Mexicos undersecretary for North America at the Ministry of Foreign Affairs has said the country must move away from competing on low wages

Mexico's undersecretary for North America at the Ministry of Foreign Affairs has said the country must move away from competing on low wages

The resolution of key worker issues by Mexico is fundamental to the successful ratification of the new United States Mexico Canada (USMCA) trade agreement, US labour leaders have warned.

Last week, Richard Trumka, president of the American Federation of Labour and Congress of Industrial Organisations (AFL-CIO), led a delegation of US labour leaders to Mexico City to meet with Mexican counterparts and President Andrés Manuel López Obrador to discuss shortcomings in the NAFTA-replacement's labour and enforcement provisions.

The USMCA was agreed with Canada and Mexico on 30 September 2018, and was officially signed by the presidents of the three countries on 30 November 2018. But while the Trump Administration is working to ratify the trade pact in 2019, upcoming election cycles mean it is not certain whether USMCA will be ratified and enter into force this year. 

Strong labour commitments are a key component in the USMCA. The US has repeatedly griped about Mexico's labour conditions and has reiterated calls for provisions for workers to form trade unions as well as for higher wages, saying low wages have enabled the country to compete unfairly with the US and Canada.

"Trade without enforcement is a windfall for corporations and a disaster for workers," Trumka said. "We want to get to 'yes.' But, if Mexico can't ensure workers' ability to bargain for higher wages through real unions, the entire deal is a nonstarter."

Trumka repeatedly has warned the Trump administration that the proposed agreement is incomplete as written – and that any attempt to force its passage prematurely would spark nationwide mobilisation by the labour movement to defeat it.

In May Mexico announced a complete overhaul of its labour relations after the Mexican Senate approved a new labour bill. Under the reforms, workers will be free to choose which union to join and will be able to elect their union leaders through an individual, free, secret and direct ballot. 

But Trumka warned: "Mexico has yet to demonstrate that it has the resources and infrastructure to follow through on its promised reforms. Trade without enforcement is a windfall for corporations and a disaster for workers. We want to get to yes. But, if Mexico can't ensure workers' ability to bargain for higher wages through real unions, the entire deal is a non-starter."

Low salary shift

Following last week's meeting with US representatives, Jesús Seade Kuri, Mexico's undersecretary for North America at the Ministry of Foreign Affairs (SRE), said the country must move away from low salaries that have dominated for the past 40 years in order to allow Mexico to compete for investment and boost its economic growth through better labour, wage and union conditions for workers.

At the first National Labor Reform Congress, he explained: "Much of the development in Mexico has been based on low wages, that in addition to affecting the worker, means that there is a population mass with low purchasing power, so there is no potential for the growth of the economy. These salaries have taken away potential for us to purchase, aggregate demand, growth, you cannot grow only by exporting. Labour reform and TMEC (USMCA) will help reconnect and encourage productivity improvement."

USCMA would update and replace the 25-year-old North American Free Trade Agreement (NAFTA), whose supply chain drives around $20bn in annual trilateral textile and apparel trade. 

The updated USMCA includes several changes such as more restrictive rules of origin for sewing thread, pocketing, narrow elastics and certain coating fabrics, all of which are wanted by the US textile industry. In addition, it fixes the Kissell Amendment loophole – which allowed NAFTA members to supply the Department of Homeland Security (DHS) even though it operates the Kissell Amendment 'Buy American' rule.

The deal is also welcomed by the US apparel brands and importers, with a recent assessment concluding the USMCA is a balanced trade deal for both textiles and apparel.