Tag: Canada

Immigration Politics Is About Perceptions of Control, Not Immigration Policy

Many major political changes over the last few years are related to immigration. From the rise of Eurosceptic political parties in Germany, France, Italy, and elsewhere, to Brexit, and the U.S. election of Donald Trump, many political commentators are blaming these populist and nationalist political surges on unaddressed anti-immigration sentiment among voters. Although anti-immigration opinions certainly have a role to play in those political upsets, voter feelings of chaos and a lack of control over immigration are likely more important.

President Trump focused his campaign on the “build the wall” chant that capitalized on the perception of chaos at the southwest border where the worst from Mexico were supposedly crossing. His campaign platform called for cutting legal immigration, mandating universal E-Verify, and many of the other bells and whistles demanded by restrictionists over the years, but “reduce legal immigration” never became a chant because it doesn’t play on the perception of immigration chaos that fueled his political rise.     

The theory is that the perception of greater chaos and less control over immigration leads to opposition to immigration, even the legal variety, and greater political support for harsh repressive methods. Images of Syrians arriving by the boatload and illegal immigrants scaling border walls or walking through the desert spread the perception that immigration is out of control and that crackdowns are needed to regain control. Consequently, few people want to liberalize immigration when there’s a crisis.

As long as many people perceive chaos at the border then anti-immigration appeals will have an effect greater than the share of nativists in the electorate, as I wrote about here. The key idea here is “perception.” The number of people crossing the border illegally is down dramatically since the Bush years, the Border Patrol is much larger, homicide rates on the border are down, but those trends don’t seem to matter so long as the perception of chaos remains.

NAFTA 2.0: The Best Trade Agreement Ever Negotiated (Except for All of the Others)

The text of the new “United States-Mexico-Canada Agreement” was released last Sunday night, a few hours after I had spoken at an event in Birmingham, England about the virtues of “The Ideal U.S.-U.K. Free Trade Agreement.” To borrow from the late Sen. Lloyd Bentsen: I know the ideal free trade agreement; USCMA, you’re no ideal free trade agreement.

The ideal free trade agreement is one which accomplishes maximum market barrier reduction, enables maximum market integration, forecloses governments’ access to discriminatory protectionism, and obligates the parties to refrain from backsliding.

As explained in the paper:

The ideal free trade agreement provides for the elimination of tariffs as quickly as possible on as many goods as possible and to the lowest levels possible. It should limit the use of so-called trade remedy or trade defense measures. It should open all government procurement markets to goods and services providers from the other party. It should open all sectors of the economy to investment from businesses and individuals in the other party. It should open all services markets without exception to competition from providers of the other party. It should ensure that the rules that determine whether products and services are originating (meaning that they come from one or more of the agreement’s parties) are not so restrictive that they limit the scope for supply chain innovations…

…[T]he ideal FTA must also include rules governing e-commerce. Digital trade — data flows that are essential components in the provision of goods and services in the 21st century — must remain untaxed and protected from misuse and abuse. Rules that prohibit governments from imposing localization requirements or any particular data architectures that reduce the efficacy of digital services should be included, and obligations should be imposed on entities to ensure data privacy, consistent with the requirement that data flow as smoothly as possible.

When border barriers come down, the potentially protectionist aspects of regulation and regulatory regimes become more evident. Certainly, when businesses have to comply with two sets of regulations to sell in two different markets, it limits their capacity to realize economies of scale and reduces their capacity to pass on cost savings in the form of lower prices or reinvestment.

If those regulations are comparable when it comes to achieving the same social outcomes — consumer safety, product reliability, worker safety, environmental friendliness — there may be scope to require businesses to comply with only one set. A regulatory cooperation mechanism to promote mutual recognition would be a useful innovation, as a means to reducing business costs (provided no deep cultural aversion or science-based reason exists for considering one regulation better than the other and worth the greater cost).

Finally, the rules of the ideal FTA must be enforceable. What’s the point of a trade agreement if its terms are just suggestions? To make sure governments keep their promises, trade agreements should have a binding and enforceable dispute settlement mechanism, to ensure that the agreement is followed.

Here’s how the USMCA stacks up to the ideal free trade agreement, which:

  • Would provide for the elimination of tariffs as quickly as possible on as many goods as possible and to the lowest levels possible.

In USMCA, most goods trade will continue to be tariff-free (the NAFTA status quo) under the new agreement, and barriers to certain agricultural products will be reduced as well. Moreover, the value thresholds for importing goods without having to pay any duties have been raised in Mexico and Canada, which will benefit small businesses, disproportionately, as they tend to conduct a larger share of transactions online.

(Conclusion: Criterion is almost met).

  • Would limit the use of so-called trade remedy or trade defense measures.

Trade remedy laws give domestic industries recourse to trade restrictions when they can demonstrate injury caused by “dumped,” subsidized, or substantially increasing imports. These laws are prone to misuse and abuse and become loopholes through which the benefits of trade barrier reduction achieved in the agreement can be quickly rescinded.  

In USMCA, no restrictions on the use of antidumping, countervailing duty, or safeguard measures are made. Rather, the long arm of the Safeguard law extends further under the revised deal by making it more difficult for Canadian and Mexican exporters to be excused from prospective safeguard tariffs. Moreover, the failure of the United States agreeing to blanket exemptions for Canada and Mexico from prospective tariffs on imported automobiles under Section 232 of the Trade Expansion Act of 1962 and the failure of the United States to remove the existing Section 232 tariffs on Canadian and Mexican aluminum and steel—thereby enshrining the view of Canada and Mexico as threats to U.S. national security—is in extremely poor taste, violates the spirit of a trade agreement, and reflects an absence of understanding of the meaning of being a good trade partner. 

(Conclusion: Criterion worse than unmet.)

Steel Yourself as Trump Cuts Off Trade to Spite His Face

Various news outlets are reporting that, at midnight tonight, special U.S. tariffs on imports of steel and aluminum from Canada, Mexico, and the European Union will go into effect. This action stems (incongruously and capriciously) from two nearly yearlong investigations conducted by the U.S. Department of Commerce under Section 232 of the Trade Expansion Act of 1962, which found that imports of steel and aluminum “threaten to impair the national security” of the United States. This seldom used statute gives the president broad discretion both to define what constitutes a national security threat and to prescribe a course to mitigate the threat. On both counts, President Trump has abused that discretion.

In March, the president announced his intention to impose duties of 25 percent on steel imports and 10 percent on aluminum imports from all countries. But temporary exemptions were granted to some countries in an effort to extort commitments from them to do their part to reduce the U.S. trade deficit (by selling us less stuff and buying from us more stuff) or to agree to U.S. demands in ongoing trade negotiations (South Korea, Canada, Mexico). The Koreans succeeded by agreeing to limits on their steel exports and by upping the percentage of US-made automobiles that can be sold in Korea without meeting all of the local environmental standards. Ah, free trade…

Apparently, the Europeans, Canadians, and Mexicans haven’t bent sufficiently to Trump’s will, therefore those countries—those steadfast allies—constitute threats to U.S. national security and will no longer be exempt from the tariffs, which means that U.S. industries that rely on steel and aluminum (imported or domestic) will be hit with substantial taxes to mitigate that threat. Got it?

This announcement comes on the heels of one made earlier this week regarding the “trade war” with China, which is back on 10 days after Treasury Secretary Steve Mnuchin declared it to be “put on hold.” (I guess it was just a rain delay.) On June 15, the administration will publish the final list of Chinese products—about 1,300 products valued at about $50 billion—that will be hit with 25 percent duties. The Chinese government has published its own list of U.S. exports that will be hit with retaliatory duties in China.

So, as has been the case every day for the past 16+ months, the U.S. and global economies (even as they’ve strengthened) remain exposed to the whims of an unorthodox president who precariously steers policy from one extreme to the other, keeping us in a perpetual state of uncertainty. With the Europeans, Canadians, Mexicans, and Chinese all preparing to retaliate in response to these precipitous U.S. actions, at the stroke of midnight we may finally get the certainty of the beginning of a deleterious trade war.

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The Toronto “Van Incident” and Terrorism in Canada

Toronto Police Chief Mark Saunders said that there is no evidence that yesterday’s “van incident,” where Alek Minassian murdered 10 people and injured 15 others on a busy sidewalk with a van, was a terrorist attack.  To count as a terrorist attack, Minassian’s motivations must have been political, religious, or social in nature beyond simply a desire to terrorize or murder others.  Minassian’s motives are so far unclear with much speculation regarding his social awkwardness and possible anti-women opinions but, so far, little surrounding his political or religious opinions.  This could change as police and investigators uncover new facts.

Many in media and government, prompted by Minassian’s mass murder, are commenting on terrorism in Canada but with little context.  By using the methods employed in my recent terrorism risk analysis for the United States, I’ve found that terrorism is rare in Canada.  Assuming that investigators will eventually find that Minassian’s mass-murder is not terrorism, as they currently claim, then the annual chance of being murdered in a terrorist attack on Canadian soil over the last 25 years was about one in 60.4 million per year.  The annual chance of being injured in a terrorist attack on Canadian soil during that time was about one in 7.4 million per year.

Data and Methodology

This post examines 25 years of terrorism on Canadian soil from 1993 through April 23, 2018.  Fatalities and injuries in terrorist attacks are the most important measures of the cost of terrorism. The information sources are the Global Terrorism Database (GTD) at the University of Maryland, the RAND Corporation, and others.  I excluded three fatalities counted by the GTD as they were the terrorists themselves.  I further grouped the ideology of the deadly attackers into four broad ideologies: Islamists, Anti-Muslims, anti-government, and Unknown/Other. GTD descriptions of the attackers, news stories, and wikipedia were my guide in grouping the attacks by ideology. The grouping by ideology was easy as there were so few terrorist attacks in Canada from 1993 to the present.  The number of Canadian residents and non-terrorist murders in each year comes from Statistics Canada.

Terrorism Risk in Canada

Terrorists have murdered 14 people on Canadian soil from 1993 through April 23, 2018.  Islamists murdered 3 of the victims, an anti-government terrorist murdered 3, suspected terrorists of an unknown ideology murdered 2, and 6 were murdered by an anti-Muslim terrorist named Alexandre Bissonnette in a shooting at a Quebec mosque last year (Figure 1).  Of the 63 terrorist attacks in Canada during that time, according to a wide definition of the term “terrorist” in the GTD, only 7 resulted in a fatality.  In other words, 89 percent of terrorist attacks in Canada during the last 25 years killed nobody.

Figure 1

Murders in Canadian Terrorist Attacks by the Ideology of the Attacker, 1993-2018

 

Sources: Global Terrorism Database at the University of Maryland, RAND Corporation, ESRI, and author’s calculations.

Although most of the recorded terrorist attacks targetted small groups in Canada, like Muslims or the police, it is useful to get a sense of the relative danger by looking at the annual chance of being murdered by a terrorist inspired by each ideology.  The annual chance of being murdered by an Islamist in a terrorist attack was the same as that of being murdered by an anti-government terrorist: about one in 281.7 million per year.  The annual chance of being murdered by a terrorist with an unknown ideology was about one in 422.5 million per year.  The greatest risk, but also still tiny, was being murdered by Alexandre Bissonnette in his Mosque attack last year at one in 140.8 million per year over the 25 years. 

There were 114 injuries in terrorist attacks on Canadian soil from 1993 through April 23, 2018 (Table 1).  Terrorists with unknown or other ideologies caused almost 68 percent of those injuries.  Alexandre Bissonnette, the anti-Muslim terrorist, was personally responsible for 17 percent of all injuries in terrorist attacks during this time in Canada.  Islamist terrorists were responsible for about 11 percent of injuries while anti-abortion and anti-government terrorists were responsible for 4 and 2 percent of all injuries, respectively. 

Table 1

Injuries in Canadian Terrorist Attacks by the Ideology of the Attacker, 1993-2018

  Injuries Annual Chance of Being Injured Percent of All Injuries
Unknown/Other

77

1 in 10,973,614

67.5%

Anti-Muslim

19

1 in 44,472,016

16.7%

Islamist

12

1 in 70,414,026

10.5%

Anti-abortion

4

1 in 211,242,077

3.5%

Anti-government

2

1 in 422,484,154

1.8%

Total

114

1 in 7,412,003

100%

Sources: Global Terrorism Database at the University of Maryland, RAND Corporation, ESRI, and author’s calculations.

Comparison to Murder

Fatalities and injuries in terrorist attacks are rare so a relevant comparison to non-terrorist murder puts the terrorism danger into perspective.  There were about 14,807 murders in Canada from 1993 through April 23, 2018.  Because the number of murders is not reported for 2016-2018, I assumed that the number of murders for each of those years was the same as the number in 2015.  The annual chance of being murdered outside of a terrorist attack was about one in 57,000 per year from 1993 through 2018 – about 1,058 times greater than the chance of being killed in a terrorist attack.      

Conclusion

There is a small chance of being murdered in a terrorist attack in Canada over the last 25 years.  By comparison, the annual chance of being murdered in a terrorist attack in the United States over that time was about 25 times greater than in Canada.  Similarly, the annual chance of being murdered in a terrorist attack in Canada also appears to be lower than in Europe.  The chance of being murdered in a non-terrorist murder in Canada was over 1000 times greater.  Alek Minassian’s horrific mass murder does not appear to be a terrorist attack based on the information available at this time, but if it does turn out to be terrorism then it would be the deadliest attack on Canadian soil since December 6, 1989, when Marc Lepine murdered 14 and injured 14 others in an attack inspired by his anti-feminism.  The murder or death of innocent people is tragic no matter the circumstances and the perpetrator should be punished to the fullest extent of the law.  Regardless, Canadians can at least take some comfort in the fact that the chance of being murdered in a terrorist attack in Canada is small in absolute terms, relative to the residents of other developed nations, and compared to the chance of being murdered in a non-terrorist homicide.     

 

 

 

 

Happy Ending for Bombardier

In its final ruling issued just minutes ago, the U.S. International Trade Commission determined that the U.S. industry (Boeing) was NOT threatened with material injury by reason of dumped or subsidized imports of 100- to 150-Seat Large Civil Aircraft from Canada (Bombardier). This is big news in the trade world for a variety of reasons.

Typically, domestic industries seeking relief under these statutes (the U.S. Antidumping and Countervailing Duty laws) are successful because the evidentiary thresholds are so low. The antidumping law was changed in 2015 to lower the thresholds even further, which helps explain the near record number of trade remedy case filings in 2017.  Boeing seemed to be testing how low that threshold was. As I wrote a few months ago, “The language in the statute would seem to preclude an affirmative threat of material injury finding if there haven’t been any import sales.” 

I’m glad the ITC seems to have agreed.  It’s important that a case as meritless as Boeing’s, which was predicated on the notion that the domestic industry was “threatened” with material injury by reason of sales by Bombardier to Delta that haven’t even happened, of airplanes that haven’t even been built, which are of a class of aircraft that Boeing doesn’t even produce, was found wanting by the ITC.  Seems like common sense, but the AD/CVD statutes accord very little room for common sense to prevail. It’s good to see some a crucial check on the system working.

But there’s still a lot of work to do to rein in the routine abuses and to make these laws more compatible with economic reality. 

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Washington Post Columnist Needs to Get Her Opioid Facts Right

In a December 28, 2017 column for the Washington Post entitled, “Opioid Abuse in the US Is So Bad It’s Lowering Life Expectancy. Why Hasn’t the Epidemic Hit Other Countries?,” Amanda Erickson succumbs to the false narrative that misdiagnoses the opioid overdose crisis as being primarily a manifestation of doctors over-prescribing opioids, goaded on by greedy, unethical pharmaceutical companies. The National Survey on Drug Use and Health revealed less than 25% of people using opioids for non-medical reasons get them through a prescription. A study reported in the Journal of the American Medical Association found just 13% of overdose victims had chronic pain conditions. Multiple Cochrane analyses show a true addiction (not just dependency) rate of roughly 1% in chronic pain patients on long-term opioids. Yet despite the 41% reduction in the prescription of high-dose opioids since 2010, the overdose rate continues to climb, and for the past few years heroin and fentanyl have been the major causes of death, as death from prescription opioids has stabilized or receded.

In actual fact, the rise in drug abuse and overdose is multifactorial, with socioeconomic and sociocultural components. This helps explain the Washington University study reporting 33% of heroin addicts entering rehab in 2015 started with heroin, as opposed to 8.7% in 2005.

It also helps explain why, contrary to Ms. Erickson’s reporting, opioid overdoses have reached crisis levels in Europe, despite a European medical culture that historically has been stingy with pain medicines, and has encouraged stoicism from patients. And the overdose crisis in Canada, ranked second in the world for per capita opioid use, has alarmed public health authorities there. But at least the Europeans and Canadians have the good sense to emphasize harm reduction measures to address the crisis, such as safe injection rooms and medication-assisted treatment, rather than focusing on inhibiting doctors from helping their patients in pain.

 

 

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Boeing-Bombardier Round II: Blame Trade Remedy Laws, Not Trump

The other shoe is about to drop in the Boeing-Bombardier trade row.  But first, some background…

Last week, smack dab in the middle of the third round of the NAFTA renegotiations taking place in Ottawa, the U.S. Department of Commerce issued a preliminary determination in a countervailing duty case brought by the Boeing Company in May. The Countervailing Duty Law provides “relief” (usually in the form of import duties) to domestic industries that can demonstrate that they are “materially injured” or threatened with material injury by reason of sales of subsidized imports.  

In early summer, the U.S. International Trade Commission ruled, preliminarily, that there was a reasonable indication that U.S. manufacturers of large civil aircraft (i.e., Boeing) may be threatened with material injury by reason of prospective sales of aircraft from Bombardier to Delta Airlines, which may be offered at artificially low prices made possible by various government subsidies to the Canadian producer.

Subsequently, Commerce’s investigation turned up 16 different subsidy programs—equity infusions, launch aid, “provision of land for less than adequate remuneration,” various tax credits and incentives, and federal and provincial grants—constituting specific benefits to Bombardier by the governments of Canada, the United Kingdom, and the province of Quebec, which amounted to an aggregate subsidy rate of 219.6 percent ad valorem. 

By historical standards, that is a very large number. If finalized at that rate, the duty would put the U.S. market out of reach to Bombardier and—of greater significance to the U.S. economy—put Bombardier airplanes out of reach to U.S. carriers, reinforcing Boeing’s monopoly power, and ensuring higher costs of air travel and air shipping in perpetuity.

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