Initially, we were nervous about making the trip to Sao Paulo, Brazil for a meeting with the Gerdau Workers World Council. We’d be 5,000 miles from home, without much idea of what to expect as representatives for unions in the U.S. and Canada.
But, as soon as we arrived, we saw that our counterparts were no different than the brothers and sisters at our own Locals: men and women who work for a living and want to do the best they can for their families. They were gracious, friendly, and proud of their work, just like we are.
It doesn’t matter where you’re from, what you look like, or what language you speak. Anyone who works for a living wants three basic things: First, we want to come home from work safe, in the same shape as when we left. Second, we want to be able to provide for our families, so that our kids can grow up just a little better than we did. And third, we want to be able to retire with dignity. We don’t expect to get rich or receive a handout, but we also know that we shouldn’t have to live near poverty after working our whole lives to make money for our companies.
Along with the Council meeting, we visited workers at a sister plant in Sorocaba. The company wouldn’t allow us in, but workers flooded to the gate to applaud and chant for solidarity. We also joined Brazilian unions in a huge protest against the cuts that brothers and sisters around the world are facing because of the financial crisis. (more…)
Rapper OB (Mike O’Brien), his band Kill the Autocrat, and the Go Team perform “One Day Longer” on the picket line in Sudbury, Ontario, Canada the day after a year-long strike by United Steelworkers (USW) Local 6500 against Brazilian-owned Vale ended in July.
It was the longest strike in Sudbury history and the longest against Vale in the multi-national corporation’s 68-year-history. In 2006, Vale bought the Canadian nickel mining and smelting operations from Inco, against which there were nine strikes in Sudbury beginning in 1958, including an 8 ½-month work stoppage from Sept. 15, 1978 until June 7, 1979.
USW workers at Vale’s operations in Voisey’s Bay in northern Labrador remain on strike. Mediated talks between Vale and USW Local 9508, representing 200 workers at the nickel mine there, broke down last month. That strike, now longer than 14 months, began Aug. 1, 2009.
The rap video is dedicated to the strikers, their families and the community supporters who fought to maintain their dignity and their rights.
Rapper OB (Mike O’Brien) raps “One Day Longer” – on the picket line – the day after the one year strike by United Steelworkers Local 6500 against Brazilian-owned Vale ended in Sudbury, Ontario, Canada. Behind him are his strike Go Team buddies.
The rap video is dedicated to the strikers, their families and the community supporters who fought to maintain their dignity and their rights.
Japan, no economic small fry, challenged China last month. The conclusion of the dispute is a cautionary tale for countries confronting China about currency manipulation.
In September, Japan seized a Chinese trawler captain after his boat collided with two Japanese Coast Guard ships near some East China Sea islands claimed by both countries.
Immediately afterward, China “coincidentally” detained four Japanese employees of Fujita Corp., charging them with filming in a restricted military area. When Japan proposed a prisoner swap, China upped the ante instead — halting shipments of rare earth minerals to Japan. China controls 93 percent of the world’s rare earths, which are minerals essential for manufacturing high-tech and energy-efficient products, from cell phones to wind turbines.
Japan caved, releasing the Chinese captain unconditionally. Suddenly, China rescinded its restriction on rare earth exports to Japan and released three of the four imprisoned Japanese nationals, ending the dispute one captive ahead of Japan.
This incident confirmed China as a burly international tyrant. The caution for countries attempting to negotiate with China is to avoid Japan’s mistake, which was single-handedly contesting the giant. For America, that means seeking an end to China’s currency manipulation by simultaneously pursuing every option the United States has, including formally naming China a currency manipulator, imposing tariffs on imports from countries that undervalue currency and creating a community of allies to campaign together to combat the illegal trade practice.
Rallying partners should be reasonably easy, as Japan, Brazil and the European Union all have exhorted China in recent weeks to allow the value of its currency to freely float on international markets.
Also last week, Brazil doubled a tax it charges foreigners who purchase Brazilian bonds. This was an attempt to slow speculation that has increased the value of its currency, the real, by 39 percent against the dollar over the past 22 months.
