Topic: Trade and Immigration

Don’t Confuse Immigration “Style” with “Substance”

Some are making a lot of hay over Senator Rubio’s (R-FL) supposed flip-flop on immigration reform whereby he now supports a House strategy of piecemeal bills as opposed to one large comprehensive package that he helped push through the Senate. Rubio has even stated that he opposed going to conference with his Senate immigration reform bill and any individual bill passed by the House. 

Rubio’s statement is not a flip-flop—it is a public acceptance of the way immigration reform will work in the House and not a repudiation of immigration reform. For a long time the word “comprehensive” has been a dirty word among Republicans and this is just a loud public statement by a pro-reform Senator—arguably the leader of immigration reform this year—moving against that word and the strategy it represents. Piecemeal bills were going to be the strategy in the House—as has been known for months. There is no surprise here.    

But his change is purely strategic, and not very substantive. As a spokesman for Senator Rubio stated:

The point is that at this time, the only approach that has a realistic chance of success is to focus on those aspects of reform on which there is consensus through a series of individual bills … Otherwise, this latest effort to make progress on immigration will meet the same fate as previous efforts: failure.

Anti-Patent Troll Bill Must Not Sidestep ITC Reform

A new anti-patent troll bill has been introduced in the House of Representatives. Although it doesn’t really address the major cause of the troll problem—vague and overbroad patents—the bill’s litigation-focused reforms are clever and will likely be effective. Unfortunately, the bill suffers from one glaring omission: it completely ignores well-documented patent litigation problems at the International Trade Commission.

Why isn’t ITC reform included in the bill? In a speech yesterday, House Judiciary Committee chairman Bob Goodlatte (R-VA), directly answered that very question:

We very much agree that the ITC’s involvement in protecting intellectual property needs to be examined.  Unfortunately, it is not primarily [within] the jurisdiction of the House Judiciary Committee…. We’re very open to collaborating with the Ways and Means Committee, and we are very open to ideas that would allow us to address any aspect of that.

First off, I’d like to point out that the congressional committee in charge of overseeing the patent system does not have jurisdiction to initiate legislative oversight of a uniquely independent, specialized patent court. This is just one more sign of how awkward and inappropriate it is to have a trade agency litigating patent disputes. 

More immediately though, I would like to take this opportunity to implore the Republican leadership in the Ways and Means Committee and the Trade Subcommittee to accept Chairman Goodlatte’s invitation, jump heartily onto the patent reform bandwagon, and fix the ITC’s patent mess

The reason patent trolls are a problem at the ITC is because of the agency’s excessive remedies. When the producer’s infringement involves one piece of technology worth a tiny fraction of the value of a high-tech electronic device, total exclusion of the product from the U.S. market is uncalled for. It would not happen in a court, and it should not happen at the ITC. The courts have ways to determine whether an injunction is appropriate, and ITC reform need only align the agency’s practice with the courts. The best way to do that right now is to reshape and strengthen the ITC’s public interest test.

But please, please don’t try to fight patent trolls by making the ITC’s patent procedures more protectionist. We do not need a stricter domestic industry requirement. Foreign trolls are not worse than domestic trolls. For that matter, foreign patent infringers are not worse than domestic patent infringers. There are ways to make the ITC less attractive to patent trolls without making it more attractive to protectionists.

In a perfect world, we would ditch the whole thing. There’s just no need to have a special patent enforcement mechanism for imports. But as long as they do it right—and there’s reason to think they will—Congress can fix some of the problems caused by having a dual-track patent litgation system if ITC reform gets included in the current bill.

Obama’s Immigration Speech Déjà vu

Right after Republican Rep. Darrel Issa (CA) announces that he’s introducing a bill to offer legalization for some unauthorized immigrants, President Obama gave a speech about how immigration reform is now his top priority. The President said: “This is not just an idea whose time has come, this is an idea that’s been around for years now.”

The President then blamed all recent political problems and failures to pass reform on Republicans – ignoring the gargantuan efforts of Republicans in the Senate like Marco Rubio (R-FL), Jeff Flake (R-AZ), and others.

Republican support for immigration reform, especially in the House of Representatives, is vital to it becoming law. By stealing the spot light and making immigration a partisan issue, he is distracting from reform.

