United Steelworkers (USW)
Five Gateway Center
Pittsburgh, PA 15222
Circa 600,000 active members, 1.2 million active and retired members total
The International Officers of the International Union are the International President, the International Secretary-Treasurer, the International Vice President (Administration), the International Vice President (Human Affairs) and the Canadian National Director. There is one District Director for each District.
The International President attends and presides over all International Conventions and at all sessions of the International Executive Board.
The President is in charge of abiding and interpreting the meaning of the Constitution. This interpretation is subject to review by the International Executive Board. Between sessions of the International Executive Board the President has full power to direct the affairs of the International Union subject to the approval of the Executive Board. The President can designate an International Officer or a Staff Representative to visit or inspect the office of any Local Union or District. The International President has the authority to appoint, direct, suspend, or remove organizers, representatives, agents and employees as he/she deem necessary.
The International President appoints committees that conduct the affairs of the International Convention. These committees meet before the opening date of the International Convention and consider all resolutions, appeals, reports and constitutional amendments submitted to the International Convention.
The International Vice Presidents are in charge of assisting the President with his/her duties.
The International Secretary-Treasurer is the chief custodian of all files, records, books, documents and effects of the International Office, except such records as properly belong to the offices of the International President and the International Vice Presidents. The International Secretary-Treasurer is also the chief financial officer of the International Union. The Secretary- Treasurer receives and collects all monies due to the International Union and is in charge of and preserves all monies and properties of the International Union. The International Secretary-Treasurer pays all bills and current expenses unless otherwise ordered by the International President.
International Executive Board
International Executive Board members attend all regular and special meetings of the International Executive Board and administer the affairs of the International Union in their Districts. The International Executive Board meets at least twice a year.. The Board enforces the Constitution and carries out the instructions of the International Conventions and has the power to direct the affairs of the International Union between the International Conventions.
- Business services
- Chemical, petroleum and paper products
- Copper and other nonferrous metals
- Education and social services
- Food processing
- Foundries and forgings
- Glass, stone, and clay products
- Health care
- Industrial machinery
- Lumber, wood products, and furniture
- Metal fabrication
- Paper products
- Public Service
- Retail, wholesale, and financial services
- Rubber and plastics
- Basic Steel
- Transportation equipment
- Travel and hospitality
- Transportation services
Gerard was appointed International President on Feb. 28, 2001 by the USW’s International Executive Board to succeed the late George Becker, who had retired. That November, Gerard was elected by acclamation in union-wide elections.
Previously, Gerard was the union’s International Secretary-Treasurer (1994-2001), the National Director for Canada (1991-1994) and Director of District 6 in Ontario (1986-1991).
In 2005, Gerard led a ticket of International Officers and District Directors. He was again re-elected by acclamation in 2009 and was installed in his current term on March 1, 2010.
Immediately after taking office, Gerard determined to put the union on a course of renewed activism, demanding — and winning — government action to halt an unprecedented flood of illegal steel imports and negotiating precedent-setting labor agreements that positioned the USW as the decisive force for a humane consolidation of the industry.
He is leading the USW’s drive to restore manufacturing jobs that built the great middle class in the United States and Canada and to prepare for new clean energy manufacturing that represents the future of American industry.
Under Gerard’s direction, the USW has filed more trade law complaints than any other union or any single company. In general, these complaints seek sanctions against foreign companies that receive illegal government subsidies and dump products in U.S. markets at predatory prices.
As USW President, Gerard was instrumental in the formation of the Industrial Union Council of the AFL-CIO. He is a member of the AFL-CIO Executive Committee as well as serving on its Executive Council. He is also a board member of the AFL-CIO Transportation Trades Department and chairs the AFL-CIO Public Policy Committee.
Gerard also serves on the U.S. National Commission on Energy Policy and is a founding board member of the Apollo Alliance, a non-profit public policy initiative for creating good jobs in pursuit of energy independence that recently merged with the BlueGreen Alliance.
A co-founder of BlueGreen, Gerard also serves on the boards of the Campaign for America’s Future, the Economic Policy Institute and the Elderly Housing Development & Operations Corp., as well as serving as a member of the Labor Advisory Board at Wayne State University.
Stan Johnson, International Secretary-Treasurer
On May 6, 2009, Stan Johnson was appointed International Secretary-Treasurer by the USW International Executive Board.
