Topic: Trade and Immigration

Does It Matter That E-Cigarettes Are Imported From China?

Senator Ron Wyden wants the government to track imports of e-cigarettes more closely.  Specifically, he has asked the U.S. International Trade Commission to create a specific reporting category for e-cigarette imports, which are not currently tracked as a distinct category from other small electronic devices.  But why does it matter where the e-cigarettes come from?

Senator Wyden never really answers that question in his letter to the ITC. 

The TPP and Tariffs

Recently, the U.S. Trade Representative’s office has begun pushing lower tariffs as a crucial part of the Trans Pacific Partnership (TPP).  For me, this is a welcome development, because I worry that the focus on some of the other aspects of the TPP could obscure the positive impact of eliminating or reducing tariffs.  In a press release related to a report issued last week, USTR put it like this:

The United States has one of the most open economies in the world, with an average applied tariff of 1.4%.  In fact, nearly 70% of the products we import do not face any tariffs at all.  However, when our exporters work to sell Made-in-America goods to other countries, they’re burdened with tariffs over twice as high on average.  American manufactured goods face tariffs of up to 100% on certain goods in TPP markets, and American agriculture exports face tariffs over 700% on some products.

Top Nine Myths About Trade Promotion Authority And The Trans-Pacific Partnership

The current debate over Trade Promotion Authority proves, once again, that the classic description of the anti-globalization movement—as “largely the well-intentioned but ill-informed being led around by the ill-intentioned and well informed”—still holds true. Despite the tireless efforts of trade policy experts to explain why TPA and the U.S. trade agreements it’s intended to facilitate are, while imperfect, not a secret corporatist plot to usurp the U.S. Constitution and install global government, myths and half-truths continue to infect traditional and social media outlets.

Because these myths—originating with the same old anti-trade bedfellows that have been with us for decades—have duped a lot of good folks who are otherwise predisposed to support liberty and free markets (including some in Congress), and because the House of Representatives is poised to vote on TPA in the coming days, here is one last debunking of the top nine myths about TPA, the Trans-Pacific Partnership (TPP), and U.S. free-trade agreements (FTAs) more broadly.

To save some time, you can skip to your favorite myth by clicking on the links below.

Strange Bedfellows, Schisms, and Subterfuge: Where Does the Trade Agenda Stand?

The Trans-Pacific Partnership is a still-evolving trade agreement that would reduce tariffs and other barriers to goods and services trade between the United States and 11 other countries. It also would likely include provisions designed to protect certain U.S. industries from the full effects of competition.  A TPP agreement, then, would likely increase our economic freedoms in some realms and reduce them in others.  How these pros and cons would be manifest is unclear at the moment, given the fact that the deal is not done.  But it would a mistake to forego the opportunity to evaluate a completed trade deal that could deliver significant benefits. 

It is broadly understood that the TPP negotiations cannot be concluded without the Congress passing, and the president signing, Trade Promotion Authority legislation.  Without TPA, the president could not be sure that any trade deal brought home reflected the official wishes of Congress, and the likelihood that foreign negotiators would put their best and final offers on the table—knowing that Congress could unravel the deal’s terms—is close to zero.

The Senate passed TPA legislation (along with language reauthorizing the Trade Adjustment Assistance program) on May 22.  The House is likely to take up the bill this week.  At the moment, the president is in lockstep with a large majority of congressional Republicans, who support trade liberalization and see TPA as essential to the process.  But some Republicans (mostly from the conservative wing), who are wary of giving this president any more power, have joined ranks with the vast majority of congressional Democrats in opposition to TPA.  Meanwhile, Democratic presidential frontrunner Hillary Clinton—an architect of the TPP as Secretary of State and a potential heir to the trade agenda—has refused to take a position on TPA.

The spotlight on trade policy has generated much more heat than light.  Misinformation abounds.  Rationalizations masquerade as rationales.

This new Cato Free Trade Bulletin is intended to dispel some of the nonsense that has been circulating and to present a brief, objective assessment of what has transpired and what lies ahead for TPA and TPP.

Europe’s Solar Cartel Enforcers Struggle to Keep Prices High

In what has been aptly named “the world’s dumbest trade war,” both Europe and America have fought to limit imports of low-cost Chinese solar panels.  Much to the chagrin of anyone who likes solar power, the United States and the European Union have imposed high tariffs on Chinese panels in order to protect their own subsidized domestic industries. 

In 2013, the EU negotiated a deal with Chinese solar manufacturers that exempted them from the duties as long as they agreed to sell panels above a set minimum price.  By managing trade in this way, European authorities are essentially creating a solar cartel that divvies up market share among established companies who agree not to compete on price.

But cartel arrangements are notoriously difficult to maintain because any member of the group can ruin the scheme by reneging.  This would seem especially likely when the cartel arrangement was forced on them involuntarily by government in the first place.

Unilateral Disarmament Is Not a Thing

As the Export-Import Bank’s charter nears expiration, supporters continue to argue that ending this government agency, which subsidizes loans to major U.S. exporters (mostly Boeing), is unwise because other countries also subsidize exports.  They’re especially eager to point to China, whose own export credit agency is very active in promoting Chinese manufacturers.  They then claim that allowing the bank charter to expire would be “unilateral disarmament.”

Claiming that the United States should pursue any economic policy on the grounds that China is doing it strikes me as bordering on insanity.  Market intervention by the Chinese government has resulted in large-scale misallocation and is a serious liability for the stability of the Chinese economy.  It’s true that Chinese subsidies to domestic industries reduce opportunities for U.S. businesses, and it’s perfectly alright for the U.S. government to condemn those policies.  But should we really seek to emulate them?

Competitive metaphors about trade are generally bad, and martial ones are especially unhelpful.  The United States is simply not engaged in a metaphorical war with its trading partners.  Thinking of trade as a contest inevitably leads to bad policy by giving governments an excuse to intervene in the market for the benefit of crony constituencies.  The fact that some U.S. businesses would make more money if foreign governments pursued better policies is not a legitimate excuse to intervene in the market on their behalf.

Regardless of the reasons offered to justify it, there are real consequences to the U.S. economy when the U.S. government picks winners and losers.

Supporters of the Ex-Im Bank make plenty of other bad arguments, all of which betray a fundamental distrust of free-market capitalism.  But “China does it” may be the worst one.

Response to Bryan Caplan

Bryan Caplan of George Mason University posted some comments I sent him along with some questions about a recent blog post of his.  His questions are in quotes, my responses follow.  First, some background.

It’s important to separate immigration (permanent) from migration (temporary).  Much of what we think of as “immigration” is actually migration as many of them return home.  Dudley Baines (page 35) summarizes some estimates of return migration from America’s past.

Country/Region of Origin            Return Rates

Nordics                                     20%

English & Welsh                         40%

Portuguese                                30-40%

Austro-Hungarians & Poles          30-40%

Italians                                      40-50%           


Gould estimates a 60 percent return rate for Italians – similar to Mexican unauthorized immigrants from 1965-1985. 

There were three parts to the Immigration Reform and Control Act of 1986 that all affected both immigration and migration.  The first part was the amnesty.  The second was employer sanctions through the I-9 form that was supposed to turn off the jobs magnet.  The third was increased border security to keep them out.  For the first two questions, I assume the rest of IRCA was passed.