http://blog.aflcio.org/2007/05/03/18-million-us-jobs-lost-due-to-china-trade/1.8 Million U.S. Jobs Lost Due to China Trade
by Tula Connell, May 3, 2007
The U.S. trade deficit with China has soared since the Bush administration took office—the nation ran a $233 billion trade deficit with China last year, and this year’s first-quarter $46.4 billion deficit is twice as large as in the same period last year. Now comes word about the human cost of this trade deficit.
The U.S. trade deficit with China between 1997 and 2006 has displaced production that could have supported 2,166,000 U.S. jobs, according to a report released this week by the Economic Policy Institute (EPI). Most of these jobs (1.8 million) have been lost since China entered the World Trade Organization (WTO) in 2001. Contrary to the predictions of its supporters, China’s entry into the WTO has failed to reduce its trade surplus with the United States or increase overall U.S. employment, according to the report, Costly Trade with China. Specifically,
between 1997 and 2001, growing trade deficits displaced an average of 101,000 jobs per year, or slightly more than the total employment in Manchester, New Hampshire. Since China entered the WTO in 2001, job losses increased to an average of 441,000 per year—more than the total employment in greater Dayton, Ohio. Between 2001 and 2006, jobs were displaced in every state and the District of Columbia. Nearly three-quarters of the jobs displaced were in manufacturing industries. Simply put, the promised benefits of trade liberalization with China have been unfulfilled.
But you wouldn’t know anything is wrong if you listened to the Bush administration (do we ever?). Just today, USA Today reports Treasury Secretary Henry Paulson insisted that a Bush administration initiative he heads is spurring China to quicken its economic reforms. Says Paulson:
We’ve made a lot of progress.
Really.
Paulson has traveled to China multiple times since he became Treasury Secretary last year, but so far, all his nice talk with Chinese officials has failed to convince China to lower its trade barriers and bring its laws and regulations into compliance with international standards.
As economist Thomas Palley notes:
In retrospect, the 2000 U.S. decision to permanently open its markets to China seems poorly conceived. That decision was driven by manic optimism about globalization that pushed a biased benefit—cost calculus that ignored economic and political reality.
Opponents claim that the trade deficit stems from lack of U.S. saving, not exchange rates. This argument misunderstands market economics. Reducing the trade deficit requires increasing exports and decreasing imports. That requires inducing foreigners to buy more U.S. made goods, and inducing Americans to “switch” their spending from imports to domestic made goods. Market economies accomplish this through changed relative prices. That calls for exchange rate adjustment that makes foreign goods more expensive for U.S. consumers and U.S. goods cheaper for foreign consumers.
FULL story at link.