Johnson began his career in 1975 as a production worker for Pirelli Armstrong Tire Corporation in Madison, TN where he joined Local 670 of the United Rubber Workers International Union. He served the local in various positions and offices, including vice president and president. He also served on the Rubber Workers’ International (URW) Executive Board.
After the URW’s 1995 merger with the USW, Johnson served the International in Pittsburgh as National Rapid Response Coordinator, Director of the Dislocated Worker Program, and Assistant to the International President. In 1999, he became Assistant to the President for Special Projects in Alabama. Returning to Pittsburgh in 2000, he served in the positions of Executive Assistant to the International President, Assistant to the International Secretary-Treasurer, and Special Assistant to the International President for Organizing. He relocated to Cornelius, NC early in 2003 as Sub-District Director. He was later appointed Assistant to the Director of District 9. In 2006, he was unanimously appointed by the USW International Executive Board to the position of Director of District 9.
As Secretary-Treasurer, Johnson oversees the finances of the USW. He chairs the Rubber and Plastics Industry Conference, and participates in major bargaining. He also chairs the International Paper Conference and co-chairs the Georgia Pacific Council and the MeadWestvaco Council. He is chairman of three union pension funds and participates as a trustee on a fourth. Johnson also heads the Rapid Response program, the union’s award-winning grassroots legislative initiative, and also directs its grassroots political mobilization program.
Thomas M. Conway, International Vice President (Administration)
Tom Conway was appointed International Vice President (Administration) effective March 1, 2005, and was elected by acclamation to a full term in office later that year and again in 2009.
Conway became an activist in Local 6787 of the United Steelworkers union soon after began working at the Burns Harbor Works of Bethlehem Steel in 1978. While working as a millwright in the coke plant, he served as a griever for plant-wide maintenance and was a member of the safety and contracting-out committees. He was appointed as a USW staff representative in 1987 and assigned to Indiana’s former District 31 office.
Conway was appointed Secretary of the Basic Steel Industry Conference (BSIC) in 1995. His additional responsibilities include developing bargaining strategy as well as directing the USW’s work with the Alliance for American Manufacturing and related trade and legislative efforts at the federal and state levels. Conway continues to focus much of his activities on trade matters across the union and played a key role in the USW’s 421 tire case in 2009, which resulted in tariffs on subsidized and dumped Chinese imports.
Fred Redmond, International Vice President (Human Affairs)
Elected by acclamation in 2005, Fred Redmond took office as the USW’s International Vice President (Human Affairs) on March 1, 2006.
Redmond joined the Steelworkers union when he went to work at Reynolds Metals Co. in McCook, Ill. in 1973. He became an active member of Local 3911 almost immediately, serving as shop steward, grievance committee member and chairman and vice-president. He served three terms as president of the local.
In 1996, Redmond was appointed to the International staff and serviced locals in District 7, in the Chicago area. In 1998, he was transferred to the union’s International Headquarters in Pittsburgh, where he developed and conducted training programs for the union’s Membership Development Department. He also reported to the president’s office, where he was assigned to coordinate special projects, including amalgamations and assisting local unions in developing by-laws.
In 2002, USW District Director Jim Robinson appointed Redmond as Assistant Director of District 7, where he served until his election as International Vice President for Human Affairs.
In addition to his regular union duties, Redmond serves as chairman of the USW Container Industry Conference and coordinates bargaining for the USW Healthcare, Pharmaceuticals and Public Employees sectors.
On May 31, 2007, Redmond was elected to the board of directors for Working America, a community affiliate of the AFL-CIO. On July 8, 2010, he was appointed to the board of directors of the TransAfrica Forum. He is the Regional 6 representative for the Coalition of Black Trade Unionists (CBTU). Redmond also has served on the AFL-CIO Executive Council since 2008.
On August 3, 2007, Redmond was elected by unanimous assent to the position of chairman of the board of directors of the A. Philip Randolph Institute (APRI) at the group’s 38th national conference in Oakland, Calif.
Carol Landry, International Vice President At Large
Carol Landry is the United Steelworkers’ first female International Vice President. Appointed Vice President (at Large) at the 2008 USW International Convention, she is responsible for the union’s airline division.
