Tag: free trade agreements

Free Trade Agreements Don’t Increase the Number of Asylum Seekers and Refugees

Alexandria Ocasio-Cortez, the recent winner of a Democratic primary for Congress in New York, argued that free-trade agreements (FTAs) have caused the number of refugees and asylum seekers to the United States to grow.  This is a somewhat common claim among some critics of trade or FTAs in particular. 

To test this claim, we gathered a list of all the FTAs that the United States has signed and how many asylum seekers and refugees they sent to the United States since the year 2000.  We combined all asylum seekers, affirmative and defensive, that were counted by the United Nation Human Rights Commission.  Some asylum seekers from these countries are double or triple counted due to the oddities of the asylum system.  We then added refugee admissions from the Department of Homeland Security. 

Next, we ran several regressions to see the relationship between having an FTA with the United States and the number of asylum seekers, refugees, or those two categories of humanitarian visas combined who arrive in the United States from those countries.  The first regression was a difference-in-differences with two-way fixed effects.  The second was a difference-in-differences regression with linear time trends.  The third was a triple difference-in-differences with two-way fixed effects that also included asylum seekers, refugees, and humanitarian immigrants from Latin America specifically.  To ensure proper statistical inference, we computed robust standard errors clustered at the country level to correct for country-level autocorrelation in these variables.

Our results are that there is no statistically significant change in the number of asylum seekers or refugees that countries send to the United States after they sign an FTA in any of the above regressions.  We find very low within R-squares for these models that suggest that the presence of FTAs has very little predictive power for within-country variability for the number of asylum seekers and refugees.  In other words, FTAs don’t explain the flow of asylum seekers and refugees, and other variables that we did not include in our model do.       

Figure 1 shows the number of asylum seekers from countries that have signed an FTA since 2000 in the five years before and after the agreement going into effect.  Each line represents a different country.  There is no relationship between signing an FTA and the number of asylum seekers.

Figure 1

Asylum Seekers within Five Years of Signing an FTA per Country

Source: United Nation Human Rights Commission

The refugee system is the other half of the humanitarian immigration system and it shows no change in the number of asylum seekers before and after the signing of FTAs (Figure 2).  It’s worth noting that nations that send refugees to the United States send very few refugees and almost all of those sent in Figure 2 are Colombian.

Figure 2

Refugees within Five Years of Signing an FTA per Country

 

Source: Department of Homeland Security.

There are many potential explanations for changes in the number of asylum seekers and refugees coming to the United States.  They range from changing conditions in other countries to alterations in American law or policy and everything in between—but let us set aside the notion that FTAs somehow force people to flee their home countries. 

Yawn, Another Round of “Free Trade” Talks

On Sunday, I went to the “stakeholder” part of the ongoing trade negotiations for the Trans Pacific Partnership. This round of the talks was held at the Lansdowne resort in Leesburg. The “stakeholder” events allow the public—in other words, people without direct access to the actual policy-makers—to have its voice heard.

Back in the late 1990s, trade negotiations caused quite an uproar, with some violent protests in Seattle being the highlight. Things are much calmer these days. I was told there was a protest on Sunday, but I didn’t notice it (and it didn’t disturb anyone’s attempts to catch up on the NFL games going on).

Why has the furor over international trade rules died down so much?

One reason may be that this is the 14th round of talks for this particular agreement, with no end in sight. There may be some protest fatigue setting in, and it may be getting difficult to convince people this is worth worrying about.

Another reason may be that we already have trade agreements with many of the participants in these talks. To some extent, it just consolidates existing agreements into a strange grouping of various countries that touch the Pacific Ocean. Thus, there is nothing radically new here.

Despite the low profile of trade protests these days, there are still people who are upset with the policies the United States is pursuing in these agreements. For the most part, however, it is not the “free trade” parts that are controversial. It is the United States’ quest for ever stronger intellectual property protections, as well as the special provisions that allow foreign companies to sue governments in international tribunals for vaguely defined due process-type concerns, that have people upset.

All in all, it is easy to come away from the experience thinking, what are we doing here and what happened to free trade? This agreement may never be concluded; it covers mostly countries with whom we already have trade agreements; and so-called “trade” agreements are becoming less and less about free trade. At a certain point, you start to think that it may be time to scrap the existing approach and try something new.

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Finally, a Vote on the Three Trade Agreements

Almost a thousand days into his term, President Obama has at last submitted the trade agreements with South Korea, Colombia, and Panama for an up or down vote in Congress.

All three agreements appear to have majority support in both the House and the Senate. Organized labor is putting up its usual anti-free-trade fight against all three, with AFL-CIO boss Richard Trumka coming out swinging in a Politico op-ed this week. He makes the standard union argument that Colombia is an unworthy free-trade partner because of ongoing violence against union members in that country.

