For more information or to schedule an interview, members of the press should contact Jacob Grier at jgrier@cato.org or (202) 218-4613.
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August 13, 2008
Obama Criticizes McCain on Trade Deficit Comment
"Though the Commerce Department announced Tuesday that the trade deficit had unexpectedly dropped in June, Sen. Barack Obama's campaign used the figures to attack rival John McCain on trade," reports The Hill. "'While Sen. McCain may believe that the small reduction in the trade deficit represents great progress in an economy he thinks is doing just fine, Barack Obama believes that America can do better than a $693 billion trade deficit over the last year,' said Jason Furman, who is Obama's (D-Ill.) economic policy director."
Daniel Griswold, director of Cato's Center for Trade Policy Studies, comments:
Contrary to the claims of free trade critics, the trade deficit tells us almost nothing about the success or failure of U.S. trade policy. The deficit reflects the continuing inflow of foreign investment to the U.S. economy. Without that investment, millions of homeowners and businesses would be saddled with higher interest payments.
It's ironic to hear Democrats complain about the trade deficit. Under President Clinton in the 1990s, the trade deficit exploded from $70 billion to $380 billion and by all accounts the American economy performed well. The biggest failure of U.S. trade policy is not the trade deficit, but a protectionist and subsidy-laden farm bill, continuing high tariffs on mass consumer goods such as shoes and clothing, unfair and much-abused antidumping laws, and a Congress that refuses to even vote on free trade agreements with key allies.
July 29, 2008
Farm Stand-off Brings WTO Talks Close to Collapse
"Talks to rescue a world trade deal were close to collapse on Tuesday over measures intended to help poor countries protect their farmers, trade officials said," reports The New York Times. "Developing countries like China and India are at loggerheads with food exporters like the United States over the issue of safeguards against food import surges, and differences on several other fundamental parts of a deal are also unresolved."
Sallie James, Cato trade policy analyst, comments:
"The record nine-day-long meeting of 30 trade ministers in Geneva is putting trade-watchers on a roller-coaster ride of imminent breakthrough followed by imminent collapse. Although members seem to agree on the broad outlines of a deal on Friday, by Monday they were back to bickering about smaller issues such as the extent to which they can shield agricultural products from import surges. By clinging to the mercantilist mindset of the WTO, whereby any openings to imports that would benefit consumers are seen as concessions that must be matched by export opportunities, trade ministers are putting the multilateral trading system in peril. Meanwhile, the commercial world continues to trade and to operate around the barriers that ministers seem incapable of lifting."
Daniel Ikenson, associate director of Cato's Center for Trade Policy Studies, comments:
"The Doha Round has struggled to gain any secure footing since its inception in 2001. That is partly explained by the fact that the world economy has forged ahead at breakneck speed during that time. Rising economic fortunes in countries that were once desperate for a deal have transformed the multilateral trade agreement business into a buyers' market. If the political costs of a Doha Round agreement outweigh the political benefits for negotiators representing any big country, then agreement will remain elusive. Based on what has transpired in Geneva over the past nine days, it is evident that more than one country fits that description."
July 11, 2008
Colombia Needs Trade for Continued Growth
"This labyrinthine metropolis [of Medellin, Colombia] transformed over the course of a decade from a battlefield of drug lords, paramilitaries and leftist guerrillas into one of the safest, most dynamic cities in Latin America," reports The Washington Post. "Visionary inner-city renewal projects and a push to take back the lawless hillside slums by force deserve credit, but many here hail an unsung hero in Medellin's urban miracle -- globalization. ... Yet the renaissance of a city best known outside Colombia for years as the base of Pablo Escobar and the Medellin cartel is entering a period of uncertainty that illustrates just how fragile such gains can be. The city's export industry has begun to slip backward, officials here say."