Landry joined the USW in 1986 at Canada’s largest copper mine. She held virtually every position in Local 7619 at Highland Valley Copper: shop steward, treasurer, vice president and president. In 1989, when she was the only woman on a 13-member bargaining committee, Landry helped lead a 107-day strike that defeated company demands for outsourcing work, inferior wages and lack of opportunities for women and technical members.
Landry advanced to lead negotiations in 1998-99 as the local union president and stood firm against company demands for massive concessions and threat of permanent closure. The contract that year tied wages to the price of copper, producing several years of increases for her co-workers.
Landry has been an instructor for the union for more than 18 years and has served as education coordinator for District 3. As a Women of Steel leader, she spearheaded programs to encourage women to seek leadership positions.
Until her appointment to the International Executive Board, Landry was Assistant to District 3 Director Steve Hunt. Landry is an executive member of the IndustriALL Global Union and a member of the IndustriALL Women’s Committee. She has been active in the Canadian Labour Congress and British Columbia Federation of Labour. She is a general vice president with the AFL-CIO Department of Professional Employees.
Jon Geenen, International Vice President
On March 1, 2008, Jon Geenen became a United Steelworkers International Vice President. His primary responsibility is developing collective bargaining programs and policies related to the paper industry.
Geenen began his career in 1977 at Thilmany Pulp and Paper in Kaukauna, Wis. and spent most of his 16 years there as a journeyman maintenance technician. He joined Local 20 of the United Paperworkers International Union and served as bargaining committee chair, vice president and president. He was an elected official of Local 20 for nine years, and he assisted in the development of the union’s IP strategic bargaining program.
In 1993, he was appointed to an international representative position in PACE Region X and serviced numerous paper facilities. From 2003 to 2005 Geenen was the National Director of Paper Bargaining and head of PACE’s Rapid Response Education Network. He helped set in motion coordinated bargaining within the paper industry and organized the first National Paper Bargaining Conference in 2004. He also helped establish the Rapid Response Network at PACE, which was modeled after the United Steelworkers’ program.
The USW International Executive Board appointed him to be the Region X Director in July of 2005. Geenen also received appointments from Wisconsin Gov. Jim Doyle to serve as a member of Wisconsin’s Technical College System’s Board, the Wisconsin Forestry Council and the Wisconsin International Trade Council. In addition, Geenen is a member of the executive board of the International Federation of Chemical, Energy, Mine and General Workers’ Unions (ICEM) and a member of the ICEM global paper work group.
Gary Beevers, International Vice President
The USW International Executive Board named Gary Beevers International Vice President in charge of National Oil Bargaining in July of 2006.
Beevers was serving as Director of USW District 13 when the International Executive Board chose him to succeed former USW Administrative Vice President Jim Pannell, who retired on July 1, 2006.
Beevers brought extensive experience in negotiating with major oil companies to his new job in charge of the USW National Oil Bargaining (NOB) program.
Shortly after he was hired by Texaco Inc. in 1971, he began work as a steward for his Oil, Chemical & Atomic Workers Union (OCAW) local. After that, he served Local 13-423 as recording secretary, health and safety committeeman, workers’ committeeman, and full-time chair of the workers’ committee.
In 1987, OCAW President Joseph Misbrener appointed him to be an international representative. For 16 years, he represented workers in the oil, chemical and paper industries as well the public sector.
After the OCAW-United Paperworkers International Union (UPIU) merger to form the Paper, Allied-Industrial, Chemical and Energy Workers International Union (PACE), he was elected in 2003 as vice president and regional director of PACE Region 6, which covered New Mexico, Texas, Louisiana and Mississippi. Following the PACE-USW merger in 2005, he became District 13 Director.
Mike Wright- Director of Health, Safety, and Environment Department
The Steelworkers Union has often been looked upon as a leader on environmental issues, including the fight against global warming. According to the BlueGreen Alliance, “the union’s commitment to environmental protection dates back more than 40 years, and includes successful advocacy for the Clean Air Act and for laws giving workers and communities the ‘right to know’ about the presence and use of toxic chemicals. The union’s official environmental policy statement, ‘Our Children’s World,’ first acknowledged global warming as “’the most important environmental issue of our lifetime’ in 1990.”
In the 1990’s, the union cooperated with the Sierra Club and other environmental organizations to oppose the World Trade Organization and demand that trade agreements include enforceable labor and environmental standards – an alliance made famous by the 1999 Battle of Seattle.
