The current crisis in the global steel industry threatens thousands of Australian jobs in steel, other parts of manufacturing and a range of service industries. The following Ten Point Plan can also be downloaded as a PDF.
During the 1990’s Australia lost 30% of its steel industry jobs, and nearly 100,000 manufacturing jobs have been lost since the June Quarter of 1996 (ABS 6248).
The mass unemployment in Australia’s major steel industry regions shown in the table below is just one indicator of the misery and hardship inflicted on thousands of workers and their families.
National Institute of Economic and Industry Research (NIEIR) Estimates of the Level of Unemployment in Australia’s Steel Regions:
Real Unemployment Rate (NIEIR)
Newcastle – 14.8%
Wollongong – 11.3%
Whyalla – 18.6%
All Australia – 10%
Official (ABS Unemployment Rate)
Newcastle – 11.9%
Wollongong – 6.5%
Whyalla – 11.4%
All Australia – 6.6%
Source: NIEIR: The estimates of the real unemployment rate include other workers such as those doing work for the dole. The official rate always underestimates unemployment.
Internationally the World Trade Organisation can’t deal with the crisis. It doesn’t stop countries unilaterally taking action that hurts Australia; by the time its disputes procedures settles a matter thousands of jobs have been lost forever; it can’t and it won’t deal with fair labour standards and protection of the environment; and it can’t deal with massive over capacity that exists in industry’s like steel.
That is why we have developed a ten point survival plan for the steel and other manufacturing industry’s.
The ten point plan
1. Demand the exemption of ALL Australian Steel Exports from the Higher Tariffs Imposed by President Bush.
There is still more than 15% of legitimate Australian Steel Exports to the United States under threat. This will lead to job losses in Australia.
2. If the Government fails to get all Australian Steel exempted it must challenge this decision
Australia can challenge this decision within the limited arrangements provided by the WTO if it can be demonstrated that President Bush’s decision breaches the WTO Agreement on subsidies and counterveiling measures.
3. Defend Australia’s domestic market from a flood of imports being diverted from the United States to Australia.
Australia is at risk of hundreds of millions of dollars of import steel being dumped or diverted to Australia as other countries look for new markets. Thousands of jobs could be lost. We must have an early warning system of steel imports threatening disruption to Australia’s market and mechanisms to fast track safeguard measures and anti dumping initiatives. Canada and Europe have already done this.
4. Australia must support tripartite international initiatives to reduce excess steel capacity in the global economy.
With some 200 million tons of excess capacity (swamping Australia’s annual production of 7.5 million tons) Governments, Employers and Unions must be involved in an international plan to rationalise capacity on a global basis and protect the interests of steel workers, their families and local communities. An international fair trade agreement and alternative full time manufacturing job opportunities for those hit by job loss and dislocation is absolutely essential.
5. Australia should terminate all attempts at negotiating a “free trade agreement” with the United States.
Such an agreement won’t protect the jobs of steel or other Australian manufacturing workers. Countries with free trade agreements with the U.S. like Canada were exempted from the Bush decision for political and commercial reasons – not because they had a free trade agreement. Free trade has destroyed rather than created manufacturing jobs in these countries.
6. Australia needs an interventionist trade and industry development plan for its steel and other manufacturing industries.
With the loss of 30% of Australia’s steel industry jobs during the 1990’s and almost 100,000 manufacturing jobs since the June Quarter 1996 Australia needs a plan to rebuild these industries.
7. The plan for steel and other manufacturing industries must involve both the Federal and State Governments.
Over the next three years billions of dollars of infrastructure projects, orders for railroad rolling stock and other steel intensive projects will commence. The State and Federal Governments need to coordinate and enforce “Buy Australian” initiatives. This also applies to major resource development and other private sector projects. Like other countries Australia must provide more support for R&D, training and new investment.
8. The plan for steel and other manufacturing industries must involve the local/regional communities most affected to carry out social and economic audits of the consequences of globalisation.
The communities where the steel industry is concentrated (Newcastle, Wollongong, Whyalla, Westernport etc) have been hard hit by the downsizing of steel and other manufacturing industries. A social and economic audit of these regions will show what has happened, why and what support is needed for reconstruction.