In the Cato-at-Liberty blog post "Free Trade Promotes Peace in Colombia," Daniel Griswold, director of Ca'o's Center for Trade Policy Studies, writes:
"Democratic leaders in the House refuse to allow a vote on the U.S.-Colombia free trade agreement, claiming the government there has not done enough to stem violence against union members. But a story in this morning's Washington Post helps to expose the hollowness of their objections. ... Democratic leaders who oppose the U.S.-Colombia FTA are not only ignoring the real progress that has been made against violence in that country. They are also blocking the very trade expansion that has so visibly helped to make that progress possible."
June17, 2008
TRADE POLICY ANALYSIS
Trade facilitation offers alternative to fledgling trade talks
WASHINGTON -- As the Doha Round lies in a cryogenic state, governments can promote trade, investment, and economic growth by reforming the administrative and physical procedures involved in the transport goods into and out of their countries.
In “While Doha Sleeps: Securing Economic Growth through Trade Facilitation” associate director of Cato’s Center for Trade Policy Studies Daniel Ikenson reminds us that “comprehensive multilateral agreement is not the only way to improve the trading system. … Like tariff cuts -- and often with greater impact --improvements in trade facilitation procedures can help reduce the cost of trade and increase its flow.”
According to recent studies from the World Bank and elsewhere, improvements to a country’s trade infrastructure -- logistics services, port capacity, administrative procedures, customs requirements, etc. -- could do more to increase global trade flows than further reductions in tariff rates. And, trade facilitation reforms are not only for developing countries.
“One recent study suggests that a one-day improvement in the average time it takes to move U.S. cargo from a warehouse to the port of export and inbound cargo from the port to a domestic warehouse could increase U.S. trade by almost $29 billion per year,” writes Ikenson. “With world trade continuing to grow faster than global output, it is imperative that governments embrace practices that position their citizens to compete effectively for markets and investment. … Closing the trade facilitation performance gap will be crucial to U.S. competitiveness going forward,” concludes the author.
June 9, 2008
States Increase Efforts against Illegal Immigration
"Three months after the local police inspected more than a dozen businesses searching for illegal immigrants using stolen Social Security numbers, this community in the Florida Panhandle has become more law-abiding, emptier and whiter," reports The New York Times. "Sheriff Wendell Hall of Santa Rosa County, who led the effort, said the arrests were for violations of state identity theft laws. But he also seemed proud to have found a way around rules allowing only the federal government to enforce immigration laws."
Daniel Griswold, director of the Center for Trade Policy Studies, comments:
"The proliferation of state and local laws against illegal immigration is the latest symptom of the failure of the federal government to reform a broken system. The effort is diverting the resources of states and counties governments that should go to fighting violent crime. The only long-term answer to illegal immigration remains comprehensive immigration reform at a national level, including more opportunities for legal immigration."
June 3, 2008
UN Secretary General Calls for Free Trade
"World food production must rise by 50% by 2030 to meet increasing demand, the UN secretary general, Ban Ki-moon, told the UN food summit today," The Guardian reports. "He urged a quick resolution of world trade talks and said nations must minimize export restrictions and import tariffs to alleviate the food crisis."
In the Free Trade Bulletin "Food Fight," Sallie James policy analyst at Cato's Center for Trade Policy Studies, writes: "Instead of conflating the harm done to consumers from high global food prices, the federal government should abandon its protection of U.S. farmers from competition and its pursuit of a misguided biofuels policy whose environmental benefits are spurious at best. Politicians especially keen to 'stimulate' the economy by putting more money in the hands of consumers should start by reducing the taxes on imported dairy products, sugar, rice, and ethanol."
May 27, 2008
Tough Immigration Rules Increase Allure of Corruption
"The pattern has become familiar: Customs officers wave in vehicles filled with illegal immigrants, drugs or other contraband," reports The New York Times. "A Border Patrol agent acts as a scout for smugglers. Trusted officers fall prey to temptation and begin taking bribes. Increased corruption is linked, in part, to tougher enforcement, driving smugglers to recruit federal employees as accomplices. It has grown so worrisome that job applicants will soon be subject to lie detector tests to ensure that they are not already working for smuggling organizations. In addition, homeland security officials have reconstituted an internal affairs unit at Customs and Border Protection, one of the largest federal law enforcement agencies, overseeing both border agents and customs officers."
