Topic: Trade and Immigration

Making Sense of the Trade Negotiations Secrecy Debate

In Tuesday’s New York Times, law professor Margot Kaminski laid out a compelling case for increased transparency in the Trans-Pacific Partnership negotiations.  On Wednesday, John Murphy of the U.S. Chamber of Commerce offered a fairly convincing response in defense of confidentiality.  The problem is that—as is common in trade policy “debates”—they’re not talking about the same thing.  That’s frustrating to me because I think they’re both right.

Kaminski makes the point that the U.S. Trade Representative has been overbroad in what it deems classified material, that the current approach improperly privileges business lobbying over public interest groups, and that as negotiations cover more non-trade issues negotiators need more exposure and guidance from different people.

Murphy responds by noting that trade agreements are successfully increasing U.S. exports, that confidentiality in negotiations is both appropriate and helpful in achieving this outcome, and that systems are in place to ensure that all interested parties have input. 

Murphy’s concern is that “public disclosure of confidential negotiating texts would mean a weaker hand for U.S. officials at the negotiating table.”  For Kaminski, “it’s a question of whose input we’re getting on decisions that reach far beyond trade — into questions on the price of generic drugs or whether websites will have to monitor users online.”

Murphy is right about the value of confidentiality.  Trade negotiations are negotiations, which means the final agreement is the result of some necessary compromise.  Compromise is politically difficult, and negotiators need to know that they’ll be evaluated on the final product regardless of their initial positions.  In any event, we don’t know what’s in the agreement until it’s completed, and there will indeed be time after the negotiations conclude to debate the package.  Murphy’s also justified in being generally defensive about secrecy complaints, which often simply mask general antipathy toward trade liberalization.

Bridging the Hatch-Wyden Divide Over Trade Promotion Authority

The eyes of the international trade community are fixed on Senators Orrin Hatch (R-UT) and Ron Wyden (D-OR), upon whom responsibility for crafting bipartisan Trade Promotion Authority (TPA) legislation has fallen. At last report, Senate Finance Committee Chairman Hatch and Ranking Member Wyden were at an impasse over some important components of the bill, passage of which is widely considered necessary to concluding the long-gestating, 12-nation Trans-Pacific Partnership (TPP) agreement. That agreement must be concluded before the Transatlantic Trade and Investment Partnership (TTIP) negotiations make any progress. Those negotiations will have far-reaching implications for the multilateral trading system, including China, India, Brazil and other countries not currently party to these mega-regional trade agreements. Hence, TPA’s outcome is of worldwide interest.

Trade Promotion Authority has been maligned as a congressional capitulation or executive power grab.  It is neither. The U.S. Constitution grants Congress the authority to “regulate commerce with foreign nations” and to “lay and collect taxes, duties, imposts, and excises” and 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. TPA is a compact between the branches that obliges these respective constitutional authorities, while guaranteeing an up-or-down vote by Congress, on an expedited basis, of any trade agreement negotiated by the executive branch with foreign governments, provided that the agreements meet the objectives spelled-out by Congress in the legislation. This conditionality is often ignored or brushed over by news reporters, who either spend too much time with trade skeptics or who are looking to economize on words.

Without such a compact, trade agreements would be nearly impossible to conclude because foreign negotiators – knowing that any agreement reached would be subject to congressional revisions – would never put their best offers on the table.  The process of negotiating and renegotiating with 535 officials (instead of one agency, the Office of the U.S. Trade Representative) would make for an interminable process too cumbersome and costly to pursue.  For practical purposes, negotiations have to occur between small parties vested with the authority to speak on behalf of those whom they represent. Trade Promotion Authority is the solution.

Checking in on the Minimum Wage in the TPP

A few weeks ago, I wrote about the possibility of the Trans Pacific Partnership (TPP) saying something about the minimum wage, which the White House had been suggesting it would.  I was a bit skeptical that the TPP would really do anything on this issue, and subsequently, I spoke to a U.S. government official who seemed to indicate that the whole thing was overblown, and nothing much would happen with the minimum wage in TPP.

But now I see that Victoria Guida of Politico has been speaking to higher ranking U.S. government officials, who said the following:

The Trans-Pacific Partnership pact, which the White House is negotiating with 11 countries, would require members to set and enforce laws on minimum wages, maximum work hours and occupational safety and health standards — things no other U.S. trade agreement has done.

Labor Secretary Tom Perez, too, is practiced at explaining why the TPP should matter to its critics, calling the labor provisions of NAFTA and the Central American Free Trade Agreement “woefully insufficient.” Labor obligations, he acknowledges, must be in the main text — as they have been in the most recent free-trade agreements — and coupled with sanctions if countries don’t comply.

