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PPI’s Trade Fact of the Week: U.S. manufacturing employment has risen in 11 of the last 12 years

Posted on December 7, 2022September 18, 2024 by The Progressive Policy Institute

FACT: U.S. manufacturing employment has risen in 11 of the last 12 years.

THE NUMBERS: Annual manufacturing job growth* in U.S. –

Employment:

Average 1998-2010:	-508,000
Average 2010-2022*:	+95,000
2022 only**:	+420,000?

* Using BLS’ annual averages
** Gain from November 2021 to 2022 is +420,000; final full-year 2022 figure will likely differ slightly.

WHAT THEY MEAN:

First reaction to the U.S. International Trade Commission’s “Distributional Effects of Trade and Trade Policy on U.S. Workers” report, out November 14: Seems a bit mis-titled. The report is much more an in-depth survey of economic literature on, and summaries of testimony relating to, “import shocks” and manufacturing job loss in the United States than a 360-degree survey of the full set of questions inherent in the title, which include import competition but also the role of exports in rural and agricultural communities, the effect of tariff systems and trade remedy laws on consumers and ‘downstream’ industries and their communities, or services trade and the digital world.

Second reaction: Looking at the focus on import shocks and manufacturing job loss, should academia start asking some new questions?

As the ITC conducted its hearings, read up on the lit., and drafted its chapters over the past year, the U.S. was adding a net of about 1,150 manufacturing jobs every day — in total, 420,000 from November 2021 through November 2022, almost certainly making 2022 the largest upward annual jump since 1984. A random sampling of states finds 14,400 net new manufacturing jobs in Arizona, 39,200 in California, 1,300 in Delaware, 6,200 in Colorado, 15,600 in Michigan, 4,900 in Nevada, 8,500 in New York, 12,700 in North Carolina, and so on. And though the 420K annual total is exceptionally high, it isn’t simply an overheating-economy anomaly. Apart from COVID-stricken 2020, in fact, the U.S. has added net manufacturing jobs every year since 2010, marking the longest period of expansion since the 1960s.

A brief history of the national manufacturing-job trajectory, then some possible new-era questions:

1. Peak: Manufacturing employment in the U.S. peaked as a share of the workforce in the mid-1950s at about 30% of all jobs. In 1952, in the era of Eisenhower, Sloan, King, Reuther, and Dulles, 15.3 million of America’s 50.3 million workers went off to factory jobs each morning.

2. Transition: The Bureau of Labor Statistics’ total counts of manufacturing jobs continued to rise for another generation, peaking at 19.6 million in 1979. On the other hand, employment in other industries grew faster and manufacturing employment steadily fell as a share of employment, to 22% of 1979’s 90.1 million jobs. Following that came a long decline to 16.8 million by 1992; then a modest rebound to 17.6 million in 1998 (14% of 126 million workers) as the 1990s boom approached its crest.

3. Drop: In the next 12 years, actual production continued to grow — the BEA reports $1.48 trillion in “real manufacturing value-added” GDP as of 1998, and $1.94 trillion in 2010. But employment dropped fast, falling for 12 consecutive years to a low of 11.5 million (9% of 130 million jobs) in early 2010, with about 60% of net job loss coming in the 2001/2 recession and the 2008/9 financial crisis.

This experience sparked intense debate in the academic and policy worlds, on Chinese competition, import shocks, automation and robotics, and the experience of manufacturing-reliant communities. As the ITC’s report suggests, the debate continues today. But as it goes on, manufacturing employment trends have reversed, and by now have probably risen for long enough to justify a new phase and some new questions:

4. Rebound?: Since the 2010 nadir, manufacturers have added jobs in 11 of the last 12 years* — the only exception, again, being 2020 during the COVID pandemic – and total employment has grown to 12.9 million. (8.4% of 154 million jobs). In both length and net totals, this rebound has surpassed that of the 1990s; by length alone, as of 2019 it matched the 1960-69 period** as the longest continuous period of manufacturing job growth in BLS’ records***. Some industry samples, from 2010 through 2022: automotive industries +370,000 (though from a dire financial-crisis low), food manufacturing +265,000, fabricated-metal products +197,000, machinery +130,000, chemicals +127,000, wood products +92,000, electrical equipment +55,000, rubber +22,000, furniture +20,000. Or, alternatively by state (from 2010, rather than the single-year growth reported above): Nevada +29,000, Georgia +72,000, Pennsylvania +11.000, California +70,000, Texas +115,000, Michigan +155,000. Most states remain below their 1998 counts, but one region — the Great Plains and Rocky Mountain West — has gotten all the way back.

