Tricom Associates Conference CalL Host: Scott Paul Page1 Tricom Associates Conference Call Host: Scott Paul Operator: Good day everyone. Thank you for holding and welcome to the EPI China Trade Loss Study Conference Call with your host Scott Paul, Executive Director of the Alliance For American Manufacturing. Today's conference will begin with a presentation and then a question and answer session. Instructions on that feature will follow later in the program. I would now like to turn the call over to Scott Paul, please go ahead sir. Scott N. Paul: Good afternoon everyone. Thank you for joining us, I’m Scott Paul of the Alliance for American Manufacturing, I’m the Executive Director. AAM is a labor management partnership between the United Steel Workers Union and a number of Fortune 500 manufacturers who are committed to keep jobs in United States. I'm honored to be joined on this call by Senator Lindsey Graham of South Carolina. Senator Charles Schumer of New York will be joining us momentarily and Dr. Robert Scott of the Economic Policy Institute, who is the author of the report. I’m going to make a very brief introductorian remark and turn over the call to Senator Schumer. First I want to make sure everyone knows they can access the report today from the economic policy institute website which is epi.org. They can access an interactive map that drills down into industry congressional district and state data on our web site, which is americanmanufacturing.org. China is emerging as an important job issue for the following reasons, unemployment still stands near 10%, it’s the top of mind issue for voters that Tricom Associates Conference CalL Host: Scott Paul Page2 is jobs in the economy, and voters are frankly angry and discouraged about the employment prospects for their own households as well as their children. It is clear that China is playing an increasing role in job loss in the United States, we have lost 50,000 manufacturing facilities over the last decade. China's share of our overall manufacturing trade deficit when you exclude oil is now over 80%. And if this study, and this map doesn’t help move the China debate forward, I don’t know what will, because it shows across a wider rage of wide array of industries from basic manufacturing to high-tech semiconductors across every state, not only industrial Hartland, and the industrial Heartland of the south, that also in places like California, Oregon and Minnesota, we have seen massive job loss, in fact 2.4 million jobs lost since China joined the world trade organization. The question is what do we do about this? We strongly support efforts by Senator Graham and senator Schumer and others to hold China accountable for it’s currency manipulation. We believe that penalty should be able to post in trade cases for currency manipulation. We think that China should be designation as a currency manipulator, and we think that this should be an issue that is the top of the bilateral agenda. I want to turn the call over now to senator Lindsey Graham, who has been a long time leader of efforts to try to hold China accountable, stop it’s cheating and have a much more rational and balanced relationship, that will benefit workers and businesses in the United States for any comments that he may wish to senator Graham. Lindsey Graham: Thank you. I think a good word you take this topic up is use the rational line, rational imbalance. It’s not lost upon maybe, the benefit that our country could achieve with a good balance relationship with China. I want to have a beneficial relationship with China, that’s mutually beneficial, obviously we Tricom Associates Conference CalL Host: Scott Paul Page3 receive goods from China that are low cost, it helps working people to be able to purchase goods at a lower cost, but not under-but not at over cost. One of the problems that I have with our relationship with China, is it their economy is too large on the world stage to allow it’s government to manipulate it’s currency. And currency manipulation is a trade advantage or a marketplace advantage that tilts the marketplace to China's benefit unfairly. If they can outperform a South Carolina company, or if they can do better job delivering a service so be it. That’s not what's going on here. We have the world trading market and the world economy skewed, because the Chinese government clearly is manipulating the value of their currency. A lower valued Chinese Yuan makes any product in China that’s produced in China remarkably cheaper than the competition throughout the world. Some estimate between 15% and 40% the amount of the Chinese currency under valuation and this is general rules… Charles Schumer: Hi everybody, this is Chuck Schumer sorry to be late, go ahead Lindsey. Lindsey Graham: Thank you, I just finish but then I will turn it over to you. The general rules of trade are being decide here you know, when you export a lot the value of your money should adjust. Well, China is a huge exporter, and their currency is unfairly pack (unintelligible) dollar is creating an imbalance when it comes to trade, it’s creating an unfair advantage vis-à-vis manufactures who have to compete with