08:57 PM ET 01/19/98
Study says Asia crisis could hit U.S. workers hard
By Adam Entous
WASHINGTON (Reuters) - A Washington think-tank has warned in a new study
that more than one million Americans could lose their jobs as a result
of Asia's economic crisis, feeding U.S. workers' fears the turmoil
threatens their jobs.
Jeff Faux, president of the pro-labor Economic Policy Institute, said
the jobs could be lost over the next two years as cheaper Asian products
flood U.S. markets and U.S. sales to the hard-hit region weaken.
The study will be released later this week, before Congress reconvenes
and considers a controversial request by the Clinton administration to
give billions of dollars to the International Monetary Fund to help it
fight Asia's economic crisis.
The study will fan the fears of labor groups that say the crisis will
spread and hurt U.S. workers. It could also be used by IMF critics to
lobby against funding for the agency.
As part of the IMF's multibillion-dollar bailouts for Indonesia, South
Korea and Thailand, authorities have put painful reforms in place that
have forced companies out of business and will make it easier for them
to shed workers.
``It (the study) will not only add fuel to labor's concerns, but to
everyone's concerns,'' Faux said in an interview. ``There will be about
a million U.S. jobs lost because of the increase in the trade deficit,
assuming the Federal Reserve does not lower interest rates.''
``You have imports coming in and you have a loss of export markets.
There will be a lot of dislocation, and a big hit to manufacturing,'' he
added.
Analysts expect lower growth in Asia to reduce exports to the region,
slowing down the seven-year-long U.S. expansion and further inflating
the already ballooning U.S. trade deficit.
Also currency devaluations and price cuts in Asia will make for cheaper
imports. But exactly how much, or when, the U.S. economy will feel those
effects is mostly guess work.
The Economic Policy Institute's study assumes that the U.S. trade
deficit will grow by $100 billion over the next two years. Other details
from the study were not released.
When it reconvenes on Jan. 27, Congress will be asked to make an extra
$3.5 billion available to the IMF for an emergency lending facility and
around $15 billion to cover the U.S. share of a quota increase to
replenish IMF funds.
But critics of the IMF have emerged on the political right and left,
arguing that the bailouts shackle the free market, hurt workers and the
environment.
Labor groups -- including the powerful AFL-CIO -- are beginning to weigh
into the debate.
``We have very grave concerns about the employment implications of the
Asian crisis,'' said Thomas Palley, assistant director for public policy
at the AFL-CIO. ``The scale of the devaluations means we will see an
increase in Asian imports and fewer exports to Asia, and that could cost
hundreds of thousands of jobs over the next 12 to 18 months.''
Several labor groups say they will press Congress to protect U.S. jobs
from the turmoil and to make funding for the IMF conditional on
improvements in worker rights in Asia.
Last year, labor groups targeted President Clinton's fast track trade
legislation, arguing that worker rights and environmental protections
should play a greater role in U.S. trade deals. Unable to muster the
votes needed, Clinton in November had to ask congressional leaders to
take fast track off the floor of the House of Representatives.
Under fast track, the president is allowed to negotiate trade deals that
Congress cannot amend during the aproval process.
-- ************ Eirik Rossen eirikr@kanal1.no