Let's Hope NAFTA 2.0 Is A Hemispheric Shot In The Arm – Not Another Poke In The Ribs

Dec 11, 2019

COMMENTARY

When I read this week that President Trump and House Democrats had agreed on a new and improved North American Free Trade Agreement – now called the U.S.-Mexico-Canada Agreement, or USMCA – I recalled an afternoon 28 years ago when a ticked-off corporate honcho jabbed his finger in my ribs.

I and a few other U.S. correspondents working in Mexico had been summoned to the border to be lectured by Mexican officials and American businessmen on the wonders of NAFTA, which was then being negotiated. I had just written a story suggesting the pact might not be such a boon for U.S. or Mexican labor. In those heady, early days of globalization, that was considered heresy. So I soon found myself accosted by a U.S. automotive company v.p., his digit in my chest, telling me to “get with the program.”

Now it’s the business bosses who are having to get with the program.

READ MORE: Latin America's Unrest Is Nothing New, Because Its Economies Are Pathetically Old

In an unlikely moment of political synchronization, Trump and the Dems agreed that NAFTA 1.0 has not been a sufficient boon to workers on this continent. Of all the items the USMCA updates, its labor provisions – steering more car manufacturing back to U.S. factories at a minimum wage of $16 an hour, for example, or giving Mexican obreros real union and bargaining leverage for once – are what stand out.

And they stand out most because they raise the prospect that we’re not just entering NAFTA 2.0. We in the Americas might (might) finally be moving on to a fairer Globalization 2.0.

Trump’s outcry against globalization is of course populist fantasy. Globalization was inevitable: the past three centuries of technological revolution, from steam engines to jets to the internet, were bound to erase economic borders as surely as they annihilated time and distance. Globalization per se isn’t the enemy. But how we’ve thus far practiced it is, in spite of the prodigious new wealth it’s created.

NAFTA 2.0 could help push the Americas toward a fairer Globalization 2.0, but only if we do the hard work – for once – of preparing the hemisphere's workers for globalization.

Which brings us back to Globalization 1.0’s labor shortcomings. They're a big reason Trump won the White House. U.S. workers – read America’s white working class – felt betrayed by the tearing down of the world’s trade and production barriers. More specifically, it felt robbed of the upward mobility it had come to take for granted in the 20th century. So, for that matter, did a lot of America’s non-white working class.

Jobs data back them up. On Forbes.com this month, business author Steve Denning points out that even at high-employment moments like today, the U.S. job-quality index has over the past few globalized decades been “rotten.” Well-paid manufacturing jobs have dropped from a quarter of America’s civilian employment in 1970 to less than a tenth today. Our new information economy has replaced those jobs “chiefly [with] lower wage/lower-hours service jobs,” according to a Cornell Law School study.

Mexican workers, especially small-scale farmers, also feel cheated by globalization. So do workers in much if not most of Latin America and the Caribbean, where the new economic order has meant more of the old economic inertia: massive exportation of the region’s low-tech commodities to emerging powers like China, but scant importation of the kind of high-tech employment those so-called tigers have been creating since the turn of the century.

MOLOTOV COCKTAILS

Yes, Latin America’s middle class has grown in this century – but largely because commodities prices were high. They’ve fallen again. And we wouldn’t see Molotov cocktails being hurled in the streets from Chile to Colombia to Haiti right now if that growing middle class didn’t still see a gaping chasm between globalization’s promises and its realities – starting with the region's appallingly deficient education systems.

Demonstrators protesting Chile's economic inequality at a burning street barricade in Santiago in October.
Credit Rodrigo Abd / AP

That’s why the USMCA has to do more than just raise minimum wages in Indiana and enable unionization in Chihuahua if it’s going to help push the Americas toward Globalization 2.0. It has to spark something both the U.S. and Latin America, both government and business, both liberals and conservatives, have been utterly lousy at since we were all told to get with the globalization program in this hemisphere a generation ago.

For once, it’s actually going to have to do the hard work of preparing workers for globalization. It’s going to have to be an engine not just for job creation but quality job creation. Manufacturing alternatives for Floridians (like the underpaid janitors who duct-taped bananas to themselves this week) in industries like renewable energy. Higher-skilled work for Brazilians in sectors that add value to soybeans.

If it doesn’t, the workers left behind will be the ones poking ribs this time. Or worse.