In a Free Trade Bulletin earlier this year, my Cato colleague Juan Carlos Hidalgo and I examined the commercial benefits of the agreement with Colombia as well as the hollowness of the union charge. In the past decade, Colombia has made tremendous progress against violence in general, and especially violence aimed at union members. In fact, as we write in the FTB:

The statistics on the number of killings against union members vary depending on the source, with the figure from the government’s Ministry of Social Protection being lower than that of the National Union School (ENS for its acronym in Spanish), a Colombian nongovernmental organization affiliated with the labor movement. However, both sources show a steep decline in the number of killings since 2001. Moreover, when compared with the total number of homicides in the country, killings of union members clearly have dropped at a faster rate than those of the general population (see Figure 1).

Critics of the FTA fail to recognize that violent crime affects all levels of Colombian society, not only trade unions. What is more, the statistics show that union members enjoy more security than the population at large.

Looking at the homicide rate as defined by the number of murders per 100,000 inhabitants, the rate for the total population in 2010 was 33.9 per 100,000, whereas the rate for union killings was 5.3 per 100,000 unionists that same year (using the statistics of the ENS). That means that the homicide rate for the overall population is 6 times higher than that for union members.

Having just returned from a speaking trip last week to Medellín, Colombia, I can vouch that, after a difficult period of battling Marxist guerrillas and drug cartels, Colombia has once again become a normal country with a growing economy. Medellín is a bustling, business-oriented city with the usual challenges of traffic congestion. The students I spoke with at EAFIT University seemed eager for closer ties with the United States, and they do not understand why it has taken almost five years since the signing of the agreement for Congress to schedule a vote on it.

As I explained in an interview with the city’s leading newspaper (conducted in English, but translated here in Spanish), the politicians in Washington have run out of excuses for not establishing free trade between our two countries.

[Our Cato colleague Doug Bandow made the case for a trade agreement with South Korea in a study we released last year.]

Ron Paul Talks Sense on Trade

Presidential Candidate Ron Paul has a decidedly mixed record on trade policy. He often votes against trade agreements because he sees them as “managed trade” and  an interference with true free trade. Well, ok, but that’ s like voting against income tax cuts because you think the IRS shouldn’t exist. I get the point, but c’mon…

In any event, he was the only participant in Thursday night’s debate between the Republican presidential candidates who spoke about trade with any sense at all. As Inside US Trade [subscription required] points out, trade policy was not a prominent theme of the debate, but that didn’t stop Mitt Romney from (again) spouting nonsense about balanced trade:

Former Massachusetts governor Mitt Romney late last week took a swipe at the trade policies of the Obama administration in a debate of the Republican presidential candidates by implying they are unbalanced in favor of other nations.

As part of a seven-point list of actions to turn around the economy, Romney said the U.S. should “have trade policies that work for us, not just for our opponents,” as the third point…

(I’ll just interject here to say that by “opponents” I believe Mr Romney is referring to our trade partners. You know, the folks who sell us stuff and buy stuff from us. But I digress…)

Trade was only raised one other time during the debate. Prompted by a moderator, Rep. Ron Paul (R-TX) defended his earlier criticism of Obama’s sanctions against Iran for its nuclear program.

Saying it was “natural” that Iran would pursue nuclear weapons—given that India, Pakistan, China, and Israel also possess them—Paul attacked the sanctions policy as steering the U.S. toward conflict.

Countries that you put sanctions on, you are more likely to fight them,” he said. “I say a policy of peace is free trade. Stay out of their internal business.”

Paul also suggested it was time for the U.S. to engage in a trading relationship with Cuba and “stop fighting these wars that are about 30 or 40 years old,” an apparent reference to the Cold War. [emphasis added]

(My friend Scott Lincicome has more on the economic illiteracy flowing from the debate here)

Mr Paul is right on this one. He and I no doubt disagree on a few issues, and on trade I have more tolerance than he does for multilateral (and, albeit to a lesser extent, bilateral and regional) trade agreements as the only likely avenues for trade liberalization in the foreseeable future. But the link between trade and peace is an important one, and often overlooked.

Speaking of Ron Paul, the following clip shows Jon Stewart at his devastating best, calling out the mainstream media—and particularly Fox News—for ignoring and/or outright mocking Ron Paul’s candidacy. Watch to the very end, you won’t regret it. (HT: RadleyBalko)

The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
Indecision 2012 - Corn Polled Edition - Ron Paul & the Top Tier
www.thedailyshow.com
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Trade Agreements Promote U.S. Manufacturing Exports

Do trade agreements promote trade? The answer appears to be yes. In a new Cato Free Trade Bulletin released today, I examine the record of trade agreements the United States has signed with 14 other nations during the past decade.

The impact of those agreements on U.S. trade is a timely subject because Congress may soon consider pending free-trade agreements (FTAs) with South Korea, Colombia, and Panama. Opponents of such deals often argue that they open the U.S. economy to unfair competition from low-wage countries, displacing U.S. manufacturing. Advocates argue the agreements do open the U.S. market further to imports, but they open markets abroad even wider for U.S. exports.