China, at the end of the day China is too big to be allowed to have this advantage, and I have been working with senator Schumer for years, they appreciated the one by about 20% when we put out the bill in 2005, but they haven’t changed the value of the one at all since 2008. And the only thing they seem to respond to is pressure, and at the end of the day we have come up with a new approach, and I will Chuck describe this to you, but the study is compelling and devastating. Tricom Associates Conference CalL Host: Scott Paul Page4 I have fully realized that the Chinese adjust their currency, some products come from will be higher price here in America, but that’s a price worth paying, because the price of losing all our jobs to this currency imbalance is just unacceptable. So, we are trying to do something in a constructive way to allow American manufacturing to be able to compete on the (unintelligible) China and make it a win-win for both countries, and with that I will let Chuck describe this new approach to no problem. Charles Schumer: Hey Lindsey, have finished what you said, because I just - I’m sorry I was late. Lindsey Graham: Yeah, I’m - it’s all yours. Charles Schumer: Okay, thank you everybody. First I want to thank my partner in this issues for more than five years senator Graham, and I want to thank Scott Paul from the Alliance for American Manufacturing, as you know back in 2005, senator Graham and I introduced the first legislation to address kind of China currency manipulation, and it got 67 votes, but at that time we were laughed at, so many US denied there was an issue with China's currency, other acknowledge there was a problem that called our bill an over reaction, Lindsey catalogued a little of the history there, today we know better. In this new report by the EPI shows how sever the problem, we have had over the last decade, since 2001 America has lost 2.4 million manufacturing jobs because of our trade gap with China, which is ballooned due to China's undervalued currency. My home state of New York is one of the hardest hit, we have lost a 1,40,000 jobs, we have known for years that US manufacturing was paying a heavy price for China's activities, but these figures exceeded even our worst expectations. And by the way it doesn’t measure the number Tricom Associates Conference CalL Host: Scott Paul Page5 of jobs lost in service type industries, which also are effected of course by currency manipulation. So, we believe that we cannot ignore the impact of these jobs anymore, right now as you know, one in 10 workers is out of a job in America 15 million Americans if this report shows, that if China were playing by the same rules as the US 2.4 million of those workers might be collecting paychecks instead of job hunting, and that’s direct jobs, there would be more indirect jobs that would come about if these people were employed and exporting. And yet, just last week, the Chinese premier again rejected calls to let it’s country's currency flow, and that’s the last draw we are fed up, China's merchantuas policies are hearting the rest of the world, not just America, it help create the global recession that we are in. The Chinese want to be treated as a developing country, but they are global giant, the leading exporter in the world. So, here is what our bill does, first as you know, we pushed the bill previously in 2007, the pass the finance committee 20 to one, that bill imposed a serious of penalties including enabling the commerce department to factor in the misalignment when imposing duties on foreign goods under the US anti dumping law, at the same time, the senator Stab and Allen Brown pushed a different proposal, their bill instructed the commerce department to treat currency manipulation as a countervailable subsidy under US Trade Law, and commerce could then impose tariffs. : Last week we introduced a new bill that takes the best of these two different proposals, what we did is we took the wiggle room out, that had allowed treasury to turn to blind eye in the past when it comes to citing the Chinese, they will have to cite the Chinese, if the Chinese don’t change and there are legislation, and we impose additional penalties once the country, once treasury has cited a country for currency misalignment, we call it misalignment and Lindsey, if you have gone over some of this let me know. Tricom Associates Conference CalL Host: Scott Paul Page6 Lindsey Graham: No I haven’t, go ahead. Charles Schumer: We call it misalignment, because we are no longer having to prove intent manipulation implies intent, misalignment just implies a state of fact, and our bill has gotten the Chinese attention as you know they sent a spokes person over to refute the bill. Our view, the only thing that will make China move is tough legislation. We intend to move that legislation quickly. We are figuring out the best vehicle. We believe it will pass and the by part is in way overwhelmingly and frankly in the past both democratic and republican administration have turned a blind eye to this problem. This is - but I feel and I know senator Graham does an urgency here. This is the future of America's stake. If we