Topic: Trade and Immigration

Bali’s Lessons for Trade Negotiators

The future of multilateral trade has presented some vexing questions for policy watchers over the past few years. With the Doha Round of multilateral trade negotiations hopelessly stalled and the proliferation of regional and bilateral agreements in its stead, contemplation and debate about the fate of the World Trade Organization, its successful adjudicatory body, international trade governance, and globalization have been all the rage.

December continues to shine a particularly bright light on these issues, as U.S. and EU negotiators are in Washington this week discussing the proposed bilateral Transatlantic Trade and Investment Partnership. Last week, negotiators from the United States and 11 other nations met in Singapore in an effort to advance the regional Trans-Pacific Partnership deal. The week prior, representatives of 159 WTO members were in Bali, Indonesia for the Ninth Ministerial Conference (MC-9), where a multilateral agreement was reached on a set of issues for the first time in the WTO’s 19-year history.

The significance of the Bali deal depends on whom you ask. Those heavily vested in the current architecture of the multilateral system tend to hail Bali as proof that multilateral negotiations are back in business and that there is renewed promise for completing the long-stalled Doha Round. Frankly, taking 12 years to forge an agreement on trade facilitation (basically, reform of customs procedures, which constitutes a tiny fraction of the Doha Round’s objectives) plus some concessions to permit more subsidization of agriculture in the name of food security is not exactly convincing evidence that Doha Round negotiators have demonstrated their cost effectiveness or the utility of this approach.

How Dare They Not Want Us to Spy on Them!

Some members of Congress are upset that other countries around the world are taking action to protect their citizens from the U.S. spy machine.  But rather than doing something within their own power to address the economic backlash from  U.S. policies by, say, changing the policy, these members of Congress are blaming others and threatening to bully them.  According to an AP report:

Germany has asked European Union officials to consider restrictions that would prevent U.S. companies from processing commercial and personal data from customers in Europe. That could affect the flow of information and hurt U.S. businesses such as Google, Facebook, Apple and Amazon.

A bipartisan group of House members — 12 Democrats and six Republicans — has sent a letter to U.S. Trade Representative Michael Froman, insisting that nations abandon such efforts as a condition of pending trade pacts. (emphasis added)

Maybe reducing the ability of Americans to do business with foreigners is the only way to keep terrible harm from coming to U.S. companies impacted by this scandal.  I’m skeptical, so let’s ask them:

Lawmakers sent the letter a week after a coalition of businesses including Google, Apple, Yahoo, Facebook and Microsoft penned its own, asking Obama to curb the surveillance programs.

Silicon Valley has been fighting in the courts and in Congress for changes that would allow them to disclose more information about the secret government orders they receive. Several companies are introducing more encryption technology to shield their users’ data from government spies and other prying eyes. (emphasis added)

Since option B solves the problem and increases liberty, let’s try that one first, please.

(I would be remiss not to point out the House Intelligence Committee’s strident condemnation just last year of Huawei, and their subsequent recommendation that U.S. companies avoid doing business with the Chinese telecom giant to ward off vague dangers of cyber espionage.)

Ohio Backs off of REAL ID

Sometimes there are setbacks to the efforts of the Department of Homeland Security, the American Association of Motor Vehicle Administrators, and state motor vehicle bureaucrats to quietly knit together a national ID. If this story is true, Ohio appears to be breaking with the national ID plan.

What’s remarkable about this case is Ohio’s recognition that the federal government will never act on the threat that TSA will refuse drivers’ licenses and IDs from states that decline to implement the REAL ID Act.

Ohio is among a growing number of states that are refusing to comply with federal standards intended to toughen access to driver’s licenses. … The states are betting that federal officials do not implement plans to accept only “Gold Star” licenses as proof of identity to fly on commercial flights or to enter federal buildings and courthouses. “We’re not so sure the federal government” will only honor IDs that meet its requirements, [Ohio Department of Public Safety spokesman Joe] Andrews said.