Here is a new topic for academia, then: What explains rebounds and resilience? Some starting points:

* Policy? Seems at first glance unlikely, as job growth has continued through the quite different approaches of the Obama, Trump, and Biden administrations, but perhaps some Obama-era innovations worked and had lasting effects?
* Some internal change and successful adaptation to competition within American industry and labor?
* A change in the external environment? Perhaps the China boom ran its natural course, or got submarined and lost competitiveness as Zhu Rongji-era liberalization lost out to Xi Jingping-period dirigisme and central planning?
* Or something else that hasn’t yet occurred to us here?

Ideas and speculation welcome.

* Or 10 of the last 12 counting December-to-December totals instead of using the BLS annual averages.
** Using BLS’ annual averages; counting December-to-December, 2016 had a very slight decline, so the uninterrupted-growth period would be six years, equaling the six-year expansion of the 1990s.
*** Consistent data on manufacturing jobs go back to 1939.

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.

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PPI’s Trade Fact of the Week: International student enrollment in U.S. colleges and universities is down by 12,000 since 2018

Posted on November 30, 2022September 18, 2024 by The Progressive Policy Institute

FACT: International student enrollment in U.S. colleges and universities is down by 12,000 since 2018.

THE NUMBERS: Drop in international student enrollment for 2018/19-2022 –

Total U.S.:	-127,000 (-12%)
Arizona State University:	-652 (-14%)
Montgomery College:	-403 (-19%)
Hartwick College:	-8 (-22%)
Spelman College:	-15 (-47%)
University of Montana:	-199 (-70%)

WHAT THEY MEAN:

From Spelman College’s International Student site:

“Diversity is a large part of what makes Spelman a global leader in higher education. Spelman College welcomes women from all over the world, including the Bahamas, Ghana, South Africa, Japan, Trinidad, Tobago, Australia, the United Kingdom, Czech Republic, South Korea and Vietnam.”

Spelman, an historically black women’s college in Atlanta, reports 17 international students in a student body of 2,417 this year. Some other snapshots drawn from the U.S.’ kaleidoscopic array of 3,731 public universities, private colleges, religious schools, HBCUs, arts academies, community colleges and more: According to the Common Data Set, which schools publish each year, in upstate New York Oneonta’s Hartwick College has 28 international students among 1,163 undergrads; looking west, Arizona State has 4,049 in a student body of 64,716, and the University of Montana, 83 of 7,223; and just north of D.C., two-year Montgomery College counts 1,751 international students among its 17,137 students.

The Institute for International Education’s Open Doors 2022 report provides a full national picture. In the 2021-2022 academic year, 948,000 international students were at school in the U.S., comprising 2% of America’s 16.9 million undergraduates and 12% of its 3.1 million graduate students. Most are here for a long stay with a degree at the end, and their top choices are technical subjects: topped by 290,590 aspiring engineers, 182,106 computer science and math students, and 147,293 in business and management. Some data points, and then a look at a perhaps troubling recent trend:

1. Origins and Destinations: Open Doors finds students from 218 countries and territories — essentially every place on Earth with the lone and slightly puzzling exception of Greenland. China’s 290,086 and India’s 199,182 represent a bit more than half the total. More data by country below; by region, exclusive of China and India, IIE counts 42,500 from sub-Saharan Africa; 3,700 from Central Asia; 102,000 from East Asia excluding China; 26,000 from South Asia apart from India; 49,000 from Southeast Asia; 83,200 from Europe; 10,800 from the Caribbean; 67,200 from Latin America; and 53,000 from the Middle East and North Africa.

By state, the top five destinations are California with 134,000 international students; New York with 114,000; Massachusetts with 71,000; Texas with 70,000; and Illinois with 47,000. By institution, eight institutions (NYU, Columbia, Northeastern, USC, Arizona State, University of Illinois/Champaign, UCSD, and BU) together enroll more than 100,000.

2. Tuition and Trade: Considered as a form of “trade,”* U.S. education ranks comfortably with U.S. exports of grains, cars and trucks, and metals. In 2019, the peak year for international enrollment, the Bureau of Economic Analysis reported $47.9 billion in “exports of travel services, education,” or 2% of the $2.5 trillion in total U.S. exports. A quick table puts this in perspective:

Total goods & services:	$2,528 billion
Agriculture:	$142 billion
Cars & trucks:	$57 billion
Education services:	$48 billion
Steel:	$13 billion

Alternatively, as part of the U.S. higher-ed economy, Princetonian Chengyu Ming finds that international students make up about 5% of the student body, but being in most cases ineligible for financial aid programs, they pay about 12% of U.S. higher-ed tuition revenue. American students abroad spent about $11 billion in 2019, so as a trade matter education services were about $36 billion in surplus.

3. Economics & Workforce: Having finished their degrees, some graduates go home. Others stay on in the U.S. to work. The high counts of engineering and math students, for example, underpin the large foreign-born scientist role in U.S. science and technology. The National Science Foundation’s Science and Technology Indicators 2022 reports that at master’s level, 34% of U.S. engineers and 47% of U.S. math/computer science workers are foreign-born, and at doctoral level the shares are 57% and 60%.

In sum: In an idealistic sense, all this represents a sort of republic of knowledge, with large and free flows of information and ideas between and among students, universities, scholars, and countries everywhere in the world. In more practical terms, students purchase knowledge and credentials for themselves, universities receive revenue, the overall U.S. trade deficit gets a modest offset, and U.S. science & technology get an immodest boost. With that, recent trends and policies raise some questions:

Having risen rising steadily from 1950 through the mid-2010s,** international student enrollment peaked in the 2018/2019 academic year at 1.095 million students and 5.5% of a 19.8 million student body. The count then dipped to 1.075 million in 2020 and 915,000 in Covid-stricken 2021, before this year’s modest rebound. By major, Open Doors counted 230,780 international engineering students in 2019 and 188,194 in 2022; and by state, international enrollments are down by 12,000 in Texas, 6,000 in Florida, 5,500 in Michigan, and similar percentages generally. Or, returning to the institutions sampled above, the Common Data Sets of the past five years show Spelman’s enrollment peaking at 32 in 2018 and falling to 11 in 2021, before rebounding to this year’s 17, the University of Montana’s down from 282 to 83; Hartwick’s from 36 to 23 with a 2022 rebound to 28; ASU off by 652 from its 4,692 peak, and Montgomery College down from 2,154 to 1,751.

Much of this decline came with the COVID-19 pandemic and is likely temporary. Another cause, though, is a set of Trump-era rules requiring multiple visa applications and limiting post-degree job opportunities, which make study in the U.S. more difficult and less attractive. The rationale appears mainly to be a foggy “lump-of-labor fallacy” thinking that higher international student admissions might require lower U.S. student admissions. In fact this has not happened, as foreign enrollment rose by about 700,000 between 1990 to 2019, U.S. citizen enrollment rose by 5.4 million, and the share of U.S. high school grads going on to college rose from 60% to 69%. It’s more plausible, in fact, that international students mostly paying full ride are subsidizing financial aid for larger college-bound U.S. born student body. Biden administration efforts to dial back these constrictions are still new and the 2022 rebound is encouraging though not dispositive.

* BEA and international trade statisticians generally classify education as a form of “trade” on the grounds that a foreign consumer is purchasing knowledge — differential equations, literary theory, CGE modeling, materials science, management case studies, etc. — plus valuable credentials assuming all goes well from an American provider.

** Long-term counts: In 1950, there were 26,000 international students in the U.S., making up 1% of the 2.4 million students. By 1980 these counts and fractions had risen to 290,000 students and 2% of 11.6 million students; in the millennial year 2000, 515,000 students and 3.5% of 14.8 million students.

ABOUT ED

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

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PPI’s Trade Fact of the Week: PPI has published 171 papers, posts, op-eds & Trade Facts so far this year

Posted on November 22, 2022September 18, 2024 by The Progressive Policy Institute

FACT: PPI has published 171 papers, posts, op-eds, and Trade Facts so far this year.

THE NUMBERS:

Publication average, 2022: One every two days

WHAT THEY MEAN:

With staff preparing for holiday travel, in lieu of a regular Trade Fact we have some reading ideas for the long weekend: (a) highlights from PPI’s papers and posts over the past year; (b) four not-quite-canonical classics for the ambitious reformer already thinking about 2023; and (c) four book recs for sidewise, bottom-up, and overhead views of economic policy, trade, and technology:

1. Five reads from PPI:

Bill Galston & Elaine Kamarck, in The New Politics of Evasion, look at swing voters, the American political system, and liberalism in 2022.
Ed Gresser on the U.S. tariff system, mostly ineffectual as a job-preserver but quite good at taxing the shoes and clothes low-income families and single moms buy.
Paul Bledsoe’s prescient case against the European Union’s dangerous reliance on Russian gas (December 2021) and better alternatives for European security and emissions reduction.
Malena Daley cautions against antitrust over-enthusiasm in the tech world.
Arielle Kane examines the lessons of COVID-19 and preparation for the next pandemic.
And Taylor Maag and Gresser suggest replacing Trade Adjustment Assistance with all-worker-eligible supports.

