Steel Crisis -Efforts in Congress
Congressman Kucinich has been one of the most outspoken and active members of Congress in response to the crisis. A leader of the Congressional Steel Caucus, Congressman Kucinich has again been active in the 107th Congress pushing a steel quota bill. H.R. 808, the Steel Revitalization Act, would limit foreign steel imports to levels existing before the recent surge. It would also increase loan guarantee funding for steel companies, and set up a fund to help pay the retirement costs of steel worker retirees. Congressman Kucinich has fought for this bill's passage, helping to recruit more than 220 co-sponsors. This effort mirrors his work on the steel quota bill introduced in the 106th Congress, the Visclosky-Quinn-Kucinich-Ney bill. During the floor debate on that bill, Congressman Kucinich pointed out to members of Congress the absurd priorities of U.S. trade policy. Referring to the U.S.'s vigorous use of the World Trade Organization to open Europe to bananas grown in Central America by Chiquita brands, a U.S.-bsed multinational corporation, Kucinich said, "Bananas did not build America. Steel did... The administration cares more about bananas than about steel. Such a trade policy is, in a word, bananas." The quota bill passed the House by an overwhelming margin, 289-141, on March 17, 1999.
Congressman Kucinich has also pursued other legislative initiatives to secure a healthy steel industry for the long-term. Congressman Kucinich introduced the Steel and National Security Act, which would reauthorize a law, the Defense Production Act, that authorizes various Presidential actions to save industries vital to our national security. His reauthorization bill includes specific directives that the President consider steel such an industry and step in to help domestic steel. Congressman Kucinich has also introduced a bill along with Rep. Steven LaTourette, H.R. 1564, that would provide money for states to undertake infrastructure projects, such as the building of schools and roads. States would be required to use only American steel.
In addition to votes and floor speeches, Congressman Kucinich was the first member of Congress to confront the Administration with the effects on the steel industry by the Asian financial crisis. In a White House meeting in mid-December 1997, he met with National Economic Advisor Gene Sperling and discussed the necessity of renewing voluntary restraint agreements and the use of U.S. anti-dumping laws to protect the American steel industry.
Congressman Kucinich has also pressured the administration to act on the steel crisis. The efforts of the Congressman and other members of Congress helped spur President Bush to initiate a Section 201 trade investigation of steel imports. Since that announcement and a subsequent unanimous finding by the US International Trade Commission (ITC) that the domestic steel industry had been seriously injured by illegal foreign imports, Congressman Kucinich applauded the March 2002 imposition of the section 201 steel tariff safeguard to help the domestic steel industry recover and restructure. Prior to the imposition of the tariffs, Congressman Kucinich testified before the ITC in support of the tariffs and co-signed a letter to the President urging the inclusion of all steel-related products in the safeguard.
In the 108th Congress, Congressman Kucinich has been working with his colleagues to pressure the administration to maintain the Section 201 relief for its full three-year term, as originally intended. With other Congressional supporters of the domestic steel industry, Rep. Kucinich sent a letter to the President in support of the tariffs and testified a second time before the ITC in support of sustaining the tariffs. The midterm report issued by the ITC reflects the fact that the steel safeguard is serving a vital role in helping the industry build a strong and vibrant domestic steel industry. The industry has invested more than $3.6 billion in consolidation efforts in reliance on the program, and the industry is beginning to see signs of a modest price recovery, in spite of hundreds of exclusions granted by the administration.
