Topic: Trade and Immigration

Trade Promotion Authority Is not an Executive Power Grab

With the Trans-Pacific Partnership (TPP) negotiations reported to be nearing completion and the Transatlantic Trade and Investment Partnership (TTIP) talks kicking into higher gear, Congress is expected to turn its attention to Trade Promotion Authority (TPA) legislation in the weeks ahead.

That’s where opponents of trade – mostly from the Left, but some from the Right – have decided to wage the next battle in their war against trade liberalization. Tactically, that makes some sense because, if they succeed, the TPP and the TTIP will be sidelined indefinitely. But, as observed by the Greek Tragedians and countless times in the millennia since, truth is the first casualty of war.

Trade opponents characterize TPA as an executive power-grab, a legislative capitulation, and a blank check from Congress that entitles the president to negotiate trade deals in secret without any congressional input except the right to vote “yea” or “nay” on an unalterable, unamendable, completed and signed agreement. But the truth is that TPA does not cede any authority from one branch to the other, but makes exercise of that authority more practicable for both branches.

Under the Constitution, Article I, Section 8, Congress is given the authority to “regulate commerce with foreign nations” and to “lay and collect taxes, duties, imposts, and excises.” While the president has no specific constitutional authority over trade, Article II grants the president power to make treaties with the advice and consent of the Senate. Accordingly, the formulation, negotiation, and implementation of trade agreements require the involvement and cooperation of both branches.

Trade Agreements Can Be Net Liberalizing

Some libertarians have been expressing concern about particular aspects of trade negotiations, often focusing on provisions relating to intellectual property. Here’s Jesse Walker of Reason:

“Free trade” agreements frequently include details that don’t have anything to do with freeing trade. When intellectual property enters the picture, the rules typically make trade more rather than less restrictive. That certainly seems to be the case with the TPP: Provisions in the leaked drafts would extend copyright terms, impose DMCA-style restrictions on circumventing copy protection, and otherwise take a maximalist approach to intellectual property. There are efforts to add tighter IP regulations to the Transatlantic Trade and Investment Partnership too.

I already tend to be skeptical about trade agreements as a path to freer trade, but I recognize and respect the argument that they do more good than harm. That argument is much harder to maintain, though, when the deals are loaded down with provisions like these. If fast-track authority makes such rules easier to pass, then fast-track authority is something I’m happy to do without.

I get what he is saying about intellectual property, and I have criticized this aspect of trade talks myself. But as my colleague Dan Ikenson says, we should consider whether these deals are “net liberalizing.”  In this regard, I think trade deals have the potential to do a lot of good, in ways that people may not be aware of.  Here’s an example from the negotiations between the U.S. and EU.  The EU has proposed new disciplines on government subsidies, in which it states:

subsidies given to support insolvent or ailing companies without a credible restructuring plan belong to some of the most harmful types of subsidies and have the potential to have an adverse effect on trade and investment relations.

Now, translating such sentiments into concrete rules can be difficult, but I like the idea of pushing for limits on subsidies. I can’t guarantee that anything will come out of the EU proposal, but I’m glad they are pursuing it.  To me, a trade agreement that offers additional disciplines on subsidies is something of great value.

(Some of you might be thinking, wait, how come the EU is proposing constraints on subsidies?  Aren’t they the worst abusers, with their farm subsidies, Airbus subsidies, etc.?  Here’s my sense of what is going on:  In addition to the concerns about bailout-type subsidies mentioned in the quoted text, the EU has some pretty strict internal rules governing when its member states can provide subsidies.  As a result, the Europeans get annoyed at subsidies offered by U.S. states, and are looking for ways to impose constraints on these and other U.S. subsidies).

TTIP Opponents Fret Over Phantom Liberalization of GIs

Some of the most vocal criticism of the Transatlantic Trade and Investment Partnership, a proposed trade agreement between the European Union and the United States, is coming from Europeans worried that the agreement will liberalize parts of their economy that it actually won’t.  This is a very frustrating situation, because supporters of the agreement are then forced to assure critics that the TTIP will not, in fact, do this particular good thing they don’t want it to do.

For example, people have claimed angrily that the TTIP will require the UK to privatize its National Health Service and then prevent the government from “renationalizing” it—that would be great, but it’s not true.  At most, the UK would be required to allow U.S. companies to participate if the government chose to privatize parts of the NHS and then compensate them in any future taking, as it would surely do anyway.  If the UK ever reforms its health system, it won’t be because of TTIP.

Now a new boogieman has emerged, with European news media fretting this week that the TTIP could require Europe to relax protections for geographical indications on cheese and meat products.

As reported in the Financial Times:

Christian Schmidt, Germany’s agriculture minister, said in an interview with Der Spiegel: “If we want to seize the opportunities of free trade with the enormous American market then we can’t carry on protecting every sausage and cheese speciality.”

Food producers, politicians and campaigners against the trade deal seized on his remarks as evidence that the protection of regional brands would be sacrificed to globalisation.

