal as Obama’s Secretary of State, to withdraw her support. We must do the same in the upcoming primaries so that all candidates reject NAFTA, USMCA, and corporate trade in favor of a new model.

USMCA and Another Way

As discussed, the USMCA lacks labor and environmental enforcement mechanisms.  But this is just part of the problem. Even if there were enforcement, the USMCA lacks good rules to enforce. Further, the new NAFTA includes two ways–ISDS and good regulatory practices–that allow corporations to change or repeal regulations that hurt their profits. USMCA is fundamentally oriented towards corporations, not people or the planet, which is why it must be stopped altogether and not simply reformed.  Stopping the USMCA will allow us to go back to the drawing board. A better model for North American trade is achievable if we maintain that focus.

A new North American agreement needs strong and enforceable labor and environmental standards. It needs to raise wages in all three countries, support unions, repeal right-to-work laws, and end the outsourcing of jobs and pollution. It needs to protect small and indigenous farmers, sustainable food systems and consumers by strengthening food labeling and inspections of imported foods. It needs to make medicine and health care more accessible and affordable. It needs to protect wildlife, clean air and water, and the health of our communities. It needs to address climate change head on and defend the most vulnerable communities from environmental disasters. Trade must be used to obtain positive goals that reduce inequality and treat people with dignity. It must prioritize reparations to indigenous peoples and black and brown communities through financial compensation and decolonization and respect the sovereignty of Indigenous Nations to control what happens on their land. Any new ‘trade’ deal must be negotiated through a democratic and transparent process that includes public participation with broad swaths of society, not just corporations. NAFTA 2 falls far short of meeting these basic criteria.

Dr. Margaret Flowers and Kevin Zeese write, the “new NAFTA framework remains trade for corporations while undermining health, the environment, food, and worker rights.” NAFTA 2 provides new avenues for corporations to challenge public interest laws that hurt their profits. It maintains NAFTA offshoring of jobs and pollution as well as buy american and buy local waivers for Canadian and Mexican industries. The USMCA facilitates the expansion of chemical agriculture and GMOs while undermining food safety inspections and labeling. It encourages dirty energy from fracking and tar sands and fails to even mention climate change. As the recent IPCC report shows, we don’t have 16 years to start talking about climate change.

In terms of offshoring, the current language of USMCA allows corporations to send jobs and pollution to Mexico where environmental and human rights protections are often lower. For instance, this new NAFTA would allow metal recyclers to send toxic used car batteries to Mexican recycling factories that do not have lead exposure controls and where workers have and continue to get lead poisoning.

In terms of energy, fossil fuel companies are major winners of the new NAFTA. Instead of moving North America towards renewables, USMCA locks us into oil and gas. According to the Sierra Club, the USMCA maintains NAFTA rules that prevent the U.S. government and the Department of Energy “from determining whether gas exports to Mexico or Canada are in the public interest.” This basically is an automatic guarantee of gas export which would “increase fracking in the U.S., expand cross-border gas pipelines,” and create greater Mexican dependency on natural gas, which has been the main contributor, way more than any other fuel type, to Mexico’s recent increase in climate pollution.

Also in Mexico, the USMCA will lock in the government’s recent deregulation of oil and gas. Big oil successfully lobbied for two ways–ISDS and good regulatory practices–to challenge the Mexican government if it tries to nationalize its energy sector agan.

The USMCA also supports tar sands, though in a little different way from NAFTA. NAFTA supported tar sands with the proportionality rule that locks in tar sands oil extraction in Canada. USMCA, on the other hand, supports tar sands by making it cheaper for oil companies to export Canadian tar sands through U.S. oil pipelines. This could make it harder to shut down existing tar sands pipelines like Keystone Phase 1, Enbridge line 6b, line 5, and line 17 as well as stop new ones like the proposed Enbridge line 3.

USMCA’s proposed expansion of the fossil fuel empire is an environmental disaster on its own. But, NAFTA 2 goes further by reducing environmental protections that are included in the last four US trade deals. It does this by “failing to reinforce a standard set of seven Multilateral Environmental Agreements (MEA)” that protect wetland ecosystems, arctic ecosystems, and endangered species and prevent overfishing, unnecessary marine pollution, and so much more. An environmental coalition shows: “the deal includes standard enforcement language for only one of the seven MEAs, while using weak language for two and failing to even mention four of these essential environmental agreements.”

Corporate trade deals like USMCA are modern colonialism. They uphold and refine the extractive economy that goes hand in hand with the militarization of indigenous, and black and brown communities. The Zapatistas who rose in resistance to NAFTA in 1994 said that NAFTA would be a death sentence for indigenous communities in the Americas. This has been true for so many. Trump’s new NAFTA has no objectives that seek to guarantee and enforce the rights of indigenous peoples nor does it seek reparations or decolonization which need to be prioritized in any new trade deal.

