Category: Uncategorized

The SEC’s Approach of Regulation by Enforcement for Crypto Assets

Posted on by Alyssa Brown

As crypto assets have gained mainstream popularity, most industry leaders have been vocal about the need for a defined regulatory framework for decentralized finance in the United States. Now, in lieu of a successful legislative effort from Congress, the SEC has taken matters into its own hands. Crypto exchange platforms Coinbase and Binance are both facing lawsuits filed by the SEC as of last week, with the agency alleging that the companies are guilty of operating unlicensed securities trading platforms in the United States.

The suits represent a sort of regulation by enforcement, penalizing exchange platforms that have struggled to find where they exist in the current financial system. It is the responsibility of the SEC to protect investors where necessary and, with a robust history of fraud, the industry has not done its credibility any favors. However, considering the dynamism of still-developing crypto markets, the SEC must ensure that their aggressive enforcement efforts, absent clear laws or guidance from Congress, don’t throttle the entire crypto industry, effectively punishing good actors alongside the bad ones while paralyzing innovation.

The cases against Coinbase and Binance rest on a hotly disputed question: Do crypto assets qualify as a security under U.S. financial regulation, and if so, which ones? The SEC seems to think yes in many cases, with Chair Gary Gensler leading the charge toward defining them as such. But even in the eyes of the SEC not every crypto asset is a security, and the lack of clear legal definitions makes it impossible for exchanges to ensure complete compliance laws not written with crypto in mind.

In the past, courts have applied the Howey test, a common framework for determining whether an asset is a security, to crypto assets. The test has four basic requirements. A security is defined in instances in which there (1) must be investment of money, (2) in a common enterprise, (3) with reasonable expectation of profit, (4) derived from the efforts of others. Under this test, it is generally agreed upon that Bitcoin and Ethereum are decentralized enough — meaning that they are detached from any collective effort or organization promoting them — that they are not considered securities. But in other cases, such as Balestra v. ATBCOIN LLC, courts have determined that certain crypto coins do in fact qualify as securities, because the model of the organization behind the coin acted more like a centralized investment fund than a decentralized system.

Though they have lost momentum since the last congressional session, efforts have been made to codify the differences between an asset’s classification as a security or commodity. Senators Lummis and Kirsten Gillibrand’s Responsible Financial Innovation Act, for example, established that under the Howey test some assets should qualify as securities based on their level of decentralization. But the bill did not pass–and without clear lines being drawn by Congress, it has been up to companies and the SEC to provide their own guesses as to which is which. While the SEC’s stance has been made clear, there is also currently no way for crypto exchanges to register with the SEC, meaning these companies couldn’t avoid these suits even if they happen to independently arrive at the same conclusions as the agency.

Within this uncertain environment, Coinbase has been adamant that based on the Howey Test crypto assets are not securities, as explained in their February 2023 blog post on the matter. This is consistent with the company’s many statements insisting their compliance with the law to the best of their abilities, though this a moot point if their legal interpretation doesn’t match the one now touted by regulators.

With legislation stalled in the United States and slow rollout of regulation in the European Union, the recent filings by the SEC represent some of the first widespread attempts for a government to act on defining crypto assets around the globe. As such, the SEC should do so in a way mindful of the impact it will have on crypto’s ability to innovate in U.S. markets. Without policy changes, crypto exchanges will be left with three options if the SEC finds success with its recent filings: shut down crypto exchanges in the US entirely, find another legal avenue to register with the SEC, or only allow trading of coins which have been accepted as being decentralized enough to not qualify as a security–likely excluding everything but Bitcoin and Ethereum.

The crypto space has not been without its problems, but current efforts by the SEC may undermine the ability for an honest, robust industry to thrive in the United States. Though crypto trading platforms should be held to a high level of scrutiny to protect investors, the SEC must balance this with an approach that still allows Congress to move forward with legislative efforts to regulate the industry in a way that both provides guidance and preserves crypto’s innovative potential.

How Student Debt Forgiveness Widens the Diploma Divide

Posted on by Alyssa Brown

INTRODUCTION

In August of last year, President Biden announced an ambitious plan to wipe out more than $400 billion of student loan debt for the nation’s borrowers. Individuals with incomes below $125,000 (and couples with combined incomes below $250,000) could receive up to $10,000 of loan forgiveness, with former Pell Grant recipients receiving up to $20,000. Speaking about his plan less than a week before the midterm elections, the president made it clear who he was trying to help.

“I want to state again who will benefit most: working people and middle-class folks,” he declared in a speech at Central New Mexico Community College (CNMCC).

Given the skyrocketing costs of higher education, some borrowers — particularly those with low incomes and those who were scammed by for-profit colleges — genuinely need assistance. But portraying student loan forgiveness as a working-class issue is highly misleading. In fact, data on student borrowing shows that debt relief benefits few working-class families, most of whom never attended college in the first place.

This paper dives deeply into the evidence on the economic impact of student loan forgiveness. As the paper shows, proposals from political progressives to forgive all student loan debt (or large amounts such as $50,000 of debt) overwhelmingly benefit affluent Americans. President Biden departed from these more elitist proposals, yet his decision to forgive even a more limited amount is still puzzling. At a time when the economic returns to education are rising and the Democratic Party is losing noncollege voters, it makes little sense to target government aid to people who attended college.

The noncollege workers who do not benefit from the President’s plan are certainly in greater need of support than student loan borrowers.

