Category Archives: Trade

Looking for Local Labor Market Effects of NAFTA

Source: Shushanik Hakobyan, John McLaren, Review of Economics and Statistics, Vol. 98 No. 4, October 2016
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From the abstract:
Using U.S. Census data for 1990 to 2000, we estimate effects of NAFTA on U.S.wages. We look for effects of the agreement by industry and by geography, measuring each industry’s vulnerability to Mexican imports and each locality’s dependence on vulnerable industries. We find evidence of both effects, dramatically lowering wage growth for blue-collar workers in the most affected industries and localities (even for service-sector workers in affected localities, whose jobs do not compete with imports). These distributional effects are much larger than aggregate welfare effects estimated by other authors.

Increase in imports adversely affects provision of public services across U.S. localities

Source: IZA Newsroom, October 19, 2016

Recent research suggests that workers living in places with a heavy manufacturing presence in the U.S. have experienced both a decline in wages and a deterioration of employment prospects due to increased imports from China. While social assistance and trade adjustment programs at the federal level did kick in, they did not make up for the adverse labor market outcomes in these areas. As a result, workers in the manufacturing sector, but also in non-manufacturing sectors which do not face direct competition from China, have experienced a decline in incomes.

Local governments may play an important role in this context both by mitigating risk through welfare spending and by investing in public services, such as high quality education and infrastructure, to ensure the competitiveness of workers and firms. The problem is that funding for these public services is highly localized in the U.S., with a heavy reliance on property and sales tax revenues. Therefore, a decline in the level of local economic activity and incomes in an area’s labor market depresses revenues and restricts the ability of local governments to fund services, precisely at a time when these expenditures may be needed the most. ….

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Trade Shocks and the Provision of Local Public Goods
Source: Leo Feler, Mine Zeynep Senses, Discussion Paper No. 10231, September 2016

From the abstract:
We analyze the impact of trade-induced income shocks on the size of local government, and the provision of public services. Areas in the US with declining labor demand and incomes due to increasing import competition from China experience relative declines in housing prices and business activity. Since local governments are disproportionately funded through property and sales taxation, declining property values and a decrease in economic activity translate into less revenue, which constrains the ability of local governments to provide public services. State and federal governments have limited ability to smooth local shocks, and the impact on the provision of public services is compounded when local income shocks are highly correlated with shocks in the rest of the state. The outcome is greater inequality not only in incomes but also in the quality of public services and amenities across US jurisdictions.
Text: See Discussion Paper No. 10231

Findings on the Worst Forms of Child Labor – 2016

Source: U.S. Department of Labor, Bureau of International Labor Affairs (ILAB), September 2016

From the summary:
The Department of Labor’s annual Findings on the Worst Forms of Child Labor focuses on the efforts of certain U.S. trade beneficiary countries and territories to eliminate the worst forms of child labor through legislation, enforcement mechanisms, policies and social programs. Read More
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List of Goods Produced by Child Labor or Forced Labor – 2016

Source: U.S. Department of Labor, Bureau of International Labor Affairs (ILAB), September 2016
ILAB maintains a list of goods and their source countries which it has reason to believe are produced by child labor or forced labor in violation of international standards, as required under the Trafficking Victims Protection Reauthorization Act (TVPRA) of 2005 and subsequent reauthorizations. As of September 30, 2016, the List of Goods Produced by Child Labor or Forced Labor comprises 139 goods from 75 countries.

ILAB maintains the List primarily to raise public awareness about forced labor and child labor around the world and to promote efforts to combat them; it is not intended to be punitive, but rather to serve as a catalyst for more strategic and focused coordination and collaboration among those working to address these problems.

Publication of the List has resulted in new opportunities for ILAB to engage with foreign governments to combat forced labor and child labor. It is also a valuable resource for researchers, advocacy organizations and companies wishing to carry out risk assessments and engage in due diligence on labor rights in their supply chains.
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Who wrote the rules for the Trans-Pacific Partnership?