Corporate trade destroys food and seed sovereignty. NAFTA favored agro-chemical corporations at the expense of small and indigenous farmers, local food systems, and consumers. In the US, 250,000 small and medium scale family farms went out of business. In Mexico, over two million farmers left agriculture because of NAFTA, mostly because agricultural export dumping, or flooding Mexican markets with corn, wheat, and rice from the US at below the cost of production. Small farmers simply could not compete. The USMCA ensures the continuation of this practice, one of the main causes of Mexican migration and refugees to the US.

Mexican President, Manuel Lopez Obrador, along with more than 100 Mexican farmers’ organizations have come out with a plan to rebuild Mexico’s decimated food system. One of the main goals of the plan is self-sufficiency in corn, wheat, rice and beans by 2024. It supports a transition toward agro-ecology while barring GMO crops. This could be considered trade distortion under USMCA’s Agriculture chapter, endangering the whole plan for food sovereignty in Mexico. It’s also “hard to see,” writes the Institute for Agriculture and Trade Policy (IATP), “how Mexico can achieve self-sufficiency in basic grains without limits on…dumping.”

NAFTA 2 also threatens seed sovereignty in Mexico. The IATP shows that, like the TPP, USMCA requires all countries to ratify the 1991 version of the International Union for the Protection of New Varieties of Plants, which “prohibits farmers from saving and sharing seeds. Mexico ratified the 1978 version of that accord, which includes exceptions for small-scale farmers, but has declined to ratify the more stringent 1991 version.” With this requirement, small farmers in Mexico will lose control of their seed to Monsanto and Dow-DuPont.

On the consumer side, USMCA fails to require Country Of Origin Labeling (COOL) and dolphin-safe labeling. It also makes GMO labeling more difficult. It would also make it more difficult to regulate and inspect foods, limiting inspections and allowing food that fails to meet US safety standards to be imported. Food and Water Watch writes, the “text encourages the United States to accept the food safety rules in Mexico as comparable to domestic protections and to accept imports from Mexico with less scrutiny than from other countries.

Corporate Deregulation

Deregulation is characteristic of all “free trade” deals–they are free for transnational corporations, but no one else. USMCA not only maintains some of the worst aspects of the Investor-State Dispute Settlement (ISDS) court system, but adds new deregulatory provisions that empower corporations to delay, weaken, and even repeal environmental, food, health, labor, and human rights protections.

Since NAFTA, ISDS has been used by corporations to challenge government regulations that may curb their profits. In ISDS court rulings, tax-payers have paid billions of dollars–that should be going towards essential public services–to corporations for toxics bans, land-use rules, regulatory permits, water and timber policies and more. For instance, Ecuador was forced to pay $1.4 billion to Occidental Petroleum “after the government terminated an oil concession due to the U.S. oil corporation’s breach of the contract and Ecuadorian law.”

People around the world are fighting to end ISDS. And, while there are gains in the new NAFTA–most importantly that ISDS would be eliminated between Canada and the United States–there are also setbacks. Environmental groups point out that the USMCA maintains the “full suite of overreaching substantive corporate rights to some of the biggest ISDS offenders: oil and gas corporations.”

Any oil and gas company that has, or may at some point have, government contracts for offshore drilling, fracking, oil and gas pipelines, refineries, or other polluting activities in Mexico will be able to use ISDS courts to challenge public interest and environmental policies. Repeat ISDS users like Chevron and ExxonMobil “would be allowed to challenge environmental protections in Mexico by relying on the same broad corporate rights that they have used to successfully challenge public interest policies from Ecuador to Canada.” The ISDS exception also applies to companies with government contracts in power generation, infrastructure, transportation, and telecommunications.

In addition to ISDS, corporations successfully lobbied for a new way to challenge regulations in the Good Regulatory Practices (GRP) chapter of the new NAFTA. The GRP chapter “allows corporations to challenge regulations before they are finalized and to ask that existing regulations be repealed.” According to IATP, many corporations “are recognizing that preventing a regulation in the first place, rather than waiting to challenge it after the fact, is far more effective in reducing their costs. Now that ISDS has become widely reviled in the public sphere, even in government, this strategy is becoming a necessity.”

The GRP chapter would have far-reaching consequences for environmental, food, health, labor, and human rights protections. According to IATP, “it applies broadly across all of government and affects virtually all regulations, even if not trade-related.” Whereas NAFTA had two paragraphs on GRP, USMCA has 13 pages that offer all sorts of corporate favors.

The GRP chapter limits the ‘science’ that regulators can use to create new protections; fosters a regulatory race-to-the-bottom through provisions on regulatory cooperation; and, for the first time, is enforceable through trade sanctions between nations–so much for Trump’s protectionism! Any trade agreement that includes such a chapter is a major threat to Democracy and must be stopped.|

Take Action

NAFTA spurred a failed wave of corporate globalization around the world. Now it’s time for a new model, not Trump’s NAFTA 2. The USMCA must be defeated and replaced with a North American agreement that puts people and planet ahead of corporate profit. If you are involved with an activist or community group of any kind you can generate discussion and action around this. Call and email your representative now!

Join the Popular Resistance trade campaign,
People and Planet Before Profits.


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