Does anybody else have déjà vu? How many times do we have to hear the President give a speech pleading for reform while his administration continues to deport record numbers of people? How many times will the President blame the Republicans for every problem with our immigration system in one sentence and then say we need bipartisanship in the next? How many times will the President blame everybody but his administration for our destructive immigration system?

President Obama is not in a position of moral authority to blame his political opponents for all of the problems with our immigration system, especially considering that sometime in the next few months, this administration will likely have deported its 2 millionth immigrant.

In his speech, the President also pointed to his record as a Senator in working with Republicans to pass immigration reform during the Bush administration. In fact, Obama was instrumental in killing immigration reform in 2007 when he voted for the Dorgan amendment, named after then-Sen. Byron Dorgan (D-N.D), a known poison pill designed to gut the guest worker expansion and scuttle the entire reform along with it. Without a guest worker portion, much of the support from businesses and pro-reform Republicans evaporated – which is why so many anti-immigration reform Republicans voted for the Dorgan amendment too.

It passed 49 to 48 thanks to Obama’s unexpected support.

President Obama does deserve credit for some positive changes to our immigration system. Deferred Action for Childhood Arrivals (DACA) has limited deportation of some Dreamers, at least temporarily. President Obama could have deferred their deportations on his first day in office but instead he waited almost three and a half years – five months before the next Presidential election – to do so.

President Obama’s priorities will probably shift next week toward fixing the atrocious rollout of the healthcare.gov website or some other issue, but for this fleeting moment he’s focusing on immigration – because his political opponents are. I suspect that I will write something very similar to this in the next few months while suffering from déjà vu.

Trading Marijuana

I was struck by the following from a recent news article about legalized marijuana in Uruguay:

[Uruguay’s] Marijuana sales should start in the second half of 2014 at a price of about $1 per gram, drug chief Julio Calzada told a local newspaper, El Pais

In the U.S., the states of Washington and Colorado have legalized marijuana and adopted rules governing its sale.

Unlike Uruguay, they will tax pot, seeing it as a revenue source, when it goes on legal sale next year.

In Washington, the state marijuana consultant has projected legal pot might cost between $13 to $17 per gram, though some people suggest that’s high.

Marijuana in the medical dispensaries typically ranges from $8 to $14 per gram in Washington depending on quality.

As with many products, it seems, marijuana will be much cheaper in developing countries than in the United States. This offers up opportunities for trade, as U.S. consumers would benefit from lower priced imports.

But I doubt that this trade will happen soon. I haven’t looked at the proposed Washington and Colorado rules, but I’m guessing that import is prohibited. And the article notes that Uruguay is only selling domestically: “Sales would be restricted to locals, who would be able to buy up to 40 grams per month.”

I can imagine that in the future, if the product becomes more widely accepted, trade between different jurisdictions that allow marijuana will be permitted and U.S. prices will come down. It may be a while, though.

But wait, there is one other problem: Is the price in Uruguay a market price? It may not be:

the idea is not to make money, but to fight petty crime and wrench the market away from illegal dealers.

“The illegal market is very risky and of poor quality,” he said. The State “is going to offer a safe place to buy a quality product and on top of that, it’s going to sell it at the same price.”

In August, he had estimated that the price would be around $2.50 per gram.

It may be that Uruguay is offering not just legal marijuana sales, but subsidized marijuana sales. So, if there is trade at some point, we will have issues about whether below market marijuana is being traded “fairly.” And I can imagine anti-dumping and countervailing duty complaints being filed against marijuana imports to drive those prices back up. This will be annoying if it happens, but at least it will make the cases more interesting than if it’s just another boring steel product.

E-Verify’s Continued Ineffectiveness

Now that the government shutdown is over, Congress’ attention will turn to other issues.  There is a possibility that a series of immigration reform bills will be voted on in the House of Representatives before the end of the year.  One bill will certainly include mandatory E-Verify.