So far, America has just attempted to persuade China to stop undervaluing the yuan – a practice that artificially suppresses the price of Chinese exports while at the same time artificially raising the price of imports into China from America and other nations. China’s deliberate currency undervaluation accounts for a significant part of America’s massive trade deficit with China.
Last spring, the United States asked China politely to allow the value of its currency to float up. As the United States awaited China’s answer, the U.S. Treasury delayed issuing its semi-annual foreign exchange report in which it could name China as a currency manipulator, then initiate a formal response.
Afterward, just nine days before the next Treasury report on currency manipulation is due on Oct. 15, Treasury Secretary Timothy Geithner, in a speech at the Brookings Institution, offered thinly veiled criticism of China’s persistent manipulation:
No one wants that. Workers everywhere applaud the rise of millions of Chinese citizens out of abject poverty. But increasing the value of the yuan will benefit Chinese workers at the same time as it begins to balance currencies worldwide. An appreciated yuan effectively increases Chinese workers’ wages.
By deliberately undervaluing its currency, the government of China is waging a stealth trade war against the rest of the world. Independently, the United States must protect its economy, but to reign in this international outlaw, America also must secure the help of a posse.
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Leo W. Gerard also is a member of the AFL-CIO Executive Committee and chairs the labor federation’s Public Policy Committee. President Barack Obama recently appointed him to the President’s Advisory Committee on Trade Policy and Negotiations. He serves as co-chairman of the BlueGreen Alliance and on the boards of the Apollo Alliance, Campaign for America’s Future and the Economic Policy Institute. He is a member of the IMF and ICEM global labor federations and was instrumental in creating Workers Uniting, the first global union.
President Lyndon Johnson is said to have commented that the press is like birds sitting on a telephone line. When one flies away, they all fly away.
This week they are all flying around squawking “currency war!” But the world has been in a currency and trade war for some time, with only one side fighting and the rest losing. Now the world, on the edge of defeat in that war, sees that China is not “trading”; they are taking. So, how do we fight back without (further) blowing up the world’s economy?
The world can’t get to full recovery from this terrible recession without more balanced trade. That is a huge part of the equation. Our trade deficits started with Reagan when “free trade” was used to force concessions from labor by threatening to move the factories to non-democracies, away from the wage and environmental protections We, the People fought so hard to achieve. The wage squeeze resulted in unprecedented concentration of wealth —and loss of buying power for the rest of the population.
Under ‘W’ Bush, Wall Street used China for short-term profits and bonuses and China used the power that brought to buy advantage around the world. So now the rest of us are living with the long-term consequences of race-to-the-bottom policies. Namely, the bottom.
Last week, the simmering threat of trade disputes erupted into a full boil when Brazil’s finance minister Guido Mantega said that national governments around the world were weakening their currencies in an “international currency war” to gain competitive advantage. Mantega stressed that Brazil was prepared to back his words with action to lower the value of the Brazilian real. Yesterday, IMF chief Dominique Struass-Kahn warned that countries were beginning to use their currencies as “a policy weapon” in a Financial Times interview.
So does the world now go into a full-on, chaotic currency and trade war? Martin Wolf weighs in at the Financial Times, How to fight the currency wars with stubborn China, (Click through to see the charts)
Has the time for a currency war with China arrived? The answer looks increasingly to be yes. The politics and economics of an assault on Chinese exchange rate policy are increasingly convincing. The idea is, of course, deeply disturbing. But I no longer believe there is an alternative.
Wolf runs down the issues.
Currency manipulation? “If a decision to invest half a country’s gross domestic product in currency reserves is not exchange rate manipulation, what is?”
Does it matter? “By keeping its real exchange rate down, China subsidizes production of its exports and import substitutes. Since China is now the world’s biggest exporter, this has to be a significant distortion of world trade.”
What might China reasonably be asked to do? Stop the manipulation and increase domestic demand. “[T]he menu of possible options for the Chinese authorities could include a cap on the intervention, an end to sterilization of the monetary consequences and targets for real domestic demand, household consumption and the current account.”
