Topic: Trade and Immigration

Ted Cruz’s Mixed Record on Immigration Reform

Republican presidential candidates Ted Cruz and Marco Rubio both impressed audiences in the last debate.  Senator Rubio’s positions on immigration are discussed frequently, but Senator Cruz is normally viewed as an immigration restrictionist – an unfair characterization.  It’s more important to look at Senator Cruz’s actions when he offered amendments to the 2013 “Gang of Eight” comprehensive immigration reform bill (S. 744) than it is to cherry-pick a few quotes.  Senator Cruz did end up voting against S. 744, but only after he offered many amendments.   

Senator Ted Cruz was a tremendous supporter of skilled immigration and supported massively expanding the size of those programs, even beyond what was proposed in S. 744.  He offered four amendments (1324, 1326, 1586, 1587), to expand the number of employment based green cards to over a million annually.  Senator Cruz offered two amendments (1325 and 1585) to increase the number of H-1B visas issued annually to 325,000 while S. 744 allowed an upward bound of 180,000 annually (with some upward adjustments possible).  In other words, Senator Cruz’s amendment intended to practically double the number of H-1B visas over that which was proposed in the Senate’s 2013 comprehensive immigration reform bill.  Amendment 1587 also increased the number of H-1B visas and employment based green cards.  Senator Cruz’s amendments would have also allowed the spouses of all H-1B visa holders to work legally – going beyond President Obama’s actions to increase work eligibly for those spouses.  Expanding the number of green cards and H-1B visas for skilled workers would have been a tremendous boost to the U.S. economy.   

Enforcement Didn’t End Unlawful Immigration in 1950s, More Visas Did

In last night’s Republican Presidential debate, Donald Trump argued that President Eisenhower immigration enforcement plan called Operation Wetback (Trump didn’t use that horrendous name) drastically reduced unlawful immigration in the early 1950s.  He said:

“Let me just tell you that Dwight Eisenhower. Good president. Great president. People liked him. I liked him. I Like Ike, right? The expression, ‘I like Ike.’ Moved 1.5 million illegal immigrants out of this country. Moved them just beyond the border, they came back. Moved them again beyond the border, they came back. Didn’t like it. Moved ‘em waaaay south, they never came back. Dwight Eisenhower. You don’t get nicer, you don’t get friendlier. They moved 1.5 million people out. We have no choice. We. Have. No. Choice.”

The evidence and statements by border patrol and INS officials in the 1950s and afterward disagree with Mr. Trump’s analysis.  Increased immigration enforcement did not reduced unauthorized immigration in the 1950s, legal migration did.


In 1942, the United States government created Bracero guest worker visa program to allow Mexican farm workers to temporarily work for American farmers during World War II.[i]  The government entered into a bilateral labor agreement with Mexico that regulated the migrant’s wages, duration of employment, age of workers, health care, and transportation from Mexico to U.S. farms.[ii] Transportation to the farm, housing, and meals were sold by the employers for a low price.[iii]  Ten percent of the migrant’s wages were deducted from their paychecks and deposited in an account that would be turned over to them once they returned to Mexico.[iv]  

The Bracero program did not limit the number of migratory workers as long as the government’s conditions were met, making the system flexible to surges in demand. As a result, nearly five million Mexican workers used the Bracero program from its beginnings in 1942, when the first group of 500 braceros arrived at a farm in California, until the program’s cancellation in 1964.[v]  The program’s flexibility increased over time as the Border Patrol and INS realized that the Bracero program was an indispensable component of reducing unlawful immigration by providing a lawful means of migration. During the early phase of the program, the United States government acted as the arbiter and distributor of the Mexican workers to American farms – heavily subsidizing the movement and not requiring total reimbursement for government expenses on medical and security screenings.[vi]  Later, as the number of unauthorized immigrants began to rise, the government reformed the program to allow for workers and employers to deal more directly with fewer regulations and government subsidies.[vii] 

