Category Archives: Trade

Human Trafficking and Forced Labor: Trends in Import Restrictions

Source: Liana W. Rosen, M. Angeles Villarreal, Ashley Feng, Congressional Research Service, CRS Insight, IN10541, July 29, 2016

More than 85 years ago, Congress passed a provision against forced labor in the Tariff Act of 1930 (19 U.S.C. 1307), which prohibited from import into the United States “all goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in any foreign country by convict labor or/and forced labor or/and indentured labor under penal sanctions” (Section 307 of the Act)…..According to human rights and anti-human trafficking awareness and advocacy groups, the use of Section 307 has been limited. In the over 85 years since the Tariff Act was enacted, U.S. authorities applied this provision to relatively few specific goods and manufactures. Some observers pointed to the so-called “consumptive demand” clause for the limited effect of this import prohibition. This clause excluded Section 307’s application to any imports that were not made “in such quantities in the United States to meet the consumptive demands of the United States.” In February 2016, the 114th Congress passed the Trade Facilitation and Trade Enforcement Act of 2015, known also as the Customs Reauthorization bill (P.L. 114-125). The bill was signed into law on February 24, 2016. Section 910 of the Act repeals the “consumptive demand” exception, effective 15 days after enactment, or March 16, 2016…..

The Trans-Pacific Partnership (TPP): Analysis of Economic Studies

Source: James K. Jackson, Congressional Research Service, CRS Report, R44551, June 30, 2016

…This report analyses some studies of the economic impact of TPP that are playing an important role in affecting the public policy debate, including the following:
• U.S. International Trade Commission (USITC): estimated the TPP would increase annual U.S. GDP by 0.15%, and trade by 1.0% by 2032; U.S. annual employment would be higher by 128,000.
• Peter A. Petri and Michael G. Plummer (Peterson Institute for International Economics) estimated that the TPP would increase annual GDP by 0.5% and increase U.S. exports by 9.0% by 2030.
• World Bank: estimated the TPP would increase U.S. GDP by 0.5% by 2030.
• Tufts University, Global Development and Environment Institute study by Jeronim Capaldo and Alex Izurieta: estimated that all TPP participants would lose 770,000 jobs and non-TPP developing economies would lose 4.5 million jobs.
• Other studies that use such proxy indicators as trade balances and jobs associated with exports to assess the impact of the TPP….

The High Health Costs of TPP’s “Free Trade”

Source: Joseph Stiglitz, Public Citizen, Global Trade Watch, 2016

Despite protests from industry lobbyists who are upset that they did not get everything they wanted, big pharmaceutical companies are some of the biggest winners in the Trans-Pacific Partnership (TPP). This supposed “free trade” agreement between the United States and 11 countries in the Americas and Asia would enshrine expansive monopoly protections for intellectual properties that shield drug makers from competition and provide them with new powers to challenge government decisions aimed at managing health care costs. A win for Big Pharma here will leave virtually everyone else worse off, with their higher profits coming at the expense of higher health care costs for consumers and taxpayers, avoidable deaths and suffering, and health innovations being brought to market at a slower pace….

It’s Tax Not Trade (Stupid)

Source: Edward J. McCaffery, USC Gould School of Law, USC CLASS Research Papers Series No. CLASS16-20, USC Law Legal Studies Paper No. 16-22, July 19, 2016

….The simple fact is that globalization and free trade are good for economies, as Adam Smith taught us in 1776 and as a decent high school economics class can prove today. The trouble in America is that the gains from trade are not being shared. The rich who can live off their capital or wealth rather than by the sweat of their brows are the big winners from globalization; workers are the big losers.

Spreading the wealth from those who benefit most from social changes to those who are harmed by them is the responsibility of our tax system. Yet tax has failed miserably in this role. In fact, tax as it now stands is not even designed to collect from the wealthy. And no candidate — on the right, left, or middle — has any serious plan to change this fact. Indeed, Trump and his fellow Republicans continually vow to cut taxes on the wealthiest, further benefitting globalization’s winners while adding to the pain of its losers.

In sum, tax not trade is what ought to be changing, and rich Americans, not workers worldwide, ought to be paying more to help their fellow citizens…..

The Surprisingly Swift Decline of US Manufacturing Employment

Source: Justin R. Pierce and Peter K. Schott, American Economic Review, Vol. 106, no. 7, July 2016
(subscription required)

From the abstract:
This paper links the sharp drop in US manufacturing employment after 2000 to a change in US trade policy that eliminated potential tariff increases on Chinese imports. Industries more exposed to the change experience greater employment loss, increased imports from China, and higher entry by US importers and foreign-owned Chinese exporters. At the plant level, shifts toward less labor-intensive production and exposure to the policy via input-output linkages also contribute to the decline in employment. Results are robust to other potential explanations of employment loss, and there is no similar reaction in the European Union, where policy did not change.

Who’s responsible for child slavery?

