The TPP essentially took NAFTA, the free-trade agreement among Canada, Mexico, and the United States that Trump called “the worst trade deal ever,” and added a whole bunch of countries, including Australia, Vietnam, Japan, and Malaysia. But TPP’s labor and environmental standards went far beyond NAFTA’s, establishing stronger rules for child labor, wages, and protecting unions and the environment. Countries such as Vietnam, for instance, would have been required to comply with the International Labor Organization’s principles prohibiting child labor and forced labor, and would have been required to permit collective bargaining and establish a minimum wage. Under the TPP, labor standards would have been enforceable under dispute settlement, which meant that if countries didn’t live up to TPP standards, the U.S. could have retaliated by imposing higher tariffs. (Labor groups were skeptical that these new enforcement mechanisms would have been effective.)
According to Bown, TPP “writes a lot of new rules covering things that were really just kind of touched on in NAFTA, but that folks have been complaining about—labor standards and environmental standards.”
Perhaps many American workers don’t particularly care about working conditions for people in places like Vietnam, especially when U.S. workers are themselves suffering. But raising labor and environmental standards abroad, especially in countries where many companies have moved manufacturing operations, could have a very direct effect on U.S. workers. When other countries have to put in place labor and environmental standards, labor becomes more expensive there. Just look at China, where the cost of doing business is rising as more workers are organizing and demanding better working conditions. Now, companies are bringing back manufacturing operations from China. The TPP provisions “would have made foreign labor a little bit more expensive and that would have helped U.S. labor,” Bown said.
To be sure, regulations aren’t the only reason U.S. labor is more expensive than foreign labor. Other countries like Vietnam have a lower cost of living, and thus can pay much lower wages. But labor and environmental standards are the type of policies that drive up costs of living, Bown said. And even adding some costs to labor could make companies reconsider their decision to locate overseas. Outsourcing is an expensive headache; at some point, the costs make it not worth it anymore.
Of course, detractors say that despite the rules on the books, the TPP was not enforceable enough, and that countries would still be able to flaunt laws with impunity. And by lowering tariffs, the TPP could have caused some jobs to move overseas. But the TPP was the U.S.’s last best chance to get other countries to improve their labor standards, Bown says. With it gone, there are few options left, since other trade agreements were weaker in this arena. The U.S. tried to enforce labor standards in Guatemala after the signing of the Central America-United States Free Trade Agreement (CAFTA), but its efforts have been slow and trade negotiators have not made much progress holding Guatemala accountable.