9. In rebuilding the communities most exposed to the crisis in steel and other manufacturing industries new economic development strategies need to be put in place.
We cannot let the global crisis in steel and other manufacturing industries undermine the economic base of the regions affected. New initiatives to get new investment in manufacturing, a freeze on tariffs and other measures are required.
10.To develop and implement Australia’s new plans for steel and other manufacturing industries we need to establish a National Development Authority (NDA) and abolish the Productivity Commission.
Australia needs a single agency to develop, co-ordinate and implement the plans to rebuild our Steel and Manufacturing Industries. By abolishing the discredited Productivity Commission and establishing a National Development Authority we can put an end to “talkfests” about the problem and implement industry plans that provide the solutions.
About The ACTU’s Ten Point Plan
The second half of the 1990’s has seen the global steel industry lurch from crisis to crisis as excess capacity, trade wars and ongoing job losses have made this industry increasingly unstable, unpredictable and subject to mounting tension between nations, companies and workers around the world. Steel workers, their families and communities are bearing a heavy burden as a result of this situation.
With the recent International Iron and Steel Institute Survey of leading steel producing countries showing a loss of 500,000 steel industry jobs in the 1990’s (including the loss of 30% of Australia’s steel industry jobs), with more job losses in the last 2 years, and with some 200 million tons of excess global capacity, it was only a matter of time before America or the European Union took action that could deepen the crisis, particularly during and after the late 1990’s Asian economic crisis which exacerbated an already serious situation.
With a strong American economy sustaining the global economy during the Asian crisis, and a booming stock market (particularly in “new economy” companies) sucking in capital to the U.S. from around the world, the American dollar remained significantly over-valued (despite the deteriorating trade balance) and the U.S. continued to absorb huge quantities of imported steel and other manufactured goods. Not surprisingly when the U.S. downturn came, and with the American dollar still over-valued, political pressure began to build for protection of basic U.S. industries such as steel as job losses mounted.
The decision last week by President Bush to impose additional tariffs of up to 30% on certain steel imports to the United States is the trigger that may well deepen the global crisis. For Australia it was not just $200 million of exported steel to the U.S. that was potentially under threat. The European Union, Canada and other nations, in some cases almost 9 months ago, began to prepare for the potential crisis caused by countries seeking to divert their exports destined for the American market to other countries. Australia stands to lose hundreds of millions of dollars and thousands of jobs if our domestic market is flooded by imports from a trade war in steel. While recent developments suggest that “only” 15% (rather than 50%) of Australia’s steel exports to the U.S. are still under threat, our domestic market and other exports still face a potential crisis.
However the steel crisis is part of a broader crisis in manufacturing. At the international level the narrow, limited and ideological free trade bias of the World Trade Organisation is incapable of dealing with steel or the broader issues confronting manufacturing. At the domestic level we seem to be simply reacting to each crisis as it emerges rather than being proactive and haveing a plan. Clearly Australia needs a comprehensive action plan to deal with this situation.
In this environment the ACTU urges all levels of Government and the community to support the following ten point plan for the Australian steel and global industry:
AUSTRALIA NEEDS TO SEEK EXEMPTION FOR ALL ITS STEEL EXPORTS TO THE U.S. AND DETERMINE THE GROUNDS ON WHICH TO APPEAL THE BUSH DECISION. AUSTRALIA MUST ALSO PROTECT ITS DOMESTIC MARKET FROM A FLOOD OF STEEL IMPORTS.
Most countries saw the current crisis in the steel industry coming to a head when in June 2001 President Bush announced a 3 point steel plan involving:
a) initiatives to eliminate global excess capacity;
b) negotiations to eliminate subsidies;
c) under section 201 of the 1974 Trade Act for the U.S. International Trade Commission (ITC) to investigate the impact of imports on the U.S. steel industry.
On December 19th, 2001, the ITC released its findings that steel imports were damaging and threatening further serious damage to America’s steel industry. It recommended tariffs and safeguard measures be applied to 16 of the 33 steel product imports it investigated. Accordingly, on March 5th, 2002, President Bush announced that for 3 years additional tariffs of 8% to 30% (in most cases reducing over time) would apply to a number of steel imports including some from Australia. In taking this decision, President Bush and his Administration argued:
- The WTO Agreement on Subsidies and Counterveiling Measures (SCM) allows a country to restrict imports if its domestic industry is injured or threatened with injury caused by a surge in imports (whether they be dumped or fairly traded imports).