Source: Al Jazeera, Inside Story, June 12, 2016

Almost one in 10 children wakes up each morning and goes to work. These children slave away in factories and fields, and as maids and sex workers. United Nations declarations specifically guarantee the rights of a child to be protected from economic exploitation. But vague laws, or sometimes a complete lack of legislation, mean that millions of children find themselves at work when they should be at school – often in hazardous conditions. At least 168 million children around the world work, with more than half of them in dangerous conditions, according to the International Labour Organization. Almost 80 million children are working in the Asia-Pacific region. That’s equivalent to the entire population of Turkey. And one in five children in Sub-Saharan Africa has a job. That’s almost 60 million children. The agriculture business is the biggest employer. Sixty percent of child labourers – nearly 100 million children – tend to farms and animals. But a lot of children, around 66 million, are also working in the service and industry sectors. What does it take to end child slavery?

Eradicating Child Labor in Supply Chains Requires Binding, Enforceable Standards

Source: Sonia Mistry, Solidarity Center, June 10, 2016

…..Unions are key partners in eradicating child labor through the promotion of decent work for adults and advocacy for improved government policies. Workers are the best workplace monitors, capable of identifying violations, including child and forced labor. Through collective bargaining, unions have engaged employers to address many of the root causes of child labor, including inadequate access to education, low wages and excessively high production quotas.

On this World Day Against Child Labor, I offer the following solutions for stakeholders seeking to eradicate child labor in supply chains:

Businesses—Work with unions and independent workers’ organizations to develop binding and enforceable standards, such as through collective bargaining agreements. Precedent for other forms of enforceable agreements has also been set in the garment industry, for example, where clothing brands and unions signed on to the Bangladesh Accord on Fire and Building Safety.

Governments—Ensure that all workers, including those in informal sectors, are covered by labor law protections that adhere to international standards. Enforce those laws to promote accountability.
Consumers—Contact companies and government officials to advocate for the actions noted above. When making purchases, look for the union label because it means workers had a role to play in upholding standards in their part of the supply chain.

In the Congo, where government regulation was severely lacking and companies did not trace informally mined minerals that ended up in their supply chains, it was the teachers union that played a key role in helping thousands of children, like the little boy I met, gain access to education. By advocating for regular payment of wages so that teachers did not have to charge school fees to survive and parents could afford to keep their children in class, the union chose to take on one of the drivers of child labor rather than simply seek a stopgap…..
Ending Child Labor: The Dirty Business of Cleaning Up Supply Chains
Source: Nina Smith – GoodWeave International, Huffington Post, June 10, 2016

Made by Children. Instead of Made in China or Made in India, what if this was the label inside the neatly stacked sweaters on a department store shelf?

For most major brands, such a designation would be accurate. Despite companies making large investments to secure ethical supply chains, the International Labour Organization estimates that 168 million child laborers and 21 million forced laborers are still toiling in the global economy….

ILO: Ending child labour in supply chains is everyone’s business
Source: International Labour Organization (ILO), Press Release, June 8, 2016

This year, the focus for World Day Against Child Labour – marked on 12 June – is on child labour and supply chains. With 168 million children still in child labour, all supply chains, from agriculture to manufacturing, services to construction, run the risk that child labour may be present.

The Buy American Act — Preferences for “Domestic” Supplies: In Brief

Source: Kate M. Manuel, Congressional Research Service (CRS), CRS Report for Congress, R43140, April 26, 2016

The Buy American Act of 1933 is the earliest and arguably the best known of the various statutes regarding federal procurement of domestic products. Essentially, the act attempts to protect domestic businesses and labor by establishing a price preference for domestic end products and construction materials in government acquisitions. The act is of perennial interest to Congress, which has periodically enacted or considered measures to expand the scope of domestic preferences in federal procurements or, more rarely, to narrow it. The act itself has seldom been amended. However, numerous statutory requirements like those of the Buy American Act have been enacted. See generally CRS Report R43354, Domestic Content Restrictions: The Buy American Act and Complementary Provisions of Federal Law, by Kate M. Manuel et al. This report supersedes CRS Report 97-765, The Buy American Act: Requiring Government Procurements to Come from Domestic Sources, by John R. Luckey.

Importing Political Polarization? The Electoral Consequences of Rising Trade Exposure

Source: David Autor – Massachusetts Institute of Technology, David Dorn – University of Zurich, Gordon Hanson – University of California San Diego, Kaveh Majlesi – Lund University, April 23, 2016

Has rising trade integration between the U.S. and China contributed to the polarization of U.S. politics? Analyzing outcomes from the 2002 and 2010 congressional elections, we detect an ideological realignment that is centered in trade-exposed local labor markets and that commences prior to the divisive 2016 U.S. presidential election. Exploiting the exogenous component of rising trade with China and classifying legislator ideologies by their congressional voting record, we find strong evidence that congressional districts exposed to larger increases in import competition disproportionately removed moderate representatives from office in the 2000s. Trade-exposed districts initially in Republican hands become substantially more likely to elect a conservative Republican, while trade-exposed districts initially in Democratic hands become more likely to elect either a liberal Democrat or a conservative Republican. Polarization is also evident when breaking down districts by race: trade-exposed locations with a majority white population are disproportionately likely to replace moderate legislators with conservative Republicans, whereas locations with a majority non-white population tend to replace moderates with liberal Democrats. In contrast with much previous work in political science, we find limited impacts of economic shocks on the probability of party turnover (an anti-incumbency effect) or on the electoral vote shares of the major parties (a party realignment effect). Focusing on legislator behavior rather than on party vote counts, we find that trade exposure abets the replacement of incumbents from both parties with more ideologically strident successors.