The worker protections in the deals with Peru, South Korea, Colombia and Panama stemmed from the “May 10 agreement” that House Democrats reached with the George W. Bush administration in 2007, which covered freedom of association, collective bargaining rights, the elimination of forced or compulsory labor, child labor and employment discrimination. The TPP would go further with its minimum wage, hours and workplace safety standards, Perez said.

Rebuttal of Sen. Sessions’ Anti-Legal-Immigration Op-ed

Senator Jeff Sessions’ (R-AL) Washington Post op-ed calls “for an honest discussion on immigration.” He then lays out his case against legal immigration. 

Although I appreciate Sessions’ honesty in calling for large reductions in legal immigration–a level of candor too often shrouded by immigration-restrictionists’ political correctness (“I’m only against illegal immigration”)–his op-ed makes a poor case for more government regulation of international labor markets.

Below, I look at Senator Sessions’ arguments against legal immigration. His writings will be in block quotes and my responses will follow.

The first “great wave” of U.S. immigration took place from roughly 1880 to 1930. During this time, according to the Census Bureau, the foreign-born population doubled from about 6.7 million to 14.2 million people. Changes were then made to immigration law to reduce admissions, decreasing the foreign-born population until it fell to about 9.6 million by 1970. Meanwhile, during this low-immigration period, real median compensation for U.S. workers surged, increasing more than 90 percent from 1948 to 1973, according to the Economic Policy Institute.

Senator Sessions only presents the income data for Americans during the time when immigration was restricted. Real per-capita GDP increased by 95 percent during the 1880–1930 period of high-immigration that he cites. There are other sources for wage data from that period, although all of them are troublesome compared to the modern economic information available.

The United States did not have closed borders from 1948 to 1973. The Bracero guest-worker visa program let in nearly five million lower-skilled Mexican workers to temporarily labor in American agriculture, a policy that did more to limit unlawful immigration during that period than any other.

Economists Weigh-in on the TPP

In recent weeks, a number of prominent economists have expressed views on the Trans Pacific Partnership (TPP).  David AutorDavid Dorn, and Gordon Hanson are for itTyler Cowen is for it, mainly for foreign policy reasons; Noah Smith is for it; Larry Summers is a maybe; Paul Krugman thinks it’s not a big deal and questions whether Obama should spend “political capital” pushing it; Brad DeLong is more positive than Krugman; Dean Baker is skepticaland Matt Yglesias is skeptical, noting that “[t]he political economy and public choice issues around what’s become of the mutlilateral trade process stink.”

Before jumping to any conclusons, though, I think DeLong makes an important point here: 

“It is foolish to debate whether a trade agreement that has not yet been negotiated is a good idea and should be ratified. Such a debate should properly begin only once there is something to analyze.”

That’s very true: We don’t have a negotiated agreement yet, so it’s difficult to judge its content.  If this were an old-school trade agreement whose main function was to get rid of tariffs, it would be easier to make an assessment in advance.  If we knew all or most tariffs would be brought to zero, and that’s all that would happen in the agreement, we would know just about everything we needed to know.   However, today’s trade agreements have lots of substantive policymaking in them, and the details are important.  

Immigration and Equality

Now that a federal judge has enjoined President Obama’s unilateral amnesty, immigration reform will have to be achieved the old-fashioned – and constitutional – way: by compromise with Congress. A grand bargain is not impossible, but it will require a broad re-framing of the issues and a clear sense of what is at stake. For one thing, any such bargain should end, once and for all, governmental discrimination on the basis of race.

Affirmative action and immigration might, at first glance, appear unrelated; in fact, they are profoundly and perversely intertwined. It is often said that anti-immigration sentiment is driven by a fear of competition; Americans are said to fear competing against new immigrants for jobs, for contracts, for educational opportunities. This account leaves out a crucial part of the story: Americans have never lacked competitive spirit or feared a fair fight. What many Americans fear is that these competitions will, in fact, be rigged from the outset. The sad fact is that they are right.

Hot Off the Press: April 2015 “Cato Trade” Newsletter

If you don’t yet subscribe to Cato Trade, the monthly newsletter of the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies, you can find the current edition here.  Highlighted in this month’s release is Simon Lester’s new paper, Expanding Trade in Medical Care through Telemedicine.  Additionally, you will find Cato trade scholars’ commentaries on the Export-Import Bank; the Trans-Pacific Partnership talks; Investor-State Dispute Settlement (ISDS); Trade Promotion Authority (TPA); and, other important matters of U.S. trade policy.

And here are the links to all previous monthly newsletters: