President Obama’s drive to complete new open trade agreements with the European Union and 11 Pacific Rim nations are the most critical economic initiatives of his second term. Their importance reflects the basic patterns of economic growth across the world. After a decade of unusually weak growth, job creation and income gains, America’s prospects for rising wages and employment are increasingly linked to how successfully American businesses can tap into foreign demand. Beyond the big demand issues, the two agreements also should subtly affect the tradeoffs that American multinationals face between exporting goods and services produced here, versus expanding their European and Asian operations. And those more subtle effects could produce large long-term benefits for American workers.
The Transatlantic Trade and Investment Partnership (TTIP) talks would end most tariffs and reduce countless other barriers to open trade between the United States and the 27 countries of the European Union, with their combined GDP of some $17 trillion. Not only would the agreement give American businesses and investors nearly as much access to European consumers and businesses as Germany or France, including the fast-growing emerging economies of Central and Eastern Europe. Equally important, such an agreement would recalibrate the choices that U.S. companies face today between exporting to Europe and increasing their foreign direct investments there. For the first time, America’s multinationals could enjoy nearly unfettered access to the European market without setting up more operations there.
The second proposed agreement, the Trans-Pacific Partnership (TPP), also would reduce tariffs and other barriers between and among ourselves and Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Not counting ourselves and our NAFTA partners Mexico and Canada, where we already enjoy open trade, the other TPP countries represent nearly $9 trillion of potential demand for our goods and services. And much like the proposed EU-US partnership, the Pacific agreement would, at once, lower barriers to U.S. exports to those countries and change the calculus of foreign direct investment (FDI) versus exports in ways that would tilt more towards exports. If 10 percent of our current FDI flows to countries involved in the two agreements shifts to domestic investments or simply higher profits, it could boost U.S. employment by as much as 450,000 jobs.
These initiatives present a singular opportunity to open up markets that represent nearly half of all non-U.S. global GDP. As the world’s most comprehensive and productive economy, the United States will be well positioned to use this enhanced access to increase our global market shares in countless advanced goods and services. And by reducing the costs of exporting into foreign markets, as compared to setting up more new factories and offices inside those markets, these agreements could be the first new trade pacts for a global economy that genuinely favor U.S. workers.
This post was originally published on Dr. Shapiro's blog.
In light of the recently released GOP Standards for Immigration Reform and ongoing discussion about the safety of the US-Mexico border, NDN and the New Policy Institute have prepared the following backgrounder. A quick fact sheet on the progress made on the US side of the border in recent years is below, and the full document with charts is attached or available here.
A statement from NDN President, Simon Rosenberg:
“As House Republicans begin to put together their approach to immigration reform, it is important for them to acknowledge, as their colleagues in the Senate did this past spring, that tremendous progress has been made on the US-Mexican border over the past decade. Investments of tens of billions of dollars, better strategies and greater cooperation with Mexico along the border has brought results – the border is much safer, net migration of unauthorized migrants has plummeted, all while trade with Mexico has increased to historic levels. Given the obvious difficulties of managing this border – 2,000 miles long, containing the busiest land border crossing in the world, and enabling half a trillion dollars of trade each year – the Administration’s track record on the border is a very good one.
It is important as we enter this debate that we have a fact-based conversation about the US-Mexico border. Much has gone right. And if the Republicans have the ideas and the money to improve upon what has done, they should put their plan on the table right now, without delay, and let the debate begin.”
The Administration’s Border Strategy Has Yielded Very Strong Results
Over the past decade, more money, a better strategy, and enhanced cooperation with Mexico has made the US side of the border far safer, the flow of undocumented migrants over the border has plummeted, and spillover violence is rare. Despite this historic enforcement buildup, trade with Mexico has exploded, almost doubling in the past 5 years. Below please find some background data on the very real progress which has been made in recent years. A series of charts follow.
Key Data Points
A Border Build Up, A Big Decrease in Border Crime – US border enforcement spending has tripled over the last decade from $6.2 billion in 2002 to $18 billion in 2012. Boots on the ground – border patrol - have doubled from 10,650 in 2004 to 21,300 in 2012.
