Union divide puts Elizabeth Warren in a bind over USMCA vote as she seeks labor backing

Presidential candidate Sen. Elizabeth Warren is in a political bind as she weighs whether to vote for President Donald Trump’s new North American trade deal while several labor unions are concerned about the pact.

The deal, called the United States-Mexico-Canada Agreement, or USMCA, has earned the support of the country’s largest federation of unions, the AFL-CIO. Yet several unions have publicly expressed concerns about the deal, which replaces the North American Free Trade Agreement signed by President Bill Clinton in the 1990s. Some unions continue to gripe about USMCA privately, as well, according to people familiar with the matter.

A surrogate for Warren told CNBC after this month’s debate in Los Angeles that the senator was still weighing whether to support the deal as she considers the views of labor and community organizations. Warren herself told NBC News after the debate that she is concerned that the deal “has nothing on the environment, and that’s really important, especially for the competition with our own companies.”

Warren, D-Mass., is in the top tier of Democratic presidential candidates, with national polling averages placing her third behind former Vice President Joe Biden, who supports the deal, and fellow progressive Sen. Bernie Sanders, I-Vt.

Democrats who support USMCA shrug off concerns about backing one of Trump’s signature policy victories by arguing their party’s negotiators made the deal better and that they can put voters’ interests above partisan politics. Those in the party who oppose it believe it doesn’t go far enough to protect workers and insist on a better deal.

Like Sanders, Warren is staking her electoral appeal on the populist wing of the Democratic Party and is seeking union support. Sanders has said he would not support USMCA after calling its improvements over NAFTA “modest.”

Other Democratic senators running for president have either supported it or stayed mum. Sen. Amy Klobuchar, a moderate, has said she supports the deal after expressing concerns earlier this year. Klobuchar represents Minnesota, a state that will benefit from the deal’s easing of Canadian dairy import rules. Sen. Michael Bennet, of Colorado, on Tuesday announced his intention to support the deal.

Representatives for Sen. Cory Booker, D-N.J., did not respond to requests for comment. In June, months before House Democrats’ negotiations with the Trump administration, Booker said he opposed the agreement as written.

Warren’s vote is unlikely to make a difference in the GOP-controlled Senate, where it is expected to pass next year after passing with bipartisan support in the Democratic-led House. But her vote could indicate how she would treat USMCA if she were to win the White House. If she votes for it, she risks angering key constituency in important swing states. If she votes against the deal, she is going against leadership in her party and in the largest federation of unions.

“If she votes for USMCA, any union that doesn’t endorse her is a problem,” said Harley Shaiken, a labor economist at the University of California in Berkeley. “There could be many workers in unions that endorse her who just stay home,” he added.

Unions have largely withheld their endorsements until after the primaries.

The final version of USMCA is the result of intense negotiations between House Speaker Nancy Pelosi and the Trump administration. Pelosi said she was only comfortable bringing a vote before the House after it earned the warm endorsement of Richard Trumka, leader of the 12.5 million-member AFL-CIO.

But the United Food and Commercial Workers International Union, International Association of Machinists and Aerospace Workers, and United Auto Workers are among those who released statements following the deal’s announcement expressing their disappointment.

Those unions have a presence in key swing states such as Michigan and Wisconsin. UAW, which is headquartered in Michigan, counts Ford Motor and General Motors among its members’ employers. IAM represents 600,000 active and retired members, and companies that employ them include Boeing, United Airlines, Lockheed Martin and Harley-Davidson.

Pelosi has cheered the deal as significantly better than the one originally presented to her, due in part to added protections for workers and the removal of language that would have helped pharmaceutical companies.

Trumka’s support for the deal gave it more weight from Pelosi’s standpoint.

“When they were satisfied, we were satisfied,” she explained at a recent convention of attorneys general, referring to the AFL-CIO.

But not everyone is satisfied.

The IAM, which is part of the AFL-CIO, has publicly urged Congress to vote against the deal. The union has said it does not believe the deal sufficiently halts the outsourcing of manufacturing to Mexico. It has expressed concern about how enforceable the deal is. The union also said it is frustrated that the deal did not give certain industries “stronger rules of origin” requirements, which dictate how much of the products its industry manufactures must be made in the U.S.

Even industries that did get “rules of origin” perks, such as the auto industry, have expressed discontent.

