Trade Policy

Steelworkers' Union Chief Becomes a Force in Trade


Over the past eight years, Leo W. Gerard has earned a reputation as a labor strongman with a pragmatic streak. The 62-year-old Canadian who heads the 850,000-strong United Steelworkers has played a pivotal role in the consolidation of the American steel industry, engineering mergers while fighting to save as many union jobs as possible. Now, as the leader of the country's largest industrial union, Gerard is becoming a major force in U.S. trade policy.

It was a complaint by the USW that prompted President Barack Obama's Sept. 11 decision to slap a punitive 35% tariff on Chinese tire imports, which total some $2 billion a year. The union is now contemplating action on numerous other possible violations by U.S. trading partners. Says Gerard: "We're [not] lining up with a bag full of cases." But "if we find other places where we feel the rules have been violated, it is our responsibility to try to get the government to enforce the rule."

On Sept. 23, the USW filed one of those new cases with the U.S. Commerce Department—this time against both China and Indonesia. The anti-dumping case, filed jointly by the USW and three U.S. paper companies, alleges that the two Asian countries have subsidized their coated paper industries and sold the paper in the U.S. below the cost of production. It claims that in the first half of this year, the Chinese and Indonesians doubled their share of the U.S. coated paper market compared with the same period in 2008, to about 30% from 15% respectively. U.S. sales of coated paper were about $1.8 billion in 2008.

Some economists and industry analysts have worried that such union actions will trigger retaliatory trade protectionism, but Gerard takes the position that he is merely invoking the law. The Chinese "think that because we owe them so much money that they can push us around," he told reporters in a phone call Sept. 24. "I don't think it's protectionism. That's a misuse of language. We are applying the law as it exists."

Always an important political constituency for Obama, labor has become all the more crucial now that the President faces stiff opposition from Republicans on key initiatives, notably health-care reform. Gerard—along with AFL-CIO President Rich Trumka and Andy Stern, president of the Service Employees International Union—are key to Obama's efforts to energize his base. "Labor must be kept happy so that they will continue to push hard to produce the Democratic votes in the House and Senate needed for a health-care victory later this fall," says Larry Sabato, director of the Center for Politics at the University of Virginia.

Gerard: A Pragmatic Back-Slapper Though he's a relative newcomer to politics, Gerard has already distinguished himself as one of the most aggressive and creative of the country's union bosses. Since taking the USW's helm in 2001, he has boosted membership by 60% through a series of mergers with other unions. Industry executives say Gerard was the pivotal player in the 2003 consolidation of four steel companies into the hands of two behemoths, International Steel Group and U.S. Steel (X).

Gerard is well aware of the competitive challenges that face North American industry. The son of a union miner, Gerard took a job at a nickel smelter in Ontario at the age of 18. During his tenure as chief of the USW he has demonstrated a willingness to compromise, bargaining for plant upgrades and job reductions in exchange for saving what jobs he can by helping make the companies more efficient, analysts say. "Leo is one of those guys you want to have a beer with. He will clap you on the back. He is easy to talk to," says Bill Reinsch, president of the National Foreign Trade Council, who got to know Gerard while working as a U.S. Senate staffer on steel issues for U.S. Sen. Jay Rockefeller and others.

But the burly Canadian also has a tougher side. It was on display two years ago, when Gerard helped to engineer the ouster of the entire board of Wheeling-Pittsburgh when it backed what the USW regarded as the wrong suitor in a takeover battle. The USW prevailed and the company was purchased by Esmark, which had pledged it would not fire any USW workers.

China Plays Chicken in Response Trade is another area where Gerard has demonstrated a take-no-prisoners approach. Not long after taking the reins at the USW in 2001, Gerard succeeded in getting President George W. Bush to impose anti-dumping tariffs on foreign steel imports. More recently, the USW has targeted imports of Chinese steel pipes, paper, and off-road tires, citing evidence of illegal subsidies and dumping. Now Gerard is mobilizing his members in support of health-care reform; card-check legislation aimed at loosening the rules for unionization; and climate-change legislation, which labor sees as vital to the goal of creating more U.S. jobs and safeguarding existing ones.

Both the Administration and Gerard strongly deny that Obama's decision to slap tariffs on Chinese tires was intended to shore up his political base. Whatever the case, the move—as analysts had predicted—riled China. Beijing immediately threatened to retaliate by imposing restrictions on U.S. exports of poultry and automobile parts. China is the U.S. poultry industry's biggest market and companies such as Tyson Foods (TSN) and Sanderson Farms (SAFM), which ship approximately $340 million a year in chicken feet and wing tips to China, are concerned that the trade spat could escalate. The Administration "knows how upset we are," said Jim Sumner, president of the USA Poultry & Egg Export Council, a lobbying group that counts both companies as members.

Despite his track record on trade issues, Gerard resists being tagged as a protectionist. "This is a crucial moment in the economic evolution of the country," he says. And the USW chief and other union bosses are not about to pass up the opportunity to put their imprint on policies that could radically alter the landscape for U.S. businesses and their workers—though not necessarily for the benefit of both groups.
LeVine is a correspondent in BusinessWeek's Washington bureau.

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