Despite increasing organized crime violence in Mexico, violent crime on the US side of the border has decreased in the last decade: in the 12 largest border cities, violent crime incidents have dropped by about 25% while population has increased. The two safest large cities in the entire US (population over 500,000), according to violent crime rates, are El Paso and San Diego, the two largest cities on the US-Mexican border. Spillover crime from Mexico is rare, and not a significant factor in the border region.
Unauthorized Flow Has Plummeted, Effectiveness Way Up – In the five high-traffic corridors which experience most of the flow of unauthorized migrants, two already have achieved a 90% effectiveness rate (apprehensions plus turn backs per year divided by the estimated total number of illegal entries per year), and two are over 80%.
Because of the drop in flow and increase in effectiveness, the apprehension rate per border patrol agent has dropped from 327 in 1993 to just 19 in 2012.
The average annual inflow of unauthorized immigrants is now nearly half of what it was at its height, declining from 550,000 or more to 300,000 over the last decade.
Total migration from Mexico to the US has decreased by 80% from 770,000 in 2000 to 140,000 in 2010. Net migration with Mexico has dropped to zero or less.
Additionally, this year the US and Mexico just announced they would increase binational security cooperation, including communications and intelligence sharing and, for the first time, joint border patrols of the US-Mexico border. Mexico has also committed to strengthening its southern border to stop the flow of Central and South American migrants through Mexico to the US.
Trade With Mexico Has Exploded, More Infrastructure Needed To Support This Growth– Meanwhile, goods and services trade with Mexico across this very same fortified border has exploded, growing from $300 billion in 2009 to $536 billion in 2012. Mexico is now the US’s third largest trading partner.
Mexico is the US’s second largest export market, buying twice the value of US goods that China does, and outspending Japan, Germany, and the UK combined. 6 million US jobs depend on US-Mexico trade.
The FY 2014 budget bill acknowledges the need for more infrastructure spending at the border to facilitate this cross-border trade and tourism. It appropriated $128 million in for California’s San Ysidro crossing, the world’s busiest land port of entry; funding for an additional 2,000 CBP officers; and it supports a 5-year public-private partnership program, an expansion of a current PPP program, to allow CBP “to enter into partnerships with private sector and government entities at ports of entry,” which could provide additional needed funding. These measures will allow for increased security, decreased wait lines, a greater flow of trade, and economic growth for the border region and the greater US economy.
Mexico Is Growing, Modernizing – See this fact sheet on Mexico’s economic progress over the past 20 years.
Last week I offered my thoughts about why Members of Congress should proudly work with the President in his final three years to pass his ambitious trade agenda, extending our reach throughout Asia, Latin America and Europe. While there have been some bumps in that process this week, I still remain optimistic that the President will be able leave office having completed both TPP and TTIP, as they are called.
But to do so we are learning a few things. The President will have to continue to sell his broader economic agenda with vigor to the American people, giving them a strong belief that he has a plan that can make their lives better in this new age of globalization. He will have to find a way to work with Congress to provide more consultation and transparency in the fashioning of these and future trade agreements. And USTR will have to demonstrate, through the agreements themselves, that we are indeed modernizing our approach to trade, raising standards and making our global system better and more responsive to the realities of the world as it is today.
As I wrote in my piece, the geopolitical case for these agreements, and for the President's desire to strenghten the liberal international order in a time of great transformation, are compelling. But to get these done in the next three years, the White House and its allies have an awful lot of work to do. We at NDN welcome this debate as I think we have a good argument to make, and the issues at play here are perhaps the most important the Obama Administration will be involved in over the next three years. But this will be a long process, a complicated one, and those who agree with us need to take this time and get very serious about marshalling our arguments and making our case over years, not just days, weeks and months.
One word of caution to my fellow advocates for the President’s trade agenda. 2014 isn’t the 1990s. We are attempting to sell these far reaching arrangements not during a period of extraordinary growth, when median incomes went up more than $8,000 a family. Workers today haven’t received a raise in 14 years, and have become far more skeptical that technology advances and globalization have been good for them and their families. Way back in 2005 Rob Shapiro, current Rep. Joe Garcia and I wrote a landmark paper arguing that to continue to keep domestic support for global economic liberalization at 1990s levels, we need to do far more for workers and their families. The President’s economic agenda this year, coupled with previous actions like health care reform, are the kinds of things we will need to enact if we are to pass these trade agreements with broad support from the American people.