Source: Todd Allee, Andrew Lugg, Research & Politics, Vol. 3 no. 3, July-September 2016

From the abstract:
Twelve governments recently signed the much-anticipated Trans-Pacific Partnership (TPP), sparking heated debate about its merits. As a primary motivation for this first “mega-regional” agreement, US President Barack Obama argues that the TPP is a way for the USA, and not China or someone else, to write the global trade rules of the future. This begs some important questions, namely which country or countries really did write most of the TPP and thus whose agenda for 21st century trade might it advance? To answer these questions, we compare the recently-released text of the TPP to the language in the 74 previous trade agreements that TPP members signed since 1995. Our text-as-data analyses reveal that the contents of the TPP are taken disproportionately from earlier US trade agreements. The ten preferential trade agreements (PTAs) that most closely match the TPP are all US PTAs. Moreover, the contents of controversial chapters, such as the one on investment, are drawn even more heavily from past US treaty language. Our study and findings apply power-based accounts of international institutions to a landmark new agreement, and portray a more active, template-based process of international diffusion.

ISDS: Expanding Corporate Power to Attack Laws in Every State

Source: Public Citizen, Global Trade Watch, September 2016

At the heart of the Trans-Pacific Partnership (TPP) are new rights for thousands of multinational corporations to sue the U.S. government before a panel of three corporate lawyers. These lawyers can award the corporations unlimited sums, including for lost future expected profits, to be paid by America’s taxpayers. The corporations need only convince the lawyers that a U.S. federal or state law, court ruling or regulatory decision violates the extraordinary new rights the TPP would grant them. The decisions are not subject to appeal. This shocking process, called “investor-state dispute settlement” (ISDS), empowers multinational corporations to attack the laws we rely on for a clean environment, financial stability, affordable medicines, safe food and decent jobs.

The United States has largely avoided ISDS attacks because past treaties were with nations that did not have many investors here. But the TPP and a similar deal with European nations, called the Transatlantic Trade and Investment Partnership (TTIP), would change that. Under existing U.S. treaties, other countries have paid nearly $3 billion to corporations for toxics bans, water and timber policies, land-use rules regulatory permits, and more. Another $70 billion in claims are now pending against climate and energy laws, medicine pricing policies, pollution cleanup orders and other public interest policies.

Nationwide, the TPP would roughly double U.S. exposure to ISDS attacks and a TTIP would quadruple the exposure, spelling an unprecedented increase in U.S. ISDS liability. Under all existing ISDS-enforced pacts, the total number of firms that can currently launch ISDS cases against the U.S. government is about 4,100 foreign corporations that own about 9,829 U.S. subsidiaries. The TPP would newly empower more than 3,682 additional corporations in TPP countries that own more than 10,085 subsidiaries here, to launch cases against the U.S. government. The TTIP would newly empower more than 12,100 European Union parent corporations that own more than 26,961 U.S. subsidiaries, to go to the panels of corporate lawyers and demand U.S. taxpayer compensation.

How could your state be threatened? Click the map above to find out.
Related:
Trans-Pacific Partnership (TPP): Expanded Corporate Power, Lower Wages, Unsafe Food Imports

Frustrated with Democrats, white working-class voters turn to Trump

Source: Emily Mills, Jimmy Miller, Lian Bunny, Center for Public Integrity, August 25, 2016

….In economically struggling communities like Mahoning County – where most steel mills have closed – many white, working-class Democrats are voting for Trump, registration records and 2016 presidential primary results show….

…..In Tennessee, after a clothing factory outsourced jobs and operations to Mexico, a county that voted Democratic in the 2000 and 2004 presidential elections went Republican in both 2008 and 2012.
In Mahoning County, Ohio, as its county seat Youngstown labors under the loss of the steel industry, more than 6,000 voters have switched from Democrat to Republican this year.

Similarly, frustration over closing steel mills and rising health care costs has swayed nearly 5,400 voters to switch parties in Westmoreland County, Pennsylvania.

And in one Kentucky county where residents frustrated with the demise of the coal industry voted about 31 percent Republican in the 2000 presidential election, they voted more than 72 percent Republican in 2012, even though a majority of its voters remain registered Democrats…..

…..In the March 2008 primary, just under 14 percent of registered voters in Mahoning County – where Youngstown is located – voted Republican. During this year’s state primary in March, more than 48 percent of the county’s registered voters cast a Republican ballot, and poll workers had to print additional Republican ballots. More than 6,000 voters then switched from Democratic to Republican this year…..
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Trump a Working-Class Hero? A Blue-Collar Town Debates His Credentials
Source: Richard Fausset, New York Times, August 26, 2016

The talk gets heated in Youngstown, Ohio, when residents discuss whether a New York billionaire’s ideas can revitalize a struggling Rust Belt town.

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….