Trade Promotion Authority and the TiSA’s Immigration “Smoking Gun”

A widespread criticism of Trade Promotion Authority (TPA), which remains in limbo after a surprising legislative mess last Friday, has come from conservative skeptics who believe that TPA will permit President Obama to change US immigration laws unilaterally.  Originally a fringe argument, it gained momentum earlier this month when WikiLeaks published the confidential draft negotiating texts on the Trade in Services Agreement (TiSA), which is currently under negotiation.  Among those texts was an Annex on “Movement of Natural Persons” – one of the standard “modes” of supply (Mode 4) negotiated in trade agreements that cover services.  The leaked annex, TPA critics claimed, was “smoking gun” proof that President Obama was, in fact, secretly negotiating with foreign governments to liberalize US immigration restrictions without congressional input, and that TPA would grant him the power to lift such restrictions in the very near future.  The facts surrounding TPA, TiSA and global services trade, however, effectively rebut such claims.

BACKGROUND

Before getting to these facts, it’s important to understand just what TiSA is.  The TiSA is a plurilateral free trade agreement on services being negotiated among 27 participants (including the US and EU).  TiSA began in 2012 but only picked up momentum over the last year or so, as the World Trade Organization’s (WTO) Doha Round, which also included services, faded.

If signed and implemented, TiSA would likely represent a major economic win for the United States, given that (i) the vast majority of the US economy is services; (ii) the United States has a large comparative advantage in global services; and (iii) unlike goods, global trade in services remains relatively restricted.  TiSA’s basic goals include that each participant offer to all other parties, at a minimum, the best commitments that it has made in preferential FTAs, and, importantly, the eventual “multilateralization” of the agreement into the WTO such that it is open for accession by all WTO Members.  As such, the architecture and principles of the TiSA reflect those of WTO’s General Agreement on Trade in Services (GATS), which was finalized in 1995 and covers all WTO Members including the United States.  Any final, multilateralized TiSA deal would be a very good thing for those who support free markets and, of course, the US global economies.

Despite these benefits, the leaked TiSA has caused an uproar among skeptical (and in many cases, anti-immigration) conservatives.  (It’s also upset anti-trade liberals who see the deal as “global deregulation,” but that’s a canard for another time.)  As mentioned, however, there are a lot facts that undermine the argument that the TiSA represents an immigration “smoking gun.”

HISTORICAL LIMITATIONS

The most basic reason for skepticism is the history of Mode 4 negotiations.  First, the TiSA is far from the first international trade agreement to address Mode 4, which is one of the four basic “Modes of Supply” covered by the GATS:

  • Mode 1: Cross border trade (delivery of a service from the territory of one country into the territory of other country);
  • Mode 2: Consumption abroad (supply of a service of one country to the service consumer of any other country);
  • Mode 3: Commercial presence (services provided by a service supplier of one country in the territory of any other country); and
  • Mode 4: Presence of natural persons (services provided by a service supplier of one country through the temporary presence of natural persons in the territory of any other country).

The leaked TiSA Annex – despite being unfinished and heavily bracketed – is quite similar to the original GATS Annex completed over two decades ago.  These facts belie the idea that the TiSA represents some sort of pathbreaking global agreement on immigration – these issues have been with us for decades.

Second, US involvement on Mode 4 has been relatively minimal.  Despite providing major economic benefits, Mode 4 liberalization has been controversial in the United States and, as a result, no US FTA negotiated after those with Chile and Singapore includes provisions on Mode 4 (See: Congressional Research Service).  In a letter to Senate Finance Chair Orrin Hatch, US Trade Representative Froman confirmed that “the United States is not negotiating and will not agree to anything in TPP [Trans-Pacific Partnership] that would require any modification to U.S. immigration law or policy or any changes to the US visa system.”  Also, past Mode 4 commitments have been very limited.  For example, in the WTO’s Uruguay Round, “commitments scheduled under Mode 4 were largely limited to two categories: intra-company transferees regarded as ‘essential personnel’, such as managers and technical staff linked with a commercial presence in the host country; and business visitors, i.e. short-term visitors not in general gainfully employed in the host country.”  Hardly the massive immigration overhaul that some TPA critics now claim.

Third, the leaked TiSA text was not nearly as big a revelation as the TPA opponents claim: public readouts of the TiSA negotiations have long made clear that Mode 4 was under discussion.  The leak simply added details to basic concepts that were already easily Googleable.  Hysteria nevertheless has ensued, to the surprise of many who have actually been paying attention to these things for the last few years.

Fourth, even though many trade agreements to which the US is a party (e.g., the GATS) contain provisions on Mode 4, none of these agreements – even those with actual US commitments – has (i) led to a significant, unregulated increase in legal immigration (even temporary); (ii) provided US presidents, including President Obama, with a “backdoor” means of liberalizing US immigration restrictions without the full consent of Congress; or (iii) forced the US government, against its will, to change its immigration laws.  No US trading partner has used these Mode 4 provisions (e.g., through dispute settlement) to push the United States to further open its labor market – India did once yell about a proposed doubling of certain US visa fees, but never actually did anything about it.  Anyway, even if a trading partner did try to challenge the United States under Mode 4, global services agreements contain broad exceptions – including for national security (e.g., GATS Art. XIV bis) – that permit the US to derogate from these commitments (e.g., by banning temporary workers from one trading partner) for a host of reasons.  And finally, as noted below, the United States could simply refuse to comply if none of the exceptions applied.  Because the TiSA is based on, and intended to be folded into, the GATS, it will unquestionably contain similar rules and exceptions.

US LAW LIMITATIONS

US law provides other reasons for skepticism of the idea that the leaked TiSA text will cause a significant and near-term erosion of US immigration law.  As discussed in my recent analysis of TPA and the TPP, the law provides significant checks on the ability of a US president or a US trading partner to force changes to US law (including on immigration) without the full consent of Congress.  Two of these checks bear repeating:

  • First, because TiSA is a US trade agreement, it must be approved by Congress before any of its provisions may be implemented.  As such, even assuming TiSA included actual US commitments on Mode 4 (and this is far from clear), and even assuming the TiSA were completed any time soon (and this is far from certain), those provisions could not affect US immigration policy until approved by Congress and passed into law. 
  • Second, even assuming TiSA contained US commitments on Mode 4, and that Congress agreed to implement the TiSA with these commitments (again, highly unlikely), no foreign country could compel the United States to adhere to these commitments.  The United States would retain absolute authority to refuse to implement the commitments, and future US presidents or Congresses could change US law. There is nothing a TiSA party could do the United States for such a violation, other than to litigate the claim at the WTO and, possibly, eliminate certain benefits for US services exports under the TiSA.

It’s also worth reiterating that TPA would subject any agreement, including the TiSA, to ample transparency requirements – including publication long before Congress voted on the deal.  Thus, the US public would have months, if not longer, to review any trade agreement and register objections prior to any congressional vote.  As the recent furor over President Obama’s executive actions on immigration makes clear, the public objections to a global agreement broadly liberalizing US immigration law would be substantial (to put it mildly!).

Finally, according to reports, Rep. Paul Ryan has included new language in TPA that would ensure that would remove an FTA from “fast track” consideration if it contemplates changes to US immigration law.

OTHER LIMITATIONS

Outside of US law and the checks on presidential power under TPA, several other issues undermine the idea of President Obama using TiSA to liberalize US immigration restrictions.  Thus, even if you don’t trust the US congress to act as a check on President Obama’s actions under the TiSA, there are still plenty of other reasons to doubt the “smoking gun.”

Timing.  First, there is almost no chance that TiSA will be completed while President Obama is in office.  The most ambitious timeline for completing the TiSA is December 2016.  This deadline, however, is very likely unrealistic.  (FTA negotiations are notorious for setting, and missing, deadlines for completion; TPP, for example, was originally supposed to be completed in 2012.)  Instead, it is far more likely that completion of the TiSA will fall to the next US President, because it will require:

  • Completion of the basic agreement, which includes 17 texts, none of which is reportedly completed. (Hence all the brackets in the leaked texts.)
  • Agreement among all members on all other members’ services offers, which are detailed “schedules” of specific, line-by-line commitments (or lack thereof) in listed services sectors across all 4 modes of supply.  These schedules are highly technical and involve intensive, time-consuming negotiations, offers and counter-offers.
  • Agreement among members as to membership and “multilateralization” of the agreement – i.e., folding it into the WTO GATS structure and extending TiSA commitments to all WTO Members on a “most favored nation” (MFN) basis.  The big problem here is that China wants to participate in the TiSA, but adding China and other important developing countries would greatly delay the process.  On the other hand, multilateralizing the TiSA would be politically difficult, if not impossible, if important trading countries like China remained outside as “free riders.”  It’s thus accepted that there must be a “critical mass” of TiSA participants, including large developing countries like China, before the agreement could be multilateralized.  This takes time.  Lots of it.

Text.  Second, the actual text of the leaked TiSA Annex on Mode 4 plainly establishes other major limitations on the agreement’s near-term impact on US immigration policy.  These include—

  • The text contains no actual commitments from the USA or any other TiSA party to liberalize trade in services under Mode 4.  The annex is merely the basic disciplines (transparency, non-discrimination, etc.) that would govern any agreement among TiSA parties on Mode 4 and any eventual specific liberalization commitments by TiSA members in their service schedules.  Parties to services agreements like the GATS and TiSA can, and often do, provide no such commitments in sensitive sectors/modes.  There is nothing here to suggest that the United States has made any such commitments, and, in fact, there are very few US proposals at all, even on the basic Annex disciplines.
  • It’s unfinished.  The vast majority of the Annex text (and all other leaked texts) is bracketed, thus indicating no agreement among the TiSA parties on those provisions.  Indeed, many of the bracketed proposals are explicitly opposed by other TiSA parties.  Thus, it’s literally impossible to determine from the Annex what its final text will look like.  And, as already noted, it’s far from clear when final agreement will be achieved.
  • Finished/agreed provisions establish there is no requirement to liberalize immigration.  Any such liberalization would be at a party’s discretion as set forth in its Schedule (which we haven’t seen).  The most obvious provisions are on the Annex’s first page:
    • Article 1, Paragraph 2 states: “The Agreement shall not apply to measures affecting natural persons seeking access to the employment market of a Party, nor shall it apply to measures regarding citizenship, residence or employment on a permanent basis.”  Some countries have proposed (bracketed) language in para. 3 on specific commitments (liberalization) on these measures; the United States is not one of them.
    • Article 1, Paragraph 4 states: “The Agreement shall not prevent a Party from applying measures to regulate the entry of natural persons into, or their temporary stay in, its territory, including those measures necessary to protect the integrity of, and to ensure the orderly movement of natural persons across, its borders, provided that such measures are not applied in such a manner as to nullify or impair the benefits accruing to any Party under [the Agreement].”
  • Small scope.  Finally, other provisions make clear that any Mode 4 disciplines would relate to only temporary workers (e.g., one year or less) – they would not apply to residency, naturalization, citizenship or border security.

In conclusion, it’s impossible to change the minds of TPA skeptics who are convinced that President Obama and the GOP-controlled Congress are secretly working together, against the will of the American people and contrary to decades of precedent, to change US immigration or other laws through TPA and the trade agreements it’s intended to cover.  However, the above facts, history and law hopefully will help everyone else feel more confident that the leaked TiSA Annex, empowered by TPA, is not a “smoking gun” that proves the US government’s intention to substantially change and liberalize domestic immigration law.  I, and many others here at Cato, would welcome a more modern and open US immigration system (done in an orderly and lawful fashion, of course), but there’s simply no credible evidence that it’s happening here.

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