In "Real Reform Can Fix Immigration," Daniel Griswold, director of Cato's Center for Trade Policy Studies, writes:
"We can't close our eyes and hope illegal immigration goes away. Nor can we simply throw money at the same enforcement programs that have failed to fix the problem for more than 20 years. To solve this vexing problem, we need to reform our immigration system in a way that recognizes economic reality, guards our security and reduces the incentives for illegal immigration. ... The answer is not to merely spend more to enforce the existing, dysfunctional law, but to change it. Immigration reform must include an expanded visa program so that willing workers from Mexico and elsewhere can enter the United States legally to help us build a more vibrant economy, and reform must offer a path to legal status for workers already here."
April 28, 2008
Nationalism Threatens Globalization
"The world isn't as flat as it used to be," reports The Wall Street Journal. "The global economy appears to be entering an epoch in which governments are reasserting their role in the lives of individuals and businesses. Once again, barriers are rising. Call it the new nationalism."
Daniel Griswold, director of Cato's Center for Trade Policy Studies, comments:
"Rising nationalism poses the same threat to the global economy as it did in the 1920s and 1930s. Erecting new barriers to global trade and investment will diminish the freedom of millions of people and slow economic progress. It will undermine the historic progress we have made in recent decades in reducing poverty and promoting global peace. The U.S. government should set a good example by reducing its own remaining barriers to trade and encouraging other nations to do the same."
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April 15, 2008
TRADE BRIEFING PAPER
Race to the Bottom? The Presidential Candidates’ Positions on Trade
by Sallie James
In a new Trade Briefing Paper, the Cato Institute's Sallie James examines the voting records and campaign pledges of the presidential candidates and finds that John McCain’s policies on free trade would be most beneficial to the U.S. economy. Based on campaign rhetoric and trade voting records, “voters could expect a President McCain who promotes freer trade and cuts in market-distorting subsides, and a president Clinton or a President Obama who views free trade between voluntary actors as something to be restrained,” writes James.
A faltering economy has made trade policy a salient topic during the 2008 presidential elections. Clinton and Obama especially have exploited news that the economy is slowing, linking it to what they see as faulty policies of the Bush administration, and implying that more government management of trade flows will reverse this trend.
James concludes: “Far from just a rhetorical device, proposals to increase restrictions on trade—or even to suspend further liberalization—are economically worrying. After all, tariffs do not create wealth; they are merely a device for protecting special interests by restricting consumers’ choices.”
The study can be found at http://www.freetrade.org/pubs/briefs/tbp-027es.html.
March 31, 2008
FREE TRADE BULLETIN
Worried about a Recession? Don’t Blame Free Trade
by Daniel Griswold
WASHINGTON--Contrary to political rhetoric, free trade does not cause economic downturns, but in fact it has helped ensure that recessions are “mercifully shorter, shallower, and less frequent” than in past decades, according to a Free Trade Bulletin released by the Cato Institute today.
Increased foreign trade and investment has helped bring about what economists call “The Great Moderation.” A trend that began to appear in the mid-1980s, The Great Moderation has seen recessions become milder and less frequent. The Cato study finds that the U.S. economy was in recession 21 percent of the time from 1945 through 1982 compared to 5 percent in the more globalized era since then. This decreased volatility has not come at the expense of overall growth. Annual real GDP growth has been the same over the past 25 years that have experienced The Great Moderation as the 25 previous years that did not.
The author, Daniel Griswold, concludes: “For the U.S. economy as a whole, the era of globalization has brought healthy long-term growth and a moderation of the business cycle. Expansions are longer if less spectacular than in eras past, and downturns are mercifully shorter, shallower, and less frequent. Moderation of the business cycle in recent decades is something to be thankful for, and expanding trade and globalization deserve a share of the credit.”
This paper can be found here.