Congressman Kucinich strongly criticized the World Trade Organization’s (WTO) ruling against the continuation of the 201 tariffs, co-sponsoring a congressional resolution denouncing the WTO’s ruling against American steel. Congressman Kucinich has argued that if the United States is to be free to negotiate trade agreements and take actions to protect American jobs, the environment, and the rights of workers domestically and abroad, the United States must withdraw from the WTO.Steel Crisis - Efforts in Cleveland
Congressman Kucinich has fought hard to help Cleveland-area workers affected by the steel crisis. During the recent negotiations between LTV and the United Steelworkers of America, The Congressman worked to make sure that LTV jobs and the pensions of current and former LTV retirees remained intact. He met numerous times with LTV Chairman William H. Bricker and urged him to negotiate in good faith with the Steelworkers and LTV's creditors towards an agreement that preserved the jobs and benefits of employees. When LTV filed motions in bankruptcy court to cancel existing labor and retiree agreements, Congressman Kucinich spoke out against the use of threats in the negotiating process by filing a motion on behalf of LTV workers objecting to LTV's actions. The efforts of the Congressman and others paid off: LTV and the United Steelworkers of America reached an agreement recently that preserves the retirement benefits of current employees. This agreement has been approved by a bankruptcy judge. Worker Rights and Trade
Congressman Kucinich was an active opponent of making permanent most-favored-nation trading status with China, continuing his effort to build support for a new trade policy that conditions trade relations with the U.S. on worker rights. Kucinich was most concerned that granting China permanent MFN would encourage U.S. businesses to close facilities in the U.S. or forgo investment in the U.S. in favor of opening new factories in China. Products made in those factories would be sold in the U.S. as well as other places in the world.
As Congressman Kucinich said in a letter released to every member of Congress:
"It is a myth that the U.S. exports high technology to China, while the U.S. only imports labor-intensive, low technology goods. In fact, we import both, and we have a trade deficit with China in both.
"Indeed, trade in the highest technology is unbalanced in China's favor. According to the latest figures from the Department of Commerce, the U.S. now imports from China 64 percent more than it exports to China in Advanced Technology Products. These products include: microprocessors, printed circuits, integrated circuits, telephone switching equipment, and turbojet engine parts.
"Corporate leaders are fond of calling high-technology the "industry of tomorrow." Some tomorrow is in store for American workers! Permanent MFN will give China a permanent advantage in attracting high technology manufacturers, and U.S. firms a permanent incentive to build new plants in China, not the U.S."
Congressman Kucinich organized several briefings on the effects permanent MFN would have on manufacturing, agriculture and high technology. He did this in coordination with Rep. Charlie Norwood, a Republican from Georgia.
In the previous year, Kucinich organized 113 Democrats to sign a letter calling upon the Administration to renegotiate existing WTO agreements to remove prohibitions on linking trade and worker rights, before any new WTO agreement is negotiated. The letter states that the U.S. should be free:
to prohibit import of products made with child and forced labor, and International Monetary Fund Reform
to use the leverage of access to the U.S. market to guarantee the rights to workers all around the world to organize into unions and bargain collectively; to be protected by workplace safety and right-to-know standards that are minimally equivalent to current U.S. standards, and to benefit from legal minimum wage levels.
Congressman Kucinich has been instrumental in drawing Congressional attention to the effects of the IMF's harsh economic policies on developing countries. For the past two years, Congressman Kucinich has insisted that future funds for the IMF must be conditioned on an end to the IMF's imposition of those policies, which cause unemployment, environmental despoliation, and a deterioration of health and education.
In the 107th Congress, Congressman Kucinich has tried to protect gains made in previous Congresses. He testified
to the Foreign Operations Subcommittee that an important reform banning user fees for certain essential services was being undermined by the Department of Treasury.
In the 106th Congress (1999-2000), the House made two important advances. Congressman Kucinich offered an amendment to direct the Department of Treasury to create an inventory of all the instances in which the IMF requires borrowing countries to privatize industry and government services, deregulate environmental and financial laws, roll back labor law reforms, and raise interest rates. The Chairman of the subcommittee agreed to include acceptable language in the bill to obtain such a study. In exchange, the amendment was withdrawn. The House also passed an amendment offered in the Foreign Operations subcommittee by Rep. Jesse Jackson Jr. to prohibit the IMF from requiring developing countries to charge fees for health services and education. Those fees have been shown to discourage poor people from receiving health care and education for their children. In addition, Congressman Kucinich was the only member of Congress invited to speak to the tens of thousands of people who demonstrated against the IMF and World Bank in Washington, DC on April 16, 2000.