[But] Daniel Rosario, spokesman for the EU, insisted that TTIP would not undermine European food brands or weaken intellectual property safeguards.

“On the EU side, we have made clear to our American counterparts that geographical indications are one of our main priorities and we have not agreed and will not agree to reduce the protection of our geographical indications in Europe,” he said.

Despite what a German official may have said, the EU is not only committed to maintaining its GI protection scheme but is intent on spreading it internationally.  If the TTIP does impact the use of geographical indications it will likely be to require the United States to recognize and protect European GIs in the U.S. market.

That’s a real shame, because Europe’s method for protecting GIs is bad for European consumers.  U.S. policymakers should avoid imitating it.

Challenging President Obama’s Immigration Action Even Though It’s Good Policy

Our immigration system is broken and Congress has shamelessly refused to fix it. Of course, this unfortunate circumstance doesn’t give the executive branch the power to institute reforms itself. Yet through a recently announced policy known as Deferred Action for Parental Accountability (DAPA), President Obama has given partial legal status to more than four million illegal migrants, entitling them to work authorizations and other benefits.

This unilateral action is good policy, bad law, and terrible precedent. Perhaps most importantly, it violates the separation of powers and is thus unconstitutional.

In what is becoming a routine occurrence under this administration, 25 states have sued the federal government in response to this executive action. The case is now before a federal district judge in Brownsville, Texas, who is entertaining the plaintiffs’ motion to enjoin DAPA.

Cato, joined by law professors Josh Blackman, Jeremy Rabkin, and Peter Margulies, has filed an amicus brief supporting the motion. It’s highly unusual for Cato to file at the district court level—indeed amicus briefs of any kind are unusual in this forum—but this is a highly unusual situation.

To be clear, we support comprehensive reform that would provide relief to the aliens protected by DAPA (among many other goals), but it’s not for the president to make such legislative changes alone.

President Obama has defended his action by citing past deferrals for (1) battered and abused aliens, (2) aliens involved in human trafficking, (3) foreign students affected by Hurricane Katrina, and (4) widows of U.S. citizens. But these deferred actions, to the extent they’re relevant here, served as temporary bridges from one legal status to another, not tunnels that undermine legislative structure or detours around the law to hitherto unknown destinations. Moreover, they were several orders of magnitude smaller than DAPA, in the tens of thousands not the millions. Most significantly, they were all approved by Congress.

None of these principles holds true for DAPA. The administration itself stated the applicable test in the memorandum setting out DAPA’s legal justification: “an agency’s enforcement decisions should be consonant with, rather than contrary to, the congressional policy underlying the statutes the agency is charged with administering.” This executive action represents a fundamental rewrite of the immigration laws that is inconsistent with the congressional policy currently embodied in the Immigration and Naturalization Act (INA)—a policy that, again, those who joined this brief by no means endorse.

As Prof. Blackman explains in a new law review article, DAPA is in palpable tension with the INA, implementing under the guise of executive discretion wholesale waiver/suspension/deferral that swallows the enforcement rule. Indeed, Congress rejected or failed to pass immigration-reform bills reflecting this policy several times, so executive power in this area is “at its lowest ebb,” to use Justice Robert Jackson’s famous formulation from the 1952 Steel Seizure Case.

In our constitutional architecture, executive action based solely on Congress’s resistance to presidential policy preferences has no place. While we agree that the immigration laws need to be overhauled and sympathize with the plight facing undocumented aliens, the path designed by the Framers for implementing needed reforms goes through the halls of Congress. Unilateral exercises of power such as DAPA undermine the separation of powers and ultimately the rule of law.

Judge Andrew Hanen, who was nominated by George W. Bush and unanimously confirmed by the Senate, will hold his preliminary injunction hearing in Texas v. United States on Jan. 15 in Brownsville, Texas.

The Auto Bailout Warrants No Pride, Mr. President

President Obama is in Michigan today, which means his handlers at the White House recently consulted their very thin manila file folder labeled “Economic Successes or Anything That Might Pass for Such” to cull talking points about the auto bailout. Of course, nothing has been more celebrated as an economic policy success of this administration by this administration than the “rescue” of GM and Chrysler.
 
I spent a good deal of time in 2008-2010 analyzing, commenting, and testifying about the collateral damage–the often unseen but important externalities and longer term costs–that was being inflicted on third parties, the U.S. economy, and the rule of law, all for the purpose of ensuring that specific interests were insulated from the consequences of their behavior. So let me just summarize by repeating some previous thoughts.
 
It is galling to hear the auto bailouts characterized as “successful.” The word should be off-limits when describing this unfortunate chapter in U.S. economic history. GM and Chrysler, through their own relatively poor decisions with respect to labor contracts, product offerings, and quality management, failed by the market’s judgment and were rightful candidates for downsizing or liquidation. The bailouts essentially deprived the better auto companies of the spoils of competition and forestalled a capacity reckoning, which meaning that in the years ahead, auto workers in Alabama, Tennessee, South Carolina, Indiana, and even Michigan and Ohio may lose their jobs because GM and Chrysler were propped up beginning in 2009.
 
