CUSMA,a capitalist adventurism? Marxist analysis of class inequities in the Canada-United States-Mexico agreement

Abstract

This essay will serve as a theoretical intervention, highlighting the inherent contradictions within CUSMA's labor provisions. By critically analyzing the agreement through a Marxist lens, it will reveal how the agreement perpetuates capitalist exploitation even with its purported aims of improving labor conditions. The analysis will emphasize that meaningful advancements in labor rights under global trade agreements like CUSMA require a radical restructuring of economic systems. This theoretical critique aims to deepen the understanding of labor rights within the context of international trade and capitalist frameworks, rather than proposing policy changes.

Introduction

The Canada-United States-Mexico Agreement (CUSMA), signed in November 2018, replaced the North American Free Trade Agreement (NAFTA). This new Free Trade Agreement (FTA) significantly expands upon the labor provisions first introduced in NAFTA (Morin, 2022). CUSMA includes 34 chapters and 12 side letters, ¹ requiring member countries to enforce their laws and adopt specific laws in line with the International Labour Organization (ILO) Declaration. This commitment emphasizes the importance of enacting laws and effectively enforcing them, addressing a challenge seen in various international trade agreements. The agreement obliges parties to adopt and maintain laws, monitor compliance, and prevent derogations from existing legislation. It also mandates that imported goods must be free from forced labor and addresses violence against workers, migrant worker protections, and workplace discrimination. These labor obligations mark a significant departure from NAFTA, with a particular focus on enforcement. ² Annexure 23-A of CUSMA specifically requires Mexico to enact laws related to forced labor, union protection, and the impartiality and independence of labor courts before the agreement enters into force. Mexico had to act swiftly to implement these reforms, leading to significant labor law changes and constitutional amendments in 2019.

Beyond the specific measures for Mexico, CUSMA covers a wide range of labor standards, including freedom of association, the abolition of child labor, and workplace health and safety. It also establishes a comprehensive dispute settlement system to address various issues, with provisions for consultations, enforceability, and remedies. The agreement includes the creation of a labor council that meets regularly to review current legislation and provide guidance and recommendations. ³

These labor provisions may make the trade agreement appear pro-worker and welfarist, but they serve as a guise under which capitalism explores new production sites and expands its influence. ⁴ Commenting on the inclusion of labor provisions in trade agreements globally, scholars like Harrison state, “Labor provisions have not been a priority of those charged with negotiating and implementing trade policy in either the United States or the EU. They have largely been a sideshow to the main business of implementing liberalization commitments and commercial regulatory requirements, which are perceived to be where the benefits of trade agreements lie” (Harrison, 2019: 724) . In fact, if one examines the rationale behind CUSMA, introduced by the Trump administration to replace NAFTA, it becomes evident that it was a populist move aimed at addressing working-class discontent through a neoliberal lens. Trump's “populist neoliberalism” reframed trade policy as a way to reclaim jobs and sovereignty, appealing to blue-collar voters disillusioned with previous multilateral trade deals that, at least in rhetoric, promoted a cooperation-based liberal international order. ⁵ Trump sought to intensify competition at both regional and international levels in a unique manner through CUSMA. This is particularly evident when we examine the original provisions, such as the increase in the regional content requirement for automobiles from 62.5% under NAFTA to 75%, as well as the restriction on importing more than 2.6 million passenger vehicles from Canada and Mexico into the United States each year, fostering the “America First” vision. ⁶

In this evolving context examining CUSMA through a Marxist lens is essential to understand its impact on Mexico. There is significant optimism among the ruling class and the proletariat about the opportunities CUSMA is expected to bring, heightened by the COVID-19 pandemic and the US-China trade war, which promote ‘nearshoring' ⁷ as a trade strategy. Assessing the agreement from both capital and labor perspectives is crucial. A Marxist analysis will reveal how, despite seemingly pro-worker policies, the fundamental capitalist rule remains unchanged. As Das argues, the totality has ontological primacy over individual parts (Das, 2017). While capitalist socio-economic structures may appear ‘just’ and ‘inclusive,’ their fundamental form and logic persist. Studying CUSMA from this perspective will illuminate the underlying capitalist relations and structures defining the North American and Mexican socio-economic totality. ⁸ Commenting on the need to study the totality, Lebowitz argues,

Marx's starting point, accordingly, is to develop an understanding of the society as a ‘connected whole’, as an organic system; … the ‘inner core, which is essential but concealed’ on the surface of the society (Lebowitz cited in Das, 2017: 177).