continue to let the Chinese just manipulate currency, unfairly export, keep out our imports, even of our best products. It's going to hurt America in ways from which may never recover. I'm - I'm hopeful that our legislation has sort of gotten the Obama administration to give this a second look when they issue their currency report. But whatever they issue, we are going to move forward. It is not we are tired of the Chinese not playing by the rules that everyone else has to play by. Ready for... Man: Senator Schumer. Charles Schumer: Yes. Scott Paul: It's - it's got poll with the alliance. Thanks so much for your comment, in 60 seconds Rob Scott briefly describe the report and then we will turn it over to questions. (Schumer): Right. Tricom Associates Conference CalL Host: Scott Paul Page7 Scott Paul: For you and senator... (Schumer): And I apologize for being late to everybody. Scott Paul: Exactly. Even senator (Graham), I know your schedules are very busy so thank you. Rob. Robert Scott Paul: Thank you (Scott). I will just hit the high points to save time for questions as you have suggested. What we found is that the growing trade deficit between the US and China has eliminated and displaced approximately 2.4 million jobs in - in the United States since 2001, that’s between 2001 and 2008. We have looked at the impact of this deficit on employment by state and for the first time we have estimates also by congressional districts. We have talked already about some of the state numbers, some of the - some of the hardest hit states in terms of overall numbers of jobs lost in California and Texas. Some of the hardest hit states in terms of the share estate employment are states such New Hampshire, which lost over 2.35% of it's employment, North Carolina 2.3, Massachusetts 2.25. These are very significant numbers of jobs in these states. So overall we have also seen job loss concentrated particularly in areas they were involved in or have been involved in high tech industries. We found that approximately 40% of the - of the increase in the trading deficit was in computer and electronic products. And that sector was responsible for about 627,700 jobs lost, about more than a quarter of all the jobs displaced between 2001 and 2008. The hardest hit districts were in Silicon Valley. The 14th, 15th, and 16th congressional districts. So with that I’ll - I’ll stop and turn it over to Scott you can direct the questions. Scott Paul: Rob thank you. The call moderator will come on and describe how to get into queue to ask questions for senator Graham, senator Schumer or the two of us. Tricom Associates Conference CalL Host: Scott Paul Page8 Operator: Thank you. If anyone has a question please press one on your touchtone phone. Our first question comes from (Chris Hopkins), the National Journal. (Chris Hopkins): Yes. Thank you for holding this call gentlemen. Given that some portion of the jobs lost are likely in the green technology sector, would you expect the comprehensive energy bill to help address this problem? Thank you. Charles Schumer: Well this is Chuck Schumer. Look this affect every sector and that’s the harm of it. And we expect to push this legislation to affect every sector it will certainly affect green jobs because America has some technological advantage there. But again our export-import balance is not very good. But the effectiveness of our legislation affects everything. High end products, low end products, you name it. And just imagine if you had a store on - two stores on opposite sides of the street and one just automatically got a 30% advantage in terms of the sales price. How do you think people - where do you think people would shop? That’s the problem here. Man: Well, that’s a good question. And, you know, I'm trying to find a way to become energy independent, deal with the climbing issue I think the jobs of the future in this country are going to come from independent - energy independent and cleaning of the air. But China is a good example of a country that made a decision to go into the alternative energy sector. About five years ago they had 3% or 4% of the solar panel market. Today it's almost 45%. They've made an put an emphasis on alternative energy solar panels, wind and battery powered systems. But, yes I would like our country to have a national energy plan that would (unintelligible) alternative energy. But as Chuck said, if you allow the currency manipulation to continue, you are going to take one step forward and two steps backward. So one of the reasons they have increased the market share in alternative energy, particularly solar panels, as they put an emphasize on it the other reasons, which is an unfair reason is that Tricom Associates Conference CalL Host: Scott Paul Page9 their currency manipulations allows those products to be artificially cheaper. So given credit for having an emphasis over, you know, give us a bad marks for not having a coherent policy. But you can’t allow them to grow their market share in currency manipulation. So if we took the currency manipulation of the table, we will be more competitive in every sector including green technology. Man: Thank you. Moderator: Thank you. Our next question comes from (Doug Palmer) from Reuters. Your line is open. (Doug Palmer): Hi, thanks very much. I was just wondering if - if either of you would - would be meeting with this Chinese vice-minister that - that coming this week. I know he is having meetings with administration officials. And I also wonder if you could be a little more specific on when your bill, you know, might come to the forward. Do you think that could come up after the - after the Easter recess and before the strategic and economic dialogue meeting in late - in late May? Charles Schumer: Well, speaking for me, the sooner the better. We are just sick and -- you know, what, my belief is China will not do anything unless they required to. And everyday we wait is a day we lose wealth, we lose economic advantage, we lose jobs. Man: Well I would just add to that. The history is pretty clear here, in 2005, we introduced our legislation and we get 67 votes for a tier off. (Chuck) and I back off hoping the message would be received by the Chinese. They did allow appreciation of a one for a few years I think about 20% since 2005. And nothing has happened since 2008, so it's clear to me that the only reason Tricom Associates Conference CalL Host: Scott Paul Page10 they allowed their currency to - to be revalued. Oh it got various legislations. Yes, I will meet with the representatives from China, I'm sure (Chuck) will too. But they have got to understand this game has to change permanently, just not in stages, just not every time pressures applied. We have come to the point now where congress won’t substantial change in an enduring fashion. Charles Schumer: I would like to - I would like to move to legislation. We find the opportunity before the end of May, yes. Man: Okay, thank you. Scott Paul: (Doug) I just want to add - add a brief comment Scott Paul here. Historically this is the only way that change happens. President (Regan) did it with a (unintelligible) but he was - his hands was forced by an active congress President (Nixon) did it in 1971 and it produced results. Our trade deficit came down in both instances. So there is a - there is a road map to do this. And we recommend the leadership of senator (Schumer) senator (Graham) and others for moving this forward. Man: Thanks. Moderator: Our next question comes from (Harvard Snyder) from Washington Post. Your line is open. (Harvard Snyder): Hi senators, hi (Scott). Two things, first sort of a data questions here, which is that, you know, you - senator (Schumer) and (Graham) mentioned that there was this - this 20% appreciation you want to follow their legislation 2005. I was wondering in doing the study we were able to - to tease out a - a slowing in the job loss as of 2005, when that 20% appreciation took place? Tricom Associates Conference CalL Host: Scott Paul Page11 (Rob Scott): I - I can respond to this (Scott) if it's all right. This is (Rob Scott) from EPI. I did - did the study and we did not observe any slowing in 2006-2007. And the - the trade deficit did stop growing somewhat in 2008. But that was largely due to the recession not to the appreciation of the currency. We - we had a seminar on this last week with (Paul Crewmen) and (Fred Burgs) and they pointed out that because China is growing so fast, its productivity is growing so fast. The 20% appreciation was just necessary to keep up with very rapid productivity - Man: Their - their currency is misaligned by as much now as it was then. That’s the problem. In another words it would just dropped even. If we might have saved some jobs but you can’t really tell, because productivity is going up so much. And currency misalignment gets worse. Man: Okay. And then for the senators I'm just interested in - in how you sort of divine the politics of this moment versus the, you know, the two previous reports that the Obama Administration has put out on this issues of why do we think (Tim Ginner) or (Larry Summers) were changing their perspective? Man: I think we are all set up. I think China has speak on economic recovery there was a little more tolerance in the administration not with us. While there was a recession and they were worried about loosing jobs and now gaining jobs, and they are gaining exports, their economy is growing they are still sticking to this policy. So I think that maybe different and frankly, I think our pressure is going to make a difference not only to China, but to the administration. Man: Do you find the, the recent statements from the business community at all, (Myers Gillian) from the chamber for example that they are, you know, they are changing their tune a little bit, do you think that might change the discussion at all? Tricom Associates Conference CalL Host: Scott Paul Page12 Man: Well business, you know, business has always been divided on this large multinational corporations, don’t have any interest in – in American jobs versus oversees jobs or they wouldn’t move from there. But lots of the business community is becoming change, but the biggest change I think I have noticed and I want to what (Lincy) thinks, is in the academic community, I think everybody, you know, when we first