Time was when states fell in line at the suggestion of this federal government threat. Eight-and-a-half years after REAL ID became law, the states may be recognizing the inability of the feds to coerce them into implementing their national ID.

Cuba: Global Free Trade Champion?

I would like to second Simon Lester’s ambivalent endorsement of the trade agreement reached by WTO members in Bali last week.  Despite cheers from governments and embarrassingly unrealistic claims of economic value, the new WTO agreement on trade facilitation is hardly something for free traders to get super-excited about. 

There was some excitement, however,  when a bit of last-minute diplomatic drama at the talks threatened to derail everything.  Cuba, it turns out, had some genuine demands for actual trade liberalization and indecorously refused to be ignored.  As reported by Inside U.S Trade [$]:

Cuba and three other Latin American countries – Bolivia, Venezuela and Nicaragua – had withheld consensus from the so-called Bali package consisting of a trade facilitation agreement as well as agriculture and development components.

Specifically, Cuba had refused to endorse the package until its demands were met for a provision in the trade facilitation deal that would prevent countries from applying discriminatory measures to goods in transit. This was aimed at counteracting a part of the U.S. trade embargo that prevents ships that engage in trade in Cuban ports from unloading cargo in the U.S. for 180 days thereafter.

After Cuba’s demands on trade facilitation came to the fore as the last outstanding issue on the evening of Dec. 6, WTO Director-General Roberto Azevedo held consultations throughout the night with the U.S. and Cuban delegations until 6 am. At that point, the two sides agreed to compromise language to address Cuba’s demands, according to an informed source.

The compromise language consists of one sentence in the Bali ministerial declaration that appears immediately after a sentence adopting the trade facilitation deal. It states: “In this regard, we affirm that the non-discrimination principle in Article V of the [General Agreement on Tariffs and Trade] 1994 remains valid.”

This “compromise” means that the U.S. takes on no new obligations, and the embargo remains as is.  Cuba wasn’t looking for an end to the embargo with its demands, merely recognition that this one small component of the embargo violates the brand new, U.S.-approved WTO rules. 

It’s difficult to imagine, however, that the process could have worked out any differently.  If there’s one thing that’s clear about the new WTO package at this point, it’s that the deal will not have any meaningful impact on U.S. trade policy.

Something is amiss when the global trading system’s achievements depend on the United States convincing Cuba and Venezuela to stop demanding freer trade.

Trade Talks Are Heating Up

There’s suddenly a lot going on in the trade negotiating world.  Unfortunately, there is not as much free trade involved as one might hope or expect.

Over the weekend, the members of the WTO reached an agreement on several issues, the main one being “trade facilitation”.  This was touted as a big deal because it is the first time the WTO agreed on just about anything in its almost 20 years of existence.  In addition, supporters talked up its potential “$1 trillion” increase in global trade. 

It’s important to understand, however, that this agreement is not an agreement under which all countries will lower tariffs or barriers to trade in services, which is the traditional kind of trade agreement.  My colleague Dan Ikenson wrote about trade facilitation here. Reading through a draft of the agreement, it seems to cover two things.  First, it tries to achieve “good governance” in customs procedures, such as through requiring an appeals process for customs decisions.  And second, it requires governments to speed up the import process where possible, for example by letting frequent traders use expedited procedures. These are all good things, but it is not the same as using trade agreements to rein in protectionism. Also of note is how it accomplishes these things.  Basically, it will be rich country governments paying, through money and training, for improvements to customs procedures in developing countries. Is that the best way to accomplish all this?  I’m not really sure, to be honest, but that’s what they are doing.

Next up is the Trans Pacific Partnership (TPP), an agreement being negotiated by 12 countries in the Pacific region.  Those talks have started up again, with a goal of finishing by the end of the year. (Probably won’t happen, but it’s good to have goals, I guess).  What’s fascinating about these talks is how many non-free trade issues are involved.  Someone just leaked a summary of where the parties stand on all the issues.  What jumps out at me in this document is that about half the issues deal with environmental law or intellectual property!  Not that there is no free trade at all in there, of course.  There is the traditional tariff lowering as well.  But there are so many other things to be ambivalent about.

