The United States-Mexico-Canada Agreement (USMCA), signed on 1 October, concluded the renegotiation of NAFTA, to the relief of all leaders involved. President Donald Trump needed a victory before the US mid-term elections this month. During his own campaign, he had promised to improve or tear up NAFTA and wanted results before escalating his trade war with China.

Canadian premier Justin Trudeau, who was excluded from the last round of US-Mexico negotiations, wanted to rejoin the process before it became just bilateral talks, and before Trump threatened import tariffs for automobiles. And Mexico’s president Enrique Peña Nieto, whose approval rating is very low, was desperate for any success before he leaves office. Hating US presidents is a Mexican national sport, so he was derided for not standing up to Trump; he wanted to show that bootlicking could work. And his successor, Andrés Manuel López Obrador, needed the agreement signed before he takes office in December, to steady market nerves.

What does the new agreement say? The change of name is more than cosmetic. USMCA drops any mention of free trade and North America as these irritate the far-right wing of the US Republican Party, which mobilised its working-class base by blaming NAFTA for undermining national sovereignty and destroying US jobs. When Trump announced its replacement, he insisted: ‘It’s not NAFTA redone. It’s a brand new deal.’ In Trump newspeak, he claimed it was ‘the most modern, up to date and balanced’ deal in US history. Former State Department adviser Christian Whiton wrote on the Fox News website that the deal revolutionised global trade and marked the beginning of ‘a new world order of trade.’

In reality, the agreement contains positive measures and others that could have devastating effects. This has confused commentators. USMCA has a greater concern with national sovereignty: it explicitly recognises the right of individual signatories to determine the policies they implement.

Such a measure may give the junior parties, Canada and Mexico, greater room for manoeuvre. It has already led to a considerable advance by eliminating NAFTA’s (chapter 11) investor-state dispute settlement process. (Many citizen organisations have long contested this chapter because it allowed companies to challenge nation-states whose decisions might reduce their actual or anticipated profits.) The only exception is the Mexican oil sector; if the incoming López Obrador government criticises irregularities in contracts signed by its predecessor, it could still be brought before a court of arbitration.

The main advances of the agreement concern labour regulations, which only featured in NAFTA as a supplementary clause added at the last minute in 1993, to appease a reluctant US Congress. The new chapter demands that parties adhere to ILO rules. An annex lists detailed measures to end Mexico’s protectionist (‘ghost’) unions, controlled by employers, and to institute collective bargaining processes in Mexico. USMCA stipulates that 40-45% of the components in cars covered by the agreement must be manufactured by employees who make at least $16 an hour, around four times the current salary of Mexico’s car workers. It is unlikely that the (mostly American) automobile companies in Mexico will quadruple wages in the near future or relocate to the US overnight, but addressing the wage gap between the countries is notable progress. Whether this leads to higher salaries in Mexico will depend on López Obrador, whose campaign promises were aligned with some aspects of the agreement.

Small farmers in all three countries are among the losers. Big US dairy producers won a partial victory by gaining greater access to the Canadian market. Canada has a supply management system intended to maintain fair prices for producers and restrict imports. USMCA preserves this system but permits more imports, which the Canadian dairy industry has called ‘death by 1,000 cuts.’ The agreement also allows Midwestern agricultural giants such as Cargill and Archer Daniels Midland access to the Mexican market, but does nothing for small US family firms. The Institute for Agriculture and Trade Policy says that ‘farming communities in the United States, Canada and Mexico have demanded a different kind of trade deal for decades. We want trade rules that support strong, sustainable and fair food systems and rural economies. This reworked agreement achieves none of this.’

Small Mexican farmers share this concern, as they were the biggest losers under NAFTA, which flooded their country with US imports. The Plan of Ayala coalition, which defends smallholder farming in Mexico, criticised the absence of regulation of trade in strategic foodstuffs, the inadequate protection of intellectual property rights for traditional practices, and the promotion of genetically modified organisms (GMOs). The coalition’s spokesman, Ernesto Ladron, said: ‘The agreement is mainly an attempt to defend the big American producers. Our aim is food self-sufficiency, but this agreement puts us on a track that goes in the opposite direction.’

Another significant retrograde step concerns the right to affordable generic medicines. The US won 10 years of protection for patents on treatments known as biologics, as well as the opportunity to change and renew US patents about to expire. Shareholders in US pharmaceutical companies can look forward to bigger profits.

USMCA neglects many things progressives would like changed. True regional integration would mean engaging with climate change, inequality, extractivism, tax havens and financial speculation. The words ‘climate change’ and ‘migration’ do not appear; the US now criminalises would-be immigrants (although that will not stop them from coming), even as it encourages the type of investments that displace people and contribute to immigration. This missed opportunity perpetuates a vicious circle.

The final agreement does not end US customs tariffs on steel and aluminium from Canada and Mexico, which suggests that the current US government’s interpretation of integration is more about its own trade rather than free trade. Canada and Mexico have won a Pyrrhic victory; the overall balance of power remains unchanged.

- Laura Carlsen is the director of the Americas Policy Programme, Centre for International Policy; she is based in Mexico City. Translated by George Miller.

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