The dockworkers union along the East and Gulf Coasts is
threatening to strike on October 1, should there be no agreement
with transportation providers by the end of September.
Such a work stoppage will adversely affect U.S. export and
import shipments of most products – and likely result in
collateral effects at West Coast ports, too – all a month
before the presidential election.
The coast-wide master contract between the International
Longshoremen's Association (ILA) and the United States Maritime
Alliance (USMX) is set to expire at midnight on September
30. The two parties have been negotiating since March
but have not been able to reach an agreement for a new
contract. In late August, negotiations collapsed and the ILA
threatened to strike, but last week Federal mediators announced
that the parties will return to the table on September
17th. The parties remain far apart and the prospect of a work
slowdown or stoppage – whether by strike or lockout
– is both real and imminent.
The gravity of this situation cannot be overstated.
According to the president of the Retail Industry Leaders
Association, "a disruption of this magnitude would be
devastating to the retail industry and would have severe
consequences for the U.S. economy." Retailers are
stocking inventories for the holiday season, the most crucial time
for many U.S. businesses. The potential strike would also
come one month before a presidential election, with the incumbent
facing reelection. The potential for the situation to devolve
into political football – at the expense of averting
economic disaster – is high. The Dept. of
Transportation and the White House are involved, but few signs
indicate there is a coherent strategy moving forward.
The last time a stoppage occurred on the waterfront was on the
West Coast in 2002, when negotiations between the ILWU and
management broke down and a lockout ensued. After 10 days of
West Coast port closures, President Bush invoked the National
Emergency provisions of the Taft-Hartley Act (1947) to reopen the
ports to traffic. However, the damage was done as the
stoppage led to massive financial losses (up to $2 billion per day)
and diversion of cargo traffic away from the West Coast, some
permanent. Whether the Obama Administration plans to invoke
Taft-Hartley in the event of a work stoppage is not clear.
The Act, which gives the President authority to enforce a
"cooling off" period for up to 80 days, is perceived by
labor as heavily pro-management, and so the political calculus
becomes very interesting – and difficult – only
four weeks out from the election.
Venable is actively involved in the situation on behalf of
several clients and is ready to provide updates, share practical
advice on preparing for a possible strike, and advise on issues
that may arise if the strike occurs. Please contact any of
the authors of this alert or members of
Venable's International Trade and Customs Group if you have
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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