In 2006, the Sierra Club and the United Steelworkers initiated the BlueGreen Alliance under the banner of “Good Jobs, A Clean Environment, And a Safer World.” This “strategic alliance” would focus on “those issues which have the greatest potential to unite the American people in pursuit of a global economy that is more just and equitable and founded on principles of environmental and economic sustainability.
Additionally, the union expanded its reach to a global level. In 2010, the United Steelworkers finalized an agreement with two major Chinese power generation companies “to work collaboratively on all aspects of the companies’ U.S. market strategies including manufacturing, assembly, component sourcing, distribution and wind energy project development.” This partnership arose from a deliberate decision to address both the future of manufacturing and the present danger of climate change. In the words of President Leo Gerard, “The future of manufacturing in the global economy will belong to those nations who solve the problem of the world’s growing shortage of fossil fuels through energy efficiency technology and building redesign, mass transportation systems, and new forms of renewable energy.”
The union labels the “science” of the oil industry as “fraudulent,” calling the oil industry one of the “deadliest industries on earth.” In its recent video, “Still Out of Control,” the union said it gave the industry a chance to come to the bargaining table and that the Steelworkers will withhold their work if safety doesn’t get taken into account. In early 2012, the USW signed on to a letter with UMWA and AFL-CIO calling for greater security measures in the fracking process.
The USW has been supportive of cap and trade as a climate change reduction policy. In September 2012 at a public hearing of the California Air Resources Board in Sacramento, oil refinery workers of USW Local 675— “testified in favor of the implementation of the cap-and-trade component of AB32.” According to President Gerard, “All policy proposals to address climate change, including cap-and-trade, arise from the idea that if a price is put on carbon, it will provide an incentive to emit less carbon…This theory is sound, as long as the cost cannot simply be evaded by companies moving production overseas or by downstream producers and consumers avoiding the cost by purchasing imported materials from nations that do not share the U.S.’s commitment to climate change abatement.” In his testimony before the U.S. House Trade Subcommittee on climate change legislation, he brought up alternative solutions to “carbon leakage” and established USW’s view on each of them (See Appendix 1).
The Steelworkers supported the first delay of the Keystone pipeline in 2012 but not for the sake of killing the project altogether. The USW advocated for the delay largely due to the fact that TransCanada Corporation bought its initial piping from India. “When TransCanada presents its new proposal for a pipeline, the USW looks forward to working with the Administration and others to ensure that the eventual project is done in the safest and most economically beneficial way for our members and their communities,” said Gerard.
Because the union was fundamental in the formation of the BlueGreen Alliance, it clearly has a stake in the green economy. However, the USW includes workers that build oil pipelines, mine nonrenewable minerals, are potentially involved in fracking and nuclear waste management—all of which are harmful to the environment. The Steelworkers also applauded President Obama for his investment in cleaner coal and biofuels, both buzzwords that raise the eyebrows of environmentalists.
Green Employment Prospects
USW’s workers will be directly affected by climate change legislation. If the union is as concerned about the environment and safety of its workers as it professes to be, it will have to rethink its policies and begin exploring transitions for its oil workers.
Gerard said, “Any climate change policy that does not seek to prevent the unnecessary off-shoring of production from state-of-the-art American industries to less efficient, more carbon-intensive industries overseas will both cost American jobs and, perversely, will actually make the problem of global climate change worse.”
USW has also been exploring the template of the union co-op. Already in Pennsylvania and Ohio, the USW has launched co-ops. It has also studied the Evergreen Cooperatives, which are looking at solar and greenhouse installations.
Appendix 1: USW President Gerard Testifies on Trade Aspects of Climate Change
Good afternoon. On behalf of the 850,000 active members of the United Steelworkers (USW), I would like to thank Chairman Levin for holding this hearing on the challenges to the competitiveness of domestic manufacturers and workers posed by the adoption of comprehensive climate change legislation. I am Leo Gerard, the International President of the USW. As you know, the members of the United Steelworkers produce more than just steel. They supply almost every sector of the economy, including the North American auto industry, and produce a wide array of products, including paper, glass, ceramics, cement, chemicals, aluminum, tires and rubber. Our members produce these energy-intensive products in facilities that are as efficient as any in the world. They are ready to answer the call to produce the next generation of clean energy products and parts, and reassert America’s leadership on the cutting edge of new technology. But they can only answer that call if their jobs are not unnecessarily squandered to the law of unintended, but not unforeseen, consequences. Amid this economic collapse, this country cannot afford to lose any more jobs.
