Topic: Trade and Immigration

Chamber of Commerce Endorses Carbon Tariffs?

Even though the climate change summit in Copenhagen next month is likely to yield very little, domestic shenanigans continue. The Senate Committee on Environment and Public Works passed a bill on Thursday amid controversy, and the farmers’ friends in the Senate (notably Sen. Debbie Stabenow, D. Mich) are looking to send goodies their way by filing an amendment that would pay farmers for not cutting down trees, not farming, and will likely see states such as — well, how about that! —  Michigan “cashing in” (see here).

Meanwhile, those concerned about the cost of climate change regulations may have lost an ally. Often, but not always, one can depend on the U.S. Chamber of Commerce to defend free enterprise, or at least free trade. On climate change, however, they are a little more ambiguous. If anything, they appear to be getting more sympathetic to climate change legislation. Nothing to do with membership defections, they assure us, just good business practice. Maybe it is. I’m not a member of the Chamber so their strategy is not really any of my business.

What concerns me is the apparent shift in their position toward so-called carbon tariffs (also called “border adjustment measures,” and often spoken of in terms of “international competitiveness,” “negotiating leverage” and other terms that should raise the alarm). My friend, and former Catoite, Scott Lincicome does an excellent job here of parsing through the Chamber’s recent public letter in support of  the Kerry-Graham “framework” (outlined in this New York Times op-ed) and their strange silence on the framework’s inclusion of the need for carbon tariffs, so I won’t repeat his analysis here. Suffice to say, their non-comment on the issue of carbon tariffs is worrying. As Scott points out, they appear to endorse the concept, if in a coded manner.

Back in June, the Chamber explicitly opposed Waxman-Markey, in part because “It would also impose carbon tariffs on goods imported into the U.S., a move that would almost certainly spur retaliation from global trading partners.” (See here.) I would feel a lot more comfortable if a similarly explicit statement had been repeated in their letter.

Cato Podcast Exposes Anti-Poor Bias of U.S. Tariffs

The dirty secret of the U.S. tariff code is that it is not only insanely complex but that it is biased against the poor. Our highest remaining trade barriers are imposed on goods that loom the largest in the budgets of poor and middle-income families — such as food, shoes, and clothing.

Politicians and interest groups that fight any reduction of U.S. tariffs are unwittingly picking the pockets of the poor every day. I discuss how President Obama supports this unfair status quo in a new Cato podcast, in an earlier newspaper column, and in Chapter 9 of Mad about Trade.

And you can bet your imported t-shirt that I will highlight this inconvenient truth during my presentation at today’s Cato book forum. You can watch it live online beginning at noon, eastern time. Commenting on Mad about Trade will be Steven Pearlstein, business columnist for the Washington Post.

Immigrants Respond to Economic Incentives

As I blogged here, I got my green card in April – and am now counting down the days till I can naturalize (five years from the green card, though you can apply three months before that and processing takes a year or so).  Because of my various travails over the years that led to that fortunate day this spring, I’ve learned quite a bit about immigration, both as a matter of policy and as a matter of law.  Indeed, both before joining Cato and ever since, it’s been an area in which I’ve been writing and speaking – and I appreciate very much the synergy this work has had with my colleagues in the trade and immigration shop.

One oped I had in National Review Online dealt with H-1Bs, the temporary visas for highly skilled workers to work in the United States.  One of the problems with H-1Bs is that they provide no path to a green card (meaning permanent residence) or citizenship – so just as hard-working, tax-paying professionals gain expertise in a particular American company or industry, just as they grow roots in an American community, they have to leave.  Nevertheless, there have long been more H-1B applicants than available visas.  The last few years, the annual 65,000 quota has been oversubscribed on the very first day of eligibility for each fiscal year!

Well, not any more.  As this recent article points out, the recession has impacted our immigration system as well: “A coveted visa program that feeds skilled workers to top-tier U.S. technology companies and universities [the H-1B program] is on track to leave thousands of spots unfilled for the first time since 2003, a sign of how the weak economy has eroded employment even among highly trained professionals.”

This is just another indication that the free movement of goods, money, and people, will regulate even such perceived social ills as “foreigners taking American jobs.”  There’s simply no need for “U.S. citizen only” provisions in (so-called) stimulus bills, or (further) immigration restrictions during bad economic times.

In other words, even foreigners respond to market incentives.

For more on Cato’s work on immigration policy, go here.

If At First You Don’t Succeed

Mexican sugar growers want “in” on the cozy little arrangement that domestic sugar growers have here in the United States.  They have formed an alliance with the U.S sugar lobby to recommend that the U.S. and Mexican governments work to “avoid importing sugar from other countries to help boost the market between the neighbours” (full article here [$]).

This proposal is not new, of course, having previously been suggested to lawmakers’ during the 2008 farm bill debate (see here). The “recommendation” was rebuffed at that time, but these people are nothing if not tenacious.

In what surely must be a contender for the “Understatement of the Year” award, the article ends with this: ” Sweetener users and free trade advocates are likely to find the recommendations controversial”. Someone at CongressDaily has a sense of humor.

Ask Consumers if They Like a Weak Dollar

According to a Washington Post story today, “the weak dollar is one problem the United States loves to have.” The story reports how the fall of the dollar against the euro and other currencies in the past year has boosted U.S. exports and discouraged imports, cutting the trade deficit and allegedly boosting the U.S. economy. A weaker dollar has spurred complaints in Europe and elsewhere, but here at home the Post story leaves the impression the approval is practically unanimous.

Nowhere in the 1,058-word story is the impact on consumers ever mentioned. But it is American consumers who pay the biggest price when the dollars we earn buy less on global markets. We are paying more for oil, which not coincidentally has zoomed toward $80 as the dollar flounders. A weaker dollar means higher prices than we would pay otherwise for a range of goods, from imported shoes and clothing to food, that loom large in the budgets of American families struggling to make ends meet in this difficult economy.

Ignoring consumer interests is widespread in reporting about trade. It reflects the strong bias of elected officials to see trade issues strictly through the lens of producers and never consumers. After all, it is producers who form trade groups and hire lobbyists to promote their exports or protect themselves from imports. Nobody in Washington represents the diffused, disorganized but much more numerous 100 million American households.

The dollar’s value should be set by markets, and I have no reason to believe the dollar is over- or undervalued. But pardon me if I dissent from the consensus that a falling dollar is unambiguously good news.

Studying Confirmation Bias Tends to Convince People of the Existence of Confirmation Bias

If you were a federal contractor with millions of dollars in federal business, would you ever say that federal regulations are too burdensome? Would you tell a newspaper that you violated federal rules by turning away workers because a federal database reported a discrepancy between the information you submitted and the information the government holds?

I don’t think so.

But on National Review’s “The Corner” blog, Mark Krikorian of the Center for Immigration Studies takes a federal contractor’s self-serving statements about E-Verify as evidence that it’s “working fine.”

Of course it is! If you carefully consider the evidence you want to! Readers Getting “Mad about Trade”

My new Cato book, Mad about Trade: Why Main Street America Should Embrace Globalization, has sparked a lively exchange this morning over at the American Spectator’s popular web site.

Contributing Editor Shawn Macomber introduces a Q&A with me by telling his readers:

Daniel Griswold is not shy about sharing the high aspirations he harbors for his superlative new book Mad about Trade. Griswold has managed to compose a volume as accessible and persuasive as it is indispensable, as fresh and uplifting as it is firmly grounded in accumulated wisdom–a rare bird, indeed.