In the 105th Congress, Congressman Kucinich was one of the leading advocates of IMF reform. Congressman Kucinich introduced a bill with Congressman Jim Saxton, a senior Republican from New Jersey, to press for reform of the IMF and deliver meaningful debt cancellation to the world's poorest countries (HR 2939). The bill was the inspiration for a successful amendment offered in the Banking Committee that delinked debt relief from obligating poor countries to follow IMF economic policies. That amendment passed on November 3, 1999. In the 105th Congress, Congressman Kucinich was a leader in the effort to prevent IMF expansion, and his activities helped to delay a $18 billion expansion by nearly one year. Notably, Congressman Kucinich successfully lobbied other Members of Congress when a procedural motion was raised to require that Congress give the IMF expansion funds. The motion was defeated on April 23, 1998.
Congressman Kucinich was also successful in eliminating a "plant closing provision" of the IMF funding bill. The bill contained investment deregulation conditions that would have automatically applied if funds were appropriated for the IMF. Those conditions would have had the effect of encouraging plant closings in the U.S., since the IMF would have been guaranteeing conditions that multinational corporations seek when they transfer capital from the U.S. to developing nations. Those conditions were also the subject of negotiation in the Multilateral Agreement on Investment (MAI). Congressman Kucinich lobbied other members of Congress in the leadership to eliminate those conditions. What is Fast Track (a.k.a. Trade Promotion Authority)?
Fast Track is a procedural straightjacket designed to speed Congressional votes on international trade agreements. Congressman Kucinich has opposed Fast Track legislation since coming to Washington.
He was one of the leaders of the effort that defeated Fast Track in 1997 and 1998. Fast Track would have enabled the U.S.Trade Representative to negotiate an expansion of NAFTA to the rest of South America and other countries.
There is good reason to oppose Fast Track. Namely, it ushered in NAFTA. The North American Free Trade Agreement has caused numerous problems since it was enacted in 1993. The U.S. trade deficit with Mexico and Canada has ballooned. As a result of increased imports from our NAFTA partners, American workers have lost thousands of good paying jobs. At the same time, some companies have used the threat of moving jobs to Mexico to place downward pressure on wages and benefits for American workers. Meanwhile, the labor side agreement to NAFTA has proven to be totally ineffective. The real value of wages for Mexican workers has declined since NAFTA was enacted, and not a single company has been cited for violations of worker rights or labor standards.
In addition, serious concerns have been raised about environmental problems and food and truck safety under NAFTA. The degradation of the environment has escalated along our border with Mexico, and the environmental side agreement has proved to be a complete failure. At the same time, it is abundantly clear that the U.S. government is not adequately inspecting trucks and agricultural products that enter this country, thereby threatening the health and safety of the general public. Furthermore, the sovereignty of local, state and federal authorities to protect their constituents from environmental and other dangers is severely undermined by the investor rights section (Chapter 11) of NAFTA.
If granted Fast Track authority, the new administration hopes to expand NAFTA to encompass all countries in the Americas. This Free Trade Area of the Americas (FTAA) would export the destructive effects of NAFTA throughout our hemisphere.
For all of these reasons, Rep. Kucinich is convinced that Congress should continue to reject any fast track legislation. We need to make sure that the serious problems which have arisen under NAFTA are addressed in a meaningful way before we rush ahead with expanding this trade agreement to the rest of South America. What is the WTO?