The paper goes on to examine the question of why the Democratic Party — traditionally the party of working-class people — has become so focused on canceling student loans. One possibility is that Democratic lawmakers are ensconced in a D.C. bubble. The nation’s highest student loan balances are found in Washington, and these borrowers would benefit more from President Biden’s forgiveness plan than borrowers in 49 out of 50 states. In short, many in the party establishment seem to be conflating the problems of highly educated college graduates — an elite class of Americans — with those of working-class people.

This is not to deny that the cost of college has become a significant problem in recent decades. Over the past 19 years, consumer prices have risen 59%, and per capita personal incomes have doubled (in nominal dollars). By contrast, prices for college textbooks have risen 122%, and college tuition (net of grant aid) has gone up 124%.6 This means that a typical family would have found it more difficult to finance a college education in 2022 than in 2003. Some students understandably forego college entirely, while those who attend are stuck with high bills.

Unsurprisingly, many households have turned to the student loan system. Between the first quarter of 2003 and the fourth quarter of 2022, student loan debt held by consumers increased from $392 billion to $1.6 trillion (in inflation-adjusted dollars).7 Student loans also rose from 3.3% of all consumer debt to 9.4% over the same period.

However, the financial burdens of college do not justify widespread student debt relief. If funded through higher taxes, the costs of student loan cancellation will be borne by taxpayers; if funded through higher borrowing, loan cancellation will increase economic demand, thereby raising prices for consumers. Either way, the cost of student debt cancellation will fall on members of the general public, most of whom do not have four-year degrees.

There are better ways of helping working-class Americans. As the Progressive Policy Institute (PPI) has advocated, the government should invest more in apprenticeships, job training, and career pathways for noncollege workers, who generally have lower wages than college-educated workers. Lawmakers should also dramatically increase the size of the Pell Grant (thus helping students from low-income families) and craft policies aimed at reducing administrative bloat at universities (which would reduce expenses and thus tuition). These policies would boost the employment and wages of noncollege workers while also making college more affordable for ordinary families.

It’s no secret that Democrats have lost support among working-class voters in recent elections. Forgiving student debt only reifies the image of Democrats as beholden to the interests of the educational elite. Until the party puts forth pragmatic solutions to the pocketbook issues facing ordinary people, they are likely to continue losing ground among the exact voters Democrats claim to support.

READ THE FULL REPORT.

PPI’s Trade Fact of the Week: 13.4 billion COVID vaccinations and boosters have been delivered since December 2020

Posted on by Alyssa Brown

FACT: 13.4 billion COVID vaccinations and boosters have been delivered since December 2020.

THE NUMBERS: World under-five mortality rate, per 1,000 births* –
2021 38
2010 52
2000 76
1990 93
1980 132
* World Health Organization for 1990-2021; World Bank World Development Indicators for 1980.

 

WHAT THEY MEAN:

Trade Fact series editor Ed Gresser, testifying at the House Judiciary Committee last week on COVID-19, the WTO’s intellectual property rights (“TRIPS”) agreement, and the WTO members’ decision to authorize a temporary waiver of some patent rules last summer, was asked whether the COVID pandemic had definitively “ended.” Having been down with a (very mild) COVID bout the previous week, his answer was (i) a rueful but clear “no.” But (ii) with mass vaccinations — 82% of Americans, 70% of the world — the danger COVID posed to life and health has been greatly diminished. So (iii) the Biden administration’s decision to declare the “public health emergency” phase of the pandemic over was the right call.

To get to this point, in three years the world’s science, industry, pharmacies, clinics, and hospitals have moved from:

(a)     Not quite a standing start (though close to it): as of early 2020, scientists had some knowledge of coronaviruses generally, and could make use of mRNA and nanotech technologies developed in the 1970s and 1980s and first used in development of an Ebola virus, but had no knowledge of the actual COVID-19 virus before its isolation in December 2019; to

(b)     A safe, effective, and transportable vaccine by December 2020; and then

(c)     Manufacturing, logistical, and primary-care delivery systems at a scale needed for a patient population comprised of “the whole human race” by mid-2021; and finally

(e)     Delivery of 13.4 billion actual vaccinations and booster shots — almost two for everyone in the world — as of mid-2023.

Thus a landmark achievement in a very short time for policy, science, manufacturing, logistics, and public health providers worldwide. Pulling back a bit, the speed in this case was exceptional. But as a large-scale achievement of policy, production, delivery, and public health it wasn’t entirely unique. In fact, it is one with many precedents, and is part of a larger story of remarkable successes in vaccination generally. Polio is a particularly striking case, with complete eradication of the disease now achingly close. Here’s a count of polio cases worldwide over the last 25 years:

1988 350,000 cases
2010 650 cases
2020 6 cases

Measles presents a second example: an easily transmissible disease mostly affecting children, for which large-scale vaccinations began with a U.S. launch in March of 1963, and deaths have dropped by 95% over the last generation, from 2.6 million deaths a year to 600,000 in 2000, 210,000 in 2010, and 128,000 in 2021. Likewise deaths of neo-natal tetanus, after campaigns to vaccinate pregnant women and guarantee antiseptic standards in poor-country maternity clinics, have dropped from 787,000 in 1988 to 309,000 in 2000 and 25,000 in 2018 (the last year for which data is available).

Overall, the invention of new treatments and medicines, worldwide vaccination campaigns, and improving primary-care delivery have helped cut world under-five mortality rates from 132 per 1,000 children in 1980, to 78 per thousand in 2000, and 32 per thousand in 2020, or in overall terms by 70%.

