WASHINGTON — Ending the “currency manipulation” practices of all U.S. trading partners would help slow the pace of job losses in the domestic apparel manufacturing industry over three years, according to a report released by the Economic Policy Institute today.
The study also found that employment in U.S. textile manufacturing, which has seen a small rebound the past couple of years, would see a net job gain.
The EPI report concluded that eliminating global currency manipulation could create an estimated 2.3 million to 5.8 million jobs in the overall economy by the end of 2015 and reduce the trade deficit by $200 billion to $500 billion.
The nonpartisan think tank suggested the U.S. should step up its pressure on countries, particularly China, to stop controlling their currencies and let them appreciate. U.S. lawmakers have tried for years to pass legislation that would penalize China for manipulating its currency, but those efforts have failed.
China’s trade surplus with the U.S. has also prompted lawmakers to push President Obama to declare the country a currency manipulator and impose penalties. Although China’s controlled currency has been an ongoing issue since it joined the World Trade Organization in 2001, every U.S. president has refrained from imposing the currency manipulation label.
Depending on how quickly countries move to increase the value of their currencies, the report said U.S. apparel manufacturing could lose 66,000 to 107,400 jobs through 2015. The industry’s employment level was 138,700 last month.
“If we don’t end currency manipulation, then on average imports will continue to grow at 4.8 percent [for all products] a year,” said Robert E. Scott, director of trade and manufacturing policy research at the EPI and author of the report. “That is going to decimate the [apparel and accessory] industry. If we end currency manipulation, we can slow the rate of growth of imports and stimulate the growth of exports. That will help to slow job losses in the industry in the medium term…It will be an improvement relative to where it would have been if [countries] didn’t stop this policy.”
Textile mills that make apparel fabric and textile product mills making home furnishings products would see an increase of 8,000 to 34,100 jobs by the end of 2015, the report said. The overall sector employed 227,400 people at the end of last month.
“Textile products have fared better than the apparel industry [due to trade agreements with Canada, Mexico and Central America] and that makes a certain amount of economic sense,” Scott said. “Textile production is very capital intensive and does not involve much labor. We have a technological comparative advantage [over foreign competitors] with some textile products,” adding that has helped the industry maintain its employment base and expand.