Can other countries shift China’s policies, with limited collateral damage?
Negotiation remains a hope. The rest of Group of 20 leading countries should unite in calling for these changes. But if negotiation continues to fail, alternatives must be considered. Import surcharges are one possibility. … countervailing currency intervention … affected countries could prevent other countries from purchasing their financial instruments, unless the latter offered reciprocal access to their financial markets.
OK, about that “without (further) blowing up the world’s economy” I mentioned at the top. Instead of tariffs and other trade sanctions Wolf suggests currency-rate counter-policies,
“I find ideas for intervention in capital markets far more attractive than those involving action against trade. … A trade war would be very dangerous. Insisting that China stop purchasing the liabilities of other countries so long as it operates tight controls on capital inflows is, instead, direct and proportionate and, above all, moves the world towards market opening.”
Will China retaliate by ceasing to buy U.S. bonds? If they do, that would be a good thing.
Some fear that a cessation of Chinese purchases of U.S. government bonds would lead to a collapse. Nothing is less likely, given the massive financial surpluses of the private sectors of the world and the continuing role of the dollar. If it weakened the dollar, however, that would be helpful, not damaging.
Yves here. I see the odds of things going Wolf’s way as close to zero. China has no intention of “opening” its markets to investment bankers; it is not about to have its capital markets colonized, and it lacks the domestic finance skills to cope. China has made a close study of the errors Japan made in its peak years, in the 1980s, and one was the overly rapid deregulation of its financial sector….in response to U.S. pressure.
Similarly, the impetus to put pressure on China is coming from the trade front, due to high unemployment. Action on the trade/tariff front looks like a more direct remedy, even if the lags in trade are long. And with more economists lining up behind the crowd-pleasing idea of getting tough with China, the pressures and the intellectual cover, are in place.
Even though no one wants a trade war with China, it is not beyond the real of possibility that we wind up there. … he odds of miscalculation have to be magnified when operating across a large cultural divide.
I wrote the other day, and want to repeat: There are always winners and losers. Right now in China there are currently winners and losers from the manipulated currency rate. If rates adjust to where they should be China might lose some jobs, but Chinese workers will immediately be higher-paid relative to the world than they had been, and Chinese consumers will also be more able to buy things made elsewhere.
Right now those in control of industries that are moving to China are winners and those in China who want higher pay and want to import are losers. And, as is the way of the world, the winners are fighting to keep their advantages, while the losers want change to occur.
But if China starts bringing its currency to market rates, the world’s winners and losers will be the winners and losers for the right reasons. It is time for China to move on from currency manipulation.
A business group is honoring Roger Agnelli, the CEO of Vale, one of the largest mining companies in the world, which, coincidentally, is in the midst of its longest ever labor dispute. The award is for exceptional accomplishments in corporate social responsibility.
The Business Council for International Understanding will give Agnelli the Dwight D. Eisenhower Global Citizenship Award, feting him for his corporate behavior five months after he provoked the strike by more than 3,000 miners, mill workers and smelters in my hometown of Sudbury and neighboring Port Colborne, Canada.
The strikers now include 450 Vale nickel and copper workers from Voisey’s Bay, also represented by my union, the United Steelworkers (USW).
Vale is the Brazilian-based corporation that boasted $13.2 billion in profits last year and reported third-quarter, after-tax earnings of $1.7 billion this year, more than double its second quarter haul. Vale is a highly-profitable corporation demanding workers take concessions. For example, it wants deep cuts to pay supplements workers get only when nickel prices are high.
Cash flush even during the worldwide recession, Vale has engaged in a buying spree for mines and properties worldwide. In 2008, it announced it would spend $2 billion on electrical projects, mostly coal-fired, and by year end reached agreement to spend $300 million on Colombian coal assets. It got permission from the Brazilian government this year to buy iron ore mines for $750 million. It spent $17.8 billion in 2006 for Inco’s nickel mines and smelters in Canada, and as metal prices rose, earned nearly as much from them over the next two years as Inco had in the previous 10. Still, Agnelli insisted the very Canadian workers whose labor helped Vale make that money take cuts to their income – causing the strike.