2. The timeless wisdom of the classics:

At last! That long-awaited sub-Cabinet nomination (or alternatively Congressional subcommittee chair, Chief Negotiator assignment, White House Senior Director position, etc.) has finally come through. You’re memorizing the oath and preparing to change the world. Some lesser-known classics can help you see what’s ahead:

The Tactics of Reform — As you get started, remember that while issues and political coalitions constantly shift and change, the challenges of reform are always the same. As medieval knights must triumph over ogres, dragons, and giants, modern reformers must overcome entrenched defenders of the status quo, ossified procedures and vicious though pointless bureaucratic rivalries, and ruthlessly ambitious subordinates who care more about getting your job than the vision. Mervyn Peake’s Gormenghast books (1946-1959) are a sort of parable illuminating their likely tactics, from passive aggression and embittered moping to arson, defenestration, and insincere proposals for incremental change.

The Art of Persuasion — It’s a few months later. You’ve set out a vision and called in the ‘stakeholders’ … somehow logic, eloquence, and appeals to conscience and interest don’t seem quite enough. For additional persuasive power, try Darrell Huff’s How to Lie with Statistics (1954).

The Vigorous Leader — A year in. Reform is stalled, and your superiors in the administration (alternatively the Committee chair/your Cabinet officer/etc.) seem to be hearing more complaints than applause. Time for a stronger approach. Han Fei-tzu’s The Five Vermin (240 BC) helps you play to win, by silencing … forever … the greedy interest groups, preening intellectuals, shirkers, obstinate petty officials, and big-mouths of all sorts who are in your way.

The Perversity of Human Nature — It’s over. How could your steadfast supporters, tough but principled negotiating partners, and loyal opposition have behaved this way? Try ibn Marzuban’s The Book of the Superiority of Dogs Over Many Who Wear Clothes (920)

3. And four new (or new-ish) books on global-economy-related matters:

Brad DeLong’s Slouching Towards Utopia: An Economic History of the 20th Century (2022) on big-think economists, their visions, and their equivocal successes.

Stephanie Elizondo-Griest – All the Agents and Saints: Dispatches from the Borderlands (2017), on business, daily life, and crossings at the U.S.-Canada and U.S.-Mexico borders.

Jan-Werner Muller’s What is Populism (2016, still relevant though) on the origins and ideas of populist-nationalist movements in the U.S., Europe, and Latin America.

David Kaye’s Speech Police: The Global Struggle to Govern the Internet (2019) on platforms, users, international organizations, national laws, and the future of cyberspace.

ABOUT ED

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

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PPI’s Trade Fact of the Week: 458 Native American-owned businesses exported in 2019

Posted on November 16, 2022September 18, 2024 by The Progressive Policy Institute

FACT: 458 Native American-owned businesses exported in 2019.

THE NUMBERS: Average employment and payroll for Native American-owned businesses* –

Exporting firms: 21 workers at payroll of $59,260 per worker

Non-exporting firms: 8 workers at payroll of $39,370 per worker

* Census & Bureau of Economic Analysis 2020 report

WHAT THEY MEAN:

Observing the beginning of Native American Heritage Month two weeks ago, and with a Tribal Nations Summit at the White House set for the end of November, U.S. Trade Representative Amb. Katherine Tai says that in developing trade policy:

“We must ensure that Tribal leaders and Indigenous communities have their rightful seat at the table. For these reasons, USTR held our second and now annual Tribal consultation and we are determined to visit with, learn, and hear directly from Tribal leaders on the impact of trade policies on their communities. We also remain deeply focused on exploring how trade policy can enhance the economic well-being of Indigenous workers around the world.”

