NDN Blog

Under Obama, Trade Deficits Way Down

In 2013, our trade deficit was $472b, down from $535b in 2012.   The total trade deficit represents 2.8% of US GDP, a number far lower that what saw a decade ago.  These new number speaks to an important trend – that under President Obama the trade deficit has come way down (see the chart below).  

For comparison, the average trade deficit under President Bush was $592b, or 4.5% of GDP.  Under Obama the trade deficit has averaged $489b, or 3.1% of GDP.  And it is dropping.

Source: You can find this data at the US Department of Commerce, Bureau of Economic Analysis. 

The US and Mexico: 2 Events, 4 Backgrounders

This month, President Obama travels to Mexico for the North American Leaders’ Summit on February 19th, and Secretary of Commerce Pritzker led her first trade mission there in Mexico February 3rd-7th.  Mexico continues to play a vital role in current US policy debates including immigration reform and trade.  In response to this growing bilateral engagement, NDN and the New Policy Institute have prepared the following events and informational backgrounders on our vital and modernizing US-Mexico partnership.

Please join us for two events at NDN and NPI:

For more information on how Mexico and the US-Mexico relationship are growing, deepening, and modernizing, see the following materials from NDN and NPI:

We hope you find these materials helpful, and we look forward to discussing more in the upcoming weeks.

Invite: Thurs, Feb 27th- A Forum on US-Mexico w/ Shannon O’Neil and Eric Farnsworth

Updated February 27, 2014

On February 27th, we invite you to a public forum reflecting on a very significant month of US-Mexico engagement. Leading experts on Mexico, Shannon O’Neil, Senior Fellow for Latin America Studies at the Council on Foreign Relations, and Eric Farnsworth, Vice President of the Council of the Americas and Americas Society, will offer their assessment of President Obama’s trip to Mexico, as well as the status and future of the US-Mexico bilateral partnership.  Nelson Cunningham of McLarty Associates will moderate the discussion, leaving time for audience questions.  Please join us!

"A Forum on US-Mexico w/ Shannon O’Neil and Eric Farnsworth"
Thurs, Feb 27th, 12pm-1:15pm
Lunch served at 12 noon, Presentation will begin at 12:15pm
NDN Event Space: 729 15th St NW, 1st Floor, Washington, DC 20005
RSVP here

Mexico is one of our most important bilateral relationships and plays a vital role in current US policy debates, including immigration reform and trade.  President Obama traveled to Mexico yesterday for the North American Leaders’ Summit, and Secretary of Commerce Pritzker’s first trade mission took place there February 3rd-7th. The key deliverables from yesterday’s summit focus on our shared prosperity through travel and trade, increasing joint innovation and education, as well as issues of energy, climate, security, and regional engagement. Before landing in Mexico, President Obama signed a new executive order on “Streamlining the Export/Import Process for America’s Businesses,” which will strengthen our bilateral trade and travel.  This followed the February 18th DHS and GSA announcement of $61.6 million to expand and modernize the Laredo border crossing.

For more information prior to the event see these backgrounders and recent piece from NDN/NPI:

Also see Shannon O’Neils’s widely-acclaimed book on US-Mexico and recent article:

And Eric Farnsworth’s recent congressional testimony and article:

We hope you find these materials helpful, and we look forward to discussing more on the 27th.

Note: For those who cannot attend the event in person, it will be livestreamed here, and the video recording will be posted later.

Invite: Tues, Feb 18th- “US-Mexico: A Vital Modern Partnership”

*Changed from originally scheduled date*

February marks a big month in US-Mexico Relations. Last week, February 3rd-7th, Secretary of Commerce Penny Pritzker led a delegation of 17 US businesses on her first trade mission to Mexico City and Monterrey, Mexico. Next week, February 19th, President Obama will join his North American counterparts Canadian Prime Minister Harper and Mexican President Peña Nieto in Toluca, Mexico for their annual North American Leaders’ Summit.

In one public address during her trip, Secretary Pritzker remarked on the advance in US-Mexico relations:

“We both believe in the power of democracy and a vibrant middle class. We both believe that our growing bilateral trade, investment, and supply chains have made us stronger. And we both believe that entrepreneurship and innovation are crucial to our global competitiveness in the 21st century. The mere fact that we are gathered here today shows how the ties between our countries have dramatically deepened. Our commercial and economic relationship has become one of the most fruitful in the world – defined by openness, cooperation, and collaboration.”

While there is more to do, Mexico has made tremendous strides toward becoming a modern, democratic, economically developed country over the last generation.  As it has modernized and opened its economy, trade between the US and Mexico has skyrocketed from $80 billion to over $500 billion per year, and supports six million US jobs.  Its ambitious constitutional reform agenda has gained it international credibility and even more financial strength in just the last year.

As we progress in debates on important policy issues including immigration reform and the Trans-Pacific Partnership, it is crucial that we employ a broader understanding of our relationship with our neighbor to the south.  The US-Mexico relationship is one of mutual and essential opportunity for our future as a country and a region.  

Please join us Tuesday for a lunchtime discussion of “US-Mexico: A Vital Modern Partnership.” We will present and release to the public an updated version of a presentation on Mexico, the US-Mexico Border, and Immigration Reform, followed by an interactive discussion.

Lunchtime Discussion: “US-Mexico: A Vital Modern Partnership”
RSVP here
Tuesday, February 18th, 12-1:15pm
Lunch served at 12 noon, Presentation will begin at 12:15pm
NDN Event Space: 729 15th St NW, 1st Floor, Washington, DC 20005

For more information see our recent backgrounders on the US-Mexico Partnership and the Border.