did this we were just called protectionist even thought we met all of the (tenets) of free trade. And I don’t think people calling that anymore most people say GM they even those who were sort of skeptical, say I don’t like this solutions but we need some solutions and there hasn’t seems to be any other? Man: Yeah. I would just add and its hard for an American political leader for this and put your head in the sand any longer because China impact on the world economy is substantial they are not some all nation that’s manipulates its currency and just pay the bills. They are a major economic power and there is no rational justification for allowing someone this big who exports this much to keep their currency from going where the market would take it. That’s the academic side of this argument is gaining strength by the moment, simply because to ignore China for currency manipulation is basically to ignore economic reality in the ways the economy works and, you know, you apologizing for China is where we are at today, there is no rational reasons to suggest that what we are doing is not needed there is no good economic arguments. I do realized its some good we will go up price here at home. But again that price to – that’s if a goods make oh, if its small compared the number of hobs loosing. Man: Okay. Thank you sir, lets take one more if that s okay man? Man: Yeah. We have to vote I think. Tricom Associates Conference CalL Host: Scott Paul Page13 Woman: Thank you, our next is (Tom Berkeley), from Dow Jones your lines open? (Tom Berkeley): Yes, thank you gentleman so the questions for (unintelligible) and Graham. I am just wondering given that President Obama has now call for China to move towards the more flexible currency whether you think that’s any indications treasury will finally labeled and manipulating? Man: I think treasury service we considering. Man: I have been down this road with – republican and democratic administration and this is a thing that everyone campaigns on test about – and when you actually have to pull the trigger no ones pulls the trigger. I am hopeful that we will go ahead and speak truth to power and the obvious answer to the question is China’s currency is misaligned in a dramatic fashion do a manipulation and I think it would be healthy for us to say that. Because you can’t have a real strong relationship with the country, you know, don’t speak truth to each other. Man: I mean I just say one other thing and I would have to speak to my cosponsors, speaking for myself even should they labeled China manipulator we are still going to pass our legislation because the phase is just too slow even once the administration does that... Man: Right. Man: We need to speed it up. Man: I agree. Tricom Associates Conference CalL Host: Scott Paul Page14 Man: (Unintelligible) and Graham, thank you (Robin) I can stay on and claim up we know you have to had to vote. Man: Thanks. Man: But we appreciate your leadership on this look forward to continuing to work together. Man: Thanks everybody, thanks (Lincy). (Lincy): Thank you our next questions comes from (Ted Evanoff) Indianapolis Star your lines is open. (Ted Evanoff): Thank you gentleman if this legislation is passed, would it bring back jobs or would It, would it bring back the 2.4 million or would it simply – stop the loss of further jobs? (Scott): I will answer that first and (Rob) will want to way in because his thought long and hard about this question. There is an enormous body of evidence that this would create jobs and most folks on the economic spectrum even people like (Fred Bust) at the Institute For International Economics and (Paul Truman). But both of them are very – very kind of a cast in the free trade camp. I think that ending currency manipulation would create substantial numbers of US jobs, 100s of thousands or perhaps even a million. And I want to point out one thing (Ted), if Washington is looking for a stimulus this is a stimulus that cost the treasury absolutely no money creates good paying manufacturing jobs and helps to balance our trade account. I cant think of a better solutions for jobs right now. (Rob) may want to way in. Tricom Associates Conference CalL Host: Scott Paul Page15 (Rob): (Scott) I – I would agree with that and emphasize that these are sustainable jobs once we create them and we can continue to these exports, your – you can grow them and – and those jobs would still be there and, you know, that’s – that’s one of the best things about this. I think actually just to – to update the numbers a bit - (Burgs) actually said last week he thoughts that getting the currency values correct would actually create the two million jobs and I – I think that’s conservatively accurate and – and the reasons is that its not just China, China is at the center of a – of a global currency misalignment problems its focused primarily in Asia there, there perhaps four or five countries in Asia, Taiwan, Singapore and Malaysia, and you know, and China perhaps Japan, to some extend that are – still manipulating their currencies that first three or perhaps over about under valued by 25 to 30%. If they cant revalue until China does, so we