Labor & Employment Law

Urgent Action Needed to Stop Currency Manipulation

By James Parks

It?s no secret that the Chinese government?s currency manipulation policy has caused the loss of millions of manufacturing jobs. But the question is whether the federal government has the will to act ?to level the playing field and provide the support and assistance that millions of American workers and their communities expect and deserve,? United Steelworkers (USW) President Leo W. Gerard said today.

Testifying before the U.S. House Ways and Means Committee this morning, Gerard said passing the Currency Reform for Fair Trade Act (H.R. 2378) would be a vital first step to begin the process of economic recovery. The bill would give the U.S. Treasury Department new tools to combat currency manipulation.

Over the past 10 years, the Chinese government?s policy of deliberately devaluing its currency has caused the U.S. trade deficit with China to balloon from $84 billion in 2001 to $227 billion in 2009. The Economic Policy Institute (EPI) estimates that the growth in the U.S. trade deficit with China since 2001 cost 2.4 million U.S. jobs between 2001 and 2008.

In a letter to House members yesterday, AFL-CIO President Richard Trumka said:

Immediate action on currency manipulation is the single most important step the U.S. government can take to create jobs at no cost to taxpayers. H.R. 2378?is urgently needed to address a serious and ongoing problem for American workers and manufacturing.

The lost manufacturing jobs lead to lost tax revenue and higher budget deficits that limit our nation’s ability to invest in our future, Gerard said. This puts substantial pressure on federal, state and local budgets resulting in layoffs of teachers, police and other emergency responders.

Taking action to end currency manipulation will generate jobs and investments in the U.S. economy. Gerard cited studies by Nobel laureate Paul Krugman, who estimates that ending the currency manipulation would produce a net export gain to the United States, Europe and Japan of  nearly 1.5 percent of their gross domestic product, increasing the U.S. economy by about $220 billion. The Peterson Institute for International Economics and EPI agree that a 25 percent to 40 percent revaluation in the renminbi, China’s currency, would add between 750,000 and 1 million jobs to American payrolls.

American workers, communities and industry have every right to expect their government to take action, Gerard told the panel.

There will be naysayers that tell you taking any action on currency will cause a trade war or that the Chinese are revaluing their currency and we should wait and see. We have been waiting and seeing and talking and dithering for far too long. We are in a trade war and we are losing.

The time for talk is over. We can create jobs by enforcing our trade laws consistently and proactively. On behalf of the working families of this nation, I urge you to take action now.

Full post as published by AFL-CIO NOW BLOG on September 15, 2010 (boomark / email).