Topic: Trade and Immigration

Cuba: Global Free Trade Champion?

I would like to second Simon Lester’s ambivalent endorsement of the trade agreement reached by WTO members in Bali last week.  Despite cheers from governments and embarrassingly unrealistic claims of economic value, the new WTO agreement on trade facilitation is hardly something for free traders to get super-excited about. 

There was some excitement, however,  when a bit of last-minute diplomatic drama at the talks threatened to derail everything.  Cuba, it turns out, had some genuine demands for actual trade liberalization and indecorously refused to be ignored.  As reported by Inside U.S Trade [$]:

Cuba and three other Latin American countries – Bolivia, Venezuela and Nicaragua – had withheld consensus from the so-called Bali package consisting of a trade facilitation agreement as well as agriculture and development components.

Specifically, Cuba had refused to endorse the package until its demands were met for a provision in the trade facilitation deal that would prevent countries from applying discriminatory measures to goods in transit. This was aimed at counteracting a part of the U.S. trade embargo that prevents ships that engage in trade in Cuban ports from unloading cargo in the U.S. for 180 days thereafter.

After Cuba’s demands on trade facilitation came to the fore as the last outstanding issue on the evening of Dec. 6, WTO Director-General Roberto Azevedo held consultations throughout the night with the U.S. and Cuban delegations until 6 am. At that point, the two sides agreed to compromise language to address Cuba’s demands, according to an informed source.

The compromise language consists of one sentence in the Bali ministerial declaration that appears immediately after a sentence adopting the trade facilitation deal. It states: “In this regard, we affirm that the non-discrimination principle in Article V of the [General Agreement on Tariffs and Trade] 1994 remains valid.”

This “compromise” means that the U.S. takes on no new obligations, and the embargo remains as is.  Cuba wasn’t looking for an end to the embargo with its demands, merely recognition that this one small component of the embargo violates the brand new, U.S.-approved WTO rules. 

It’s difficult to imagine, however, that the process could have worked out any differently.  If there’s one thing that’s clear about the new WTO package at this point, it’s that the deal will not have any meaningful impact on U.S. trade policy.

Something is amiss when the global trading system’s achievements depend on the United States convincing Cuba and Venezuela to stop demanding freer trade.

Trade Talks Are Heating Up

There’s suddenly a lot going on in the trade negotiating world.  Unfortunately, there is not as much free trade involved as one might hope or expect.

Over the weekend, the members of the WTO reached an agreement on several issues, the main one being “trade facilitation”.  This was touted as a big deal because it is the first time the WTO agreed on just about anything in its almost 20 years of existence.  In addition, supporters talked up its potential “$1 trillion” increase in global trade. 

It’s important to understand, however, that this agreement is not an agreement under which all countries will lower tariffs or barriers to trade in services, which is the traditional kind of trade agreement.  My colleague Dan Ikenson wrote about trade facilitation here. Reading through a draft of the agreement, it seems to cover two things.  First, it tries to achieve “good governance” in customs procedures, such as through requiring an appeals process for customs decisions.  And second, it requires governments to speed up the import process where possible, for example by letting frequent traders use expedited procedures. These are all good things, but it is not the same as using trade agreements to rein in protectionism. Also of note is how it accomplishes these things.  Basically, it will be rich country governments paying, through money and training, for improvements to customs procedures in developing countries. Is that the best way to accomplish all this?  I’m not really sure, to be honest, but that’s what they are doing.

Next up is the Trans Pacific Partnership (TPP), an agreement being negotiated by 12 countries in the Pacific region.  Those talks have started up again, with a goal of finishing by the end of the year. (Probably won’t happen, but it’s good to have goals, I guess).  What’s fascinating about these talks is how many non-free trade issues are involved.  Someone just leaked a summary of where the parties stand on all the issues.  What jumps out at me in this document is that about half the issues deal with environmental law or intellectual property!  Not that there is no free trade at all in there, of course.  There is the traditional tariff lowering as well.  But there are so many other things to be ambivalent about.