The first section will examine the provisions concerning capital and labor in CUSMA. The second section will analyze the phenomenon of primitive accumulation in Mexico. The third section will delve into capitalist accumulation, encompassing Marx's theories on machinery, technology, and their implications for the capital-labor relationship.

Labor commodification in CUSMA

In capitalism, everything with ‘use value’ must become a commodity with ‘exchange value,’ including labor power. CUSMA facilitates and regulates this commodification but does not change the exploitative nature of capitalism. CUSMA includes provisions ⁹ aimed at protecting labor rights, such as ensuring fair wages, worker protections, and the right to collective bargaining. ¹⁰ However, forced labor continues to exist in almost all the sectors of the Mexican economy, despite the provision against it envisaged in the agreement. A report published in the year 2015 stated that nearly 2 million people worked under conditions of semi-slavery (Demos, 2015). The condition further worsened despite the agreement signed by the Mexican state to implement ILO's provision on forced labor. ¹¹ The report published by the US Department of Labour in 2023 states that 4% of total children aged between 5 and 14 continue to work in almost all the sectors of the Mexican economy as a prominent form of labor. ¹²

3.7 million Mexican children aged 5–17 worked in 2022, comprising 13.1% of the child population, up 1.7% from 2019. Of these, 2 million are in hazardous labor sectors like agriculture, construction, mining, and chemicals. Additionally, Mexico receives many migrants from Latin American countries such as Venezuela and El Salvador. They serve as a cheap and valuable commodity in the capitalist structure of the Mexican economy (Izcara Palacios, 2017). The increased migrant provides cheap labor to the Mexican capital whereas Mexican surplus labor migrates to the US increasing the remittance of the Mexican state. ¹³ This nexus of state and capital structurally limits any readjustment from the labor point of view as proposed in CUSMA. ¹⁴ The agreement's dispute resolution mechanisms are designed to address violations of labor rights, but the primary focus is on maintaining stable conditions for trade and investment, not on fundamentally altering the power dynamics between capital and labor (McBride and Fry, 2022).

The commodification of labor power, shaped by historical and economic developments, continues under CUSMA, which regulates labor as a commodity. Despite provisions for fair wages and safe conditions, CUSMA doesn't challenge capitalism's exploitation of labor. Workers receive subsistence wages while surplus value goes to capitalists. For example, Mexican minimum wages range from 248 to 370 pesos per day (20–30 CAD), far less than the Canadian minimum wage of 16–19 CAD per hour. Under capitalism, capitalists control production and products, including labor that allows capitalists to extract surplus value. Under CUSMA worker exploitation will persist despite seemingly fair labor provisions, as capitalists own the entire production and the processes related to it. ¹⁵

Silhouettes of dispossession or inclusive capitalism?

CUSMA promises inclusive trade by legislating impacts on the environment, laborers, migrants, child workers, and women (Macdonald, 2022), aiming for socio-economic justice and fair trade. However, inconsistencies exist between these claims and potential outcomes. In capitalism, capitalists extract surplus value through labor power, as explained by Marx. Surplus value is not created solely through circulation alone, but also through underlying processes not visible in the exchange itself. Marx states, “Surplus value cannot be created by circulation, and, therefore in its formation, something must take place in the background, which is not apparent in the circulation itself” (Marx, 2022: 111). ¹⁶ CUSMA covers trade terms but ignores how capital's broader societal and political impacts, like “primitive accumulation,” unfold.

Primitive accumulation according to Marx forms the bedrock for capitalist accumulation. Marx suggests,

We have seen how money is changed into capital; how through capital surplus value is made and from surplus value more capital. But the accumulation of capital presupposes surplus value; … The whole movement, therefore, seems to turn in a vicious circle, out of which we can only get by supposing a primitive accumulation preceding capitalist accumulation; an accumulation not the result of the capitalist mode of production, but its starting point (Marx, 2022: 501).

