Falling exports prompted by manipulated exchange rates and high trade barriers to US goods - not outsourcing - are the culprits behind job losses in the US manufacturing industry, an industry expert said recently.

Since 2000, exports of manufactured goods fell by $70 billion, while imports went up by $20 billion, said Frank Vargo, vice president of the National Association of Manufacturers, at a trade conference in New York.

“The assertion that American manufacturing firms have outsourced abroad three million jobs is not true, it hasn’t happened,” he said, adding that the industry’s $90 billion deficit is responsible for most layoffs.

Vargo said China’s tightly controlled currency system, which keeps the yuan floating in a narrow band against the dollar, is the key culprit behind a trade deficit that’s hurting US firms.

The US trade deficit set another record high during April despite declining oil consumption as the nation’s overseas sales of goods and services fell and overall foreign purchases rose slightly.

The US deficit in international trade of goods and services expanded to $48.33 billion, up from a shortfall of $46.57 billion in March, the Commerce Department said this week. The March deficit was previously reported at a record $45.96 billion.

US manufacturers and legislators have long accused China of keeping its currency undervalued against the dollar in order to promote its export competitiveness and has urged it to loosen its grip on the yuan.

High tariffs and trade barriers in other markets also erode US firms’ global competitiveness, Vargo said.

Convincing China to revalue the yuan remains “one of the (US) government’s highest priorities,” Vargo said. “I think the Chinese know they’re going to have to do it. The amount of local currency they are pouring into the Chinese economy is really unsustainable.”

Vargo also said US firms must start investing more in research and development in order to create jobs.

“Our goal is to keep good American jobs at home, and you can’t have a vibrant US economy without a healthy manufacturing sector,” he said.

The manufacturing industry had been steadily losing jobs throughout much of the current recovery, hit hard by a robust China and structural changes in the US economy, not least the productivity miracle of the late 1990s.

Recently, the industry has been hiring again however, with manufacturers adding 32,000 to their payrolls in May, the largest of four consecutive monthly increases. Various components of manufacturing activity, in particular, the monthly Institute for Supply Management guages of national manufacturing, have been pointing to solid growth also. (Dow Jones)