14.03.2002

Trade war call to action for workers

"Unacceptable, unjustified and wrong." Strong words from Tony Blair during PM's question time in the Commons on March 6. Was this yet another arrogant denunciation of the right of trade unionists like the RMT to deploy the limited strike weapons still in their armoury after the Thatcher (and New Labour) trade union laws in order to defend their members' jobs, pay and conditions? The language was certainly familiar, but on this occasion the target of the prime minister's anger was not the British working class but none other than his best buddy, president George W Bush. It was Dubya's decision to impose the long-expected US tariffs of up to 30% on various steel imports that brought a deeply embarrassed Blair to his feet. Embarrassed, because he had spent much of the last six months travelling the globe in order to cement the so-called 'alliance' that supported Bush's campaign in Afghanistan as part of the US imperialists' global 'war on terror'; embarrassed because his frantically sycophantic attempts to bolster the 'special relationship' between the UK and the USA had in the end made him look like a dupe and fool in the eyes of many of his own backbenchers, though as yet, for the most part, they remain silent in public; embarrassed, because certain clever advisers at Downing Street had stupidly provided a hostage to fortune by letting it be known that Blair had made a personal appeal to the US president please not to go ahead with his protectionist measures; embarrassed, finally, because a certain generous 'British' donor to the Labour Party by the name of Lakshmi Mittal had, for his own sound business reasons, spent some $600,000 lobbying Congress to put these tariffs in place (see Weekly Worker February 21). Even the Labour-supporting Daily Mirror now calls the prime minister Bush's "poodle". When the Blair government, at the urging of vice-president Dick 'forget my Enron connections' Cheney, is reportedly prepared to send 25,000 British troops to support Bush's projected punitive expedition against Iraq - a mission that, if it takes place, will doubtless lead to the killing of many more innocent Iraqis, not to mention the coffins that will be flying back to Brize Norton - Blair must think that it really is something of a dog's life being the president's best friend. In the meantime, Pascal Lamy, the EU trade commissioner and the real lynchpin in trade relations between the EU and the USA, froths about Bush's "wild west" approach, attributes the US administration's decision to purely political motives and instigates an official complaint to the World Trade Organisation. There is talk of a retaliatory spiral of measures by the EU, even of a full-scale trade war. It is much too early to tell what will happen. Typically, a WTO case of this kind will take between one and two years to resolve, by which time any trade war will have been and gone. The truth is that from the viewpoint of international capital the US occupies a pivotal position in the multilateral trade system - far too important to risk a real breakdown in trade relations. The present situation is interesting in a number of ways. First, understandably, there is a fear among trade unionists and workers generally about how it might impact on their jobs and their lives. Sir Ken Jackson, leader of the Amicus engineering union and a good friend of Tony Blair not especially notable for his militancy, says that an upsurge of cheap steel imports, redirected from the American market, could cost upwards of 5,000 British jobs. No doubt trade union leaders throughout the EU are voicing similar concerns about 'their' jobs, 'their' steel industry, and implicitly 'their' bourgeoisie. At times such as this, the total absence of any sense of international working class solidarity in this period of reaction becomes starkly evident. Witness the case of the United Steelworkers of America (USWA), whose president, Leo W Gerard, hailed the Bush administration's imposition of tariffs as "a victory for grassroots activism", a decision that "raises our hopes that America's steel industry can be saved" (Financial Times March 7). In a bizarre twist, the USWA has linked its propaganda to the global war against terror and portrays the threat to the USA's steel industry as no different from the threat posed by Osama bin Laden. "Those who are not for us are against us." Secondly, the current spat about steel tariffs throws some interesting light on the contradictions that lie at the heart of capitalism, especially in terms of globalisation. Steel is a truly global commodity, produced on all continents by many hundreds of enterprises; produced not on a planned basis of actual need, but on the basis, like any other commodity under capitalism, of turning a short-term profit by extracting surplus value. If we look just at the period since World War II, steel has also been an archetypically political industry, in the sense that governments of the major producing states have used tariffs, quotas and subsidies in order to protect their indigenous steel production from outside competition. Before we give any credence to Lamy's laments, we should perhaps remember that the now distant origins of the EU can be traced to the 'European