Optimism Over New NAFTA Agreement, But Deal Could Have Problems in Congress
Politicians from Texas expressed anxiety and optimism about the future of NAFTA as they talked to a group of young Hispanics from around the country assembled for the Congressional Hispanic Caucus Institute in Washington on Sept. 11. "Most of us are hopeful we will eventually have a trilateral agreement," said Rep. Filemon Vela, D-Texas, who was introducing the panel of those associated with interest groups and an academic. He said NAFTA is "dependent on the interwoven aspects of the economy of all three nations," so a Mexico-U.S. pact is not enough. "If we have to move forward on a bilateral basis, in all likelihood things will not go very well," he said.
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Richard Cortez, a former mayor of McAllen, Texas, is an officer in the Border Trade Alliance. He sounded more confident about a revised NAFTA reaching completion this year with Canada on board. "There's just too much at stake not to reach an agreement," he said.
Some of the students' questions to the panel reflected a belief that NAFTA has contributed to deindustrialization in the U.S., and that it favors businesses over people. Cortez, a Democrat, dismissed this perspective. "The American workers are victims of the laws of economics, supply and demand," he said. American businesses have been able to compete with Asian businesses because the American firms send some work to Mexico, where workers earn $3.50 an hour, and keep some work in Detroit, where workers earn $21 an hour. With the Mexican labor, the price of goods can be cheaper. "Consumers are looking for the lowest price," he said. So American workers must adapt to this reality, he said. McAllen's economy is booming, he said, because of warehousing, trucking, freight forwarders and the like. The city is located near the Mexican border.
The academic on the panel said Mexico's low wages aren't a law of nature just because Mexico is not as developed as its neighbor to the north. Francisco Gonzalez, a Latin American studies professor at the Johns Hopkins School of Advanced International Studies, said that it's been a deliberate policy of the Mexican government to constrain wages in Mexican factories, because it saw low wages as Mexico's competitive advantage. Labor rights were quashed, he said. The revised NAFTA aims to change that.
In an interview after the panel, Gonzalez said if the Democrats retake the majority in the House of Representatives, he does not think there will be the votes to pass a new NAFTA. He said if either Republicans or Democrats vote for a new NAFTA, "either way, they let part of their coalition down. My sense is the easiest path is not voting on it ... for them not to have to burn their hands."
He noted that President Donald Trump has said he wants to call the new NAFTA by another name. "The brand TCLAN became toxic" in Mexico, too, he said, referring to NAFTA's Spanish acronym. But he thinks that won't be enough to convince Democrats to spend political capital on a free trade deal, even with some Democratic priorities reflected in the rewritten agreement, such as better enforceability of labor standards.
To vote yes on NAFTA 2.0 would be to "end up becoming of this individual [Trump] they detest ... to give him that victory, to provide him that, just for political ammunition, I find it hard to believe."