need a more of a global currency realignment and – and that’s what's going to help to provide some of the stimulus that would come out of expanding exports and reducing a straight deficit. (Scott): If China re-alliance 30 or 40% of these other Asians nations then following in China’s paths. Whether or not still remain a – a wage differential that would favor Asia compared to US manufactures? Man: Certainly what I going to, you know, there is some industries wish we are not likely to be able to compete in textiles software for example. If only they generates well over trillion dollars with exports today, so the questions I think is can we accelerate the rate of growth of exports and cant we damp in this flood some sort of imports is coming in from china and some of these other countries and I think if we cant achieve that whether with revaluation. Tricom Associates Conference CalL Host: Scott Paul Page16 Man: (Scott) – would just add that this would help in competition third markets as well substantially and the impact would probably be less more labor intensive manufacturing and – and but it would have an impact where you would see the most would be and capital intensive industries where is US is highly efficient, highly productive, and even the – the wage differential is not as big of a factor because of productivity and other advantages that we have. But the one thing that no manufactures can overcome is – is the currency misalignment and – and that’s – that’s the key piece to – to starting to knock this down and create some jobs here. Man: (Scott), if I might ask how did you differentiate between jobs lost as a result of trade and – and jobs lost as a result of other reasons? (Scott): I will let (Rob) answer that questions but this – this study is state of the art and its looks it trade flows, I think the question on productivity is one that (Rob) can easily answer and we brought it, its really canard in this debate. But this is looking specifically at trade flow, so I mean there is – there is no we are not making any assertion that these are jobs that could have been lost due to productivity, (Rob). (Rob): Yes, this study essentially estimates the job contend change in the trade flows and that’s what we say we had estimates of –jobs displays – using models that’s published by the bureau of labor statistics and the commerce department. So this is a – these are based on standard economic techniques in terms of the productivity questions I think I have addressed that in a blog post I have I can – I can make available I think its available on – on our website and on – on AEM website as well. So please I did – hoping them – hoping them post a couple of weeks ago. And that’s I showed that what's happened is that we have had high productivity growth and manufacturing for decades. That was true in the 90s, it was true in this decade, what has changed is that in Tricom Associates Conference CalL Host: Scott Paul Page17 the past that was matched by a high rates of growth of output of manufacturer goods. Productivity and output growth, both grew about 4% a year in the 1990s. In this decade it has only grown 1% or 2% a year while productivity has continued to grow about 4% a year. The reason output has not grown is because of the flood of imports and - and so this does explain a large part of the loss in manufacturing. Man: Okay. Thank you. Operator: Thank you. Our next question comes from (Louis Stanley) from Congressional Quarter, your line is open. (Louis Stanley): Hi, (Louis). I will just put up a question. I - I am just curious about the past year of Schumer, Graham legislation in the house with the new chairman of the Ways and Means Committee, do you have any read on the extend to what she is interested in following this kind of approach? Man: (Scott), I will leave it to you. You there? (Robert Scott): Sorry about that. Yeah, acting chairman Levin has had a longstanding interest in our trade relationship with China and as you know he is conducting a hearing tomorrow where (Fred Brookston) and (Clyde Watson) and (Nile Ferguson) and a couple of other folks are testifying on this. And I think the, you know, I suspect that just because of the nature of the bodies, I mean, senator Schumer and senator Graham would have a, you know, an easier time attaching this to a vehicle than in starting the process, than kind of waiting for the house of representatives to work through it's process. So it, yeah, I haven't talked to senator, I mean, excuse me, to chairman Levin particularly about the - the Schumer, Graham approach, but I know that this is an issue that's of Tricom Associates Conference CalL Host: Scott Paul Page18 great concern to him. And he certainly believes that the currency has misaligns and that the United States should respond. Man: Thank you. Operator: Thank you. Our next question comes from Sari, I am sorry. Sari Heidenreich: Heidenreich. Operator: Sari Heidenreich from Market News International, your line is open. Sari Heidenreich: Hi, thank you. I have two questions. The first one is, I am just kind of wondering how you guys would respond to the UN trade and development conference that said, I am not "I'm here from an article" that says one private consumption is raising at a break next speed and labor cost are surging, dropping along pack to the dollar I mean accelerated loss of competitiveness with a dangerous consequence to the world. This would be unfair because China has done more than any other emerging country to stimulate domestic demand. I mean, they propose rather than the US taking action and they propose that that kind of be a worldwide regulation of that but they said again they are trying to make China abide by this right now, would be unfair and, you know, cause more harm to the world market. Man: I would say they are living in an alternative universe. China's mercantilism and beggar-thy-neighbor economic policies have done more harm to global growth, developing countries, not to mention jobs and factories in United States than any other single practice during this latest global recession. They have solved their own employment problem by exporting their problems to other countries and they should be held to account. There is, you know, India, thanks to China misaligns its currency. Brazil does, the EU does, it's not just Tricom Associates Conference CalL Host: Scott Paul Page19 the United States that's making this claim and it's backed up by some of the leading economic minds in the world. If we want to restore balance to global accounts and increase global growth, the best way to do that is to realign the currencies to market rates, I don't think there is any question about that. (Robert Scott): Yeah, I would just add that China's dependence on export line of growth has really come at a tremendous expense to it's own people. There have suppressed wages, they have suppressed the purchasing power of China's consumers, they have also expended enormous amounts of Chinese treasure in suppressing the currency. They purchased over $2.2 trillion worth of foreign exchange just since 2001. That money would have been much better invested in meeting social needs, needs for infrastructure in China than simply bearing it in treasury bills. So if they simply allow their currency to appreciate as market forces would normally indicate, they would be much better off today. China needs to find another way to grow rather than being - continuing to be overly dependent on exports. Sari Heidenreich: All right. Could you clarify, who was just speaking? (Robert Scott): Well I'm sorry, I'm (Robert Scott), I am the - (Robert. E) for the record. I am an economist with the Economic Policy Institute. Sari Heidenreich: Okay. And then my second question would be, did your study look at all future trends that could, you know, you saw this many job losses in from 2001 to 2008, do we have any sort of predictions of what kind of job losses we are going to see if this policy have incurred? (Robert Scott): The study is simply, it's purely historical, I have not done any kind of forecasting at all, again this is - this is (Robert Scott), I have not done any forecasting in this study. And it depends entirely on, I think the future course Tricom Associates Conference CalL Host: Scott Paul Page20 of currency and other trade policies. The currency misalignment is not the only cause of China's trade surplus, they have also engaged in suppression of wages and they have only subsidize their exports and they restrict import. So there are a number of trade problems we have but currency is certainly near the top, at or near the top of the agenda. Sari Heidenreich: Thank you. Operator: Thank you. Our next question comes from Charles Harris. Your line is open. Charles Harris: Hi, thanks all for the call today. I just wanted to ask about the Chinese ministers announcing earlier or suggesting that the March trade that there will be a record trade deficit in March and whether, I guess, AU thought that being - having fall at this issue that that's a very unusual announcement that it comes in response to this whole issue that we are seeing with between the China and the US and then also if there is any evidence that, you know, there might be some manipulation of their numbers? Man: (Scott), do you have a point of view on that? Man: Yeah, the - I think that there is some acknowledgement that there maybe a decline in China's trade deficit in part because of the linear new year. So it's like the snow effecting the unemployment rate in the Washington DC it's a blip, it's not a trend. So I think it has absolutely no correlation or impact to what we are talking here today. If you look at the percentage increase of China as a share of the overall US trade deficit, every year since 2001 it's headed up and up and up and up and now it's 80% of our trade deficit manufactured goods when you take out oil. And it's, you know, it's four-fifth of our trade. I don't expect there to be a lot of sympathy, but for China's leaders for the policies that they have enacted, it's classic mercantilism, I Tricom Associates Conference CalL Host: Scott Paul Page21 mean, they have tried to promote economic stability at everyone else's expense and it's about time someone call them on it and shame on us, we are not doing it sooner. (Robert Scott): Yeah, this is (Robert Scott). Again, I