Based on actual post-agreement trade flows, I found that both total imports and exports with the 14 countries grew faster than overall U.S. trade since each agreement went into effect. For politicians obsessed with manufacturing exports, the study should be especially encouraging. Here is a key finding:

Politically sensitive manufacturing trade with the 14 FTA partners has expanded more rapidly than overall U.S. manufacturing trade, especially on the export side. U.S. manufacturing exports to the recent FTA partners were 10.5 percent higher in 2010 compared to our overall export growth since each agreement was signed. That represents an additional $8 billion in manufacturing exports.

I’ll be discussing the three pending trade agreements alongside William Lane of Caterpillar Inc. at a Cato Hill Briefing on Wednesday of this week. Along with the new study on the past FTAs, I’ll be talking about our recent studies on the Columbia and Korea agreements.

Have Americans Turned against Free Trade?

A new Wall Street Journal/NBC News poll would seem to say yes. In a story over the weekend under the headline, “Americans Sour on Trade,” the Journal reports:

more than half of those surveyed, 53%, said free-trade agreements have hurt the U.S. That is up from 46% three years ago and 32% in 1999.

One plausible explanation for the sour mood toward trade is the business cycle. 1999 was near the peak of the long boom of the 1990s, when Americans were feeling good about just about everything. Even three years ago, the stock market was at a record high and unemployment was below 5 percent. In this light, trade is another casualty of the lingering recession, not a cause as many trade critics want to argue.

“Outsourcing” was a major source of anxiety in the poll. Americans overwhelming believe outsourcing of production and manufacturing work to other countries is a reason why the economy is struggling and new jobs are not being created. This collective attitude is more reflective of the complaints people hear in the media than of any hard reality on the ground.

As I document in my 2009 Cato book, Mad about Trade, only about 3 percent of job displacement in the United States can be blamed on trade. (See pp. 31-33.) For every one person in the unemployment line because of imports or outsourcing, there are 30 people who have been  displaced from their jobs by technology, domestic competition, changing consumer tastes, or the general business cycle.

Despite the popular worries, outsourcing is more likely to attract business to the United States than send it overseas. Year after year, more direct manufacturing investment flows into the United States than out to other countries. Year after year, Americans sell more “business and professional services” to customers abroad than they buy.

The facts are on the side of expanding the freedom of Americans to trade and invest with people in other countries. What is lacking are political leaders in Washington who will stand up for the broader national interest of our country against the special interests who are exploiting anxiety about the economy to trash trade.

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Ron Paul, the Chamber of Commerce, and Economic Freedom

Tim Carney has a blog post at the Examiner that’s worth quoting in full:

The U.S. Chamber of Commerce has issued its 2009 congressional scorecard, and once again, Rep. Ron Paul, R-Tex. — certainly one of the two most free-market politicians in Washington — gets the lowest score of any Republican.

Paul was one of a handful of GOP lawmakers not to win the Chamber’s “Spirit of Enterprise Award.” He scored only a 67%, bucking the Chamber on five votes, including:

  • Paul opposed the “Solar Technology Roadmap Act,” which boosted subsidies for unprofitable solar energy technology.
  • Paul opposed the “Travel Promotion Act,” which subsidizes the tourism industry with a new fee on international visitors.
  • Paul opposed the largest spending bill in history, Obama’s $787 billion stimulus bill.

(Rep John Duncan, R-Tenn., tied Ron Paul with 67%. John McHugh, R-N.Y., scored a 40%, but he missed most of the year because he went off to the Obama administration.)

I wrote about this phenomenon last year, when the divergence was even greater between the Chamber’s agenda and the free-market agenda:

Similarly, Texas libertarian GOPer Rep. Ron Paul—the most steadfast congressional opponent of regulation, taxation, and any sort of government intervention in business—scored lower than 90% of Democrats last year on the Chamber’s scorecard.

Sen. Jim DeMint, R-S.C., had the most conservative voting record in 2008 according to the American Conservative Union (ACU), and was a “taxpayer hero” according to the National Taxpayer’s Union (NTU), but the U.S. Chamber of Commerce says his 2008 record was less pro-business than Barack Obama, Joe Biden, and Hillary Clinton.
This year’s picture was less glaring, but it’s still more evidence that “pro-business” is not the same as “pro-freedom.” The U.S. Chamber is the former. Ron Paul, and the libertarian position, is the latter.

I suspect that on issues such as free trade agreements and immigration reform, I might be closer to the Chamber’s position than to Ron Paul’s. But to suggest that Paul is wrong to vote against business subsidies – or that DeMint was wrong to vote against Bush’s 2008 stimulus package and the $700 billion TARP bailout – certainly does illustrate how much difference there can be between “pro-business” and “pro-market.” Instead of “Spirit of Enterprise,” the Chamber should call these the “Spirit of Subsidy Awards.”