Against this background, the success of the vaccination program for COVID-19 is, again, a remarkable success of focused policy in emergencies, scientific research and development, manufacturing and logistics technologies, and delivery systems. Its speed has been particularly impressive (and the Trade Fact series editor is appropriately grateful). But it’s especially heartening to see that this is not something entirely unique, but more like a representative case in the larger vaccine story.

* More precisely, the Judiciary Committee’s Subcommittee on the Courts, Intellectual Property, and the Internet.

 

FURTHER READING:

COVID-19:

Gresser on WTO intellectual property rules as supporters of research, exceptions in emergency situations, and the Biden administration’s reasonable choices.

… and from the House Judiciary’s Subcommittee on Courts, Intellectual Property and the Internet, the hearing video and testimonies.

Chad Bown of the Peterson Institute for International Economics maps the international science, manufacturing, and logistical “supply chains” which created COVID-19 vaccines.

HHS’ Office of Global Affairs on U.S. work.

And Our World in Data has stats for Covid vaccinations, cases, deaths, and more.

Background: 

The World Health Organization on vaccines.

… and an update on hopes for measles eradication in the next decade.

 

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007).  He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week

Alliance for Clean Trade: Creating a New Climate and Trade Alliance Between the U.S., EU, and Allies

Posted on by Alyssa Brown

The United States and the European Union have recently implemented ambitious domestic greenhouse gas reduction programs. But reducing global emissions will not be possible unless China and other middle-income emitting countries cut their emissions. And the different approaches the EU and U.S. have taken create a risk of policy and trade conflicts that divert both from the larger goal of limiting world emissions.

Today, the Progressive Policy Institute (PPI) released a new report titled, “Alliance for Clean Trade: A Framework Proposal for a New Climate and Trade Alliance Between the U.S., EU, and Allies” outlining a new low-emissions trade deal that would help the United States, European Union, and their allies harmonize approaches to transition to clean energy and incentivize China and other nations to reduce emissions.

Report authors Paul Bledsoe, Strategic Advisor at PPI and a former Clinton White House climate official, and Ed Gresser, Vice President and Director for Trade and Global Markets and former Assistant U.S. Trade Representative for Trade Policy and Economics, lay out a policy framework where the U.S., EU, and other G7 countries set emissions standards for high-carbon industries, and impose a fee applying to both local production and imported goods with high emissions rates. This trade agreement would help countries meet their emissions goals, avoid imposing trade penalties on each other, and give China and other large emitting, middle-income countries incentives to follow suit.

“The Alliance for Clean Trade (ACT) proposes that the U.S. and our G7 allies ban together to create powerful trade incentives for China and other nations to cut their emissions, so global emissions can fall and we can prevent the worst of climate change impacts,” said Paul Bledsoe. “Without new economic incentives to reduce emissions, our world will see dangerous climate impacts and rising household costs that will soon swamp our ability to adapt and protect public safety at home and around the world. Our framework helps provide a pragmatic, yet ambitious way forward, while also complying with World Trade Organization rules.”

“The world has just had a shining example of U.S.-Europe-Asian collaboration to develop new technologies and products needed to meet a worldwide threat in the case of the COVID-19 vaccines. We need a similar collaborative effort to meet the challenge of climate change, and to induce the large middle-income economies that are the source of new net emissions to become more efficient,” said Ed Gresser. “This paper is an effort to outline such a program, through trade incentives based on common charges for over-production of carbon in the highest-emissions industrial sectors.”

The framework seeks to address three major problems with current policies and other proposals:

  • The framework creates powerful economic incentives for China and other large emitting, middle-income countries to cut emissions since they now export to the U.S., EU and other allied countries without penalty for higher CO2 emissions.
  • The framework also harmonizes increasingly disparate climate policies among US, EU and G7 allies for trade purposes, using low emissions intensity by sector as the key metric.
  • The framework complies with World Trade Organization principles of national treatment and non-discrimination, avoiding the risk that proposals currently being considered in the U.S. Congress might violate U.S. trade obligations, but without requiring widespread U.S. carbon pricing.

 

Read and download the report here:

The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C., with offices in Brussels, Berlin and the United Kingdom. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.

Follow the Progressive Policy Institute.

Find an expert at PPI.

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Media Contact: Amelia Fox, afox@ppionline.org

Alliance for Clean Trade: A Framework Proposal for a New Climate and Trade Alliance Between the U.S., EU, and Allies

Posted on by The Progressive Policy Institute

ALLIANCE FOR CLEAN TRADE

A low-emissions trade deal to help the United States, the European Union, and their allies harmonize approaches to the clean energy transition and incentivize China and other nations to reduce emissions.

 

EXECUTIVE SUMMARY

After many years of discord and false starts, the United States, the European Union, and most other major developed economies are implementing ambitious domestic greenhouse gas emissions reduction programs. U.S. and EU emissions, respectively the world’s secondlargest and third-largest flows of carbon dioxide into the atmosphere, are likely to continue to fall sharply as a result.

But their efforts won’t be enough. To avert a disastrous rise in global temperatures, the larger, necessary goal is to reduce global emissions. For this, however, China — whose emissions are now greater annually than the U.S., EU, and all other developed countries combined — must reduce its emissions, and so must other major middle-income emitting countries. So far, that isn’t happening.

Here’s a program that can help: An Alliance for Clean Trade (ACT) that minimizes climate and trade policy conflict among low-emissions economies including the U.S. and EU, accelerates the reduction of emissions in some of their major industrial sectors, and creates strong economic incentives for others, including eventually China, to reduce their own emissions.