would just echo that yeah, you have to look at trade and certainly using at least annual data month-to-month, there is a huge amount of noise in these figures. The other point is that that there are problems with China's estimates based on trade flows. If you look at reported imports that all the countries report from China and for any given period of time they typically had up to substantially more than China's reported exports, is that’s not well known and consistent problem with three statistics and there are reasons for it, we can get into but not on this call. Any other questions? Operator: Yeah. Our next question comes from (Corinna Petry) from the American Metal market, your line is open. (Corinna Petry): Good afternoon gentlemen. I need some basic information and that is the number and the name of the bill being proposed by senator Schumer and Graham please. Man: I don’t have that. (Scott), do you have that? (Robert Scott): I believe that's on the media announcement, but I don't have it handy at my fingertips, we can certainly get that to you afterwards rather than trying to search for it here on this call. (Corinna Petry): Thank you. Operator: Thank you. Our next question comes from (David Moberg), In These Times. Your line is open. Our next question comes from (Mark Genver). Tricom Associates Conference CalL Host: Scott Paul Page22 (Mark): (Guenberg). Good try. Operator: I am sorry. (Mark): That’s okay. I want to get some basic numbers here. If our annual trade deficit with China is approximately $300 billion, can we break down, how much of that is currency, how much of that is Chinese suppression of workers rights, how much of that is other factors? And the second question for (Robert Scott) is your study goes through 2008, well, we are in 2010, what have you seen for 2009 if anything? (Robert Scott): In terms of the first question I have not broken down the job loss between 2001 and 2008 into the causes that you mentioned. You know, I would say that probably, you know, the largest single contributor is currency manipulation and I think the other factors that you mentioned are also important. So currency clearly is responsible for at least, you know, well over a million of those jobs that are displaced, I mean, my ballpark estimate. In terms of 2009 and going forward the trade deposit in 2009 trunk sharply because there was a collapse in world trade. If you just look mechanically it's a drop numbers that means these jobs displace numbers would probably go down. I think as I said earlier, I think you need to look over time at what happens. And I think all projections that I have seen suggest that the US trade deposit is going to go - we are going to go up again in 2010, and by 2012 the best work as I have seen suggest this is going to be back in the 5.5% to 6% of GDP range where it was in 2006 and '07. Man: As a follow-up to that since the forecasting shows that it is going to go up again or at least I believe it's going to go up again. And if the legislation was to pass and as - as (Scott) was saying or the jobs would be created if the Tricom Associates Conference CalL Host: Scott Paul Page23 legislation was passed. Can we - can we do a little forecasting on that end, in other words how many jobs would be created in those years, either of you at over how long. (Robert Scott): And again this is - this is (Rob Scott). Typically if currencies depreciate, if the attorneys want and the other currencies we mentioned depreciate and let's say the trade - value of the dollar would fall perhaps from 5% to 10% that’s what's being discussed in amongst economist looking at this issue. Typically that would take two to three years to have its full impact on the domestic economies, we will be looking in 2012. And the study that I rely on from the institute for - Peterson Institute for International Economics -- Man: Right. (Robert Scott): -- suggest that we get the dollar down that much we can reduce the projected trade deficits from about 6% GDP down to about 3% GDP and I would estimate that roughly will create two to three million jobs in the domestic economy both the manufacturing and in the industries that are supported by the exports, net exports of goods and services. Man: Two to three main jobs, over how long the period of time? (Robert Scott): Over two to three years. Man: Okay. (Robert Scott): Thank you. Man: You are welcome. Tricom Associates Conference CalL Host: Scott Paul Page24 Operator: Thank you. And we will take our last question from (Arthur Levin) from (unintelligible), your line is open. Mr. (Levin). Man: Okay. All right. Okay. If there are no more questions I just wanted to thank everyone for being on the call and there is a reminder, you can download the full report from the website of the economic policy institute at epi.org, you can find the interactive map on the website of the Alliance for American Manufacturing, which is americanmanufacturing.org and we thank you for your time today and appreciate your attention to this issue. Operator: That concludes today’s conference. Thank you for your participation. You may now disconnect.
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