Good Policy, Bad Law: Obama Correctly Rejected Again on Immigration Reform

The U.S. Court of Appeals for the Fifth Circuit has now affirmed the injunction against President Obama’s executive actions on immigration. The opinion seems daunting at 135 pages, but only just half of that is the majority opinion, and much of that consists of technical discussion. The nub of the ruling is that the 26 plaintiff states have established a “likelihood of success” on their claim that (1) the administration both violated the Administrative Procedure Act by not going through proper rulemaking channels and (2) exceeded the authority that the relevant statutes give the executive branch in enforcing immigration law. This was not a surprise given the way oral argument went – and that the two judges in the majority were also on the panel that denied the administration an emergency stay of the injunction earlier in the year – but it’s still significant.

The court cuts through the government’s obfuscation about “prosecutorial discretion” and the like, the argument that granting temporary status to millions if people is no different than a decision to prioritze deportation of murderers over those whose only violation is being in the country without authorization: Deferred action, however, is much more than nonenforcement: It would affirmatively confer ‘lawful presence’ and associated benefits on a class of unlawfully present aliens.” (35) “Moreover, if deferred action meant only nonprosecution, it would not necessarily result in lawful presence… . Declining to prosecute does not transform presence deemed unlawful by Congress into lawful presence and confer eligibility for otherwise unavailable benefits based on that change.” (36)

The court goes on to explain how the novel Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA) goes against what Congress has legislated. “The interpretation of those provisions that the Secretary advances would allow him to grant lawful presence and work authorization to any illegal alien in the United States—an untenable position in light of the INA’s intricate system of immigration classifications and employment eligibility.” (62) Moreover,

because DAPA is not authorized by statute, the United States posits that its authority is grounded in historical practice, but that “does not, by itself, create power,” and in any event, previous deferred-action programs are not analogous to DAPA. “[M]ost … discretionary deferrals have been done on a country-specific basis, usually in response to war, civil unrest, or natural disasters,” but DAPA is not such a program. Likewise, many of the previous programs were bridges from one legal status to another, whereas DAPA awards lawful presence to persons who have never had a legal status and may never receive one. (63)

This analysis mirrors the argument we make in Cato’s brief regarding the proper application of deferred action historically, as a bridge between lawful statuses rather than a tunnel around under and around the immigration laws.

In short, while we wish Congress had acted to make some sense of our immigration regime, it hasn’t – and the president can’t rewrite the law even it makes good policy sense to do so.

Now, where do we go from here? If the government files a cert petition with the Supreme Court this or next week, the case could conceivably make it onto the docket as one of the last ones to be argued this term, meaning a decision the last week of June 2016. But the government may not do that – it waited an awfully long time to file its “emergency” motion to stay the district court’s injunction – in order to keep this immigration battle alive into the presidential election. Indeed, regardless whether the Supreme Court ultimately upholds or dissolves the injunction against President Obama’s executive action, presumptive Democratic nominee Hillary Clinton would probably rather maintain the issue as a live one – especially if, as the conventional wisdom now holds, she’ll be running against one of the Cuban-Americans running for the GOP nomination, Ted Cruz or Marco Rubio.

But that’s all political speculation. For the moment we have another defeat for the imperial executive and a victory for the separation of powers and the rule of law.

How to Think about the TPP

The full text of the Trans Pacific Partnership agreement was released last Thursday.  At over 6,000 pages (by most estimates – I haven’t counted them myself!), it’s quite a challenge to digest.  It’s easy to pick out obscure technical issues and discuss them with trade experts; it’s harder to talk about the big picture significance for a mass audience.

Economist Jeffrey Sachs tried to do this in an op-ed in the Boston Globe, and I think he offered a good starting point:

The agreement, with its 30 chapters, is really four complex deals in one. The first is a free-trade deal among the signatories. That part could be signed today. Tariff rates would come down to zero; quotas would drop; trade would expand; and protectionism would be held at bay.