For decades, the USW has been a leader in the labor movement on the environment. In 1990, we published “Our Children’s World” stating our union’s environmental policy and the need to address climate change, and in 2006 we reaffirmed our union’s commitment to environmental responsibility through the publication of “Securing Our Children’s World.” We were one of the first industrial unions to support comprehensive climate change legislation, with our support for the Bingaman-Specter bill. That bill proceeded from recommendations made by the National Commission on Energy Policy, on which I serve as commissioner. USW is also a founding member of the Blue-Green Alliance, which brings together unions and environmental groups to plan a new way forward for America through the promotion of policy solutions that spur growth and investment in green technologiproducts produced here in America.
The Steelworkers are as convinced today as we were in 1990 that climate change is the most important environmental issue of our lifetime. It is the challenge of our time to transform the way this nation operates in order to bring this problem under control before it is too late. Still, in undertaking the enormous and critical task of crafting comprehensive climate change legislation, Congress must ensure that the desired emissions reductions are achieved in a structured, responsible way. The legislation must not only strive to reduce emissions to the level that the best science believes is necessary, but it must do so in a way that minimizes costs to businesses and consumers as much as possible. In doing so, attention must be paid to the need to provide incentives to build the next generation of clean energy products here in America, and the need to ensure that domestic exporters are not unfairly disadvantaged in the global marketplace. It must take into account that, for some products like steel and cement, some emissions are an unavoidable part of the manufacturing process, and that currently neither science nor technology exists to mitigate them. And it must ensure, as much as possible, that the jobs that exist here today in energy-intensive manufacturing are not lost, nor the production of those products offshored unnecessarily by neglecting the very real and potentially disastrous problem of carbon leakage. If leakage is not addressed in the development of a climate change regime, any policy runs a significant risk of not only costing American jobs but actually exacerbating, instead of mitigating, the problem of global warming.
Carbon Leakage The phenomenon by which emissions reductions in one country lead to increased emissions in another is known as carbon leakage. The reason this happens is that if one country puts a price on carbon emissions, that additional cost provides an incentive to the company to move its production and, therefore, its emissions, to a country where that additional cost does not exist. All policy proposals to address climate change, including cap-and-trade, arise from the idea that if a price is put on carbon, it will provide an incentive to emit less carbon. This theory is sound, as long as the cost cannot simply be evaded by companies moving production overseas or by downstream producers and consumers avoiding the cost by purchasing imported materials from nations that do not share the U.S.’s commitment to climate change abatement.
This threat of leakage is particularly acute among manufacturers of energy-intensive primary products like the ones made by members of the Steelworkers. In commodity-based industries like steel, glass, chemicals, rubber, and paper, even small differences in production costs can devastate an industry if they are not managed effectively. Finding a way to mitigate the competitive disadvantage that will be placed on these industries is not only an imperative, if we are to continue the recovery from the current recession, but it is an imperative if we are to actually achieve the goal of stopping climate change.
Greenhouse gas emissions and the resulting climate change are a global problem, and it makes no difference whether the emissions occur here in the U.S. or abroad. In fact, the shifting of these emissions to countries that do not share our commitment to addressing the problem of climate change is almost certain to make the overall problem worse. The reason for this is quite simple: American industry and American workers are among the best in the world, and they produce energy-intensive goods with some of the lowest emissions in the world. The same cannot be said of many of our competitors. The Alliance for American Manufacturing, a unique labor-management joint venture between the Steelworkers and several of our major employers, released a report yesterday on the pollution levels in the Chinese steel industry, and the findings are quite stark.
For example, while the American steel industry has become 25% less energy intensive over the past 20 years, the Chinese steel industry now emits as much carbon as the rest of the global steel industry combined. The production of a ton of steel in China generates more than three times the carbon emissions of a ton of steel produced in the United States. This is largely because the domestic industry is increasingly state-of-the-art and efficient, while the Chinese steel industry has a heavier reliance on older, dirtier production methods and uses higher-sulfur coal to power those processes. The Chinese government looks the other way while this goes on, and is lax in enforcing the few environmental laws and regulations it does ostensibly have in place.