Calling the bailouts “successful” is to whitewash:
  • the diversion of funds from the Troubled Assets Relief Program by two administrations for purposes unauthorized by Congress;
  • the looting and redistribution of claims against GM’s and Chrysler’s assets from shareholders and debt-holders to pensioners;
  • the use of questionable tactics to bully stakeholders into accepting terms to facilitate politically desirable outcomes;
  • the unprecedented encroachment by the executive branch into the finest details of the bankruptcy process to orchestrate what bankruptcy law experts describe as “sham” sales of Old Chrysler to New Chrysler and Old GM to New GM;
  • the costs of denying Ford and the other more deserving automakers greater market share and access to GM’s and Chrysler’s best workers and capital;
  • the costs of insulating irresponsible actors, such as the United Auto Workers, from the outcomes of an apolitical bankruptcy proceeding, and;
  • the diminution of U.S. moral authority to counsel foreign governments against similar market interventions, to name some.
Acceptance of the president’s claim of auto bailout success demands profound gullibility or willful ignorance and virtually guarantees similar interventions in the future. 

Interpreting the New Deportation Statistics

Shortly before Christmas the Department of Homeland Security (DHS) released a report detailing deportations (henceforth “removals”) conducted by Immigration and Customs Enforcement (ICE) during fiscal year 2014.  Below I present the data on removals in historical context – combined with information from the Migration Policy Institute and Pew.  See my previous writing on this topic here and here.       

ICE deported 102,224 unauthorized immigrants from the interior of the United States in 2014, down from a peak of 188,422 in 2011.  Removals from the interior are distinct from removals of recent border crossers.  Removals from the interior peaked during the Obama administration and have since fallen to a level equal to that of 2007. 

Source: MPI and DHS.

The number of interior removals under the last six years of the Bush administration (the first two years is unavailable so far) was about 475,000.  From 2009-2014, the Obama administration has removed about 950,000 from the interior of the United States.  

President Bush’s administration removed an average of about 276,000 unauthorized immigrants per year for the years available and an average of 79,000 of them annually were interior removals.  President Obama’s administration has removed an average of 405,000 unauthorized immigrants a year, an average of 158,000 of them annually were interior removals.  There were a large numbers of unknowns during the Bush administration that decreased as the years progressed. 

 

Source: MPI and DHS.

The Obama administration’s decrease in the number of interior removals is not the whole story.  The best way to measure the intensity of immigration enforcement is to look at the percentage of the unauthorized immigrant population removed in each year.  Based on estimates of the total size of the unauthorized immigrant population, 0.89 percent of that population was removed from the interior of the United States in 2014 – down from 1.15 percent in 2013. 

 

Source: MPI, Department of Homeland Security, Pew, Author’s Calculations. 

For every year for which data was available, the Bush administration removed an average of 0.7 percent of the interior unauthorized immigrant population.  President Obama’s administration has removed an average of 1.39 percent of the interior unauthorized immigrant population every year of his presidency – about twice the rate as under the Bush administration.  Even when focusing on interior removals, President Obama is still out-deporting President Bush based on the data available.

The unauthorized immigrant population increased under the Bush administration from 9.4 million in 2001 to a peak of 12.2 million in 2007 and then declined to 11.7 million in 2008.  During Obama’s administration, the number of unauthorized immigrants has, so far, stayed at or below 11.5 million.    

Obama’s interior removal statistics show a downward trend beginning in 2012 through to 2014.  The Obama administration has also focused immigration enforcement on criminal offenders (not all unlawful immigrants are criminals) but the data is a little difficult to disentangle for 2014 so I left it out of this blog post – stay tuned for a future one on that topic. 

The Obama administration has clearly not gutted interior immigration enforcement as their 2014 figures for interior removals are higher than they were for every year of the Bush administration except for 2007 and 2008.  

Industrial Policy Courtesy of the Cromnibus…Because No More Inferior Potassium

Though a monument to the ravages of Soviet central planning, the barren Magnitogorsk steel works complex still inspires America’s industrial policy proponents.  “Failure to plan is a plan for failure,” said comrade Rep. Dan Lipinski (D-IL), as he described the “pro-manufacturing” legislation he helped slip into the mammoth Cromnibus bill, which became law this month.

The Revitalize American Manufacturing and Innovation Act directs the Secretary of Commerce to establish a “Network for Manufacturing Innovation” to:

  • improve the competitiveness of U.S. manufacturing and increase production of goods manufactured predominately within the United States;
  • stimulate U.S. leadership in advanced manufacturing research, innovation, and technology;
  • accelerate the development of an advanced manufacturing workforce; and
  • create and preserve jobs

Of course, the verbs “revitalize,” “improve,” “stimulate,” “accelerate,” “create,” and “preserve” are euphemisms for protect, subsidize, regulate, and intervene.