Marx chooses to call it ‘primitive’ because “it forms the pre-historic stage of capital and mode of production corresponding with it” (Marx, 2022: 502). It remains an ongoing process in capitalist society since the fate of the capital is integrated with primitive accumulation. ¹⁷ According to Marx, Capital is intrinsically entwined or integrated with that of the labor and his labor power. Capitalism requires labor and labor of a specific kind which is free in both senses, “that they neither form part and parcel of the means of production … and free from, unencumbered by, any means of production of their own” (Marx, 2022: 502). Primitive accumulation is the process through which this is made available to the capitalist. For Marx, primitive accumulation forms the lynchpin on which transformation takes place, the transformation of labor into wage labor and the transformation of the social means of subsistence and of production into capital. This transformation involved the dispossession of peasants from their land, which gradually got enclosed and converted into private property. This process forces the peasants, who had previously subsisted under feudal relations of production, into becoming wage laborers, creating a proletariat class.

In the case of the Maya community, Primitive accumulation is transforming their solar. ¹⁸ Dispossession is rampant in Mexico, particularly affecting indigenous communities like the Maya (Cabrera Pacheco, 2017). NAFTA accelerated this through reforms promoting private property on communal lands, state subsidies undermining indigenous agriculture, and commodifying traditional lands and housing through tourism and modernization projects. These changes eroded the Maya's historic sustainable self-subsistence, which developed over nearly 2000 years in Yucatán's challenging environment. In contemporary Mexico, indigenous displacement and transformation to the working class coincide with widespread extraction projects (Cervantes and Zalik, 2018) and violence backed by private entities, drug cartels, and the state. Scholars like Dawn Paley and Guadalupe Correa-Cabrera show how state-linked violence secures zones for extractive projects, clearing territory for resource extraction through waged labor accumulation. ¹⁹ These new forms of violence dispossess and open territories not just for “plunder” but also for resource extraction through waged labor accumulation (Paley, 2015).

Correa-Cabrera's work on the Zetas, while giving more analytical weight to the idea of “cartels” and independent “criminal organizations,” arrives at similar conclusions. Her well-researched account demonstrates how violence across Mexico ultimately benefits large corporate interests (Correa-Cabrera, 2017). She writes,

In these areas, there are close business relationships between legal and illegal companies, extreme violence, militarization of security, paramilitarism, land displacements, and government protection of corporate capital and foreign investments. These territories, rich in hydrocarbons and other natural resources, initially felt the presence of criminal groups like the Zetas, or others following the same criminal model, making these territories “ungovernable.” The government's response to this phenomenon was increased violence to regain control. It is plausible that control of these strategic lands for energy production will ultimately be concentrated in the hands of transnational corporations (both foreign and national) with significant investments and interests in the area (Correa-Cabrera, 2017: 180).

In their analysis of primitive accumulation, Marx and Marxists like Rosa Luxemburg ²⁰ note that capital-labour relations are not based on a ‘social contract’, where people voluntarily undergo a treaty to underscore the ‘good life’. ²¹ The relations here are forced through violence and coercion often backed by the state and other actors as well (Luxemburg, 2015: 452). The conditions have to be reproduced through different avenues so that capitalist accumulation can continue. Marx centrally brings the role of the state at this juncture. According to Marx, the state plays a crucial role in disciplining and regulating the wages of the working class. Marx argues,

Thus were driven the agricultural people, first forcibly expropriated from the soil, driven from their homes, turned into vagabonds, and then whipped, branded, tortured by laws grotesquely terrible, into the discipline necessary for the wage system… the bourgeoisie, at its rise, wants and uses the power of the state to ‘regulate’ wages. (Marx, 2022: 516)

Marx also refers to the regulations that were enforced from the fifteenth century onwards against the labor to regulate their wages, discipline them, and create conditions for the “capitalist production to develop working class which by education, tradition, and habit, looks upon the condition of that mode of production as self-evident laws of nature” (Marx, 2022: 516). Marx here indicates the significance of state and politics in both senses, ‘coercive’ and ‘ideological’ to foster the development of capitalism by ensuring the continuity of additional ingredients (apart from free labor) required for capitalist accumulation which includes- conversion of the communal or individual property into capitalist private property, colonialism, creation of a home market for industrial capital etc. ²²

CUSMA, despite its provisions for labor rights, the agreement operates within this exploitative capitalist framework. The labor rights clauses in CUSMA, while aimed at improving conditions for workers, primarily serve to regulate labor power as a commodity within the capitalist market. Multinational corporations benefit from these regulations, ensuring that labor can be traded freely without fundamentally challenging the capitalist structure that commodifies labor power. CUSMA's labor provisions create a facade of reform but do not alter the underlying exploitative dynamics. Indigenous people are forcibly dispossessed and converted into commodities whose labor power is exchanged in the market, and the surplus value extracted from their labor continues to be appropriated by the capitalist class.