Any climate change policy that does not seek to prevent the unnecessary offshoring of production from state-of-the-art American industries to less efficient, more carbon-intensive industries overseas will both cost American jobs and, perversely, will actually make the problem of global climate change worse.
Options for Combating Leakage The USW is pleased that a growing consensus is forming around the idea that something must be done to address the leakage problem in formulating climate change policy. The question that follows is exactly what that something should be. A variety of solutions have been proposed, many of which fall into the broad categories of allocation schemes and trade mechanisms.
Allocations Because leakage is caused by the fact that the domestic industry will be bearing increased costs of production due to the requirement to pay an imposed cost of carbon, many proposed solutions center around the concept of mitigating those costs. These ideas are structured as allocations of allowances to industries that are at risk of leakage, which means energy-intensive and trade-exposed industries. The European cap-and-trade program relies exclusively on allocations to combat leakage.
Previous domestic efforts, such as the 2008 Lieberman-Warner bill, have included provisions that reserve a certain percentage of the total universe of allowances to be distributed to energy-intensive industries free of charge. This structure is less than ideal because the allocation of no-strings allowances provide little incentive to companies to avoid offshoring. The potential for a company to take its free allowances, sell them on the allowance market, and use the windfall profits to build factories in India, Mexico, Brazil or China is a serious concern. In addition, even those companies that use the allocations as intended still face a long-term leakage threat. Most allocation proposals decrease the percentage of the cap reserved for allocations over time, which would allow foreign competitors to wait out their domestic counterparts until the supply of free allowances runs out. Even those proposals that maintain a consistent percentage of the cap for allocations face the same problem, as the cap will get smaller and smaller, as will the total number of available allowances the consistent percentage represents.
While allocations are critical for the survival of energy-intensive manufacturers, they must be structured to provide an incentive to maintain or increase domestic production, and must eliminate the potential for windfall profits, particularly profits which can be used to facilitate offshoring.
Trade Mechanisms Where allocation schemes seek to even out the cost differential between domestic and international products by reducing the effective cost to domestic producers, trade mechanisms do the opposite. An effective trade mechanism would eliminate the cost differential by requiring that any import that enters our market face the same cost as domestic counterparts for those emissions not covered by an allocation scheme.
The most prominent of these proposals is the international reserve allowance program in the Lieberman-Warner bill. Between the introduction of the bill and the version improved by Senator Boxer, the international reserve allowance program was refined and improved a great deal, but more work needs to be done before it can fully address leakage concerns. A workable trade mechanism must give consideration to downstream products and exports. It must require that all products consumed in the U.S. demonstrate the same commitment to combating climate change, no matter where they are produced. And it must be put in place as quickly as possible, to limit the amount of time that domestic producers face cost disadvantages because of the requirements of the domestic program. If it is not possible to begin both programs at the same time, then steps must be taken to prevent unnecessary harm to domestic industries until such time as the trade mechanism can be activated.
Access to our consumer market is the most powerful incentive the U.S. has to encourage other nations to commit to reduce climate change. It must be used in a strong and effective manner.
Hybrid Approach The shortcomings of both the allocation approach and the trade approach are similar. Namely, this is a global economy that faces a global crisis, and there are limits to what any one country, even the United States, can do alone. The U.S. should, therefore, attempt to forge a global solution to the issue of how to deal with energy intensive manufacturers. This should take the form of global sectoral agreements within the larger global climate treaty being negotiated by the U.N. Framework Convention on Climate Change. Only by setting up a system where all products must bear a carbon cost commensurate with its carbon emissions, no matter where they are produced, can the playing field ever be truly leveled and allow us to confront this global problem.
With that as the long-term goal, the short-term goal should be to craft a hybrid approach of allocations and trade measures that increases the potential that such agreements can be reached, while still addressing the leakage and competitiveness questions and ensuring that industry has sufficient incentive and confidence to maintain domestic production here, while continuing to improve its operations, until such agreements can be reached.
