White House Issues Port Dispute Ultimatum

The White House’s top labor official has given the parties involved in the west coast labor dispute an ultimatum: end this fight here, or we’ll end it in Washington.

US Secretary of Labor Tom Perez, who flew into San Francisco earlier this week, issued the ultimatum after nine months of stalled negotiations between port owners and the labor union representing longshoreman.

The negotiations cover the contracts of 20,000 union members in 29 ports, including Los Angeles and Long Beach, two of the biggest in the US by container volume.

So far, the labor dispute has caused costly port disruptions—including a series of partial shutdowns—that have taken a toll on manufacturers facing month-long shipping delays and spoiled goods. On Friday morning, about 50 ships were stalled offshore with goods waiting to be unloaded.

If talks go sour and port owners issue a permanent shutdown, it would cost the US economy an estimated $2 billion a day.

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The White House’s “Nuclear Option”

Perez’ threat to bring port leaders to Washington could mean President Obama is coming closer to using the “nuclear option” in his arsenal, the Taft-Hartley Act.

If port disruptions are deemed by the President to be a “threat to national health or safety”, the President could invoke the act to petition a federal court to block any strike or lockout.

"On behalf of President Obama, Secretary Perez made clear that the dispute has led to a very negative impact on the U.S. economy, and further delay risks tens of thousands of jobs and will cost American businesses hundreds of millions of dollars," US Dep’t of Labor

In 2002, a similar dispute involving the same set of West Coast ports ended when President George W. Bush intervened after an 11 day owner-initiated port lockout. The shutdown cost the economy an estimated  $1 billion per day, or nearly 4 percent of the nation's output during that period.

Many CA politicians are placing further pressure on the President to act on the issue, with a bipartisan group of House members calling for a “swift resolution” to the strike on Thursday, and the mayor of Los Angeles making a public statement Tuesday.

“The economic impact of the increased congestion at the ports is simply unacceptable and unsustainable,” CA Senators Dianne Feinstein and Barbara Boxer said earlier this week.

"One Person" Conflict

The Associated Press reported on Thursday that the bulk of the conflict came down to controversy over one person: contract arbitrator Arthur Miller. Union leadership takes issue with Miller, who they view as being a biased negotiator.

Miller denied any claims of inappropriate negotiation tactics to the AP, saying he’s as “bewildered as anybody else on the outside looking in.”

Bottom Line

So far, no outside negotiator has been able to find a permanent solution to solving the port dispute. With the White House seeming to inch closer toward issuing its executive power, time will tell if port owners and the labor union will agree on a solution that can get trade flowing freely again across the Pacific.

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