Last Wednesday, the House of Representatives voted to send impeachment articles against Donald Trump to the Senate. Yet the week was still a win for the president. Both of his trade deals got a green light: the United States Mexico Canada Agreement (USMCA, or NAFTA 2.0) sailed through the Senate, and the first phase of a broader trade agreement was formalized with China.
Republicans and Democrats, including progressives like Massachusetts senator Elizabeth Warren, lauded the USMCA. The deal institutes tougher labor laws in Mexico, eliminates the much-maligned investor-state dispute machinery, and increases the North American content requirement for motor vehicles.
The Phase 1 agreement with China, while less popular than the USMCA, is seen as a welcome pause in the escalating trade war between the world’s two most powerful economies. The deal commits China to purchasing an additional $200 billion in US exports over the next two years and includes promises from Beijing that it will stop forcing US companies to share trade secrets and refrain from competitively devaluing its currency.
There’s plenty of back-slapping going on in mainstream circles. But here are three reasons why Trump’s trade deals are nothing to celebrate.
The argument that neoliberal trade policies have hurt ordinary Americans has gone from contested premise to near consensus over the past decade. Politicians on both sides of the aisle stress the need for trade policies that prioritize US workers, and Trump claims that both the USMCA and the Phase 1 agreement with China do just that. They don’t.
The USMCA is 90 percent NAFTA. It contains no mandate or goal for job creation in the United States, Canada, or Mexico. Instead, it preserves the flexibility of North American corporations to organize production as they see fit, enabling them to close plants and destroy jobs with little consideration for how their investment decisions impact families and communities. While the USMCA pushes up the North American content requirement for motor vehicles to 75 percent, it is unlikely to spur significant new employment in the US auto industry. Assemblers and suppliers can, for the most part, meet these content mandates using their existing production and employment footprints.
The Phase 1 agreement boosts Chinese purchases of US goods and services for two years, but as with the USMCA, it contains no provision for generating jobs in the US, let alone good jobs. Instead, it assumes that higher production for export and US companies’ increased control over their trade secrets will result in improved livelihoods for American workers. Considering the extremely short timeline of the export boost and the proven unwillingness of US corporations to direct profits toward brick-and-mortar investment, this assumption doesn’t hold water.
Bernie Sanders voted against the USMCA, arguing that the pact failed to attack climate change. The same can be said for the Phase 1 agreement with China. The original NAFTA and the 1995 World Trade Organization framework were tailor-made for big corporations, providing them maximum leeway to avoid and abuse environmental regulations. In the decades since, the climate crisis has become even more acute, yet the incorporation of emissions targets into either the USMCA or the Phase 1 agreement wasn’t even on the table.
It is unconscionable that a deal meant to regulate production and trade across North America for the foreseeable future makes almost no mention of climate change. At the same time, the United States and China are the two biggest polluters on the planet; both have a responsibility, to their own populations and to the rest of the world, to implement sustainable development policies.
Ultimately, trade and climate change are inseparable. Unless corporations are forced to reduce their carbon footprint, fair trade is impossible.
While the USMCA and the Phase 1 deal with China do contain some tweaks to the trade relationships of the countries involved, overall, the new deals perpetuate, and reaffirm, the global and regional trade frameworks that have prevailed for decades.
Both agreements continue to prioritize the interests of corporations, operating on the assumption that if US companies are healthy and profitable, benefits will trickle down to workers. There is little evidence to support this claim. Gains from trade over the past three decades have disproportionately gone to corporations and elites, while working people have suffered stagnant wages and shrinking pathways to success.
To move beyond the trickle-down trade status quo, we need to rip up the existing trade pacts and start from scratch. Only then can we reorder our priorities — putting well-paying jobs and a healthy environment for people North and South at the top — and get to work crafting trade policy that honors these priorities.