UAW Sides With Trump in Calling for NAFTA Reforms
Executive Summary
The UAW is maintaining its hardline position that NAFTA needs a complete overhaul, even though any political credit among blue-collar voters for doing so is likely to go to President Donald Trump, whose administration is decidedly anti-union on other key issues.
Automakers still are trying to assess the potential damage from the Trump Admin.’s efforts to revise U.S. trade policy with stiff new tariffs on steel and aluminum imports and sweeping changes in the North American Free Trade Agreement.
The UAW, meanwhile, is maintaining its hardline position that NAFTA needs a complete overhaul, even though any political credit among blue-collar voters for doing so is likely to go to President Donald Trump, whose administration is decidedly anti-union on other key issues.
Unions in general are more willing to see the free-trade agreement hobbled by Trump, even if it creates pain for major employers of union labor such as General Motors, Ford, FCA US or Caterpillar.
Union opposition to the pact between the U.S., Canada and Mexico dates to the late 1980s and early 1990s, when NAFTA first was being discussed by the administrations of Trump’s Republican predecessors Ronald Reagan and George H.W. Bush. Ultimately NAFTA was approved by a bipartisan coalition in Congress and signed by President Bill Clinton, a Democrat.
Union resistance to NAFTA and other free-trade measures has wavered little, if at all.
After meeting earlier this year with Trump as the fight over revising NAFTA heated up, UAW President Dennis Williams, Teamsters President James P. Hoffa and United Steelworkers President Leo Gerard said in a statement: “Labor is united in its view that NAFTA is a disaster for working people and must be fixed. We had a very productive meeting which made clear to the president that a new NAFTA must create fair and balanced trade in North America.
“Real solutions for any new trade deal must dramatically improve workers’ rights and raise wages and living standards in all three countries.”
Williams later told reporters: “We’ve been working with the administration the best we can. They’re focused on rules of origin. NAFTA is not going to work until a few things happen. One thing that has to be is, you have to demand a different standard of living for the Mexican worker, and you can’t have…fair trade until you have purchasing power.
“Mexico has no purchasing power, and the workers don’t have purchasing power. At least Henry Ford got that,” Williams said of the automotive pioneer’s belief that workers should be paid enough to afford the products they make. “He got that right.”
U.S. unions critical of NAFTA are “focused on Mexico and not Canada, because Canada is reciprocal,” Williams said. “We have a balance in wages, and competition’s real. It’s not real in Mexico. When you have a federal government that has a union in their pocket, there’s not a free union, and there’s not free negotiations.
“We don’t need the federal government or Mexico to do this. GM, Ford, and Chrysler can set an example, too, and raise wages of the Mexican workers, and so could Nissan and Toyota and Volkswagen and the rest of them,” he said.
However, the Center for Automotive Research in Ann Arbor, MI, notes in a recent paper on NAFTA the unintended consequences of setting stringent rules of origin, something Trump's negotiators contend would force manufacturing jobs back to the U.S.
CAR also says the current U.S. proposal could result in most-favored-nation tariffs that amount to a tax of between $2.1 billion and $3.8 billion on U.S. consumers. The tariffs would add between $470 and $2,200 to the cost of affected vehicles, the study said, and if manufacturers pass through the entire cost of the tariff to consumers, the result would be an estimated loss of 60,000 to 150,000 annual U.S. light-vehicle sales.
“Under the current U.S. proposal, at least 46 and as many as 125 vehicle nameplates would be disqualified from trade using the NAFTA preference. In 2017, the 46 nameplates represented a combined 25% of U.S. sales and the 125 nameplates represented a combined 87% of U.S. sales,” CAR estimates in its report.
The U.S. currently exports 2.4 million vehicles per year to its NAFTA partners, representing 22% of total U.S. production. Trump’s proposal would raise the cost of production, expose U.S. vehicle exports failing to meet the higher NAFTA content threshold to tariffs, and result in fewer U.S. vehicle exports, CAR says.
