A Firm Rebuttal
Posted by SCapozzola on August 28th, 2008Profiteers and apologists: EPI responds to flak from the U.S. Chamber of Commerce and others on The China Trade Toll (EPI, July 30, 2008).
By Robert E. Scott
Economic Policy Institute
Washington, DC
Who speaks for Ohio’s workers and manufacturers?
In a recent, widely reported study, I showed that growing trade deficits with China have cost the United States 2.3 million jobs over the past six years, including 102,700 jobs lost in Ohio (Columbus Dispatch Online, 7/30/08). This study has been widely criticized by the U.S. and Ohio Chambers of Commerce and by other business groups (Columbus Dispatch Letters to the Editor, 8/16/08). These PR attacks are full of inaccurate and erroneous information.
For example, the Chamber claims that China lost 25 million manufacturing jobs between 1992 and 2004. In fact, China created nearly 10 million manufacturing jobs between 2002 and 2005, when their burgeoning trade surplus was decimating U.S. manufacturing. Judith Banister is the Conference Board expert on this issue (hired by the U.S. Bureau of Labor Statistics) and she reports that Chinese manufacturing employment has increased in this period.
On this issue, the Chamber is using ancient history to hide the truth: China’s illegal subsidies, cheap currency, and other unfair trade practices have beggared the U.S. and their other trading partners and are largely responsible for the growth of their own manufacturing industries. These policies have also enriched many of the domestic and foreign companies on the Chamber’s board, firms such as Nike, IBM, CVS, Safeway, Toyota, and Siemens.
The Chamber also claims that imports from China are “replacing imports from another foreign country”. In fact, China’s primary competitors are other major exporting nations in Asia, including Japan and the newly industrializing countries; they have maintained large, stable trade surpluses with the United States, in excess of $100 billion in every year since 1998. Furthermore, these countries have directly benefited from China’s growing world trade surplus. China and its other Asian trading partners have created a regional trade and production system that is generating growing trade surpluses with the rest of the world, both in absolute dollars, and as a share of their GDP.
Ohio’s large, industrial base has been decimated by growing trade deficits in this decade. The state has lost 223,000 manufacturing jobs since March, 2001 alone. It is one of two states (the other is Michigan) where employment has declined since 1998. My report estimates that the growing trade deficit with China has displaced 102,700 jobs in Ohio since 2001, including 75,600 jobs in manufacturing. These losses have contributed to the decline of Ohio’s industrial base, and to the loss of high-wage jobs in service industries that support the manufacturing sector.
Nearly 1,200 Ohio manufacturing establishments closed between 2001 and 2006 according to the Census Bureau. This figure includes 22 plants that employed over 1,000 workers that have closed or reduced employment, a quarter of the largest plants in the state. The Chamber does not speak for businesses that no longer exist, nor for workers without jobs or the communities where they have lived. My study was based on the most widely used economic models of the effects of changes in trade on U.S. labor demand. These models have become the “industry standard” used by nearly all serious analysts in the trade debates.
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