INFORMATION UPDATE #19

July 10, 2014

I nt er vent i on and Non-I nt er vent i on
The Harper government is fond of
saying it should not intervene in private
business decisions even when those
decisions have a disastrous injurious
effect on the economy and lives of
Canadians, and even when those pri-
vate business decisions are made out-
side the country.
Hands off, its a private business
decision! a Harper minister declared
when U.S. Steel executives decided
from Pittsburgh to close down Hamilton
steelmaking permanently, a decision
that caused obvious injury to Canadas
domestic steel industry. The terrible ef-
fect on livelihoods, the economy and
thousands of pensioners was a private
foreign business decision of no conse-
quence according to the Harper gov-
ernment and its many state agencies.
Yet recently we hear of investigations
by the Canada Border Services Agency
into foreign dumping and subsidizing of
rebar coming into the Canadian mar-
ket. This investigation has spurred the
Canadian International Trade Tribunal
to initiate a preliminary injury in-
quiry to determine whether there is a
reasonable indication that the alleged
dumping and subsidizing have injured
the domestic industry.
One could ask why the Canada
Border Services Agency did not jump
to the defence of the Hamilton domes-
tic industry when U.S. forces obviously
and deliberately injured it. Is it because
the Border Services Agency, and by ex-
tension the Harper government, is inte-
grated into U.S. Homeland Security and
only acts when the injury comes from
elsewhere, such as in this rebar case
from China, Turkey and south Korea?
Al goma
Another case in point is what is hap-
pening to Essar Steel (Algoma). Essar
Steel Algoma Inc. in Sault Ste. Marie
is now an Indian-held steel company.
For a fraction of its value, KKR & Co.,
Bain Capital and others have pur-
chased Algoma Steel debt. They are
now pressuring Essar Algoma into a
possible restructuring later this month
from which they hope to make big
gains, of course without concern for
the Canadian steel sector and the lo-
cal economy.
Finance capital has no interest in
solving problems in Canadas steel
or other industries or in the broader
economy so as to move forward in a
new direction. To do so would kill op-
portunities for big scores. The people
have to face the reality of the situa-
tion and act in a manner that contrib-
utes to establishing a new direction
for the economy which benefits the
people.
Loc al 1005 USW I nfor mat i on Meet i ng
Thur sday, Jul y 17 4:00 pm
Mi chel angel os Banquet Cent r e, 1555 Upper Ot t awa
I nfor mat i on and Di sc ussi on on:
Challenges Facing Canadas Steel Industry and the Options Before Us
Local 1005 Contract Negotiation Proposals
Members and pensioners only. For information 905-547-1417 or e-mail info@uswa1005.ca.
J une 20, 2014. Protest against MANAs lockout and government inaction to defend the steel industry, Ministry of Labour, Hamilton.
To contact USW Local 1005: Call 905-547-1417 or e-mail info@uswa1005.ca.
Visit the website: www.uswa1005.ca
U.S. Steel Pays $58 Million to Settle Complaint
Price Fixing and Collusion
U.S. Steel has agreed in an Illinois
federal court to pay $58 million to settle
a complaint that it colluded with others
to infate steel prices. U.S. Steel also
agreed to provide specifc information to
the court implicating other steel compa-
nies in the collusion to fx prices.
Regarding the fxing of prices, the is-
sue is confused. Does the market col-
lude to fx the price? The market price
has to be fxed in a manner that a proft
can be made. U.S. Steel says a south
Korean steel mill fxes the price of steel
tubes too low and dumps them in the
U.S. market. The industrial consumers
of the steel tubes say the U.S. free trade
market fxes the price at an acceptable
level, at least in their view. Perhaps
U.S. Steels complaint about price fxing
should be directed against the collusion
of the free trade market and not against
a particular producer in south Korea.
The U.S. free trade zone colludes to fx
the price. One could say collusion be-
cause the market fxing the price does
so without cooperation or transparent
discussion and scientifc understand-
ing of how or on what basis the market
price is determined. The large number
of complaints over price fxing indicates
that the market collusion to fx prices
is tainted with interference by specifc
powerful private interests who collude to
fx prices in their favour.
The plaintiffs in the case against U.S.
Steel say the price of steel was fxed
too high. What price is just right? Or
did the problem arise because several
steel companies colluded to fx a price
too high rather than too low or just right
in the view of the purchasers? In that
case, the price is the issue rather than
the collusion. In the complaint involving
steel tubing from south Korea, the issue
is also the price, which is too low in the
view of U.S. Steel but not according to
the industrial consumers. The collusion
of the U.S. free trade market is not con-
sidered the problem.
It seems the plaintiffs against U.S.
Steel want the U.S. free trade market to
collude and fx a lower price rather than
have several companies collude and fx
the price too high, although they would
not complain if the companies fxed the
price too low. The fght goes on and on
and bad things happen whether compa-
nies or the U.S. free trade market col-
lude and fx the price. At any rate, with
regard to the steel they purchase, the
plaintiffs want something other than the
producers to collude and fx the price
because they do not trust them to fx
a proper price in their view. The same
holds true for steel tubes coming into the
U.S. from south Korea. U.S. Steel wants
something other than the collusion of the
U.S. free trade market to fx the price.
How do the plaintiffs fx the price of
what they produce? Do they collude
amongst themselves in the manner that
they have colluded or perhaps openly
cooperated to bring the case against
U.S. Steel and other steel producers?
Perhaps they agree to the collusion and
fxing of a price by the U.S. free trade
market but only if the price serves their
narrow private interests. In the dispute
against south Korean steel tubes, the
anger is directed against the low price
and not the collusion and price-fxing of
the U.S. free trade market.
The disputes and discussion over
market prices consistently fail to deal
with how a price should be determined
or fxed in a manner that helps and does
not destroy the economy. The fxed mar-
ket price should refect the price of pro-
duction. A market price that is consistent
with the price of production allows the
producer an average rate of proft. The
purchasers of the commodity can then
pass on the transferred-value within
whatever they produce, demanding a
market price that refects their price of
production.
Of course, such a situation requires
broad cooperation and transparency
amongst all involved and not the anti-
consciousness and collusion of a free
trade market dominated by the narrow
private interests of monopolies and car-
tels. Fixing a market price consistent
with the price of production demands
an open transparent determination of
pricing where all the factors are openly
known, and those involved are con-
scious of the economic science neces-
sary to determine a price. A public au-
thority acting in the public interest with
control over the wholesale market is
necessary to sort out this problem.
The constant fghting over the fxing of
prices is another indication that the sta-
tus quo is in crisis, does not work, and a
new direction is necessary. The fghting
amongst private interests in the form of
privately-owned parts of the economy
accusing each other of price fxing is in
contradiction with the broad cooperation
and scientifc economic precision on all
issues needed in the modern economy
of industrial mass production. The work-
ing class has to step up and demand
an end to this fghting amongst private
interests that is wrecking the socialized
economy. The modern economy needs
cooperation, science and pro-social
consciousness not this constant fghting
amongst self-serving private interests.