Non-Immigrant Labor Mobility in Trade Agreements : How NAFTA Can Address U.S. Labor Market Mismatches

The U.S. economy is changing and the labor market is having trouble keeping pace. The country suffers from significant labor market mismatches in sectors ranging from technology to healthcare to manufacturing. What’s more, companies are, increasingly, creating new jobs in places that lack sufficient skilled employees, and the needed employees don’t organically show up. The mismatch of jobs and skills will likely only worsen with the demographic shifts brought on by the retirement of the baby boom generation and the declining proclivity of Americans to relocate for a new job. We believe that there is such a tool already in existence that can achieve these goals with a modicum of reforms. Chapter 16 of the North American Free Trade Agreement (NAFTA) is an underused mechanism expressly intended to address labor market mismatches and which would meet all of the desired policy principles for a non-immigrant entry program. The challenge of using it for this purpose is that Annex 1603 of NAFTA, which sets forth a list of professions that the United States, Canada and Mexico agree to make eligible for North American-wide mobility on a non-immigrant basis, remains unchanged from when it was first negotiated in the early 1990's. While updating the list has proven to be politically difficult, a compelling case can be made for modifying it to reflect the sectors of the economy with major labor shortages, and that doing so would ultimately boost economic activity and employment in the U.S. economy