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Industry, Labor Groups Urge Panel to Reject Cap and Trade

March 25, 2009

By Terry Kivlan

Union and business group officials on Tuesday warned a House panel against
approving a cap-and-trade program to reduce greenhouse gases that could
further undermine the international competitiveness of the
recession-damaged manufacturing sector in the U.S.

“We have to make sure we do not put another nail in the coffin of American
manufacturing,” United Steelworkers President Leo Gerard told the House
Ways and Means Trade Subcommittee.

Robert Clay, CEO of Pridgeon and Clay, an auto parts manufacturer with
plants in Michigan and Indiana, said it was beyond dispute that an
unrestrained cap-and-trade system would raise costs for American
manufacturers and cede U.S market share and jobs to overseas competitors
not subject to limits on greenhouse gas emissions.

“I don’t care much about the politics of the problem; I do care about the
jobs of our employees in Michigan and Indiana,” said Clay. House Ways and
Means Trade Subcommittee Chairman Sander Levin, D-Mich., said Tuesday he
believed his panel could craft a cap-and-trade program that did not put
U.S. manufacturers at a disadvantage but said it would not be easy.

“Frankly, I think there is much work that has to be done before we find a
solution,” Levin said.

The panel is looking at several business-friendly cap-and-trade
modifications, including ones to grant free emission allowances and tax
rebates to carbon-intensive manufacturing industries, such as steel, cement
and aluminum. Also under consideration is a union-backed proposal to
require developing countries to purchase credits on the U.S. carbon market
as a condition for exporting goods into the country.

Gerard flared up when Trade Subcommittee ranking member Kevin Brady,
R-Texas, an outspoken foe of the trade restriction plan, remarked that
China, the main exporter of goods to the U.S., had been responsible in
recent months. Gerard responded that the Chinese had been dumping record
amounts of steel into the U.S. to take advantage of the domestic industry’s
recession-related slump.

“In fact, what they have been trying to do is take over our market,” the
union leader said.

Gerard added that no progress could be made in combating worldwide climate
change as long as the United States remained a hospitable market for
environmentally dubious Chinese products.

In other testimony, Sierra Club Global Warming Director Dave Hamilton
endorsed the credit-purchase plan as simple and doable, and warned that
granting free allowances to U.S. firms would only provide them with an
incentive to move jobs offshore to increase their profits. “If we go with
allowances, ultimately we fund the next [U.S.] factory in Asia,” he said.

Hamilton testified that the best way to protect American jobs was to
broker a comprehensive international agreement on cutting greenhouse gases,
but said this could not be done unless the United States took the lead by
first enacting its own program to combat global warming.

John McMacklin, spokesman for the Energy-Intensive Manufacturers Working
Group, a coalition of metal, chemical and paper industry firms, endorsed
the free allowance and rebate proposals. In his written testimony, he noted
that this approach was the one used by the member countries of the European
Union and Australia to prevent their cap-and-trade regimes from causing job