A report calling for action on currency manipulation said Ohio would reap “enormous benefits” from the elimination of the U.S. goods trade deficit. Benefits could include the creation of an estimated 36,100 to 75,900 manufacturing jobs and an increase in Ohio’s GDP of between $8.3 billion and $17.4 billion.
The report, “Reducing U.S. trade deficits will generate a manufacturing-based recovery for the United States and Ohio,” produced by the Economic Policy Institute, said because Ohio had a large manufacturing footprint, it would experience “above-average gains” from an increase in traded manufactured goods.
According to EPI’s report released today, the U.S. goods trade deficit could be reduced by up to $400 billion over three years by eliminating global currency manipulation.
Between January 1995 and October 2012, manufacturing employment in Ohio fell by more than a third, the report noted, and the state’s share of U.S. manufacturing employment fell from 6.0% to 5.5%. Manufacturing accounted for 20.0% of Ohio’s nonfarm employment in January 1995, compared to 12.6% in 2011. Manufacturing in the U.S. averages 8.9% of employment.
“We know these trade deficits lead to job losses in this state and across the country,” said Sen. Sherrod Brown, D-Ohio, at a press conference discussing the EPI report. He said the research by EPI and others shows “currency manipulation is the largest single cause of these trade deficits.”
Brown noted that the U.S. trade deficit with China was $295 billion in 2011 and would “likely” set a new record when 2012 results are announced on Friday. The 2012 trade deficit with China stands at $290 billion through November.
Brown said he plans to reintroduce China currency manipulation legislation that passed the Senate in 2011 but was not brought to a vote in the House. He said he would also work to ensure that future trade agreements such as the Trans-Pacific Partnership prohibit currency manipulation.
“We know Chinese manufacturers continue to flood our markets with subsidized, artificially cheap products,” said Brown, discussing trade enforcement actions. “We saw it with steel, with solar panels, with coated paper, with auto parts.”
Brown supported the call for a national manufacturing strategy in the EPI report and said he spoke to President Obama about the importance of such a strategy on Wednesday. He also highlighted the need for the National Network for Manufacturing Innovation, a proposal to establish public-private centers to support innovation in manufacturing technology and processes.
Randy Solganik, owner of City Plating, an auto parts supplier in Cleveland, said Ohio was a “world capital” of metal finishing because of the strength of the supply chain “from steel manufacturing to steel service centers to stampers to … the auto manufacturing industry that is here and all the other heavy manufacturers.”
But Solganik said as a small manufacturer, he sometimes wondered if the public knew what was going on with Chinese competition and unfair state-supported industries. He said he knew of auto parts being sold in the U.S. for “less than the cost of the raw materials. Clearly, there were subsidies.”
“We want a level playing field,” said Solganik. “We believe we have a very productive workforce, very productive manufacturing here and we can compete with anyone as long as we are facing the same costs. When the government is directly supporting these industries, it makes it difficult for us.”