March 14, 2008
FREE TRADE BULLETIN
No Need to Panic about Foreign Sovereign Investment
by Daniel Ikenson
"Sovereign Wealth Fund" investment, like all foreign investment, benefits the U.S. economy in myriad ways. Accordingly, it should be treated like all foreign investment: welcomed, but also subject to laws and regulations that could block proposed deals that are found to pose risks to U.S. national security, finds a new Cato Institute report.
Daniel Ikenson, associate director of Cato's Center for Trade Policy Studies writes, “Whether controlling or passive, direct or portfolio, sovereign or private, foreign investment in the United States should be welcomed with the presumption that it will be mutually beneficial. Its presence reduces the cost of capital to businesses and the cost of credit to consumers...”
Ikenson acknowledges that SWFs present unique concerns, but none that warrant categorical prohibitions, or new laws or regulations.
The study, titled "Nothing to Fear But Fearmongers Themselves: A Look at the Sovereign Wealth Fund Debate," points out that despite recent growth in their number and size, at $3 trillion, aggregate SWF assets constitute only "a tiny sliver of the $190 trillion stock of global financial assets or the $62 trillion managed by private institutional investors." Further, despite projected absolute growth in SWF assets, growth in overall global asset values will ensure that SWFs remain a very small percentage of the total.
For a PDF version of the new Free Trade Bulletin No. 33 please click here.
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February 15, 2008 |
WASHINGTON -- The Cato Institute's Center for Trade Policy Studies launched a powerful new interactive web feature this week that allows users to access and analyze the trade voting record of any member of Congress spanning more than a decade.
The new feature reveals how members have voted on 81 major trade votes cast in the House and 62 in the Senate. The votes begin with the North American Free Trade Agreement (NAFTA) in 1993 through the U.S.- Peru FTA at the end of 2007. Other major votes include the Uruguay Round Agreements Act, Permanent Normal Trade Relations with China, subsidies and protection for U.S. farm commodities, the Cuban trade embargo, and various bilateral and regional free trade agreements.
"With trade such a hot issue on the campaign trail, users can examine how members of Congress have actually voted on issues affecting the freedom of Americans to trade and invest in the global economy," said Daniel Griswold, director of the trade center. "The new web site offers a fun and transparent way to find out who really understands and supports free trade. It also shows where and how the two major parties differ on important trade issues."
According to the web site, Republican presidential candidate Sen. John McCain of Arizona has voted against higher trade barriers on 88 percent of votes since 1993, and against trade-distorting subsidies on 80 percent, placing him in the category of "Free Trader." Democratic candidate Sen. Hillary Rodham Clinton of New York has voted against trade barriers on 31 percent of her votes and against trade subsidies on 14 percent during her Senate career, while rival Sen. Barack Obama has opposed barriers on 36 percent of his votes and subsidies on 0 percent.
The new feature updates research that had previously been published in a series of Cato studies titled, "Free Trade, Free Markets," which analyzed congressional voting on trade in the 105th (1997-98) through 108th (2003-04) Congresses. Users can access the feature directly at the URL www.freetrade.org/congress or by visiting www.freetrade.org and clicking "Trade Vote Records."
February 7, 2008
FREE TRADE BULLETIN
A U.S.-Colombia Free Trade Agreement: Strengthening Democracy and Progress in Latin America
by Daniel Griswold and Juan Carlos Hidalgo
In a new Free Trade Bulletin, Daniel Griswold and Juan Carlos Hidalgo argue that Congress’s approval of the U.S.-Colombia free trade agreement is vital for supporting market democracy in the Andean region. “The free trade agreement with Colombia was designed to both strengthen civil society in Colombia and also to open economic opportunities for U.S. producers to sell to the country’s 44 million upwardly mobile, American-friendly consumers,” explain the authors.
The agreement has faced strong opposition from some Democrats who say it should not be signed until Colombia succeeds in tackling violence, including that directed toward union leaders. Organized labor in the United States, in particular the AFL-CIO, a key constituency of the Democratic Party, has made defeating the agreement a major political goal.