- The ITC inquiry found this to be the case; the measures taken are temporary and the treatment of countries in accordance with the WTO rules.
Given the direct threat to Australian steel exports and those of many other countries Australia must:
a) seek exemption for all its steel exports;
b) determine whether the U.S. has breached WTO rules in making the decision (for example imports not being the main cause of the problems confronting the U.S. steel industry) and if this is the case, with other countries, take the U.S. to the WTO Disputes Committee.
The ACTU supports this action being taken, and an ongoing strategy for pursuing these initiatives must be endorsed by the Australian Parliament and supported by employers, unions and workers in the industry. However, this is only the first step in dealing with the crisis. The next step (and one that Australia should have taken nine months ago) is to prepare for the potential diversion of steel imports from the United States market to other markets, including the Australian market.
THE EXEMPTION OF CANADA FROM THE U.S. DECISION TO IMPOSE HIGHER TARIFFS ON STEEL DOES NOT PROVIDE SUPPORT FOR AUSTRALIA TO PURSUE A FREE TRADE AGREEMENT WITH THE UNITED STATES. IT HAS DIVERTED ATTENTION AWAY FROM THE NEED TO PROTECT OUR DOMESTIC MARKET AS WELL AS OUR EXPORTS, AND THE NEED TO DEVELOP A COMPREHENSIVE, INDUSTRY AND TRADE DEVELOPMENT STRATEGY FOR STEEL AND OTHER MANUFACTURING INDUSTRIES.
The “free trade” lobby in Australia has argued that because countries like Canada have a free trade agreement with the United States they get special treatment. They argue that Canada, like Mexico, Israel and Jordan has been exempted from President Bush’s decision to impose restrictions on Steel imports because of their free trade agreements with the United States. They argue that the Steel industry case shows again how Australia would benefit from a free trade agreement with the United States. The ACTU asserts that this proposition is a total nonsense and has caused the Australian government to ignore the potential loss of thousands of jobs from a flood of Steel imports.
Canada was not automatically excluded from the ITC inquiry into the American Steel Industry. The NAFTA implementation act makes clear that safeguard actions can be imposed by one party on another. In Canada’s case the ITC found that 44% of Canada’s Steel exports to the U.S. were in product groups that were contributing to injury or potential injury of the American Steel Industry. As Canada’s Department of Foreign Affairs and International Trade correctly pointed out:
“The Commission’s (ITC) finding provides the American President with the authority to impose restrictions on Canadian Steel Imports”.
The major reason for Canada’s exemption is due to the extensive integration of the U.S. and Canadian Steel Industry’s:
- 60% of all U.S. Steel exports go to Canada.
- 95% of all Canadian Steel exports go to the United States.
- There is substantial integration of the U.S. – Canada Steel Industry through common company ownership, suppliers, joint ventures, union coverage, raw material purchases etc.
- The majority of U.S. – Canada Steel trade consists of truck load shipments of Steel products made to order and delivered on a just in time basis.
This integration of the two country’s steel industry’s was the major reason President Bush’s decision excluded Canada. The country’s with FTA’s with the United States and underdeveloped country’s were also assessed by the Americans not to have accounted for “a substantial share of total steel imports or do not contribute importantly to the serious injury or threat of serious injury found by the ITC.”
In addition Canada’s exemption is not guaranteed. As U.S. Trade Representative Robert Zoellick said at his press conference on March 5 2002.
“This remedy will exclude America’s four partners in free trade agreements and most poorer developing countries which export limited amounts of steel to the U.S. Yet these exclusions will be monitored to ensure consistency with our goals for the recovery of the U.S. Steel Industry”.
Simply put if Canadian steel imports become a problem they will lose exemption status. Canada’s exclusion was also supported by strong diplomatic representations and a much more sophisticated strategy then Australia’s for dealing with the steel crisis.