The World Trade Organization (WTO) was established in 1995. It is the result of Uruguay Round of General Agreement on Tariffs and Trade (GATT) negotiations. The WTO consists of 16 agreements on subjects ranging from domestic patent law to food safety regulations - and has 135 member countries. The WTO transformed the GATT, a consensus-based trade pact that focused primarily on tariff and quota cuts, into a new global commerce agency that allows member countries to challenge any of each other's laws as "illegal barriers to trade." The WTO can enforce its rulings and force countries to get rid of disputed laws by approving retaliatory economic sanctions against the losing country. In its five-year existence, WTO dispute panels have almost exclusively ruled against the challenged laws, which are often health and safety related. The WTO Has No Minimum Human or Worker Rights Criteria for Membership:
Under WTO rules, as long as it met WTO commercial obligations, Nazi Germany would not be disqualified from WTO membership based on its conduct. WTO rules do not require that member countries (or countries wishing to gain WTO membership) respect or enforce internationally agreed core human and labor rights standards. WTO policy explicitly enables countries to ignore global norms relating to collective bargaining, child labor, and forced labor as a strategy to reduce production costs and gain a competitive advantage vis-a-vis manufacturers in other countries. The WTO thus has put in motion a global trading regime whose rules reward the players who are most exploitative of labor, promoting a race-to-the-bottom that undercuts advancement of international labor rights and the improvement of standards of living worldwide. GATT/WTO Rules Threaten Efforts to Protect Labor Rights:
Many people want to stop child labor, but the WTO blocks the most obvious ways of doing that. For instance, the WTO prohibits our use of a ban on the import of products made with child labor. GATT rules prohibit distinguishing among products based on how they are made. This means that a WTO Member country cannot ban goods produced in forced labor camps, goods made by children under abusive conditions or goods produced in violation of other internationally recognized labor or human rights. This is confirmed by a U.S. Congressional Research Service report, which warned that a U.S. proposal to ban the products of child labor would subject the U.S. to a GATT challenge.
The WTO agreement on government procurement bans the consideration of non-commercial factors (such as human and labor rights) in government purchasing decisions. One mechanism with which to improve both government and corporate accountability is to reserve lucrative public contracts for socially responsible businesses. But the WTO denies citizens this type of control over the use of their own tax dollars. Under WTO government procurement rules, countries can only take into consideration commercial factors when awarding contracts. These rules have been used by the EU and Japan to challenge a Massachusetts state selective purchasing law against corporations in business with Burma's human-rights-violating regime.
WTO rules on product standards cast worker safety safeguards as illegal trade barriers: Under new WTO rules, even workplace safety laws can be challenged as illegal trade restrictions. Canada is pressing such a challenge against France's ban on asbestos. The WTO undermines the sovereignty of countries.
The WTO has taken away the freedom of citizens to pass laws freely. The proof is in the numbers: The total number of completed WTO cases: 65. The number of instances countries have changed their laws or policies in response to WTO challenge: 59. The U.S. uses the WTO to protect compact disk makers and bananas, not workers.
The WTO is not used by the U.S. to protect worker rights. Instead, the U.S. is most likely to use the WTO to protect patents and copyrights. The number of WTO challenges initiated by the US: 30. The chances that a US challenge targeted patent or copyright laws: 1 in 3. Another U.S. priority is bananas. The U.S. has vigorously used the WTO to open Europe to bananas grown in Central America by Chiquita brands, a U.S.-based multinational corporation. Bananas did not build America. Steel and auto did. But this shows that the administration cares more about bananas than about steel or automobiles. Such a trade policy is, in a word, bananas. The WTO has been used to rollback advances in public health programs.
Developing countries face a health and economic crisis due to HIV/AIDS. At the same time, they cannot afford the market price for antiretroviral drug treatment.
Brazil's answer has been to manufacture generic antiretroviral drugs for the treatment of HIV/AIDS and provide them free of cost to all Brazilians who need them. Brazil's program has been successful; it has reduced the AIDS death rate by half. The World Bank and the United Nations cite Brazil's HIV/AIDS program as one of the best in the world. Nevertheless, the U.S. challenged Brazil for violating WTO intellectual property laws, and the WTO agreed to establish a panel to rule on the case. If the U.S. had won this case, the WTO would have authorized the U.S. to impose punitive economic sanctions on Brazil. Fortunately, the U.S. withdrew its case against Brazil on June 25, 2001, in response to public pressure. Other trade issues: Permanent MFN status for China
Contrary to what certain special interests said to Capitol Hill, it was neither necessary nor desirable to grant China permanent Most Favored Nation (MFN) trading status. Instead, Congress could and should continue to review China's trading status on an annual basis. Permanent MFN was not necessary
-- The WTO does not require that the U.S. grant China permanent MFN. In fact, the international trade agreement only requires that China receive MFN, but it does not specify that the award must be on a permanent basis. We could continue to review China's trading status on an annual basis and satisfy the WTO. So long as the U.S. does not allow the status to lapse, we would be in compliance with international trade obligations. There is no legal reason requiring Congress to give China permanent MFN status. This isn't just my legal opinion - it’s also that of the Secretary of Commerce during the last administration, William Daley. At a news conference on December 16, 1999, Secretary Daley admitted to a reporter for a Washington trade journal that permanent MFN is not legally necessary. However, the Administration "emphatically" wanted permanent status. Permanent MFN is not desirable
-- Permanent MFN for China has cost the U.S. the best leverage we have to influence China to enact worker rights, human rights and religious rights and protections. At the current time, the U.S. buys about 40 percent of China's exports, making it a consumer with a lot of clout. So long as the U.S. annually continued to review China's trade status, we would potentially have had the ability to use access to the U.S. market as leverage for gains in worker and human rights. But once China was given permanent MFN, we lost that leverage, and China will now be free to attract multinational capital on the promise of super low wages, medieval workplace conditions and prison labor. Recent history shows that the current Chinese regime is completely incapable of reform on its own.