The second is a set of regulatory standards for trade. Most of these are useful, requiring that regulations that limit trade should be based on evidence, not on political whims or hidden protectionism. 

The third is a set of regulations governing investor rights, intellectual property, and regulations in key service sectors, including financial services, telecommunications, e-commerce, and pharmaceuticals. These chapters are a mix of the good, the bad, and the ugly. Their common denominator is that they enshrine the power of corporate capital above all other parts of society, including labor and even governments.

The fourth is a set of standards on labor and environment that purport to advance the cause of social fairness and environmental sustainability. But the agreements are thin, unenforceable, and generally unimaginative. For example, climate change is not even mentioned, much less addressed boldly and creatively. 

I would say he gets this about half right.  Some clarifications are in order.

He’s right about the free trade part. We should do the tariff/quota reduction part today (or better yet, years ago!).

He’s also right about his third category of regulations, on investor rights, intellectual property, and services.  As with most regulations, some are good, some are useless, and some are downright harmful.  The TPP regulations are no different.

As for the second category, however, when you talk about international rules that require evidence-based regulation, or prohibit hidden protectionism, that’s already taken care of at the WTO.  The WTO has a great track record of handling these cases.  It’s not clear how the TPP would add much here.

Finally, he wants stronger labor and environmental rules in the TPP, but it’s not clear to me why those subjects are suited for trade agreements.  Whatever you think about climate change, for example, if you are going to address that in a treaty, it seems appropriate to do so in a climate change treaty, not a trade treaty.  Regardless, these regulations are really just part of the general category of regulations, along with investor rights, intellectual property, and services.

Summing this up, and narrowing his four categories to two, the TPP has two major aspects to think about: the trade liberalizing part, which is good; and the regulatory part, which is pretty mixed.  The best way to evaluate the TPP over the next year – which many people are saying is how long we have until a Congressional vote – is to figure out how much liberalization is in there, and just how good/bad/ugly the regulatory aspects are, and weigh and balance the two.

E-Verify’s Standing in the States

The Arizona Republic and the Associated Press (AP) used Cato’s recent work to highlight the failure of E-Verify to turn off the jobs magnet that attracts unauthorized immigrants to the United States. Arizona has a shaky record on immigration enforcement, despite its laws and reputation to the contrary. Maricopa County Attorney’s Office has had zero E-Verify related cases since 2010 and the state Attorney General’s office has failed to update a list of E-Verify compliant businesses since at least 2012 – a requirement under state law.

Other states’ recent experiences also point to problems with E-Verify.

In Ohio, an unauthorized worker at a dairy company was charged on October 20th with identity fraud, after having been discovered to be using the Social Security number of a (legal) Arizona resident.  The fraud only came to light after the Arizonan discovered that his Social Security number was being used in Ohio. The fraud was not discovered by the routine E-Verify check that the unauthorized Ohio worker underwent in 2013. E-Verify confirmed the worker, who was utilizing the stolen SSN and fraudulently obtained documents based off of said number, as work-authorized and legal. The use of a valid number and fraudulent (but on the surface valid) documents by migrants is a problem with E-Verify that we’ve highlighted in the past.

California passed legislation to prevent employer misuse of E-Verify. Their law effectively duplicates federal restrictions on re-verification of employees, bars selective verification (targeting certain applicants over others), punishes use of E-Verify as an interview screening tool, and imposes a $10,000 fine for misuse. The intent of the new law is positive but it will be impossible to enforce. 

Finally, a controversial immigration bill has become law in North Carolina (I wrote about this in May). The new law lowers the threshold for mandated E-Verify to businesses with five or more employees, limits the types of identification that migrants can present (effectively banning use of Mexican consular identification cards), and prevents local and county governments from adopting so-called “sanctuary city” policies.