As early as July 19 2001 (less than two months after the U.S. Government announced the ITC inquiry into steel) the Canadian Government had developed its strategy to exempt the Canada – U.S. steel trade from safeguard action they expected the ITC would propose.
In addition, the Canadians recognised that the ITC action would potentially lead to steel exports intended for the U.S. market being diverted to other countries, potentially threatening thousands of jobs and local communities. Accordingly the Canadian Government focused on a three point plan.
A. Government initiated anti-dumping investigations that would target the sources of the diverted imports.
B. A government referral to the Canadian International Trade Tribunal (CITT) to initiate a safeguard investigation against those products where there is evidence of diversion. This is under active consideration at this time; and
C. In the case of critical circumstances, the government could impose a provisional surtax and request the CITT to initiate a safeguard investigation.”
The European community is doing the same thing. As E.U. Trade Commissioner Pascal Lamy stated in his speech to the U.K. Steel Association on December 13 2001, the E.U. was reintroducing the system of prior surveillance of steel imports so they can act quickly to steel exports diverted from the U.S. to other markets.
Simply put the American decision in the context of massive global over capacity could see Australia hit by a flood of steel imports as countries divert trade from markets such as the United States. We need an action plan to deal with this situation.
The bottom line is that:
- The Canadian Steel Industry is far more integrated with America’s than is Australia’s Steel Industry.
- The Canadians know if they use the breathing space created by Bush’s decision to flood the U.S. with steel imports they will lose their exclusion and NAFTA won’t protect them.
All of this helps explain why an Australian – American Free Trade Agreement will do nothing to protect the interests of Australian Steel Workers or other manufacturing workers.
Accordingly the following measures are required as a matter of urgency in addtion to representations for exemption, and a WTO appeal:
Australia must establish an early warning import monitoring system for steel as well as taking steps now so we can fast track anti dumping and safeguard measures to prevent a potential flooding of the Australian market with imported steel. To support putting this in place.
a) Australian based companies who are considering importing steel must be required to provide advanced notification of their intention prior to signing commercial contracts for the next two years. They need to be warned by the government that safeguard and/or dumping duties may be imposed, in some cases retrospectively.
b) Australia’s intention to defend its domestic market must be conveyed to overseas Governments and steel companies so they are absolutely clear about our intention to keep diverted imports or dumped imports out of Australia.
c) Through the information system of the industry supply office network, major projects that are considering importing steel must be “jawboned” about the current environment and the government’s determination to Act.
There can be no excuses for not doing this now and like the Canadians being prepared to take preliminary measures at the first hint of an import surge.
WITH MORE THAN 200 MILLION TONS OF EXCESS CAPACITY, A GLOBAL SOLUTION TO THE STEEL INDUSTRY CRISIS IS REQUIRED WHICH MUST INVOLVE THE REPRESENTATIVES OF ORGANISED LABOUR TO ENSURE A WORKABLE SOLUTION THAT SUPPORTS STEEL WORKERS, THEIR FAMILIES AND LOCAL COMMUNITIES
The ACTU supports the general thrust of the High Level Steel Meetings in the OECD involving 38 countries plus the European Commission. Two working groups are progressing these steel discussions:
A) A Disciplines Study Group dealing with Government interventions and other distortions in steel markets.
B) A Capacity Working Group is dealing with closure of inefficient capacity, restructuring developments and financing issues.
In addition, participating countries have agreed:
‘To explore the scope for the political commitment by participants to voluntarily limit, or where possible, eliminate market distorting Government measures related to the Steel Industry except for facilitating closure.’
While estimates vary, the reality is that the world economy today has something in the vicinity of 200 million tons of excess steel making capacity. This is a major cause of the crisis in the steel industry today. We need a mechanism to address this and related issues. At this point in time the participants in the High Level Steel Discussions appear to be aiming to, amongst other things, achieve more than 120 million tons reduction in global steel making capacity by 2010.