“Rejecting a free-trade agreement with Colombia because of lingering violence in that country would be an irresponsible mistake by Congress,” write the authors. Violence has fallen dramatically since President Uribe took office in 2002. It would also be unfair to the country that has seen great improvement in safety, security, and economic opportunity for Colombians thanks to Uribe’s policies.
The authors conclude: “Approving a free trade agreement with Colombia is about supporting a market democracy in a region where liberal values are under attack. It is about being a reliable partner in turbulent times. It is also about building long-lasting institutions for economic prosperity and democracy for millions of Colombians.”
For a PDF version of the new Free Trade Bulletin No. 32 please click here.
January 31, 2007
FREE TRADE BULLETIN
Food Fight
by Sallie James
In a new Free Trade Bulletin, the Cato Institute's Sallie James examines the forces behind recent surges in food prices and how the government can provide some relief to consumers. Drawing on the latest available figures, James shows that food prices are indeed rising faster than prices of other goods, and much faster than in the past. The U.S. government’s own actions are contributing to the surge in food prices.
Citing major international studies, James concludes that while international factors—drought in major agricultural exporting countries, changing global food consumption patterns, and higher fuel prices— go some way to explaining increased grocery bills, U.S. government action is adding to consumers’ woes. By encouraging the growth of corn-fueled ethanol, the federal government is adding to corn demand and therefore to higher prices for the grain. Other commodity prices rise, too, as land is diverted to growing corn. That in turn increases the cost of livestock products, as feed prices rise. As for trade policy, the Cato study notes that American consumers pay an implicit tax of $5 billion per year because of trade barriers that prevent cheaper imports of such commodities as rice, sugar and dairy products.
James concludes: "Instead of conflating the harm done to consumers from high global food prices, the federal government should abandon its protection of U.S. farmers and its pursuit of a misguided biofuels policy. Politicians especially keen to "stimulate" the economy by putting more money in the hands of consumers should start by reducing the taxes on imported dairy products, sugar, rice and ethanol."
For the full PDF version of the new Free Trade Bulletin No. 31 please click here.
January 30, 2008
Cato Scholar Comments on Rising Food Prices
Sallie James, trade policy analyst:
"The federal government should abandon its protection of U.S. farmers from competition and its pursuit of a misguided biofuels policy whose environmental benefits are spurious at best. Politicians especially keen to 'stimulate' the economy by putting more money in the hands of consumers should start by reducing the taxes on imported dairy products, sugar, rice, and ethanol."
January 28, 2008
Cato Institute Scholars Comment on Upcoming State of the Union Address
WASHINGTON – In anticipation of President Bush's State of the Union address tonight, Cato Institute scholars comment on trade.
Daniel Griswold, director of the Center for Trade Policy Studies:
"Like similar agreements, the U.S.-Colombia FTA would eliminate almost all tariffs on trade between the two countries. More than 80 percent of U.S. exports of consumer and industrial products to Colombia would become duty free on enactment, and remaining tariffs would be phased out over next 10 years. The U.S. International Trade Commission estimates the FTA would boost U.S. exports, including a range of agricultural products, by $1 billion a year.
"Beyond trade, the agreement would strengthen our ties to one of our best allies in Latin America. President Uribe has been a bulwark against Venezuelan President Hugo Chavez and against Chavez's plans to spread anti-American and anti-democratic socialism throughout the region. Rejecting the agreement would jeopardize our relationship with Colombia and undermine Uribe's credibility."
Sallie James, trade policy analyst:
"Mr. Bush is right to reaffirm the importance of open trade to the American economy, and to remind Congress of the dangers of protectionism. The Bush administration has been admirably consistent in its support for trade liberalizing agreements. With the rhetoric on the campaign trail taking an increasingly trade-skeptic tone, and time running out on the Doha round of global trade negotiations, Mr. Bush has an opportunity to promote a more positive, outward-looking agenda for the remainder of his term in office."