As the trade negotiations starts for the TPP, one of the major areas where it is still not able to conjure up a deal is in relation to automobile manufacturing- specifically known as “Rules of Origin”. These rules will set the benchmark for how much of the auto product must come from TPP nations to be covered by the trade agreement. The intensity around this issue reflects the economic importance of the automotive industry to the United States and other TPP countries. To realize what exactly is at stake, one can look into the NAFTA trade deal. It has been in existence for approximately 20 years, and we can see a major integration of the U.S. and Mexico auto industry. A report shows that Mexico will send to the U.S. more vehicles than Canada or even Japan by the end of this year.
However, the workers in Mexico are paid 1/5 th of their American counterparts in auto industry. There are 2 major obstacles between workers and rights in Mexico: protection agreement and labor boards. A protection agreement is to protect a company from any real union or bargaining agreement and also workers have no say in terms of these agreements. In theory, TPP could be a powerful lever to change this. The agreement includes enforceable worker rights and environmental standards. But the Mexican officials insist that such changes be done outside of TPP.
So to resolve such issues, these trade agreements can be seen as a tool to shape globalization and raise standards. Several such issues still remain unresolved in TPP. It will also not work around countries like Vietnam or Malaysia where they excessively violate human rights. The plight of 4 million migrant workers in Malaysia, many laboring without protection of rights, is well documented. All of these and some others raise the basic question of whether the TPP will be built around meaningful standards as the basis of international competition.
When Congress is presented with the deal, it will have a direct answer rather than making some changes and then putting it back into the negotiation table. That is why it matters so much what negotiators are pushing for. Imagine the scenario when the U.S. would have insisted Mexico to changes its labor laws during NAFTA. Some people say that TPP will reform that, but it is still far from clear. Rather than rushing into the deal, the negotiators should try to resolve such important issues. The stakes are too high for American workers, and also International trade and competition must be built on more human condition for all of us.