Whether or not this objective is appropriate or achievable, an action agenda to reduce global capacity cannot be implemented with equity and efficiency without the participation of organised labour to represent the interests of workers, their families and local communities. AMWU President and International Metal Workers Federation International Executive member Julius Roe in consultation with Bill Shorten, the AWU and ACTU has written to the IMF with the following proposal that reads in part:
‘The Washington Declaration from the IMF World Steel Conference April 2000 stated:
“In order to avoid trade unions having to resort to unilateral actions in order to protect the jobs and welfare of their members from unfair competition, it is proposed that the International Metal Workers Federation should establish a steering group that will be charged with responsibility of bringing together representatives of steel industry unions, to propose commonly agreed collective actions in the event of any future crisis……”
Clearly the time has come for such a group to be convened, and a consultation forum with it and the OECD High Level Steel Meeting Groups established to progress the long term agenda of ensuring the future of a global steel industry, minimise the resort to actions that could provoke a stele industry war between nation states, and protect the interests of steel workers, their families and local communities around the world”.
The ACTU believes that the Australian Parliament, employees and Unions should endorse and help facilitate such an international action agenda.
Support for this proposal and those previously discussed in the ACTU’s ten point Action Plan for steel are the main issues that need to be agreed upon. Once this is done an implementation agenda and timetable for progressing the issues should be the responsibility of a tripartite steel industry committee.”
AUSTRALIA NEEDS AN INTERVENTIONIST TRADE AND INDUSTRY DEVELOPMENT PLAN FOR STEEL AND OTHER MANUFACTURING INDUSTRIES. WE NEED A PARLIAMENTARY INQUIRY INTO THE STEEL AND MANUFACTURING CRISIS NOW
According to the Australian Bureau of Statistics (ABS 6248) between the June Quarter of 1996 and September Quarter 2001 there was a reduction of more than 98,000 in the number of wage and salary earners employed in manufacturing.
We need to address this crisis with the development of industry plans in steel and other manufacturing industries to rebuild the country’s industrial base.
THE PLAN FOR STEEL AND OTHER MANUFACTURING INDUSTRIES MUST INVOLVE THE FEDERAL AND STATE GOVERNMENTS AS WELL AS THE LOCAL/REGIONAL COMMUNITIES WHERE THESE INDUSTRIES ARE BASED
With the threat of a flood of steel imports into Australia it is imperative that a Steel Plan involve all levels of Government as well as local/regional communities. They all have a key role to play. For example:
- State Governments have responsibility for billions of dollars worth of infrastructure projects, railway rolling stock and other steel intensive projects. With the Federal Government there is also a network of industrial supply offices that encourage companies to find and buy Australian manufactured goods rather than imports. It is absolutely essential that all levels of Government promote and enforce “Buy Australian initiatives now, particularly Australian steel and products manufactured in Australia with Australian steel.
Each $1 Billion of new or retained manufacturing content in Australia creates 20,000 jobs and generates $320 million of tax revenue for Government.
- You can’t have plans for steel and other manufacturing industries without involving the regions and local communities. As we saw earlier the real unemployment rates in Newcastle (14.8%) Wollongong (11.3%) Whyalla (18.6%) are just one indicator of what happens when globalisation rips a manufacturing community apart.
The first step in supporting these communities is to get more exports and stop the flood of imports. But while we are doing this economic and social audits have to be done at the local level to show what has happened, why and the support that is needed for reconstruction.
These communities need a new economic development strategy for their region including initiatives to get more investment in greenfield manufacturing sites to provide the kind of full time well paid jobs that have been lost.
Workers are bloody fed up with being told that as manufacturing closes down, new jobs will arrive. As Professor’s Gregory, Sheehan and Borland have demonstrated:
- during the 1990’s 1.3 million new jobs were created. But more than 85% of them paid less than $26,000 per annum, almost all were part time and casual and very few required any training.
Full Time decent paid manufacturing jobs matter to these communities and its time something was done about it.
TO DEVELOP AND IMPLEMENT AUSTRALIA’S NEW PLANS FOR STEEL AND OTHER MANUFACTURING INDUSTRIES WE NEED TO ESTABLISH A NATIONAL DEVELOPMENT AUTHORITY AND ABOLISH THE PRODUCTIVITY COMMISSION
To develop real long term plans to protect our steel industry and rebuild Australia’s other manufacturing industries we need a Planning Agency committed to nation building rather than some ideological obsession with zero tariffs and free trade.
The time has come to abolish the discredited Productivity Commission and establish a National Development Authority.