And finally, next week the Europeans will be in town for another round of negotiations on the Transatlantic Trade and Investment Partnership (TTIP).  These talks are in a much earlier stage than the others.  The big issue being talked about here is what to do about “regulatory trade barriers.” Some on the left fear that this will mean lowering everybody’s regulation to a least common denominator.  Some conservatives and libertarians worry that it will mean more regulation, as regulations are harmonized around higher standards.  In practice, I think it is unlikely to mean either of these things.  I don’t see much of a role for international law, through trade agreements, to make substantive regulatory policy, and I would be surprised if the TTIP does much of this.  But where I think international agreements could help is pushing countries to remove the impact of divergent regulations.  For example, if the U.S. and EU both regulate for auto safety, but do it differently, why can’t both sides sell their cars in the other market as is, based on the assumption that the regulations are functionally equivalent?

So that’s a basic round-up.  There are some modest successes, and some issues causing distractions from actual free trade, but things are moving forward, for better or worse.  (How’s that for a not-so-ringing endorsement?)

E-Verify Can Now “Lock” Social Security Numbers

Immigration reform is taking its time in Congress but the executive branch agencies charged with enforcing immigration laws have not been idle. Rather, they’ve been implementing bits and pieces of the reform package on their own – but not any of the good ones. 

Last month, the U.S. Citizenship and Immigration Services (USCIS) announced that it will “lock” a Social Security number when E-Verify or USCIS employees, based on new algorithms, believe the number is fraudulent or used fraudulently. The number is locked and a tentative non-confirmation (TNC) is issued to the applicant or applicants using the contested number – preventing any further E-Verify confirmations until the fraudulent user proves he or she is the lawful holder.

Although my colleagues and I have written extensively about the E-Verify system and its threat to liberties and economic growth, locking adds a newer negative dimension.   

“Locking” was proposed as part of the summer’s comprehensive immigration reform bill that was passed by the Senate and in the House’s Legal Workforce Act. Locking was a bad idea in those bills and remains a bad idea today when implemented by regulatory fiat.

Immigrant Attitudes toward Libertarian Values

A recent paper by psychology Professor Hal Pashler of UCSD analyzes General Social Survey (GSS) data and finds that immigrants are less libertarian than the U.S.-born.  This is an interesting paper and professor Pashler notes the many limitations of his findings – mainly that the GSS doesn’t ask many questions that are good barometers of libertarian ideology.  But that hasn’t stopped non-libertarian immigration opponents from using the paper’s conclusion to try and convince libertarians to oppose immigration reform: “With increasing proportions of the US population being foreign-born, low support for libertarian values by foreign-born residents means that the political prospects of libertarian values in the US are likely to diminish over time.” 

Here are some reasons why Pashler’s paper shouldn’t worry libertarians much or convince many to oppose immigration:

First, libertarians generally support immigration reform, the legalization of unauthorized immigrants, and increasing legal immigration because it is consistent with libertarian principles – not because immigration reform will lead to breakthrough electoral gains for libertarian candidates.  The freedom for healthy non-criminals to move across borders with a minimum of government interference is important in and of itself.  General libertarian support for immigration reform does not depend upon immigrants producing a pro-liberty Curley effect – as nice as that would be. 

Second, under free immigration the freedom of current Americans to sell to, hire, and otherwise contract with foreigners would increase substantially.

Third, the ideological differences between the U.S.-born and immigrants are relatively small for some of the questions Pashler analyzes.  For instance, the GSS asked whether the government should do more or less to reduce economic inequality with a response of “1” meaning the government should do much more and a score of “5” meaning the government should do much less.  The average score for immigrants was a 2.75 while the average score for the U.S.-born was 3.18 – a statistically significant difference but hardly one that will push the U.S. toward central planning.