The United Steelworkers: Proving Business Relevance in China Trade Cases

I don't know about you, but having lived in Pittsburgh, I tend to think of the United Steelworkers philosophizing over the best way to get better football season tickets the following year and extract concessions from management rather than muddying themselves in trade debates. Yet inserting themselves into the China trade argument is precisely what the Steelworkers are doing, potentially proving a new relevance for industrial trade unions. Our sister site MetalMiner covered the topic on an in-depth basis in a post last week suggesting that the very issue the Steelworkers are concerning themselves with, allegations of illegal trade practices by China, could become a huge issue in Washington. In fact, MetalMiner opines that "International trade policy as it relates to both the US/Chinese trade deficit and the loss of US manufacturing jobs to China will become a central plank of the upcoming mid-term elections."

The specific issue the United Steelworkers are concerning themselves with suggests that China violated a range of World Trade Organization (WTO) rules concerning green technology applications. MetalMiner states that the Steelworker's petition is "broad and varied" and represents "the biggest argument against Chinese export restrictions on rare earth metals that we have seen." Specifically, the complaints include the following: "allegations that the Chinese have engaged in prohibited subsidies based on export performance or domestic content, discrimination against imported goods and foreign firms, technology transfer requirements for foreign investors and trade distorting domestic subsidies." In short, "even just a couple of the allegations are proven true, this petition represents one of the largest challenges against the Chinese ever presented against them since their admission to the WTO in December, 2001."

Even though I'll leave it to MetalMiner to cover the metals angle on the case, I do think that allegations in the ferrous, non-ferrous and rare-earth areas have broader ramifications for all companies and consumers currently sourcing from China (either indirectly or directly), let alone selling into the market. For one, I do believe that there is broad bi-partisan support in Congress to finally investigate China's historic trade practices, from current manipulation and export incentive micromanagement to product safety and traceability concerns. I also agree that the timing of this petition around the mid-term elections will force politicians -- especially those from rustbelt states, not to mention those with burgeoning green-tech economy interests -- to engage voters in a dialogue to see where they stand on the issue of China trade.

Who knows. Perhaps we'll find that we'd all be willing to pay a bit more for those electronics, durables and hard goods from Wal-Mart with the assurance that Chinese producers did not trade on illegal terms or jeopardize the welfare and safety of customers through inferior parts or tainted ingredients. Regardless, I'll go on record with the prediction that the US Steelworkers petition represents a signpost marking a new direction for US/China trade discussions and relations.

Jason Busch

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