Kentucky officials and a national economic research group are at odds over the impact of alleged currency manipulation in Japan.
The Alliance for American Manufacturing claims Japan cost Kentucky 16,400 jobs in 2013 through what’s known as currency manipulation. The practice allegedly creates a trade imbalance between Japan and the United States by creating vast quantities of yen to buy foreign assets, further devaluing their own currency.
The AAM’s model estimates lost jobs based on GDP differences; they claim cash that could’ve been gained from a balanced trade relationship would have paid for those jobs.
Scott Paul is the AAM's president; he says Japan's practices bolster export totals at the expense of domestic consumers and those seeking to establish trade in Japan. He also says that imbalance especially hurts areas like the Commonwealth.
“Kentucky is a pretty auto-intensive state, so the stakes are really high for states that have an outsized concentration of auto workers and suppliers, which is why this is so important,” Paul said.
Paul says his group is looking to influence the development of a United States trade agreement between the U.S. and several other countries (including Japan), known as the Trans-Pacific Partnership. The TPP's designed to increase American exports as well as create the jobs to sustain those exports.
The AAM's numbers contradict reports from the Kentucky Economic Development Cabinet. Spokesman Joe Hall says exports to Japan are actually on the rise, as are automotive jobs.
“Last year, we had a record level of company investment and job numbers were up across the board. It’s between a fourth and a third of our investment of jobs come from companies of international ownership,” Hall said.
“Japan plays a role in that.”
An EDCreport released this week shows Japan as Kentucky’s seventh largest export destination, with about $1.3 billion worth of goods shipped in 2014. On the other hand, about $5 billion in Japanese goods came into the Commonwealth last year.
Hall says automotive parts make up a significant portion of those products.
The Commonwealth’s overall 2014 export numbers total $27.5 billion, a new state record for the fourth straight year.
Hall says Kentucky’s continued to make economic strides with Japan, something he thinks will persist for the foreseeable future.
“Our relationship with Japan is really strong on both the import level and export level,” Hall said.
“There are more and more Japanese companies that are locating to the Commonwealth, and we expect that trend to continue.”