TORONTO & OTTAWA, Ontario--(BUSINESS WIRE)--United Steelworkers National Director Ken Neumann told the federal Standing Committee on International Trade today that COVID-19 has exposed fundamental problems with the international trading system and Canada’s reliance on global supply chains for essential products.
“We must refocus the entire trade system to one that benefits both workers and the environment, rather than one fixated on obtaining the cheapest possible products, regardless of the conditions of production,” Neumann said to committee members on Thursday.
“Our membership in Canada is currently focused on the United States’ possible re-imposition of Section 232 tariffs on aluminum, as well as the risk of unfair trade in steel products, and with the ongoing softwood lumber dispute.
“It's a huge disappointment and a mistake that these issues were not fully resolved prior to the negotiation and implementation of the CUSMA, which came into force on July 1.”
He said that, while there are positive aspects of the CUSMA – specifically the labour provisions demanded by trade unions and the U.S. Democratic Party – the Section 232 side letter legitimizes the once-rare national-security tariffs, and limits Canada’s options for counteractions if the U.S. re-imposes tariffs.
“The possibility of 10% tariffs on aluminum products threatens 15,000 direct and 41,000 indirect jobs in Canada’s aluminum sector, including the 5,000 workers represented by the USW,” said Neumann.
Neumann noted that Canadian aluminum does not pose a national security threat to the U.S., nor has there been any significant surge in exports. This assertion is backed by the Aluminum Association, which represents the majority of producers in the United States. The drop in U.S. aluminum prices is largely caused by a significant drop in demand as a result of COVID-related shutdowns, particularly in the auto sector.
Meanwhile, massive growth in Chinese production over the last 20 years remains the biggest threat, increasing from 1.9 million metric tons (MMT) in 1999 to 31 MMT in 2019. The Aluminum Association states that China alone exports five million tons of primary aluminum every year, five times the amount of aluminum produced in the U.S.
The massive drop in trade between the U.S. and Canada – with exports down by 41% in April alone -– has had an immediate impact on USW members, especially on those in trade-exposed sectors such as manufacturing.
“At the height of the economic slowdowns, about 15% of our entire membership was on a layoff of some type, including about 20% in manufacturing,” he said.
“Canada must strongly defend the community-sustaining jobs in the aluminum and steel sectors,” said Neumann, with the prospect of possible tariffs on selected steel products, despite an overall 20% drop of steel mill exports to the U.S. in May, and Canada’s strengthened anti-circumvention and trans-shipment measures.
“Beyond trade, we must promote use of Canadian-made steel products in infrastructure projects and implement a carbon border adjustment,” he said, adding that trade unions must also be able to initiate trade cases in order to protect domestic workers.
In the forest sector, which represents 14,000 USW members in Canada, softwood lumber exports remain at risk, despite the retention of NAFTA’s Chapter 19 dispute-settlement system in the CUSMA. These provisions are not enough to prevent future duties on softwood exports.
Steep declines in forestry product exports (-18% in April), combined with a volatile trade situation with the U.S., adds insult to injury to the Canadian forestry sector beset by declining prices.
“Thousands of workers have lost jobs and communities have been decimated by the effects of trade disputes, low prices, and COVID-19,” Neumann said.
Looking to the United Kingdom, Neumann said the USW stands with its U.K. trade union allies in their opposition to entrance into the so-called Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
“Along with our partner union Unite, we support a trade policy that includes binding labour rights and strong trade safeguards for vulnerable industries. A fair trade policy does not include investor-state dispute settlement provisions, nor should it diminish the right to regulate.
“A post-Brexit U.K. must not diminish domestic labour rights – whether related to unionization, health and safety, pay equity, maternity and parental leave – as a means of making its goods or services more attractive to its trading partners.”