E-Verify imposes an economic cost on American workers and employers, does little to halt unlawful immigration because it fails to turn off the “jobs magnet,” and is an expansionary threat to American liberties.  During the housing collapse and Great Recession, Arizona enacted the Legal Arizona Workers Act (LAWA), which mandated E-Verify for all new hires in the states.  In its early days, E-Verify had a reputation of effectiveness that, combined with the crashing economy, resulted in a large exodus of unlawful immigrants from Arizona.  After the economic recovery and E-Verify’s flaws were made clear, subsequent states like Alabama, Mississippi, and South Carolina have had far less success in using E-Verify to decrease the numbers of unauthorized immigrants in their states.  E-Verify’s bark was worse than its bite.   

This post was written with the help of Scott Platton

Transatlantic Regulatory Cooperation: Possible, But Don’t Bet the House

As the prominence of tariffs in the transatlantic relationship has receded and transnational supply chains and investment have proliferated, regulatory barriers to transatlantic trade have become more evident. Reducing duplicative regulations that increase production and compliance costs without providing any meaningful social benefits is a chief aim of the Transatlantic Trade and Investment Partnership negotiations. Indeed, most of the economic gains from the TTIP are expected to come from this exercise.

But that is easier said than done.  According to University of California-Irvine law school professor Gregory Shaffer, “regulatory barriers to trade can be more pernicious and more difficult to reduce than tariff barriers because they often reflect certain cultural values and preferences, and there are often more interests vested in the status quo.” In his Cato Online Forum essay, submitted in conjunction with last month’s TTIP conference, Shaffer describes five different approaches to regulatory coherence/harmonization (with pros and cons) that could be undertaken by U.S. and EU negotiators.

Depsite vastly different approaches to regulation on opposite sides of the Atlantic, Shaffer points to examples of successful cooperation in recent years as evidence that the TTIP’s regulatory coherence discussions could bear fruit. But he doesn’t bet the house on that outcome. Instead, he writes:

We should nonetheless be cautious in our optimism given the serious impediments to achieving regulatory coherence. Removing regulatory barriers to trade and investment while continuing to reflect local preferences and retain democratic accountability is, and always has been, a challenging undertaking.

Read Shaffer’s essay here.  Read the other Cato Online Forum essays here.

GMOs and the EU Parliament

The European Union (EU) and its member states have had a difficult time dealing with the politics of genetically modified organisms (GMOs).  Despite the fact that the European Food Safety Authority (EFSA) has determined numerous GMO products to be safe, only one currently is allowed to be planted.  MON 810 corn (maize) resists insects, such as the European corn borer.  Although this type of corn is widely grown around the world, it is planted on only 1.5 percent of the land area devoted to corn production in the EU.  The main reason is a decision by the EU to allow individual member states to forbid the planting of crops that have been enhanced through genetic engineering. Member states now banning the planting of GMOs include Austria, France, Germany, Greece, Hungary, Italy, Luxembourg, and Poland. 

Regardless of the EU’s reluctance to allow GMO crops to be grown, importation of GMO soybeans and soybean meal has been a commercial necessity.  In 2014 the EU consumed the protein equivalent of 36 million metric tons of soybeans for livestock feeding.  Roughly 97 percent of those soybeans were imported.  The three largest soybean producing and exporting countries – the United States, Brazil, and Argentina – each devote more than 90 percent of their plantings to GM varieties.  It simply isn’t possible to buy enough non-GMO soybeans in today’s world to meet the protein needs of the EU livestock sector. 

Apparently it also isn’t possible for the European Commission to achieve agreement among member countries to authorize new GMOs for importation as human food or livestock feed.  Since the regulations for considering GMO applications went into effect in 2003, a qualified majority of member states has never agreed to approve a new food or feed product.  When the outcome among member states is “no opinion,” the decision on whether to allow a product containing GMOs to be imported reverts to the Commission.  Perhaps with some reluctance, the Commission has approved the importation of around 50 genetically modified products.