December ’22 at-a-glance … supply chain

U.S. proposes trade with EU in lower-carbon-emission metals

The Biden Administration sent a proposal to the European Union (EU) in early December to create a Global Arrangement on Sustainable Steel and Aluminum to promote trade in metals produced with lower carbon emissions profiles. The parties announced the intention to negotiate such an agreement when the U.S. converted the Section 232 steel and aluminum tariffs on EU products to tariff rate quotas (TRQs). The Administration’s proposal also would impose tariffs on steel and aluminum produced from countries like China that do not meet emissions standards and do not commit to overproducing steel and aluminum. The agreement is expected to take months to negotiate.

WTO finds metal tariffs in violation of its rules, U.S. expected to appeal

Four World Trade Organization (WTO) dispute panel rulings say U.S. tariffs on steel and aluminum do not qualify for the national security exception and violate WTO rules. The rulings, after four years, address cases brought by China, Turkey, Norway and Switzerland. Similar disputes brought by India and Russia remain pending.

With the release of the panel reports, the U.S. has 60 days to appeal or accept the rulings. The U.S. Trade Representative (USTR) made it clear that the US does not plan to remove the 232 tariffs, stating, “The United States strongly rejects the flawed interpretation and conclusions in the WTO panel … These reports only reinforce the need to fundamentally reform the WTO dispute settlement system … The Biden Administration is committed to preserving U.S. national security by ensuring the long-term viability of our steel and aluminum industries, and we do not intend to remove the Section 232 duties as a result of these disputes.” If the U.S. appeals, as expected, the disputes will remain in limbo – essentially allowing the U.S. to continue with the status quo – with a nonfunctioning WTO Appellate Body unable to hear new appeals due to an ongoing U.S. block on new nominations to fill its vacancies.

Rail strike averted

At the 11^th hour, Congress and President Biden stepped in to approve a contract with the nation’s 115,000 railroad workers to avoid a strike that Reuters estimates could have cost the U.S. economy nearly $2 billion. Congress leveraged its power to intervene in transportation-related strikes, approving the proposed contract that includes a 25% compound pay increase over five years, plus five annual $1,000 lump sum payments. The contract does not include paid sick days the unions requested. Eight of 12 unions had approved the contract with four rejecting it before Congress and the President blocked the threatened strike.

West Coast port negotiations reported on hold

The Wall Street Journal reports, “A dispute between two unions over which workers get certain jobs at a cargo-handling terminal at the Port of Seattle is holding up labor talks” between the International Longshore & Warehouse Union (ILWU) that represents 15,600 dockworkers and the Pacific Maritime Association (PMA) that represents employers at 29 ports. According to the publication, discussions have been on hold for three months until the situation in Seattle is resolved. One official told the Journal that “when bargaining resumes, it will take many more months to address remaining issues such as wages and the use of automated machinery.” The ILWU and PMA agreed not to publicly discuss negotiations and have continued to abide by this decision.