Topic: Trade and Immigration

Today’s Trade Vote Is Getting A Partial Do-Over Next Week—Here’s Why

A very unexpected outcome during a series of votes on trade policy in the House of Representatives has managed to confuse pretty much everyone today. 

The most important and controversial bill in the package was Trade Promotion Authority, which narrowly passed the House 219-211 with 28 Democrats in favor and 54 Republicans opposed.  Trade Promotion Authority (TPA) will enable the President to conclude the Trans-Pacific Partnership (and other) trade negotiations and submit a final agreement to Congress for an up-or-down vote. 

But in order for TPA to go to the President’s desk, the House must also pass Trade Adjustment Assistance.  That’s because TAA was included together with TPA in the bill the Senate passed last month. 

Normally, Democrats support TAA, which is an entitlement program for people whose jobs are displaced due to import competition.  Many Republicans oppose TAA as a useless, big-government entitlement program.  House leadership chose to hold two separate votes on TAA and TPA to prevent Republicans from voting no on the package out of opposition to TAA. 

That strategy may have backfired.  Because advancing TPA required passage of TAA, Democrats were able to scuttle the whole thing by voting no on TAA.

But it’s not over yet.  Republican leadership is planning a do-over on the TAA vote in order to salvage TPA.  So there’s likely going to be another vote on TAA early next week.  In the meantime, Republican leadership and President Obama will be madly lobbying their respective party members to muster enough support.

For practical purposes, this result means that Congress has kicked the can down the road for a few more days.  Today’s vote was definitely not a win for the President or GOP leadership, but they haven’t been defeated either.  They can still pull out a victory if they can win enough votes next week to pass TAA—a bill that was defeated today by a solid 126-302.

What Explains the Flow of Unlawful Immigration?

The flow of unauthorized immigrants to the United States has collapsed.  The apprehension of illegal immigrants by Customs and Border Protection (CBP), the best proxy measurement of the flow of such people, along the Southwest Border is way down (see below). 

All Apprehensions on Southwest Border


Source: Customs and Border Protection.

What explains this?  A number of factors are at play.  Economic conditions in the United States, economic or other conditions in other countries, and immigration enforcement all explain part of the decrease in unauthorized immigration over the years.    

Mark Krikorian of the Center for Immigration Studies (CIS) gives most of the credit to beefed up immigration enforcement along the border.  Krikorian seconds a quote by Marc Rosenblum, deputy director of the Migration Policy Institute, who says:

Every month or quarter that the economy continues to improve and unauthorized immigration doesn’t pick up supports the theory that border security is a bigger factor, and it’s less about the economy and we have moved into a new era.

But if immigration enforcement is the main reason why unauthorized immigration collapsed, why are the numbers of unlawful immigrants from countries Other than Mexico (OTMs) increasing?  CBP apprehensions don’t discriminate based on country of origin because they can’t tell where the immigrants are from until they’re apprehended.

Egg Shortage? Let’s Open Up the U.S. Market

An outbreak of bird flu has prompted the untimely demise of 35 million hens, seriously disrupting the supply of eggs in the United States.  Now we get to watch the relationship between supply disruption and price changes play out, which is fun (if you’re into that sort of thing).  There have already been reports of rationing by retailers and of significant price hikes

With eggs costing up to 3 times their normal price, a lot of retailers and restaurants are “rationing” eggs.  The goal of the rationing is most likely to avoid raising prices.  For example, Whataburger chose to stop offering late night breakfast rather than raise prices. And some grocery stores are limiting the number of eggs shoppers can purchase in an effort to keep prices low for regular customers without attracting hordes of commercial users.

High prices are also pushing consumers toward premium egg products.  The Guardian reports:

The higher prices have driven some consumers to buy specialty eggs including cage-free and organic, which typically cost more but haven’t seen a similar increase because specialty-egg chicken houses haven’t been hit as hard, Urner Barry egg industry analyst Brian Moscogiuri said. He noted that specialty-egg prices are closer to regular eggs, leading some consumers to justify the purchase.

With a large portion of America’s egg production capacity suddenly wiped out, the only way to get prices back down quickly is to find new sources of supply.  Thankfully, the U.S. Department of Agriculture has a way to do that.  According to the Associated Press:

The bird flu outbreak has caused the U.S. Department of Agriculture to approve importing egg products from the Netherlands to be used for baking and in processed foods.

The USDA said last week the Netherlands should begin shipping egg products within days.

It’s the first time in more than a decade the U.S. has bought eggs from a European nation.

In recent years, only Canada held certification to sell liquid, dried and frozen egg products to U.S. companies.

Allowing more imports is a great idea.  Local supply shocks like the bird flu outbreak have much less impact on prices and availability when there is a diverse array of sources available.  There are still costs associated with shifting supply chains, but basic commodity prices are much more stable and less prone to shocks in a global market.

It’s good that the USDA has responded rationally to alleviate this problem by permitting egg imports from the Netherlands, but the move raises an important question: Why was it not okay to import eggs from the Netherlands before?  Were Dutch eggs unsafe?  Are they safer now?

The USDA is supposed to allow egg imports from countries with equivalent safety standards.  It seems pretty clear that the way the system is currently being managed results in an overly protected U.S. egg market.  It’s more than a little silly to think that Canada and the United States are the only places with sufficient regulatory oversight to ensure the production of safe egg products.

In 2013, Sallie James and I wrote a paper explaining how regulatory protectionism is often disguised as safety standards.  If U.S. authorities are willing to allow certification to prevent price surges, have they been denying certification based on price control considerations?  That would be an abuse of sanitary and phytosanitary measures for protectionist purposes in violation of international trade rules. 

While it’s great that the USDA is working to find new sources of supply now, the bird flu outbreak wouldn’t have caused as much disruption for consumers if the U.S. market had been more open to begin with.

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.