On Trust and “Enforcing the Laws” in the Immigration Reform Debate - A Response to Speaker Boehner

Today, Speaker Boehner once again repeated the new Republican excuse for inaction on immigration reform – the President has failed to enforce immigration laws, and cannot be trusted to see through commitments on border security and other enforcement objectives.  

Let’s take a quick look at both these claims.  
On the issue of border security, a new pragmatism has begun to break out in many quarters in what has long been a contentious issue.   In its introductory paragraph, the Senate Gang of 8 framework included these words:
 “And while border security has improved significantly over the last two Administrations…”
The Senate Judiciary Committee added more customs agents to the border to help facilitate our exploding trade relationship with Mexico, and no additional border guards.  The recent 2014 budget resolution made smart investments in border infrastructure, added more customs agents, and did not add more border patrol.  
The reason that as a nation we’ve begun to move beyond the “enforcement only” approach to the border is that after a decade of significant investment, better strategies and much greater cooperation with Mexico, the border is far safer than it was, net migration of unauthorized immigrants has dropped to zero all while trade with Mexico has more than doubled.  A reasonable look at the data would lead one to conclude that the border is on track to be safe and largely under control, with the main effort now modernizing a trade and tourism infrastructure designed for a trade relationship at levels hundreds of billions of dollars less than it is today.    
The Obama Administration deserves far more credit for managing the tough realities and politics of the border than they have gotten.  Our border is 2,000 miles long, it extends across four states, and the threat of cartel violence on the Mexican side is very real.  It is one of the busiest borders in the world, with billions of dollars of trade and millions of people crossing each week.  That the two largest border cities on the US side of the border, El Paso and San Diego, are the two safest large cities in America today is simply an extraordinary accomplishment.  4 of the 5 high traffic migration corridors are at or close to the widely accepted goal of a 90% effectiveness rate, spillover violence is rare, and just in the past few months Mexico has announced unprecedented efforts on their northern and southern borders which should do much to improve the situation in the years ahead.   More, of course, can be done, and the Senate bill invests in the things most border experts think is most needed now – better technology and more customs agents.  
Coming out of their retreat last week, the House leadership has adopted a very hard line on “securing the border,” and has repeatedly said the Obama Administration cannot be trusted on the issue.  Given its new centrality to their reform approach, the House leadership simply must put a real plan and budget for “securing” the border on the table immediately.  Their rhetorical rejection of the very real progress made on the border in recent years is a worrying sign about their lack of seriousness; and if they insist border security is a trigger even for legal status, no negotiations with the House should begin until they come to the table with an actual plan.  Trust works both ways.  The House leadership cannot expect the Senate to accept triggers on legal status/citizenship if the metrics and funding levels are not spelled out in great detail.   
The mischaracterization of the progress made by the Obama Administration impacts the interior enforcement portions of the “Standards” document as well.  At the root of the GOP’s concern is the Administration’s decision to prioritize criminal migrants for deportation, known as “prosecutorial discretion.”  In what is a tortured ideological position, the House GOP opposes this practice, preferring that law enforcement just round up everyone, and remarkably, NOT prioritize criminals.  The President used this rationale to authorize DACA, the 2012 executive order which gave DREAM-eligible youth relief from deportation.  The simple idea is that if the President can prioritize the front of the deportation line, he can also prioritize the back of it – determining that there is a class of unauthorized migrant who should not be deported.   
Thus by using DHS’s limited resources to get rid of the most dangerous of the unauthorized population, the Administration is, by this GOP logic, not enforcing immigration law.  Yes, this is a little hard to believe.  
One would not know from the “Standards” that President Obama has deported migrants at a higher rate than any other modern President, and has, in recent years, deported criminal migrants at double or triple the rate of previous Presidents.  It will be interesting to see how the House GOP can improve upon that record without providing billions in new resources, or rolling over local elected officials and law enforcement who will strenuously oppose the appropriation of local resources to enforce what is a federal responsibility.  
Given this track record, why exactly are the House Republicans walking from immigration reform?  The border is safer today, net migration is zero, deportations of criminal migrants are at all time highs while trade with Mexico has exploded, creating millions of jobs on both sides of the border.  There is a strong argument to be made that no President in American history has been more committed to enforcing our immigration laws and improving border security than President Obama.  If they are going to walk away from immigration reform for the 3rd time in the last decade, the House leadership are going to have find a far better set of excuses.  
For more information see the following backgrounders:
The Administration's Border Strategy Has Yielded Very Strong Results
NDN/NPI Background on Mexico Prior to Feb Visits by Pres Obama, Sec Pritzker

U.S. Workers Could Be Big Winners in the Current Trade Talks

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.

Administration’s Border Strategy Has Yielded Very Strong Results

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.  

Also see accompanying charts here.

Thoughts On The President's Trade Agenda

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.

Simon To Speak on Immigration Reform in San Francisco This Friday, March 14th

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.

World Affairs writes:

"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.

Video of the panel is available here (added 3/14/14).

NDN/NPI Backgrounder: US-Mexico: A Vital, Modern Economic Partnership

Full memo pdf attached

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:

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.
  • Mexican tourism to the US ranks second for number of visitors to the US and fourth for level of spending in the US.
  • 14 million jobs in the US are dependent on trade with NAFTA countries, 6 million with Mexico alone.
  • 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)

U.S. Trade With NAFTA

Source: U.S. Census Bureau Credit: Danny DeBelius, Emily Siner / NPR


Further Reading:

General Background


Mexico/North America

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