Trump’s Trade Deal: It’s Not Looking Good

A recent announcement from the Trump administration could harm millions of people across North America, affecting paychecks for workers, medicine costs for cancer patients, and air quality for communities grappling with lead pollution.

The announcement signals a new round in the fight over the future of our trade policy:

“The United States and Mexico have reached an agreement to modernize the 24-year-old North American Free Trade Agreement (NAFTA) into a 21st century, high-standard agreement.”  

Notice anything odd about that statement?  

You may recall that North America includes not two, but three countries. Canada didn’t agree to the NAFTA 2.0 “deal” due to outstanding differences, and is still negotiating with the U.S. That, of course, didn’t stop Donald Trump from trumpeting the “deal” with Mexico to try to score political points.

We do not yet know if or when Canada, which has said it wants climate-friendly trade, might agree to a deal. Canadians who want trade to benefit people and the planet are currently working to convince their government to walk away from a bad deal.

So what’s in the U.S.-Mexico NAFTA deal?  Would it support -- or threaten -- clean air and water, clean energy jobs, and healthy communities across North America?  

Spoiler: It’s looking pretty bad.  

It’s hard to know precise details, given that the talks have happened behind closed doors, with the public shut out and corporate polluters invited to give input. Though this deal could affect everything from our air to our jobs, we’re not allowed to see the text until the end of this month -- after it’s too late to change a single word.

That doesn’t bode well, as decisions hidden from the public rarely benefit the public. “If you’re not at the table, you’re on the menu,” goes the adage.

Without text to look at, our current take is based on credible inside reports. To assess the deal’s potential environmental impacts, we can use the minimum criteria for NAFTA renegotiation that we and other leading environmental groups outlined in May. This is not our wishlist for a gold standard trade deal that advances environmental goals. These are baseline changes that must be made just to eliminate NAFTA’s many threats to our air, water, and climate.

Environmental groups boiled these changes down to three essential fixes to halt NAFTA’s environmental damage. For each, here’s how well the NAFTA 2.0 deal seems to measure up:

Essential fix: Stop the offshoring of pollution and jobs.  

Likely outcome: Major fail.   

The U.S. is by far the world’s largest outsourcer of climate pollution. That’s the alarming conclusion of a new study, which makes clear why trade deals must include binding climate standards. Without climate rules, trade deals like NAFTA help U.S. corporations simply move their climate pollution to countries with weaker standards. The result is lost jobs for U.S. workers, imported pollution for other countries, and negation of our hard-won climate policies.

It has been the same sordid track record with other types of pollution, such as toxic lead waste. When the U.S. enacted new protections against lead pollution in 2009, corporations simply used NAFTA to export their lead waste to Mexico, where lead standards are ten times weaker.  U.S. workers lost their livelihoods, and children in northern Mexico started inhaling toxic levels of lead.

To close this pollution-offshoring loophole, NAFTA’s replacement -- and all U.S. trade deals -- must include binding climate and environmental standards, enforced across borders.

But Trump’s NAFTA 2.0 deal is almost certain -- like Trump -- to ignore the reality of climate change. And it’s unlikely to include strong standards for lead and other types of pollution. While Trump tries to directly dismantle our environmental protections, his NAFTA deal could further erode those protections by allowing more corporations to export their pollution.

Even if NAFTA 2.0 does include some new environmental standards, how will they be enforced? The last four U.S. trade deals used an environmental “enforcement” mechanism that has categorically failed. Not once has the U.S. used the mechanism to challenge environmental abuses in a U.S. trade partner country, despite widely documented violations. Rumor has it that Trump’s NAFTA redux includes more of the same, failed enforcement terms.

Essential fix: Shield environmental policies from industry interference.

Likely outcome: A step forward, a step backward.   

For years, the trade justice movement has pushed for the elimination of a private legal system for corporations that’s hidden in trade deals. Corporate polluters have repeatedly used the “investor-state dispute settlement” (ISDS) system to sue governments over environmental and health policies in tribunals where corporate lawyers -- not judges -- call the shots. Reports suggest the current NAFTA 2.0 deal at least curtails the most egregious elements of ISDS by reining in the rights given to corporations -- a testament to the momentum of the movement to eliminate ISDS.

But there’s a catch, and it’s a big one. U.S. oil and gas corporations in Mexico get to keep their broad rights. That’s right -- the deal reportedly says that while most companies cannot have sweeping rights to challenge environmental and health policies in NAFTA 2.0, they’ll make a special exception for the most polluting corporations in history. It’s like saying, “From now on, we’re going to protect the henhouse by keeping all other animals away... except for foxes.”

This is a shameless and dangerous handout to corporate polluters like Exxon and Chevron, which have used ISDS to successfully challenge policies ranging from offshore drilling requirements in Canada to a court order in Ecuador to clean up toxic oil sludge. Trump’s NAFTA 2.0 would apparently let them challenge environmental policies in Mexico, using a similar set of broad corporate rights.

Essential fix: Support a clean energy economy, not fossil fuel dependency.

Likely outcome: Fossil fuel handouts.  

If we are to transition to an economy based on equity and clean energy, our trade deals cannot move us in the opposite direction. For example, we must eliminate a NAFTA rule that requires the U.S. Department of Energy to automatically approve climate-polluting gas exports to Mexico, instead of evaluating whether they are in the public’s interest. But Trump’s NAFTA 2.0 reportedly maintains this handout to gas corporations, which has facilitated increased fracking in the U.S., expansion of cross-border gas pipelines, and growing dependency on climate-polluting gas in Mexico.

We’re also concerned by the Trump administration’s own admission that it sees NAFTA 2.0 as a tool to “lock in” deregulation of oil and gas in Mexico. We’ll be checking for any new rules that could restrict -- for years to come -- Mexico’s ability to curb fracking and offshore drilling, as described in our recent report. We’ll also be checking whether the text maintains NAFTA’s “proportionality” rule, which locks in tar sands oil extraction and fracking in Canada. Rumor has it that this rule has been eliminated, which would be a bright spot in a deal that is otherwise looking grim for our air, water, and climate.

Here’s the good news: Any NAFTA 2.0 deal still must be voted on in the next Congress. The fight for the future of trade policy doesn’t end when the Trump administration reveals the secret NAFTA text. That’s when it heats up. Stay tuned.


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