The core idea is for the U.S. and EU, joined by other G7 countries and eventually OECD nations, to set emissions standards for high-carbon industries, and impose a fee applying to both local production and imported goods with emissions rates above an agreed emissions intensity standard. This would help them meet their emissions goals, avoid counterproductive rivalries and imposition of trade penalties on one another, and give China and large emitting, middle-income countries incentives to do the same.

READ THE FULL REPORT

PPI Announces Hiring of Mitchell Taylor as Congressional Policy Fellow, Supporting the Blue Dog Coalition

Posted on by Alyssa Brown

Today, the Progressive Policy Institute (PPI) announced that Mitchell Taylor has been hired as a Congressional Policy Fellow to support the Blue Dog Coalition. Taylor will be placed in the office of Congresswoman Mary Peltola (AK-AL), the recently named Blue Dog Coalition Co-Chair for Policy and Legislative Strategy, and will provide critical policy, communications, and administrative support for the 10-member coalition.

The Blue Dog Coalition is led by Congressman Jared Golden (ME-02), Co-Chair for Administration, and Congresswoman Marie Gluesenkamp Perez (WA-03), Co-Chair for Communications and Outreach, in addition to Congresswoman Peltola. Together, these Democrats represent the three most GOP-leaning districts in the House Democratic caucus.

“I am excited to join the Blue Dog team and look forward to helping its members advance common sense policy solutions,” said Mitchell Taylor. “After starting my career working in the Senate, this PPI fellowship opportunity will allow me to take on an expanded policy portfolio in the House and provide support to this exciting group of members who are committed to breaking gridlock and getting things done.”

Prior to joining the Blue Dog Coalition as a PPI Congressional Policy Fellow, Taylor worked in the office of U.S. Senator Jerry Moran (R‑KS). Taylor is also a member of the DC New Liberals, a local chapter of the Center for New Liberalism, a grassroots organization fighting for center-left, pragmatic policies.

The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.

The Blue Dog Coalition is an official caucus in the U.S. House of Representatives comprised of fiscally-responsible Democrats, who are leading the way to find common sense solutions. The Blue Dogs are dedicated to pursuing fiscally-responsible policies, ensuring a strong national defense for our country, and transcending party lines to get things done for the American people. Learn more about the Blue Dogs by visiting https://bluedogcaucus-golden.house.gov/.

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Media Contact: Amelia Fox, afox@ppionline.org

Ainsley on Socially Democratic: Making the Centre-Left More Competitive

Posted on by The Progressive Policy Institute

Dunn Street founder and Community Organiser Stephen Donnelly was joined by Director of the Project on Center-Left Renewal at the Progressive Policy Institute, Claire Ainsley.

Claire joins the show to discuss the Project on Centre-Left Renewal and how it aims to make center-left parties more competitive and improve their governing performance.

She also discusses her journey into politics and towards working for the Progressive Policy Institute.

Marshall for Progressive Britain: Starmer Steers Labour Back to Home Port

Posted on by The Progressive Policy Institute

By Will Marshall

Like the lawyer he is, Keir Starmer seems to be calmly and methodically building a conclusive case for Labour’s return to power after a 13-year absence.

True, he’s gotten a big assist from Boris Johnson’s downfall and the ensuing succession chaos among the Tories. But Starmer has deftly steered Labour away from the reefs of doctrinaire socialism — which contributed greatly to its shattering 2019 defeat — and back toward its “home port” among working-class voters.

Why should an American observer from a center-left think tank in Washington take such a keen interest in Labour’s ups and downs?

Read more on the Progressive Britain blog.

PPI’s Trade Fact of the Week: Seven countries have ratified the WTO fishery subsidies agreement

Posted on by Alyssa Brown

FACT: Seven countries have ratified the WTO fishery subsidies agreement.

THE NUMBERS: Fishery subsidies (2018 estimates*) –
World $35.4 billion
Asia $19.5 billion
    China only $7.5 billion
Europe $6.4 billion
    EU members $3.8 billion
U.S./Canada/Mexico $4.4 billion
    U.S.  $3.4 billion
South/Central America $2.0 billion
Africa $2.1 billion
Oceania $0.8 billion

* Sumaila et al.

WHAT THEY MEAN:

A year ago at the WTO’s 12th Ministerial Conference in Geneva, the 164 WTO members “reached consensus” — WTO-speak for agreeing on something with no holdouts — on the first new multilateral trade agreement in a decade. This is the “Agreement on Fishery Subsidies,” a trade/environment accord that “prohibits support for illegal, unreported and unregulated (IUU) fishing, bans support for fishing overfished stocks, and ends subsidies for fishing on the unregulated high seas.”

Where does it stand a year later? Some context first, on fish, ships, and money:

Fish: Last year’s fishery market, according to the UN’s Food and Agriculture Organization in State of World Fisheries and Aquaculture 2022, totaled about $406 billion at “first sale” (i.e. price on the dock, rather than on the plate) with $151 billion of this from exports. “Capture” marine fishing (i.e., caught from a boat as opposed to farmed) produced about 80 million tons of seafood, a total which has been roughly stable for the last 25 years. (The freshwater catch came to 10 million tons, and aquaculture about 88 million tons.) To put these figures in context, the human race collectively weighs about 500 million tons.