As per the report published by UNHCR, the major cause of internal displacement for the Indigenous people includes, “violence, often backed by state and non-state actors”. 72 percent of people are displaced due to violence originating from organized crime, 24 percent of people due to political violence, social and territorial conflict which includes violence for development projects, including mining and illegal logging, and 4 percent of people are displaced due to human rights violations. This dynamic illustrates how violence continues to aid primitive accumulation and CUSMA, like other neoliberal trade agreements, will continue benefiting from it as it will perpetuate capitalist exploitation by maintaining the conditions that allow for the commodification and exchange of labor power while giving an appearance of labor rights protection. It also underscores how the Mexican state collaborates with capital and actively supports securing the interests of the capitalist class (Roman and Velasco Arregui, 2015).

CUSMA- an agreement aiding capitalist accumulation

From a Marxist perspective, particularly through the lens of the working day and exploitation, CUSMA can be critiqued for perpetuating and exacerbating the conditions of labor exploitation that Marx so vehemently critiqued. Marx locates the source of worker exploitation in the elongated working day, wherein the capitalist seeks to extract surplus value by making the worker labor beyond the necessary time required for their sustenance. In capitalism, the working day is split into necessary labor time (for wage production) and surplus labor time (for unpaid surplus value). CUSMA supports capitalist interests by promoting practices that elongate the working day through deregulation and labor flexibility. Despite provisions to protect workers’ rights, enforcement gaps lead to a race to the bottom, relaxing labor laws to attract investment and intensify exploitation. For instance, Mexico tops OECD countries with an average of 2255 annual working hours, approximately 43 h per week.

The pursuit of surplus value drives technological advancements to reduce necessary labor time and increase surplus labor time (Das, 2022a). CUSMA accelerates this by promoting technological integration and digital trade, often displacing jobs and forcing workers into precarious, low-wage employment. The agreement's focus on capital accumulation via investor-state dispute settlement undermines labor rights and concentrates capital, worsening labor exploitation. Marx's theory distinguishes between simple and expanded reproduction (Das, 2022b), where CUSMA facilitates expanded reproduction by ensuring a constant flow of goods and capital across borders. This benefits corporations but increases labor exploitation, worsened by the agreement's investor-state dispute settlement that can challenge labor laws. CUSMA's facilitation of capital mobility concentrates power among multinational corporations, increasing the reserve army of labor and expanding the informal sector in Mexico. According to the data released by the World Bank, 23% of Mexican GDP is produced by the informal economy, 6 out of every 10 workers participate in the informal economy and 1 out of every 4 workers at a formal firm is informally employed. The overall size of the informal economy in Mexico has grown by over 50 percent in Mexico.

The agreement's provisions do little to address this imbalance, instead reinforcing the power dynamics that favor large capital at the expense of labor. From a Marxist perspective, CUSMA perpetuates and deepens the exploitation of labor by extending the working day, promoting technological changes that favor capital over labor, facilitating the accumulation and centralization of capital, and increasing the reserve army of labor. While the agreement includes provisions to protect workers’ rights, these are often insufficiently enforced and overshadowed by the broader structural dynamics that favor capital accumulation and exploitation. Marx's critique of the working day and surplus value provides a lens through which to understand how CUSMA, like many free trade agreements, reinforces capitalist exploitation and undermines workers’ rights and conditions.

Conclusion

Labor unions must remain vigilant and prioritize enforcing and strengthening labor protections to prevent the elongation of the working day and the intensification of exploitation. Unions must advocate for robust regulations that protect workers’ rights and prevent the erosion of labor standards, even in the face of technological advancements and increased capital mobility. By promoting policies that support fair wages, job security, and safe working conditions, labor unions can mitigate the adverse effects of capital accumulation and centralization, at the immediate level. The effectiveness of CUSMA's labor protection mechanisms will ultimately hinge on the political activism and advocacy efforts of unions, they should work towards creating comprehensive support systems for displaced workers, and informal sector workers ensuring that the benefits of technological progress and economic integration are equitably distributed. The political left must view CUSMA as an opportunity to bolster their campaigns aimed at fundamental transformations in the system.