coal and steel community', which erected a system of high external tariff walls, within which to facilitate the development of a free internal market. Protectionist practices, then and now, are hardly foreign to the EU, as any British beef farmer can tell us. Steel, it need hardly be said, is also a classically cyclical commodity, in that its price is particularly sensitive to the ups and downs of the global economy as a whole. The historical, systemic over-production of steel, a facet ultimately of the intrinsic irrationality of the capitalist system, is a major factor. Although, on a global basis, steel producers are currently working at only around 77% of actual productive capacity, their output already exceeds demand by more than 100 million tonnes a year. Hence, any cyclical fall-off in demand, such as has been experienced during the current economic downturn, results in rapid price depreciation, a growing glut of the finished product looking ever more desperately for a buyer, and the consequent destruction of inefficient capitals: jobs and lives thrown on the scrap heap. In these circumstances, those who produce the commodity at low cost and in sufficient quality and quantity obviously have a decisive competitive edge. That is what lies at the root of the current crisis for American steel producers. While, to a greater or lesser extent, other developed countries (like the UK) have bitten the bullet and allowed their steel industries to function as genuine open market and competitive enterprises (at the cost of many thousands of workers' livelihoods), the US industry has remained cocooned in a blanket of influential political caucuses, backed up by the trade union lobby. No less than 30 US senators are numbered among the steel caucus. The USWA and its allies were able to put some 30,000 workers on the streets in a demonstration outside the White House last month. What is Bush defending? An unrestructured and uncompetitive industry. On the average, it costs $475 to produce a tonne of steel in the USA; in South Korea, they can do it for $350; in Kazakhstan, the Russian Federation and other former republics of the USSR like the Ukraine, the figure is around $300. Needless to say, this is not because the steel industry in these latter countries is technically more advanced or more efficient per se; in the case of the former USSR, far from it - merely that wages are so low (indeed, in the former USSR they are practically non-existent) - that unit labour costs are what an American steel capitalist could only dream about. The US steel industry finds itself in a no-win situation of high labour costs, added to which is the enormous and ever-growing 'burden' represented by pension and healthcare benefits accrued by present and former employees. In all developed countries (including the UK), the pensions question is set to become a key political issue: under new accounting rules dictating how company pension liabilities must be reflected in balance sheets, many pension schemes are already technically insolvent and represent a time bomb in terms of these companies' future financial viability. But at least in the UK workers still have a notional right of access to healthcare through their contributions to the NHS (pitifully inadequate though the service actually is). In the USA, things are different. When, under the pressure of competition from abroad, a steel company goes bust, as more than 30 of them have in the last couple of years, workers and pensioners find that their healthcare benefits are wiped out at a stroke and their pensions, even after intervention by the US government-aided Pension Benefit Guarantee Corporation, are reduced by as much as 90%. If a failing company is 'lucky' enough to be snapped up by a predator, the 'legacy costs' of pensions and healthcare are, for obvious reasons, never part of the deal - otherwise what would be the point? Some 600,000 former steelworkers find themselves in this dilemma right now, and that explains the animus behind the USWA campaign. Bush's ministers, like US trade representative Bob Zoellick, have done their best to portray the steel tariffs as an essentially tactical move designed to boost the president's domestic credentials when it comes to seeking Congress's ultimate approval for further, more meaningful, free trade agreements on a global basis. Bush must first secure home base, as it were. There is a truth in this, but the overriding domestic pork barrel politics are self-evident. This year sees mid-term elections and some of the major steel-producing facilities happen to be located in states like Ohio, West Virginia and Pennsylvania, which were all marginal last time round. To have ignored the siren voices of the steel caucus on the hill and the increasing clamour from the grass roots would have taken more nerve than Dubya evidently possesses. If he is to get the necessary fast-track approval from Congress for the implementation of measures set out in the latest round of global trade liberalisation talks begun at Doha, Qatar, last November, Bush must show vested interests that he is prepared at the end of the day to put Americans first: hence the concessions to powerful textiles and agricultural lobbies that he has already been obliged to make in order to