The top fishing countries by the FAO’s tally are China, Indonesia, Peru, India, and Russia, with the U.S., Vietnam, Japan, Bangladesh, and Norway next. Together, these ten countries catch about half the global “capture fishing” total. China alone, at 13 million tons, makes up about a seventh of the combined marine and freshwater catch, and (see below) is also the largest provider of fishery subsidies. Estimates for the sustainability of this catch often read the data differently, but express similar pessimistic messages. FAO says that “the fraction of fishery stocks within biologically sustainable levels decreased to 64.6% in 2019” (from nearly 90% as of 1974), or in more detail that 35.4% of world fisheries are overfished, 57.3% are at maximum yield, and only 7.2% are “underfished.” The view of the NGO Oceana (not necessarily contradictory in factual terms, but different in emphasis) is that only 17% of fisheries are currently able to produce more fish, and over 80% “cannot withstand additional fishing”.

Ships: The FAO’s report counts 4.1 million fishing vessels on the water in 2022, topped by 2.7 million in Asia and 1 million in Africa. Most are very small, and the total includes 1.5 million sailing or rowing boats. About 45,000, though, are large factory-type ships of lengths over 25 meters and weight above 100 tons. To put this in context, UNCTAD’s World Maritime Review 2022 reports that the world’s cargo fleet comprises 102,899 ships of more than 100 tons. Navies operate about 10,000 boats, while wealthy individuals and businesses sail around in about 10,800 pleasure yachts. So all told, FAO’s figure suggests that about a third of the world’s big ships are large fishing vessels.

It would be nice to think that these large fishing ships are professionally managed and less likely to be involved in IUU or other destructive fishing practices than small boats.  But this is not so. One notorious individual case, that of the Vladivostok 2000 — a converted oil tanker said in media reports to be the world’s largest factory fishing vessel — is an example. At 228.6 meters in length and 49,400 tons, it is about twice as large as UNCTAD’s 21,700-ton average for major cargo ships, and can process half a million tons of fish a year. V2K was blacklisted by the South Pacific Regional Fisheries Management Organization as an IUU vessel ten years ago (under its earlier name Damanzaihao) but continues in operation and is en route this week in the Sea of Okhotsk, traveling from Russia’s Maritime Province to Sakhalin Island.

Subsidies: Estimates of the scale of fishery subsidies are currently about $35.4 billion (as of 2018) — that is, nearly a tenth of “first sale” and a quarter of export value. A detailed look from a research group finds these subsidies heavily concentrated in Asia, where China pumps $7.5 billion into fishery fleets each year and other Asian states add $13 billion more. North America and Europe combine for $8 billion; Latin, Africa, and Pacific subsidies are modest by comparison, combining for a value of about $5 billion. About 80% of subsidies go to large boats and fleets, and 20% to smaller boats and artisanal fisheries. By function, $22 billion goes to ramp up the size of fishing fleets, and $7 billion to subsidize fuel.

Back now to the WTO. Last June’s agreement caps fully 24 years of official negotiating, dating back to the Clinton administration’s adoption of fishery subsidy reduction as a WTO cause in the late 1990s. So, quite an accomplishment for governments, activists, scientists, and responsible industry. On the other hand, reaching a consensus on the text was a milestone rather than a final act, and (setting aside big implementation and enforcement jobs), still has two steps to go:

(1) Ratifications and acceptances: The agreement requires ratification by two-thirds of the WTO’s 164 members to go into effect. Only then will countries be required to start cutting back their fishing-fleet enhancement, fuel, and other subsidy budgets. Seven countries have ratified so far: the United States, Canada, Iceland, the Seychelles, Singapore, Switzerland, and the United Arab Emirates.

(2) Unsettled issues: Finally, the agreement has a “provisional” quality, as it left some issues unsettled last year.  WTO members need to settle these to make it permanent. Especially notable among them is treatment of subsidies related to overcapacity. Once in force the agreement will last only for four years and self-terminate if these remaining questions aren’t settled in future talks.

 

 

FURTHER READING:

Counting fish and boats:

FAO’s State of World Fisheries and Aquaculture 2022 reports on fish take, fleets and employment, sustainability and more. A sample, breaking down the 80 million tons of sea catch:

  • 67 million tons of fish, led by anchovies, Alaska pollock, and skipjack tuna;
  • 5.6 million tons of crustaceans, mostly varieties of shrimp and crab;
  • 5.9 million tons of mollusks, topped by squid;
  • 0.5 million tons of edible jellyfish, sea urchins, sea cucumbers, and miscellaneous other sea life.

FAO’s report.

UNCTAD’s World Maritime Review 2022, meanwhile, tracks the world’s merchant fleet.

Negotiators and agreement text: 

The WTO’s agreement on fishery subsidies reduction.

A Washington signature ceremony.

Fishery subsidies and sustainability:

Rashid Sumaila et al. in Science Direct tabulate a worldwide $35.4 billion in fishery subsidies by region, purpose, large vs. small ships, and more.

Final thought from the researchers:

“[In the past decade] no real progress to eliminate capacity-enhancing subsidies has been made. For example, fuel subsidies are still the largest subsidy type being provided by countries. This is not good news as this subsidy is the most directly linked to overfishing. A concerted effort by all countries to discipline these subsidies via the WTO or other mechanisms is crucial.  … The fact that countries that fall within the high HDI [“high development index,” a UN index of wealth] group, including Russia and China, provided 87% of total global subsidies is telling. It is clear that to discipline subsidies and safeguard marine fisheries, these countries will need to step up.”

Oceana reports that $5.3 billion worth of subsidies, or a fifth of the world total, go to support fleets operating in other countries’ water.