As my colleagues and I have written over the last several years, E-Verify is bad for businesses, taxpayers, the privacy of all Americans and residents, economic growth in general, and it won’t stop unlawful hiring.  Don’t believe me on the last point?  Just look at Arizona.  Here is a table of the number of all new hires in the state and the number of E-Verify queries run per quarter:

Year, Quarter

All New Hires

E-Verify Queries

Percent

2008, 1

558,949

36,723

6.6%

2008, 2

563,980

238,593

42.3%

2008, 3

533,502

265,452

49.8%

2008, 4

563,744

276,371

49.0%

2009, 1

385,166

197,612

51.3%

2009, 2

376,634

167,313

44.4%

2009, 3

353,744

172,350

48.7%

2009, 4

477,636

184,053

38.5%

2010, 1

353,612

160,790

45.5%

2010, 2

427,575

199,885

46.7%

2010, 3

384,026

310,648

80.9%

2010, 4

470,302

273,955

58.3%

2011, 1

363,854

220,471

60.6%

2011, 2

446,439

229,635

51.4%

2011, 3

455,134

249,873

54.9%

2011, 4

513,352

281,277

54.8%

2012, 1

406,895

224,396

55.1%

2012, 2

429,773

230,169

53.6%

2012, 3

454,834

267,577

58.8%

2012, 4

496,482

296,856

59.8%

Source: U.S. Census and Department of Homeland Security

Although all hires in Arizona are supposed to be run through E-Verify, an average of just over 50 percent of hires actually were from 2008 to the end of 2012.  These numbers actually overstate E-Verify’s enforcement record because multiple E-Verify queries could be run on the same hire.  The numerator could be a lot smaller than is reported above.    

If a state like Arizona will not enforce E-Verify, what chance is there that the federal government will do it everywhere?  Thankfully, lax enforcement of E-Verify in Arizona is a good indicator that this harmful system will not get the chance to be as destructive as many of us fear if it is ever mandated nationally.      

The World Is Entering a Devastating Chocolate Crisis: The Government Must Act to Save Us

Attention in Washington remains focused on the government shutdown.  But a far more important issue confronts America: rising chocolate prices. When will the government address this terrifying global crisis?

Cocoa trees have been cultivated for thousands of years. The early Mesoamericans, including the Aztecs and Mayans, turned the beans into cocoa solids, liquid, and butter. These peoples offered cocoa beans as gifts for the gods and using cocoa drinks in sacred ceremonies.

The Europeans became acquainted with chocolate after the Spanish conquistadors came and conquered. The Europeans sent cocoa beans and added sugar and milk. 

Hard chocolate finally arrived in the 18th century, apparently first in Italy. But it was the Industrial Revolution that delivered chocolate to the rest of us. A German company created the first chocolate bar in 1839. Is there another invention that benefited mankind so greatly?

But perhaps the most important innovation was yet to come. In 1867 a Swiss chocolatier, recently removed from candle-making added milk. And then America’s Milton Hershey created a mass market with cheap chocolate bars. 

For all of the genius of Thomas Jefferson, he failed to capture this aspect of humanity. What is “life, liberty, and the pursuit of happiness” without chocolate?

Truly access to chocolate is a vital national, even global interest.

Free Trade on the Internet

This is from a recent speech by Senator Ron Wyden (D-OR):

Today, the Internet represents the shipping lane of 21st Century goods and services. It is reshaping global commerce just like social media is reshaping societies. But right now the trade rules don’t neatly apply to the digital economy, despite the growing number of protectionist barriers popping up. The most recent WTO rules were written before the Internet.

It’s time for the digital economy to be within the Winners Circle by keeping data flows open and ensuring that foreign markets aren’t more legally hazardous than the U.S.

This is an important point. With regard to international trade in goods, the impact of the Internet has been significant, but only within certain limits. With the exception of goods for which electronic versions have been developed, you still need to make the goods at a factory and ship them around the world.  

With services, by contrast, the Internet revolution has been greater. A number of services that used to be difficult to trade internationally at all are now tradable with the click of a mouse. To use an example I’ve written about recently, online higher education services are taking off. Someday soon it may be just as convenient for a Washingtonian to get a degree from Melbourne University in Australia as it is to do so from Georgetown.

One problem, though, as Senator Wyden points out, is that many of our international trade rules were written in the pre-Internet era. This became apparent during the WTO dispute over online gambling. The rules could barely fit with this new industry.