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Tim Ryan targets China's trade practices

Rep. Tim Ryan, a Democrat from Ohio, center, says unfair trade practices by China have hit the Buckeye State hard. Rep. Tim Ryan, a Democrat from Ohio, center, says unfair trade practices by China have hit the Buckeye State hard.

Rep. Tim Ryan, a Democrat from Ohio, center, says unfair trade practices by China have hit the Buckeye State hard.

Sabrina  Eaton
By Sabrina Eaton March 16, 2012

China may be on the other side of the globe from Ohio, but it plays a central role in the worldview of U.S. Rep. Tim Ryan, who regularly denounces its trade practices.

The Niles Democrat had another opportunity to vent on March 6, when The House of Representatives passed a bill to overturn a court decision that interfered with federal government’s ability to impose countervailing duties on Chinese goods.

"Ohio has lost close to 100,000 jobs due to unfair trade practices by China," Ryan said a press release issued to mark the occasion.

"I’m glad the House was able to come together today and pass this minor fix to our trade law with bipartisan support, but we must start to tackle the larger trade issues together if we’re going to make any progress for American jobs and businesses."

We asked Ryan’s office how he ascertained the number of  jobs Ohio lost because of China’s unfair trade practices. Ryan spokesman Jerid Kurtz said the congressman got his statistics from studies produced by the Economic Policy Institute, a liberal Washington, D.C. think tank funded by organized labor.

In 2010, the group issued a report that found 2.4 million U.S. jobs had been lost to China since its 2001 admission to the World Trade Organization, and that 91,800 of those jobs were in Ohio. The study said  rapidly growing imports of Chinese computer and electronic parts accounted for more than 40 percent of the $186 billion increase in the U.S. trade deficit with China from 2001 to 2008.

The study computed its statistics by estimating the number of jobs required to produce the exports China sent to the U.S. and the labor displaced when Chinese imports were substituted for domestic production. It used data from the U.S. International Trade Commission, U.S. Department of Commerce, and Bureau of Labor Statistics to reach its conclusions.

"Increases in U.S. exports tend to create jobs in the United States, but increases in imports will lead to job loss - by destroying existing jobs and preventing new job creation - as imports displace goods that otherwise would have been made in the United States by domestic workers," said the study, authored by Robert E. Scott.

A 2011 update of Scott’s study found the number of U.S. jobs eliminated or displaced by the Chinese trade deficit had grown even further -- to 2.8 million. By that time, the group pegged  Ohio’s share of lost jobs at 103,500 - or 1.91 percent of the state’s 5,412,1000 average state employment tally between 2005 and 2007.

The study noted that U.S. backers of China’s entry into the WTO predicted it would boost U.S. exports to China, but that didn’t happen because of "China’s currency manipulation and other trade distorting practices, including extensive subsidies, legal and illegal barriers to imports, dumping and suppression of wages and labor rights."

The group said other U.S. industrial sectors hit by growing trade deficits with China between 2001 and 2010 include apparel and accessories, (178,700 jobs), textile fabrics and products (92,300), fabricated metal products (123,900), plastic and rubber products (62,000), motor vehicles and parts (49,300) and miscellaneous manufactured goods (119,700). Sectors hit by indirect job losses included administrative, support and waste management services (204,300) and professional, scientific and technical services (173,100).

The Economic Policy Institute’s estimates of job losses because of the Chinese trade deficit have been widely circulated by other organizations including the nonpartisan Congressional Research Service, but not everyone agrees with its conclusions.

A position paper from the conservative Heritage Foundation says the idea of the trade deficit causing job loss in the U.S. "cannot be rejected outright on the basis of the record, but it does not stand up well to scrutiny." It contends that trade deficit with China has grown because of strong U.S. demand, not the falling value of China’s currency, and that strong U.S. demand "should mean more American jobs, not fewer." Imports from other countries create jobs in transport, retail and other areas, the Heritage Foundation report notes, contending that Chinese subsidies don’t take jobs away from the United States - they take them away from other countries that want to export goods to the United States.

"If Congress imposes tariffs on Chinese clothing, toys, furniture and basic household appliances, jobs will not move to the U.S.," author Derek Scissors argues. "They will go to India, Vietnam, Mexico, Indonesia, Bangladesh and other low-cost producers."

The Wall Street Journal did a more specific take down of the Economic Policy Institute’s work.  It noted the group’s study "assumed every dollar spent on Chinese goods displaces a dollar that would be spent on U.S.-made products, when in fact products made in other low-cost manufacturing nations might fill the void. Also, cheap imports might even help fuel the U.S. economy and spur employment."

The Wall Street Journal piece quotes a top Bureau of Labor Statistics official saying the EPI study misused a formula BLS, one source of data for the EPI reports, developed to convert industry spending into jobs gained or lost. "It wasn’t meant to hypothesize about job displacement because of imports," James Franklin , who heads the BLS division of industry employment projections, told the Wall Street Journal. Instead, the formula was created to give planners of projects, like construction, an estimate of their personnel needs and to tell policy makers how many jobs those projects would create.

"There is a real desire to come up with a direct number that relates some facet of globalization to the number of jobs lost or gained," the newspaper quotes Brandeis University economist Catherine L. Mann as saying. "Having spent 25 years in Washington, I know it. I also know you can’t get the number."

Ryan bases his job loss numbers for Ohio on reports from the Economic Policy Institute. His quote provided an accurate synopsis of EPI’s conclusions about Ohio job losses. His statement that the number is "close to 100,000" certainly coincides with EPI’s estimates that Ohio lost 91,800 and 103,500 jobs to the China trade deficit.

But while the reports have been widely cited by reputable sources like the non-partisan Congressional Research Service, the conclusions of those reports report aren’t universally accepted. Other economists argue it’s simply not possible to quantify the number of jobs lost or gained because of globalization.

That’s a fundamentally different view that’s rooted in opinion, rather than a factual issue that can be be quantified.

A rating on the Truth-O-Meter requires a solid basis for establishing the validity of a claim. Absent that, PolitiFact Ohio can just present the sides of the issues and leave it to readers to decide.

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Our Sources

Rep. Tim Ryan, press release, "Rep. Tim Ryan applauds passage of legislation that ensures Commerce Department can continue to apply countervailing duty laws to non-market economies," March 6, 2012

Email from Tim Ryan spokesman Jerid Kurtz, March 8, 2012

Economic Policy Institute, Unfair China trade costs local jobs, March 23, 2010

Economic Policy Institute, Growing U.S. trade deficit with China cost 2.8 million jobs between 2001 and 2010, September 20, 2011

The Heritage Foundation, Deadlines and Delays: Chinese Revaluation Will Still Not Bring American Jobs, April 6, 2010.

Congressional Research Service, China’s Currency Policy: An Analysis of the Economic Issues, December 19, 2011

Wall Street Journal, Flawed Math Seen in Unemployment Tied to China, October 30, 2010

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