In this hybrid approach, allocations could be awarded to energy intensive manufacturers commensurate with their output and their carbon emissions. If allocations diminish over time or are insufficient to eliminate the leakage problem, they can be combined with appropriate border adjustments to equalize costs for domestic and foreign goods consumed in the United States based on their associated emissions. A phased-in, hybrid approach could provide the space for both the negotiation of an international agreement – which should start upon passage of the legislation – and providing sufficient notice to the rest of the world of the eventual imposition of a meaningful trade mechanism, while preventing domestic producers from facing unnecessary competitive pressures during that time. In addition, the hybrid approach can be designed to address the problems of downstream products and exports by ensuring that costs to inputs are minimized, and thus downstream products do not see an additional cost disadvantage. Similarly, if exported goods do not face a disadvantageous cost differential abroad, their competitiveness in global markets should not be harmed.
After the negotiation period is over, a variable border adjustment will be imposed on imports. This adjustment will be imposed on imports that enjoy a cost advantage over domestic products because of lack of action on climate change. It will be based on the carbon intensity of these products and the net cost borne by domestic manufacturers of those same products.
It is a simple concept. The right to sell goods to consumers in our market brings with it the responsibility to confront the costs associated with addressing climate change.
If the output-based rebates are working as intended and meeting the competitiveness needs of energy-intensive manufacturers, the border tax adjustment will lay dormant. Similarly, if sectoral agreements are forged and work as intended, this will be a tax that no one has to pay. That is the goal, and the border tax adjustment is envisioned to be a last resort, put into use only if and when the allocations are insufficient, or the sectoral agreement is not enforced.
An Alternative Approach Hybrid approaches, allocation schemes, and trade mechanisms that could face WTO challenges are all quite complicated ways to address the questions of leakage and competitiveness. The questions themselves largely stem from the fact that the architecture of a cap-and-trade system is focused on the production of goods, but the global economy is focused on the consumption of goods. An alternative approach for energy-intensive manufacturers would be to create a separate emissions regime for these industries in which the inefficient allowance-based system is replaced with a simpler and more effective system in which emissions fees are assessed on all carbon-intensive goods consumed in the U.S. if their associated carbon emissions exceed a determined industry standard.
The potential benefit of such a system would be that the leakage problem would be effectively eliminated, because the focus would be shifted to ensuring that all products consumed in the U.S., regardless of where they are made, demonstrate the U.S.’s commitment to addressing climate change. Domestic manufacturers would face incentives to reduce emissions in order to bring emissions under the standard and avoid the tax. At the same time, they would not face unnecessary competitiveness concerns because equivalent costs can be assessed at the border on imports and rebated on exports, in much the same way as a value-added tax. In addition, the transparency of these fees would help industry attract the necessary capital to make improvements, because future costs could be more easily determined using an established fee rate than in attempting to divine the price of a volatile market in carbon allowances.
Addressing the potentially catastrophic issues posed by climate change is the challenge of our generation, and meeting that challenge will require the mobilization of everyone in the world behind a common purpose. America can and must lead this effort, not only by taking a bold stand to limit greenhouse gas emissions, but by harnessing this nation’s greatest resource, the ingenuity and creativity of the American people. We must make a national commitment to rebuild America clean and green with products built here, to develop new forms of clean, renewable energy and provide incentives to further their deployment. We must bring our power grid and energy infrastructure into the 21st century and train the American workforce to use these new technologies. We must create a revolution in our transportation sector, rebuilding the American auto industry to produce the best and cleanest vehicles in the world, and connect America’s cities and neighborhoods with world class transit systems. And, of course, we must limit greenhouse gas emissions consistent with what the best science tells us.
In creating a program to achieve these emissions reductions, we must make the development of manufacturing a centerpiece of that program. The products made by our members and millions of other hard-working Americans are quite literally the building blocks of all these new technologies. If the U.S. is to build windmills, we will need steel and aluminum. If we are to build solar panels, we will need glass. And if we are to build the next generation of industrial scrubbers to filter out these emissions, the ceramics industry cannot be ignored.
When the world transitioned to an industrial economy, America led the way by developing and producing the best products in the world. Now, as the world transitions again to a green economy, the time has come for America to lead again. This change will not come easily, and it is a heavy load to bear. But I am here to tell you today that American workers are ready and willing to help bear that burden and help lead America into a new, green future.
Thank you again, Mr. Chairman, for holding this hearing. The United Steelworkers and I look forward to working with you and the committee to renovate our economy to meet these challenges.