Why Trump’s NAFTA 2.0 Is a Win for Big Oil - But a Huge Loss for Workers and the Environment

Why Trump’s NAFTA 2.0 Is a Win for Big Oil  -  But a Huge Loss for Workers and the Environment

After the U.S., Canada, and Mexico agreed to a new trade deal to replace the North American Free Trade Agreement (NAFTA) late Sunday night, Trump heralded the new deal as “truly historic news for our nation and the world.”


Yet many activists and environmentalists are already critiquing the new deal, dubbed the United States-Mexico-Canada Agreement (USMCA), calling it a victory for large corporations and polluters at the expense of workers and the planet.

“This deal is a giant step backwards for people, communities and the environment,” Wenonah Hauter, executive director of Food & Water Watch, said in a statement.

She explained that USMCA “would enshrine and globalize Trump’s deregulatory zealotry into a trade pact that would outlast the administration and imperil future efforts to protect consumers, workers and the environment.”

In many ways, the new deal promises to deepen NAFTA’s economic and environmental crises.

In the Shadow of NAFTA

Trump famously critiqued NAFTA, implemented under Bill Clinton in 1994, calling it the “worst trade deal ever made.” Yet for decades, activists across the hemisphere have denounced the agreement as terrible for workers, small farms, and the environment.

“Most people don’t know how bad a deal NAFTA was for Mexico,” Mark Weisbrot, co-director of the Washington-based Center for Economic and Policy Research, told Al Jazeera. “But a quarter-century after NAFTA, Mexican wages are about the same as they were in 1980, some 20 million more people are in poverty, five million were displaced from agriculture because of NAFTA tariff policy, and economic growth in Mexico ranks about 15 of 20 Latin American countries.”

NAFTA has also had a devastating impact on workers in the U.S.

“Americans have suffered under NAFTA’s corporate-rigged rules for decades,” Lori Wallach, director of Public Citizen’s Global Trade Watch, said in a statement.

“Nearly one million U.S. jobs have been government-certified as lost to NAFTA, with NAFTA helping corporations outsource more jobs to Mexico every week,” she explained. “The downward pressure on U.S. workers’ wages caused by NAFTA outsourcing has only intensified as Mexican wages declined in real terms since NAFTA, with Mexican manufacturing wages now 40 percent below those in coastal China.”

New Deal a Win for Monsanto and Polluters

The new replacement for NAFTA is seen as a win for Trump and the various industries that are set to benefit from the agreement.

Mike Sommers, chief of the American Petroleum Institute, the largest oil and gas industry lobby in the country, supports the deal, saying it would “help ensure the U.S. energy revolution continues into the future.”

Yet environmental activists and organizers were not so celebratory.

“The [USMCA] has giant giveaways to the agrochemical industry that paves the way for unregulated gene-edited GMOs, rolls back Mexico’s regulation of GMOs, and lets chemical giants like Monsanto and Dow keep the data on the safety of their pesticides secret for 10 years,” Hauter of Food & Water Watch explained.

“The energy provisions will encourage more pipelines and exports of natural gas and oil that would further expand fracking in the United States and Mexico,” she continued. “The text also provides new avenues for polluters to challenge and try and roll back proposed environmental safeguards, cementing Trump’s pro-polluter agenda in the trade deal.”

Deeper Trade Policy Changes Needed

Other changes with the USMCA have drawn attention from the labor sector and advocates for progressive trade reform.

USMCA notably scraps NAFTA’s widely criticized Investor-State Dispute Settlement (ISDS) process, which allows corporations to sue nations for discriminatory practices that infringe on company profits. (In the new agreement, ISDS has been removed between the U.S. and Canada, but not between the U.S. and Mexico.)

“This is a major change,” Wallach said. “The inclusion of expansive investor privileges and powers in the 1993 NAFTA hatched a new corporate-coup-d’etat-by-trade-agreement model that’s been followed ever since.”

“That even this corporate-compliant administration whacked ISDS means a future Democratic president cannot backslide and sends a powerful signal to the many nations worldwide also seeking to escape the odious ISDS regime,” she explained.

Among other changes, USMCA includes reforms in the auto industry. Beginning in 2020, in order to avoid paying tariffs, automotive companies will be required to produce at least 75 percent of a car in the U.S., Mexico, or Canada, up from the current 62.5 percent requirement. The reform is meant to push production away from Asia and other parts of the world.

In addition, starting in 2020, 30 percent of the manufacturing of the car must be conducted by workers making a minimum of $16 an hour—roughly three times the hourly wage of Mexican workers in the auto industry.

However, the deal will also extend patents on biologic drugs from eight to ten years, resulting in a rise in the prices for customers and a win for the pharmaceutical industry.

After the heads of state from the three participating nations sign USMCA, it will go to the U.S. Congress for a vote early next year. Critics are urging Congress to reject the new deal, and work for deeper, structural reforms.

“Failed U.S. trade policies that have dramatically boosted corporate power and harmed workers, consumers and the environment require a complete transformation,” Wallach said. “A final renegotiation package that stops NAFTA’s ongoing damage and begins the process of replacing the failed U.S. trade agreement model could obtain broad support.”

This article was produced by Globetrotter, a project of the Independent Media Institute.

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