Canadian labour union Unifor and the United Auto Workers (UAW) won’t likely get what they want from a renegotiated North American Free Trade Agreement (NAFTA), says an expert in the field of international trade.
The two unions issued a joint statement Tuesday, outlining what they want included in a revamped trade deal between Canada, Mexico and the United States. The list includes:
- The strengthening of labour standards and raising wages.
- Balanced trade.
- “Made in North America” rules.
- A fair share of benefits for workers in each country.
Ian Lee, an associate professor at the Sprott School of Business at Carleton University in Ottawa, said only one of those four points can be addressed through a trade agreement.
“The only one there I think is legitimate, in the sense of being within the boundaries of a trade agreement, are the made-in-North America rules. That’s one of the things I believe will be discussed during negotiations,” said Lee, who has discussed trade policy numerous times before House of Commons and Senate committees in Ottawa. “There already is a made-in-North America rule under NAFTA.”
Currently, 62.5 per cent of the makeup of vehicles and 60 per cent of automotive parts must be made within the NAFTA region to receive duty-free status in the trio of countries.
United States Commerce Secretary Wilbur Ross has called those rules obsolete and outdated and said they will be a major focus during renegotiations. He, the United States and the unions want that percentage to be increased in hopes that it will create more manufacturing jobs in North America.
What NAFTA can’t address are wages, benefits and an automotive trade imbalance between the United States and Mexico or Canada and Mexico, Lee said.
“The whole question of wages is not something that could or can or ever will be embedded in a trade agreement. It’s just not possible,” Lee said. “Raising wages is something you negotiate during contract negotiations. Trade agreements do not negotiate wage levels. They cannot possibly say in a trade agreement, ‘wages in the auto sector should be X percentage of GDP.’ You just can’t say that.”
Benefits are also something workers negotiate through bargaining with manufacturers, not through trade deals, Lee said.
When it comes to solving the automotive trade imbalance, Lee said what the unions “are really talking about is disguised backdoor protectionism.”
“And protectionism doesn’t work,” he said. “The idea the government can somehow balance trade is straight out of the 16th Century and is the old theory of mercantilism, which was discredited 300 years ago.”
Mercantilism is an economic theory that suggests there is only a fixed amount of wealth or assets in the world and that a country’s economic prosperity depends on its ability to accumulate wealth by exporting more than it imports.
“Trade agreements don’t cause trade. Trade occurs way before trade agreements. All trade agreements do is put some rules around it so chaos and anarchy don’t occur,” said Lee, who has written several papers on trade. “When two nations trade, both sides benefit.”
Not every sector of the economy can have balanced trade. Countries will trade more of some products and less of others, Lee said.
Lee thinks Unifor President Jerry Dias and UAW President Dennis Williams might have issued their statement “partly for political reasons.”
“The [union] leaders are every bit politicians in their own right as a politician who runs for Congress or Parliament. The leadership of these unions must be elected by members of the union. They have voters and they have to appeal to voters,” he said.
“They could be doing this to appeal to the voters who elected them.”