According to the new rules, 75% of car or auto parts need to be made from products that originated in the country partnership to achieve duty-free import status. Under NAFTA’s rules, that floor was 62.5%. Additionally, a percentage of vehicles imported duty-free must be made in a place where employees make an average of $16 per hour.

But UAW believes those rules have loopholes.

“It is important to discuss what this agreement is and what it is not,” UAW President Rory Gamble said in a statement. “It is not a ‘fix’ for the many problems created by NAFTA and other misguided tax and labor policies.”

American companies can still find cheaper labor in Eastern Europe and Asia, Gamble argued. The minimum required salary of $16 an hour is an average, not a floor, he said.

As a result, “companies intent on keeping business as usual will go through great lengths to keep wages down and jobs in Mexico,” Gamble said.

“If the United Auto Workers are not for it, and they get 75% origin requirements, that’s a real red flag about how much is gained in this agreement,” said Robert Bruno, professor of labor and employment relations at the University of Illinois, Urbana-Champaign.

The UAW has 400,000 active members and more than 580,000 retired members.

The split among unions over USMCA marks a stark contrast to the 1990s, when labor groups unilaterally opposed NAFTA. That discrepancy is in part because NAFTA was the introduction of a new standard, rather than a potential improvement over one that already existed.

For people who opposed NAFTA from the beginning, USMCA represented an improvement from the status quo.

Sen. Sherrod Brown, D-Ohio, told NPR recently that USMCA will be the first trade deal he’ll vote for in his 25 years as a federal lawmaker.

“It will not solve every problem by a long shot, but it’s a significant step,” Brown said. “That’s why I’m supporting it.”

For others, it’s not enough.

USMCA’s “improvements will not be enough to overhaul the entrenched system in Mexico that denies workers their rights, keeps wages unconscionably low and, consequently, incentivizes companies to ship jobs to Mexico — and out of our communities, like mine in Southeast Michigan,” Rep. Andy Levin, D- Mich., said about his decision to vote against the deal.

Levin’s district, like much of southeast Michigan, is home to a number of manufacturing jobs, including those for General Motors.

“Mexico has not demonstrated the will meaningfully to reform its labor system, and the weakness of the USMCA’s enforcement mechanisms means that we will not be able to hold Mexico’s feet to the fire when promised reforms do not occur.”

The U.S. manufacturing industry is under pressure as more jobs switch to services and sales of the products they make, like cars, slow down. That pressure is augmented as manufacturing companies look abroad for cheaper labor to keep up with declining sales. In 2016, 55% of motor vehicles produced in Mexico were exported to the United States, according to a report by the Center for Automotive Research.

That discontent could play a key role in the 2020 presidential election, just like it did in 2016, when Trump won key industrial and Rust Belt states Wisconsin, Pennsylvania, Ohio and Michigan. Wisconsin hadn’t voted for a Republican presidential candidate since President Ronald Reagan in 1984. It was the first time Michigan and Pennsylvania voted for a Republican since 1988, when George H.W. Bush was elected. Ohio voted for Barack Obama twice.

The day Trump was impeached, he held a rally in Michigan.

Warren’s pitch to the unemployed and struggling workers in states such as Michigan and Ohio has focused largely on the benefits that would come to them as a result of her plans to strip out the interests of big business, in what she calls “accountable capitalism.”

“The principal reason [for job loss] has been a bunch of corporations, giant multinational corporations who’ve been calling the shots on trade, giant multinational corporations that have no loyalty to America,” she said when asked about job loss in Ohio during a recent debate in the state.

“I have a plan to fix that, and it’s accountable capitalism. It says, you want to have one of the giant corporations in America? Then, by golly, 40% of your board of directors should be elected by your employees. That will make a difference when a corporation decides, gee, we could save a nickel by moving a job to Mexico, when there are people on the board in the boardroom saying, no, do you know what that does to our company, do you know what that does to our community, to what it does to our workers?”

Warren’s proposal for rewriting the rules of trade negotiations include the public disclosure of draft agreement texts and expanding the number of representatives at the table to include a panel representing consumers.

Her focus on Michigan was made clear when she became the first Democratic candidate to open a campaign office in the state.

Given the labor and political divisions over USMCA in the Rust Belt, though, Warren is faced with a tough choice with no clear payoff for the primary or, if she wins the nomination, the general election against Trump.

“The reality is we don’t know how politics of this are going to play out,” said Berkeley’s Shaiken. “But in a close election, it could prove decisive.”

— CNBC’s Michael Wayland and Leslie Josephs contributed to this report.