Consider the case of the 1992 Memorandum of Understanding between the United States and China on prison labor, when China agreed to take measures to halt the export of products made with forced labor. According to a recent U.S. State Department report, "In all cases [of forced labor identified by U.S. Customs], the [Chinese] Ministry of Justice refused the request, ignored it, or simply denied the allegations without further elaboration." If Congress gives up its annual review of China's trade status, Congress will be unable to do anything about worker rights there.
Furthermore, giving China permanent MFN will be harmful to the U.S. economy, since the record trade deficit with China (and attendant problems such as loss of U.S. jobs, and lower average wages in the U.S.) will worsen. For 2000, the trade deficit was nearly $84 billion. Now that China has been awarded permanent MFN and is close to WTO membership, the trade deficit will worsen. In a September 30, 1999 report, the U.S. International Trade Commission concluded that China's accession to the WTO would cause "an increase in the U.S. trade deficit with China". Conclusion
-- There was no legal requirement to award China permanent MFN. Permanent MFN will be a drag on the U.S. economy and has cost us the best leverage we have to promote justice in China and throughout the world. How does all of this relate to Steel?
The steel crisis of the past few years is a direct result of the Asian Financial Crisis and collapse of the Russian economy, which occurred during 1997 and 1998. With Indonesia, Thailand, Korea, the Philippines, and Russia all afflicted, global demand for steel plummeted. Steel that had once gone into real estate development in Asia now came flooding into the American market. Since the steel was made in countries whose currencies had fallen in value, it was incredibly cheap. As a result, steel made in America, though made more efficiently and by high-skilled workers, could not compete. Ten thousand steelworkers were laid off, and six steel companies were driven into bankruptcy. After a brief respite, the cycle has resumed, and the American steel industry is again being battered by a flood of cheap imports. The Asian Financial Crisis, the collapse of the Russian economy, and the resulting flood of steel imports can all be attributed to the forces of free trade and globalization.
The sequence plays out as follows:
1) The International Monetary Fund, which controls international economic policy, imposes so-called “structural adjustment” policies on developing nations - including the Asian countries and Russia - as a condition of receiving loans. Essentially, these harsh policies force developing countries to very quickly transform their economies into export-driven ones. Only countries that develop such economies are granted favorable terms on their debt by the IMF.
2) Forced into the creation of export-led economies, developing nations become dependent on the United States both for investment capital and as a market-of- last-resort in which to sell goods. If investors, for whatever reason, begin to flee these countries, a financial crisis ensues. Falling demand for materials like steel force countries to dump low-cost goods into the United States.
3) The WTO regulations described above make it difficult for the United States to protect its industries through tariffs or quotas on imports, despite the existence of U.S. trade laws that provide for such action. The presumption against protective measures is often reinforced by U.S. trade representatives, who are steeped in the same free trade, pro-globalization ideology as WTO and IMF officials.
4) The result? A race to the bottom that benefits no one. One country’s hard times (say, Korea) forces it to dump cheap goods in another country (the U.S.) that then ends up sharing the misery. Workers everywhere suffer - Americans lose their jobs, and Koreans are forced to accept poor working conditions to keep prices cheap.