Workers and their families have struggled since the strike. The towns in Ontario and Newfoundland have suffered as well because many mining supply and service companies temporarily closed, idling untold additional workers. Kari Cusack, a member of Families Supporting the Strikers, talked about it early in November before a family day on the picket line in Sudbury. She told a local newspaper reporter:
“We see Vale’s attack on Local 6500 as an attack on our entire community, and we want to do our part to fight back against corporate greed.”
The Business Council for International Understanding chose that corporate social responsibility to reward.
In Brazil, Agnelli has shown off some of that corporate social responsibility as well. In September, the government fined Vale $20 million for failing to comply with an antitrust order. Last year, Agnelli secured a court injunction in an attempt to block protestors from the country’s largest social activist group, the Landless Rural Workers Movement, rather than negotiate with those complaining that the company’s iron furnaces were polluting their village and that a hydroelectric dam in which Vale is a partner was flooding their homes. Also last year, Brazil’s Office of the Environment fined Vale $3 million for illegal sale of wood.
Workers from Canada and Vale Brazil demonstrated together in August in front of the multi-national’s Rio de Janeiro headquarters. They served pieces of a giant cake commemorating the 30th day of the USW strike in Ontario. There the Canadian workers learned that Agnelli had forced its Brazilian workers to accept a defined contribution pension plan. Now Agnelli is trying to force the Canadians take the same inferior plan.
The International Metalworkers’ Federation (IMF), the National Union of Metalworkers of South Africa (NUMSA), the Botswana Power Corporation Workers Union (BCPWU) and others from around the world have written Agnelli expressing outrage about the strike. Bohithetswe Lentswe, BCPWU General Secretary, wrote:
“We have every reason to believe that Vale is trying to destroy its strongest collective bargaining agreement for the purpose of setting a precedent to weaken other collective bargaining agreements throughout the world. Vale is also attempting to export its anti-worker, anti-union practices in Brazil to the rest of the world.”
Of course. That’s what great CEOs do, as the Business Council for International Understanding will proclaim at its Dec. 3 dinner in the Waldorf=Astoria, New York City. With the cheapest tickets going for $1,000, it’s likely none of those $29-an-hour Vale workers will get a seat. But Agnelli, who is one of six Vale executives who together pulled down $33 million last year, could effortlessly drop $100,000 for an “underwriting level” table of 10 at his award dinner.
Perhaps there the Business Council for International Understanding will detail its reasons for selecting Agnelli for the Dwight D. Eisenhower Global Citizenship Award. It only profiles Vale and Agnelli on its web page, without, for example, providing the kind of insight into Agnelli’s personality that Antonio Regalado did for the Wall Street Journal in 2008 in a story:
“Current and former Vale executives say Mr. Agnelli can be hard on subordinates. Some of them cite what they say is an autocratic style and a table-pounding temper. . . . In internal company surveys, employees complain frequently that they are under too much pressure . . . Marco Dalpozzo, Vale’s head of human resources, doesn’t deny that Mr. Agnelli can be rough on people, “He’s a tough guy,” he says.”
Again: of course. That’s what business groups prize – executives with table-pounding tempers.
The Business Council is, however, a group that claims it was started by the late President Dwight D. Eisenhower and named its prize for him. It’s not clear, though, that the business values of the current council and Agnelli resemble those of President Eisenhower. For example, here’s what the President wrote in November, 1954:
“Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are H. L. Hunt. . ., a few other Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid.”
To let the Business Council know the ways in which you think this award for Agnelli will increase its goal of International Understanding, call 212-490-0460 in New York, 202-595-2668 in Washington or 44-207-225-3561 in London.
LabourStart has created a web page so you can easily write a personal note directly to Agnelli. It’s here. It enables you to quickly drop Agnelli a little note telling him just how much you think he deserves this honor.
Initially, we were nervous about making the trip to Sao Paulo, Brazil for a meeting with the Gerdau Workers World Council. We’d be 5,000 miles from home, without much idea of what to expect as representatives for unions in the U.S. and Canada.