One area that we advocates also have to confront is the remarkable decline in public investment the US has seen in recent years. At a time when we have the largest school-age population in US history moving through our schools, and global competition is more virulent than it has ever been, we are lowering our level of public investment, exactly the wrong response to what the American people need. Public investment is half of what it was in the 1960s, and lower than it has been since the late 1940s. One doesn’t have to have a PhD to know what happens if this trend continues – it is a guarantor of national decline for the United States. See the graph below.
We are already seeing warning signs about our competitive position which should be alarming policy makers. The most recently released PISA study of adult skills from the OECD documents that our workers and students are falling far behind the rest of the developed world. Even among a measure one would assume we would lead – problem solving in a technology dense environment for 16 to 24 year olds – the US is dead last in the OECD. Dead last. (see p93 here).
So we at NDN are saddling up for a three-year effort to make the case that needs to be made about the President’s trade agenda. But we advocates will have to approach this effort in far different ways than we did in the 1990s. More must be done, by both parties, for the American people themselves or we should not expect this effort to be easy, or successful.
We are pleased to announce that NDN and New Policy Institute President Simon Rosenberg will be participating in the World Affairs Council annual conference "WorldAffairs 2014: Enhance Your World View" March 14th-15th in San Francisco. Each year the conference seeks to gather experts to share and discuss the most pressing global issues.
As our national debate over how to fix the US’s broken immigration system continues into 2014, this year’s conference begins with a conversation on this timely topic. Simon will join Jose Antonio Vargas, Pulitzer Prize-Winning Journalist and Founder of DefineAmerican.com, and Tara Magner, Program Officer in the Policy Research area of U.S. Programs at the MacArthur Foundation, for a keynote conversation on “The Human Face of Immigration” at 1:15pm Friday, March 14th.
"Comprehensive immigration reform is at the top of the policy agenda in 2014. While the debate may be no less contentious than it has been in the past, there is growing consensus that a solution can be found, not only for those already here but for those who would like to come. Perspectives vary regarding immigrants in the United States with both positive and negative viewpoints, but many agree that workers are needed across the spectrum—high-tech, low-tech or no-tech. From the food that we eat to the high-tech start ups, large portions of the US economy are dependent upon foreign-born workers. Who are these people and how can immigration policy best be shaped to help fuel America’s innovation economy? What is the status of this debate?"
To register or find out more about the conference, see here.
In the next few weeks, the Obama administration embarks upon two significant trips to Mexico. From February 3rd to 7th Secretary of Commerce Penny Pritzker will lead her first trade mission to Monterrey and Mexico City accompanied by a delegation of representatives from 17 major US businesses. On February 19th, President Obama will join Canadian Prime Minister Stephen Harper and Mexican President Enrique Peña Nieto at this year’s North American leaders’ summit in Toluca, Mexico. Both trips are expected to include discussions of economic competitiveness for the region, trade and investment, and security.
These crucial dialogues coincide with the 20th anniversary of the entry into force of the North America Free Trade Agreement, ongoing US Congressional efforts to pass meaningful immigration reform legislation, as well as Trans'Pacific Partnership negotiations. We must evaluate and better understand the gains of the last two decades for both the US and Mexico as our leaders seek to build upon them moving forward. As we look to the next twenty years, the US has the opportunity to deepen its partnership with Mexico and North America, to strengthen economic development, job creation and social growth in the US and abroad, and to ensure that the US and North America remain strong in an age of increasing global competition.
We offer up the following backgrounder on the current state of our southern neighbor Mexico and our North American partnership. While there is still more to do, Mexico has made tremendous strides toward becoming a modern, democratic, economically developed country since the implementation of NAFTA. As it has modernized and opened its economy, trade between the US and Mexico has skyrocketed and supports six million US jobs. The Trans Pacific Partnership could be a means of further strengthening and expanding that growth.
See the following for more information.
Background on Mexico, North America
Since 1993, the year before NAFTA went into effect, Mexico’s:
Per capita income has doubled from $8,469 to $16,734 in 2012 (GDP per capita, PPP, current international $).
Skyrocketing US-Mexico trade and tourism, job growth, and progress at the border:
US-Mexico trade goods and services trade has increased six-fold, from $80 billion to over $500 billion. Mexico is now the US’s third largest trading partner, second largest export market. We trade more with Mexico today than Japan, Germany and the UK combined. Mexico buys twice as much from the US as China does, with 1/11 the population, and more from Brazil, Russia, India and China (the BRICs) combined.
10% of people living in the US today are of Mexican origin, and about 10% of people born in Mexico live in the United States.
In recent years, net migration from Mexico to the US has dropped from 770,000 to zero.
Despite massive organized crime violence in Mexico, the border on US side is safer- the two safest large cities in the US according to violent crime rates are El Paso and San Diego.
While Mexico faces great challenges in strengthening its rule of law and eliminating the threat of organized crime, the US shares in that challenge. Violence in Mexico has been significantly driven by US drug habits, and weak response to guns smuggled from the US into Mexico.
Mexico is becoming a modern country:
After 70 years of single-party rule, Mexico has transitioned to a more liberal democracy. It successfully transferred party rule in the 2000 and 2012 presidential elections. Its executive, legislative, and judicial branches operate independently, as does the Church and press from the state.
In the past year, President Enrique Peña Nieto has championed an ambitious reform agenda, including education, telecommunications, taxes, energy, elections and more.
Mexico has transformed from a protectionist state to one of the most open countries- it has free trade agreements with twice as many countries as the US does.
At Davos, Mexico was specially acknowledged among OECD countries for its growth and reforms, and received over $7 billion in investments from major corporations.
Images: Among Major US Trading Partners, NAFTA Countries Buy More Goodsand Support More US Jobs (See attached for more images)
Source: U.S. Census Bureau Credit: Danny DeBelius, Emily Siner / NPR
Friends – a quick point of clarification on a key point in the immigration reform debate.
Though the GOP is using the term “path to legalization,” this path does not preclude citizenship for undocumented immigrants. What Rep. Goodlatte and other GOP leaders have been floating is the idea that formerly undocumented immigrants, with whatever legal status, can apply for a green card like anyone else, thus receiving “no special path.” Once they receive the green card, they are then on a citizenship track – or path to citizenship - as a green card is the first step in the current legal process for an immigrant becoming a citizen.
So, while the House Republicans are talking about a path to citizenship, the proposals we’ve heard about in these talking stages do not contemplate a permanent second class status, and indeed many of the undocumented immigrants will receive citizenship in this process.
For more on this see Greg Sargent's smart analysis in the Washington Post.
Economic Policy Intern, Spring Semester 2013, 15-20 hours/week minimum, unpaid
About the Position: NDN and the New Policiy Institute seek a part-time intern who will focus on economic policy and general research assistance. The intern will learn from NDN’s years of economic and globalization research and join the team in better defining this moment of North American relations and exploring the possibilities of the current US global trade agenda. He/she will report to the 21st Century Border Initiative Policy Director.
Qualifications: The ideal candidate is an upperclass undergraduate student or current graduate student with a background in economics and political science, with an interest in the Americas. He/she must possess strong research and writing skills, and be able to work independently and communicate with high level staff both at NDN and elsewhere. Knowledge of social media desired. Spanish proficiency is a plus.
To apply, please send cover letter (including your schedule availability), resume, and brief writing sample (1000 words max.) to email@example.com by January 30th.
Looking back at the history of the Democratic Party since Franklin Roosevelt, modern Democrats have much to be proud of: the successful stewardship of our nation through WWII; the creation of the United Nations; a strong partnership with the GOP in fighting and winning the Cold War; rescuing the nation from the Great Depression and the Great Recession; the establishment of a strong and comprehensive safety net for the old and poor; courageous support of successful Civil Rights Era reforms; the launching of a 21st century American health care system that finally provides for universal coverage; a strong track record of job growth and deficit reduction in recent presidencies; and of late, the fight to extend equality to LGBT Americans and the growing ranks of people of color and immigrants (feel free to add things left out -- there are more, of course).
It is a remarkable track record indeed. But I want to make the case that of all these accomplishments, there is one more that has been the most consequential, that has done more to provide opportunity and alleviate poverty around the world than any other set of policies in modern history -- that is the creation of the global system launched by Presidents Roosevelt and Truman at the end of WWII built on the foundation of free and open trade.
There can be little doubt, looking back at global architecture established by the leaders of the Democratic Party at the end of WWII, that free and open trade was seen as inextricably linked to the promotion of democracy and political liberty around the world. That to prevent yet another World War, our leaders imagined a world at peace, where the industriousness and creativity of everyday people all around the world linked together through free and open trade would create a global middle class -- a sensible, powerful bulwark against totalitarianism of both right and left. This spirit is best captured in FDR's famous "Four Freedoms" speech, which is perhaps the most important speech given by a Democrat in the long and storied history of our party.
To a great degree this inherently liberal vision has both triumphed on the global stage, and worked. A majority of the world's 200-plus countries are some form of democracy today. Trade flows are exploding, a truly global middle class is emerging, standards of living are rising are all around the world, and poverty is falling at extraordinary rates -- all while the population of the world has more than tripled. Large scale global conflagrations have been avoided, and international institutions of peace and civility retain encouraging degrees of effectiveness almost 70 years after their creation.
This global system, imagined and built by leaders of the Democratic Party of the United States, has created more opportunity for more people than any other political system in human history. It is not without its flaws, and more must be done in the developed world and here in the US to ensure broad-based growth in an age of more virulent global competition and the "rise of the rest." But over this period, in this system, America itself has created unparalleled opportunity and prosperity for its own citizens, and produced technologies and companies who have made life better for billions of people around the world.
Through his vision of new trade liberalization arrangements in both the Pacific and the Atlantic, President Obama has put the weight of his presidency behind deepening, broadening and modernizing this successful global system. The trade deals would further liberalize trade in economies with more than 60 percent of global output. They do so while attempting to establish higher standards for labor and the environment, while fashioning new rules for the digital age in areas like cloud services and intellectual property. At their core these trade rounds bind countries to higher and more responsible standards of capitalism than they might practice otherwise, while opening foreign markets to US businesses who are far more prepared for the rigors of 21st century global competition than most of their peers.
From a geopolitical perspective, these far-reaching deals also keep America front and center in the economic and political arrangements of the Pacific, Latin America, and Europe. It re-affirms America's commitment to this free and open rules-based global system, providing a powerful counterbalance to those countries whose leaders have a different view of the political liberties and economic opportunities offered to their own people.
This last point deserves a bit of emphasis. We know from history that eras of peace and prosperity can give way to eras of repression and belligerence. Today, due to the in part to the peace and prosperity of the modern age, the world is very young. More than 50 percent of the people alive today are under 30. In many developing nations, two-thirds of their people are under 30. To a great degree these young people will dictate what kind of world we will have in the 21st century. It is essential, that as much as possible, this next global generation both be given a liberal and open global system, and be taught the lessons of why such a system is preferred to other, less liberal alternatives. Concluding these visionary deals, passing them through the US Congress and implementing them before President Obama leaves office will send a powerful signal to liberalism's opponents that this system will continue to prevail in the decades ahead.
And, of course, the opposite is true. If these agreements fail to pass through an inward looking Congress we will be sending exactly the wrong signal to the rising new generation soon to inherit power in the world -- that indeed free and open societies, built on responsible capitalism and respectful of human rights, were a product of a different era, lost to history by leaders and nations unwilling to renew their commitment to a global system that has done so much for so many.
The case for these nascent trade deals is powerful. But at the same time, proponents cannot ignore what has happened in the US economy since the global economy became truly global in the late 1990s and early part of the 21st century. Job growth in the US has slowed, and American workers have seen their wages stagnate. Policy makers here cannot really expect the American public to buy into these far-reaching agreements unless more is done to ensure their success in this more competitive world of the 21st century. Accompanying the passage of these trade deals should be a comprehensive agenda for the American people -- one that makes unprecedented investments in skills and knowledge, modern infrastructure, lower cost and cleaner energy, long-term research and development and innovative health technologies. We should also modernize our immigration system to meet the challenges of this global economy by passing a version of the Senate immigration bill, and raise the minimum wage. The US needs a new strategy to ensure our peoples -- not just our company's success -- in a more competitive age (NDN has been arguing for such an agenda since 2005).
In the final years of the Obama presidency, the US Congress has an extraordinary opportunity to both strengthen and buttress the global system which has done so much good for the world for so long, and to raise our game at home so we can meet the challenges of what is becoming, inevitably, a more competitive world. If the two parties can come together to do both of these things, this will become an historic period indeed, a period where despite the rancor the two American political parties came together to make both the world and our nation stronger and better in a new, uncertain age.
As a lifelong Democrat, I am deeply proud of what our party has done over the past several generations. We have left America and the world far better than we found it. A major part of our party's success has been the construction of a global system which has given far better lives and more opportunities to billions of people. As we begin a needed debate about our economic and trade policies here in the US, my hope is that modern Democrats fashion a set of answers to the challenges of the moment that strengthen, modernize and improve this global system that is perhaps our party's greatest legacy.
You can find the original Huffington Post articlef rom January 21st, 2014 here.
About $1.2 billion worth of trade crosses the US southern border per day. Trade with Mexico has skyrocketed in the last 2 decades to over $500 billion in 2012. Mexico is the US’s second largest export market, third largest trading partner overall. Trade with Mexico supports 6 million jobs in the US alone. In the post 9/11 era, the US has successfully increased its border security, tripling funding, doubling border patrol staff, increasing apprehensions and deportations of people crossing illegally. El Paso and San Diego, two of the largest border cities, have the lowest crime rates of large cities in the whole US. Yet as trade has continued to successfully expand, understaffed ports of entry and increased delays at the border have cost the US billions in additional revenue and jobs.
Congress’s prioritization of additional customs inspectors and infrastructure spending evidences the decline of an enforcement-only approach at the border. Policies like the “border surge” in the Senate immigration bill, which allotted nearly $50 billion for additional border patrol, fencing, and military equipment at the border, have been exchanged for smaller targeted spending proposals. The $128 million in appropriations allotted for California’s San Ysidro, the world’s busiest land port of entry, will allow for increased security, decreased wait lines, a greater flow of trade, and economic growth for the border region and the greater US economy. The 2,000 additional CBP officers slated for the busiest ports of entry will do the same. A 2013 USC study estimates that one additional CBP officer could facilitate an additional $2 million in GDP growth, $640,000 worth of time savings, and 33 jobs. The omnibus bill also includes a 5-year public-private partnership program, an expansion of a current PPP program, to allow CBP “to enter into partnerships with private sector and government entities at ports of entry” which could provide additional needed funding.
These border spending provisions show bipartisan bicameral movement forward toward embracing a broad, holistic strategy for a 21st Century US-Mexico Border. As we venture into 2014, NDN remains optimistic that Congress can pass meaningful immigration reform that continues in this spirit. We hope it will incorporate related CBP and infrastructure investments, like those included in Senator Cornyn’s RESULTS Act and Representatives Grijalva and Vela’s CIR ASAP bill. An immigration reform compromise should continue to include smart and targeted border enforcement for local and national security; more staffing, infrastructure, and public-private partnership support will ensure that the United States also continues to grow its globally competitive economy while meeting the needs of its vast border region and strengthening its North American community.
"The jobless rate fell sharply again – from 7.0 percent to 6.7 percent – but the reason wasn’t a burst of new job creation. In fact, total employment was up by just 74,000. What changed in December was that new layoffs fell sharply, which we usually see in the first two years of an expansion. It’s some two year behind schedule, but the number of newly unemployed people was down by 365,000 in December. The rest of it was mainly demographics, not economics. Yes, the labor participation rate fell 0.2 percentage points – but it had risen by as much the month before. Moreover, the number of “discouraged workers” (those no longer looking for work) and those “marginally attached” to the labor force (who haven’t tried to get hired for a month) did not go up. What continues to rise are the numbers of baby boomers retiring, because the numbers of boomers reaching ages 60, 62 or 65 continues to accelerate."
"Older politicians will have to get beyond their ideological blinders to recognize the opportunity waiting for any candidate or political party that can embrace both halves of the Millennial era civic ethos paradox."