… and reviews depleted, overfished, and sustainable fisheries.

UNCTAD on subsidies, sustainability, and policy.

And “IUU” (illegal, unreported, unregulated) on the water: 

Track the notorious Vladivostok 2000, steaming this week from Vladivostok to Sakhalin.

The U.S. Coast Guard vs. a Chinese IUU fleet and its diplomatic defenders in the South Pacific.

And a list, regularly updated, of 352 vessels blacklisted by Regional Fisheries Management Organizations for IUU fishing.

 

 

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007).  He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week

Intellectual Property: U.S. Interests, Emergencies, and the WTO’S TRIPS Waiver for COVID-19 Vaccines

Posted on by Alyssa Brown

Testimony from Edward Gresser
House Judiciary Committee
Subcommittee on Courts, Intellectual Property, and the Internet

June 6, 2023

 

Mr. Chairman and Mr. Ranking Member,

Thank you very much for inviting me to testify at this morning’s hearing on intellectual property, innovation, and the U.S. competition with China, focused on the World Trade Organization and its decision on waiver of patent obligations for COVID-19 vaccines and potentially for “diagnostics and therapeutics” related to COVID-19.

By way of introduction, I am Vice President of the Progressive Policy Institute (PPI) here in Washington, D.C., a 501(c)(3) nonprofit research institution established in 1989 and publishing in a wide range of public policy topics. Before joining PPI, I served at the Office of the U.S. Trade Representative from 2015 to 2021 as Assistant U.S. Trade Representative for Policy and Economics, with responsibility for overseeing USTR’s economic research and use of trade data, chairing the interagency Trade Policy Staff Committee, and administering the Generalized System of Preferences. This period coincided with the beginning of the COVID-19 pandemic in December 2019 and extended through the initial WTO discussions on a temporary waiver of some elements of the 1994 TRIPS agreement relating to COVID vaccines.

The hearing poses some important questions. Specifically, how does the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) relate to U.S. interests in innovation and technological progress? Was the Biden administration correct to support a waiver of some of the TRIPS patent provisions for COVID-19 vaccines? Will this be to the advantage of China vis-à-vis the United States? I can summarize my view of this in four points.

READ THE FULL TESTIMONY HERE.

Building a Strong Digital Trade Agenda to Foster America’s Success in Digital Economy

Posted on by The Progressive Policy Institute

A generation of technological innovation, infrastructure deployment, and generally good policy have combined to create a global digital world of 5.3 billion people. The Biden administration recently produced a report, “Declaration on the Future of the Internet,” outlining the vision of the future — one with free flows of information, high-quality consumer protection, economic growth, and liberty preserved.

Today, the Progressive Policy Institute (PPI) released a new report “Digital Trade 2023: The Declaration, The Debates, and the Next Global Economy,” detailing how the Biden administration’s vision is correct, but highly contested across the world. Report author Ed Gresser, Vice President and Director for Trade and Global Markets, provides recommendations on how the administration can achieve its vision and contribute to the next generation’s growth and digital liberty.

“A strong digital trade agenda is both a contributor to growth and American leadership, and a chance to shape the next-generation world economy in the spirit of liberty, inclusion, and American values,” said Ed Gresser.

The report makes the following policy recommendations:

  • An idealistic and ambitious approach in the 15-country “Indo-Pacific Economic Framework” (IPEF), that provides a future vision more attractive than authoritarian alternatives resting on free flows of data, opposition to forced localization of server and data, strong consumer protection, non-discriminatory regulation, anti-spam and anti-disinformation policies, cyber-security, and broad-based growth through encouragement for open electronic commerce.
  • A strong response in the U.S.-EU Trade and Technology Council (TTC) to European Union attempts to create discriminatory regulations and taxes targeting American technologies and firms.
  • Defense of U.S. values in the U.N., WTO, and other venues against “digital sovereignty” campaigns by China and others that endanger the internet’s multi-stakeholder governance, normalize large-scale censorship and firewalling, and generally place the political fears and policy goals of authoritarian governments above the liberties of individuals.
  • Supporting responsible governance of technology and politely but firmly pushing back on attempts either at home or internationally to demonize technological innovation and American success.

 

Read and download the report here:

The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C., with offices in Brussels, Berlin and the United Kingdom. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.

Follow the Progressive Policy Institute.

Find an expert at PPI.

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Media Contact: Amelia Fox, afox@ppionline.org

Digital Trade 2023: The Declaration, the Debates and the Next Global Economy

Posted on by Alyssa Brown

INTRODUCTION

In the single generation since the launch of the internet, a generation’s worth of scientific research and technological innovation, infrastructure deployment, and generally good policymaking has taken a small set of computer networks operated by academics, business researchers, and government scientists, and turned into a global digital world of 5.3 billion people. Associated with this has been an enormous leap forward in individual liberty, in global prosperity, and in new policy challenges. Looking ahead with its allies and partners last year, the Biden administration helped produce a vision of the future. This is the “Declaration on the Future of the Internet,” which, in a brief two and a half pages, illuminates a possible version of the next the digital world: one of freer flows of information, higher-quality consumer protection, enhanced economic growth, and liberty preserved.