And finally, next week the Europeans will be in town for another round of negotiations on the Transatlantic Trade and Investment Partnership (TTIP).  These talks are in a much earlier stage than the others.  The big issue being talked about here is what to do about “regulatory trade barriers.” Some on the left fear that this will mean lowering everybody’s regulation to a least common denominator.  Some conservatives and libertarians worry that it will mean more regulation, as regulations are harmonized around higher standards.  In practice, I think it is unlikely to mean either of these things.  I don’t see much of a role for international law, through trade agreements, to make substantive regulatory policy, and I would be surprised if the TTIP does much of this.  But where I think international agreements could help is pushing countries to remove the impact of divergent regulations.  For example, if the U.S. and EU both regulate for auto safety, but do it differently, why can’t both sides sell their cars in the other market as is, based on the assumption that the regulations are functionally equivalent?

So that’s a basic round-up.  There are some modest successes, and some issues causing distractions from actual free trade, but things are moving forward, for better or worse.  (How’s that for a not-so-ringing endorsement?)

E-Verify Can Now “Lock” Social Security Numbers





Immigrant Attitudes toward Libertarian Values

A recent paper by psychology Professor Hal Pashler of UCSD analyzes General Social Survey (GSS) data and finds that immigrants are less libertarian than the U.S.-born.  This is an interesting paper and professor Pashler notes the many limitations of his findings – mainly that the GSS doesn’t ask many questions that are good barometers of libertarian ideology.  But that hasn’t stopped non-libertarian immigration opponents from using the paper’s conclusion to try and convince libertarians to oppose immigration reform: “With increasing proportions of the US population being foreign-born, low support for libertarian values by foreign-born residents means that the political prospects of libertarian values in the US are likely to diminish over time.” 



Second, under free immigration the freedom of current Americans to sell to, hire, and otherwise contract with foreigners would increase substantially.

Third, the ideological differences between the U.S.-born and immigrants are relatively small for some of the questions Pashler analyzes.  For instance, the GSS asked whether the government should do more or less to reduce economic inequality with a response of “1” meaning the government should do much more and a score of “5” meaning the government should do much less.  The average score for immigrants was a 2.75 while the average score for the U.S.-born was 3.18 – a statistically significant difference but hardly one that will push the U.S. toward central planning.

Intellectual Property in Trade Agreements at a Crossroads




While the critics pounced, defenders defended.  Here’s the MPAA:




Republicans and Media Confused about Fast Track

No one is surprised that 151 liberal Democrats in the House don’t support granting the president fast track authority to negotiate trade agreements.  But two groups of Republicans have now signed letters to the President this week joining those Democrats in their opposition.  The news media have reported the story as evidence that the tea party opposes President Obama’s trade agenda.

The signatories of the letters are an odd combination of young, party-line Republicans and old-guard isolationists who oppose free trade.  Neither group has anything to do with the tea party and both seem confused about how fast track works.

One of the assertions made in the letters is that establishing fast track authority cedes to the President Congress’s constitutional power to regulate trade.  This is just wrong.  Fast track is not a grant of authority to the President but rather an exercise of authority by Congress.

No one doubts that Congress can pass statutes that regulate trade.  Also clear is that the President can enter into treaties with the advice and consent of the Senate.  Fast track combines those processes by having the President negotiate the terms of an agreement, after which both houses of Congress pass (or not) a statute that ratifies and implements that agreement.

The contentious aspect of fast track authority comes from the fact that Congress agrees to hold an up-or-down vote on any agreement submitted by the president with no opportunity to add amendments.  The good sense of this arrangement is obvious when you consider that a trade agreement is the product of complex and lengthy international negotiations that cannot be adjusted at the last minute just to accommodate each congressman’s pet issue.

But when establishing fast track authority, Congress also imposes restrictions on what must be included (or excluded) from any trade agreement placed on the fast track.  In essence, Congress agrees to adopt practical, streamlined parliamentary procedures as long as the President negotiates agreements it likes.  Fast track allows Congress to exert influence at an earlier, less-disruptive stage in the process.

While the legitimacy of fast track might be an interesting topic for constitutional scholars, the controversy is mostly a proxy for larger policy arguments about the value of trade in general.  Protectionists disapprove of fast track and trade agreements because they want more barriers to trade, regardless of its constitutional status.  Similarly, proponents of increased trade approve of fast track because trade agreements put a check on Congress’s tendency to protect domestic industries.

So why have 27 Republicans come out against fast track?  Cato’s online trade votes database can help us answer the question.

The Sugar Program Is Central Planning







For more on the sugar racket, see here and here.