get the bill through the House of Representatives. When Clinton tried to get the same speedy authorisation for his own trade liberalisation moves he was humiliated by Congress, and ultimately by the powerful unions to whom he had failed to give the necessary assurances about domestic job protection. Cries of outrage from the likes of Monsieur Lamy are, of course, predictable. In terms of 2001 output figures, the EU area's 159 million tonnes made it the world's biggest steel producer, before China (143 million tonnes) and then North America (120 million tonnes). But you can do anything with figures. In reality, although EU exports accounted for around 4.9 million tonnes of US steel imports last year - ie, more than 20% of total US imports - this represented a mere three percent of total EU output. The main danger to the EU comes not from loss of profits in terms of tariff-affected exports to the US, but from a diversion to European markets of cheap steel from the likes of Russia and South Korea. Even that danger is probably overstated. Given the enormous margins that, for example, Russian steel producers can realise - many of them pay their workers in near worthless roubles or, more usefully from the workers' point of view, in barter goods like food - they can actually absorb the hit to the bottom line represented by even a 30% tariff on their US exports. It means, in effect, that the mafia controlling much of Russian industry will just have to increase its take from other sectors in order to make good the temporary shortfall. Where the UK is concerned, the steel producing sector represented by Corus (formerly British Steel until its 1999 merger with Hoogovens to produce the present Anglo-Dutch conglomerate) accounts for some 85% of steel production. But only four percent of its total output went last year to the United States, and most of that came not from English and Welsh steel mills, but from Holland. The direct impact of tariffs will, therefore, be minimal. Ironically, however, it has been the British steel sector that over the last two years, without an iota of governmental aid, has swallowed the free market restructuring medicine to the tune of more than 10,000 jobs, yet still, in the face of global competition from cheap producers, the company cannot make a profit. Job losses there certainly will be - and in the USA itself, as well as here. Denied access to the relatively cheap foreign steel that they have eagerly bought on the market, US car companies and many other manufacturers will find their costs increased to the point where the only means of maintaining profitability for shareholders will be to cut their labour force. Analysts estimate that Bush's steel tariffs could give the ailing US steel industry perhaps another two or three years of life before they have to face the inevitable. For the time being, political considerations are understandably to the fore, but in the end it will be the economics of globalisation that will determine events, unless the US administration chooses to go down the path of outright protectionism, with all its consequences for the viability of the system as a whole. In one respect, at least, the furore over steel indicates the political as well as the economic incoherence in the Bush administration's approach: if your fundamental geopolitical objective is currently to secure and extend the USA's global hegemony by engaging in a 'war against terror', then trading the goodwill of essential alliance partners for a few hundred thousand steelworkers' votes in the mid-term elections seems even to us laymen like a pretty bum deal. It speaks volumes about the uncontrolled arrogance, myopia and crude aggression that underlie the USA's status as the world's only effective superpower. Commodity markets, especially in oil, are already reacting to the prospect of a full-blown Israeli-Palestinian conflict, not to mention the repercussions of a potential assault on Iraq. The inflationary impact of higher energy costs, combined with generalised uncertainty, will see bond and stock markets react in sympathy. In this climate, it is perhaps understandable that trade unionists abroad and at home find themselves preoccupied primarily with the impact of the ruling class's policies on their own jobs in the here and now. Certainly, we must organise and fight for the jobs, pay and conditions of workers at home. In this respect, of course, this weekend's Socialist Alliance trade union conference has a crucial role to play, in so far as it will provide guidelines for a reorientation of the organised working class's relationship with the Labour Party and hopefully demonstrate that the SA provides a way forward. That will be good, though a united party of the working class remains a sine qua non for the success of the socialist project. If the bosses' falling out over steel proves anything, it is that what our movement needs is not just a socialist but an internationalist perspective. Indeed, the two are logically inseparable. So long as they can divide us along national lines of self-interest, the bosses will always win. Once we grasp that globalisation also means the global power of our class, once we act on that fundamental notion, the bosses' days will truly be numbered. Maurice Bernal