Their vision is right, but it is highly contested — in part by authoritarian governments seeking to restore or strengthen controls over their publics (or even, at least in part, other countries’ publics), and in part by often friendly countries mistakenly believing that their own technological leadership might depend on diminishing that of the U.S. tech industry. The administration can help achieve its vision, and in doing so contribute to the realization of the Declaration’s vision, through four steps: 

1. An idealistic and ambitious approach in the 15-country “Indo-Pacific Economic Framework” (IPEF), that provides a future vision more attractive than authoritarian alternatives resting on free flows of data, opposition to forced localization of server and data, strong consumer protection, non-discriminatory regulation, anti-spam and anti-disinformation policies, cyber-security, and broad-based growth through encouragement for open electronic commerce.

2. A strong response in the U.S.-EU Trade and Technology Council (TTC) to European Union attempts to create discriminatory regulations and taxes targeting American technologies and firms.

3. Defense of U.S. values in the U.N., WTO, and other venues against “digital sovereignty” campaigns by China and others that endanger the internet’s multi-stakeholder governance, normalize large-scale censorship and firewalling, and generally place the political fears and policy goals of authoritarian government above the liberties of individuals.

4. Supporting responsible governance of technology and politely but firmly pushing back on attempts either at home or internationally to demonize technological innovation and American success.

READ THE FULL REPORT

Marshall for The Hill: While fighting Russia, Ukraine is also fighting for a home in Europe

Posted on by The Progressive Policy Institute

By Will Marshall

Expectations are sky-high for Ukraine’s coming counteroffensive against Russian invaders. Following the loss of Bakhmut, Kyiv hopes to regain the military initiative and break out of a grinding war of attrition that plays to Moscow’s big advantage in manpower.

In the next round, Ukraine’s forces will have a decided qualitative edge to offset Russia’s seemingly bottomless well of cannon fodder. They’ve received an infusion of top-line tanks, air defense systems and other advanced weapons from the United States and Europe, as well as combined arms training that will help them dictate the terms of battle.

On top of that, Ukraine’s defenders have exhibited superior morale and tactical ingenuity on the battlefield. While few military experts think the offensive will end the war, significant gains by Ukraine could have large political repercussions in Moscow, Washington and European capitals.

Keep reading in The Hill.

PPI’s Trade Fact of the Week: India is now the world’s most populous country

Posted on by Alyssa Brown

FACT: India is now the world’s most populous country.

THE NUMBERS: Annual deaths to natural disasters* –
World population 17.5%
World GDP 3.0%*
World goods/services exports  2.2%

 

* Exchange-rate basis, IMF estimate. The alternative purchasing-power parities calculation gives a GDP share of 5.9%.

WHAT THEY MEAN:

One day towards the end of April, or perhaps in the early days of May, a handful of births and a few memorial services left India (by the U.N.’s estimates) passing China as the world’s most populous country. (Bharat 1.427 billion; Zhongguo 1.426 billion.) A couple of India-in-the-world observations at this point of transition:

1. People: India’s 1.427 billion people represent a bit more than one in six of the world’s 8 billion. Apart from being a shade above China’s now-gently-declining population, the total is (a) about equal to the population of continental Africa, and (b) 200 million more than the 1.24 billion of all high-income countries combined. Put another way, seven of India’s 28 states and Union Territories would be among the world’s 20 most populous countries.

2. Economy: Indian GDP, now fifth-largest in the world after passing France in 2019 and the U.K. in 2020, is about $3.7 trillion and growing at 5.9% by IMF estimates this year.  This puts India at about 3% of the $105 trillion world GDP (with the U.S. at $26.9 trillion, China $19.4 trillion, and the EU $17.8 trillion). Perhaps still modest in comparison to population, but growing faster than all 19 of the other top-20 world economies this year (and also faster than 49 of the world’s top 50, just shaded by the Philippines’ 6.0%).  International Monetary Fund forecasters see enough sustained growth for India to reach $5 trillion in 2027, passing both Germany and Japan that year.

3. Trade flows: India’s presence in trade flows remains particularly small.  As of 2021, India’s $395 billion in goods exports made up 1.8% of a $22.4 trillion world total, at par with Spain and the United Arab Emirates.  Its $240 billion in services exports draws a lot of attention and is in fact larger, but still is only 4% of the $6.0 trillion world services-export total.  Some of this reflects geography — particularly the constant turbulence and frequent border closures with Pakistan — but not all; it’s hard to find explanations outside policy for India’s very small trading relationships with the ASEAN and the East African countries on its east and west.

4. Trade policy: India’s contemporary trade diplomacy inherits powerful swaraj (“self-sufficiency”) instincts, and (at least in the view of two generations of frustrated American trade negotiators) puts more energy toward import limits than export goals. As of 2022, India’s tariff rate is the highest among the 164 WTO members — 18.3% by simple applied average according to the WTO’s World Tariff Profiles 2022, or 12.6% by trade-weighted average. India is also the WTO’s most enthusiastic anti-dumping user, with 775 anti-dumping penalties reported from 1995 through 2022, about a sixth of the 4,463 total known worldwide. One index of the consequences is India’s modest overall share of trade; another one is the particularly low level of trade with neighboring countries — about 3% of ASEAN’s goods exchanged, and 5% of sub-Saharan Africa’s. India’s place in services trade is, however, larger — 4.0% of exports, slightly above India’s GDP share but probably still below potential.

 

FURTHER READING:

The U.N.’s Department of Economic and Social Affairs on a world-population milestone.

The IMF’s World Economic Outlook database tracks and estimates GDP in dollars and by growth rates, imports and exports, and lots more, for all countries.

The WTO reviews Indian trade policy now (or more precisely January 2021; new review coming next year).

India’s Embassy in D.C.

… and the March 2023 U.S.-India Commerce Department/Commerce Ministry joint statement reviews the state of U.S.-India trade and goals for 2024.

Indian Trade policy then: 

The Arthasastra, an encyclopedia-type Sanskrit work traditionally ascribed to the Maurya empire’s 4th century B.C. political fixer Kautilya, has a reasonable claim to be not only the world’s oldest political guidebook but also the oldest trade-policy manual (or even the first think-tank product, translating in English to 800 pages on war, administrative organization, tax, natural resource management, and more, complete with bullet-point format). Quick samples:

As a strategist and diplomat, Kautilya has a pessimistic, probably overly reductive premise:  any bordering kingdom is your enemy; any neighbor of that kingdom, so long as it doesn’t also border you, is your natural ally. As a human resources theorist, he’s practical and not much inhibited by conventional scruples: “Those who are cruel, lazy, and devoid of any affection for their relatives shall be recruited as poisoners.” On the other hand, K. takes a sensible view of natural resource management (designate state forests and limit their exploitation for wood), and views consumer protection as an important government responsibility. His trade advice is precise, profit- and growth-minded, and divides easily into three parts:

(a) Trade facilitation: A wise ruler will appoint officials responsible to keep international trade routes “free from obstruction by courtiers, state officials, thieves, frontier guards, and herds of cattle.” (Note the assumption that the main obstructors are likely to be the king’s own greedy officials.) Also, set up marketplaces in towns and at crossroads to ensure access to imports.

(b) Import promotion: Importers should get special privileges as suppliers of essential goods.  Kautilya recommends (i) exempting the early-India equivalent of the retail and wholesale sectors from taxes imposed on people selling only locally-produced goods, and (ii) allowing them to make 10% profits as opposed to the 5% cap for local business.  Offsetting this, he recommended a 20% ad valorem tariff — coincidentally, almost identical to the 18.3% “simple average applied” tariff the WTO reported for India last year — with the uncharacteristically sentimental exceptions of duty-free treatment for goods meant for weddings, dowries, and religious occasions.

(c) Export policy: Here Kautilya is cautious, apparently reflecting the relatively poor information available to rulers about foreign markets and likewise the high level of physical risk involved in moving valuable stuff past the border. Kings should authorize exports, he says, but only careful investigation shows that (i) their likely selling price would bring a profit after netting out the costs of shipbuilding, harbor and/or road fees, tariffs, and payoffs to royals in the receiving kingdom, or (ii) that exports would bring some other (unstated) “economic, political, or strategic” advantage. He forbids exports of metals, armor, weapons, or other national security assets, and advises a strong armed guard for outbound caravans.

Kautilya’s Arthasastra in modern translation.

And now:

The WTO’s Tariff Profiles 2022 catalogs tariff rates in 145 countries and economies around the world.  These can go into great detail — simple average bound, “non-agricultural,” peaks, etc. A first approximation (using “simple average applied”) looks like this, with Iran and Sudan as the highest-tariff countries in the list (and perhaps the world) to Hong Kong and Singapore among five zero-tariff economies:

Sudan 21.6%
Iran 20.1%
India 18.3%
Brazil 13.3%
Nigeria 12.1%
Jamaica   8.6%
South Africa   7.8%
China   7.5%
El Salvador   6.0%
Malaysia   5.6%
European Union   5.4%
Japan   4.2%
United States   3.4%
Timor-Leste   2.5%
Peru   2.4%
New Zealand   1.9%
Mauritius   0.8%
Singapore   0.0%

The WTO’s Tariff Profiles 2022.

And the WTO’s anti-dumping statistics.

… Or direct to a count of anti-dumping penalties by country, each year from 1995-2022 and with the full 28-year totals.

 

 

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007).  He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week

PPI Urges Congress to Adopt Permitting Reforms Included In Debt Ceiling Agreement

Posted on by The Progressive Policy Institute

Paul Bledsoe, Strategic Advisor at the Progressive Policy Institute (PPI), released the following response in reaction to the permitting reforms included in the reported agreement-in-principle to raise the debt ceiling.

“PPI supports the permitting reforms included in the budget agreement, including tighter deadlines for environmental impact statements, designation of lead agencies, and other improvements we recommended in PPI’s major report on permitting reforms last fall. We therefore urge adoption of these reforms by Congress.

“But far more extensive reforms will be needed to expedite the thousands of new energy projects that are pending approval, and to reduce both consumer costs and emissions in the long-term. These reforms include provisions to more quickly and cost-effectively build large electric power lines, natural gas and other pipelines, wind and solar projects, advanced nuclear power, electricity storage, and many other energy technologies. We look forward to working with Congress and the Administration to pass these additional and urgently needed reforms into law.”

The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.

Follow the Progressive Policy Institute.

Find an expert at PPI.

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Media Contact: Amelia Fox – afox@ppionline.org

Jacoby for New York Post: How Ukraine’s culture continues to thrive despite painful war with Russia

Posted on by The Progressive Policy Institute

By Tamar Jacoby

It was a perfect spring Sunday in Kyiv and the city’s cafés were filled with people laughing in the sunlight.

Inside the Pinchuk Art Centre, the mood was different — quiet, focused, somber — but it too was filling with visitors eager to see an exhibition of works by young Ukrainian conceptual artists.

Their pieces were mostly responses to the war, many steeped in pain and loss.

Yet of all the places, people could be spending a spring Sunday in a country at war, these visitors were choosing a museum.

But why?

Keep reading in New York Post.