“Seat at the table” can sound like boilerplate, but in this case it’s not. Under a 2021 White House Memorandum, Biden administration trade (and other) officials have been holding regular “tribal consultations”, meant to solicit advice on policy from representatives of the 574 federally recognized Native American tribes. Some thoughts on the data, institutional steps, and an overseas model that might support this program:

1. Small but high-value export community: Statistical agencies provide some basic facts and data: 1.6 million Native American workers (BLS, 2022); 26,064 known Native American-owned businesses (Census & BEA, 2019); and 79,000 farmers and ranchers (USDA’s 2017 Census of Agriculture), half of whom live and work in Arizona and New Mexico. The Census/BEA report has specifics on exporters:

As of 2019, 458 Native-owned businesses were exporting. This made up 1.7% of Native-owned businesses, which is a bit below the 2.8% exporter rate for the total U.S. business community.
Per the job and pay figures above, the exporters are on average larger and higher-paying employers than non-exporters.
Canada is their main foreign market, buying $56.6 million of $164 million in known Native American exports. The UAE was second at $14.4 million, followed by the EU at $11.1 million, Australia at $7.4 million, and Mexico at $7.0 million.
Still unknown: what products are these businesses exporting? & is there a way to distinguish reservation-based firms specifically?

USDA’s figures, meanwhile, provide an exceptionally detailed portrait of Native American agriculture – 59 million acres of land; heavier on ranching than crops; $3.5 billion in annual sales, more women operators and more very small farms than the national average – but sadly do not provide export data. Larger tribal governments, however, do at times have statistical reports that can provide some insight. About a decade ago, for example, the Navajo Nation’s tribal enterprises Navajo Agricultural Production Industries estimated $2-$3 million in farm exports, all going to Mexico, in a Navajo agricultural economy then measured at about $35 million per year.

2. “Seat at the Table” Program Might be Broadened: Annual tribal consultations presumably offer tribal governments to raise concerns and identify opportunities that federal government trade officials may miss. (Opportunities to suppress overseas counterfeiting of tribal crafts, as the Indian Arts and Crafts Act works to authenticate tribal artisanal work and deter counterfeiting within the United States? Do trade agreements and national laws offer particular opportunities or create problems for tribes – Tohono O’odham, Blackfeet, Sioux, Mohawk, Inuit – with cross-border memberships?) This may be less effective as a way to provide reactions and advice on day-to-day negotiations and litigation; a complementary option would be to add tribal governments to the “Intergovernmental Policy Advisory Committee” – “IGPAC” for short, the “cleared-advisor” group created to give state, local and other sub-federal governments – which does not now and may never have had a tribal government representative.

3. An Overseas Model: The most ambitious foreign model for indigenous trade development is probably New Zealand’s “Trade Engagement with Maori” system, based on the 19th-century British-Maori Treaty of Waitangi defining Maori rights and New Zealand government obligations. Trade Engagement is a consultative system codified in a 2019 Memorandum of Understanding, which establishes regular meetings with clan leaders, field hearings, consultations on ongoing negotiations, and also provides explanations of features of New Zealand’s trade agreements meant to provide opportunities or special protections for Maori industry, agriculture, and intellectual property.

ABOUT ED

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

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PPI’s Trade Fact of the Week: U.S. employment of biotech scientists has grown by 45,000 since January 2021

Posted on November 9, 2022September 18, 2024 by The Progressive Policy Institute

FACT: U.S. employment of biotech scientists has grown by 45,000 since January 2021.

THE NUMBERS: U.S. biotechnology researchers* –

09/2022	286,400
12/2020	239,600
12/2015	156,600
12/2010	130,000
12/2000	111,400
12/1990	107,400

* Bureau of Labor Statistics

WHAT THEY MEAN:

It is seventy years since Watson & Crick worked out the DNA molecule’s double-helical structure (1953), fifty since Cohen & Boyer produced the first “recombinant” DNA cell (1972); and 40 since the first biotech medicine launch (human insulin from an E. coli cell, 1982). For 2022, here’s a Food and Drug Administration announcement about a salmon, genetically engineered for rapid growth, which went on sale last year:

“AquAdvantage Salmon has been genetically engineered to reach a growth marker important to the aquaculture industry more rapidly than its non-GE farm-raised Atlantic salmon counterpart. It does so because it contains an rDNA construct that is composed of the growth hormone gene from Chinook salmon under the control of a promoter (a sequence of DNA that turns on the expression of a gene) from another type of fish called an ocean pout. … The salmon cannot be raised in ocean net pens: instead, the approval allows for them to be grown only at specific land-based facilities: one in Canada [Prince Edward Island], where the breeding stock are kept, and Indiana, where the fish for market will be grown out using eggs from the Canada facility. [A third site is getting ready in Ohio.] Both the Canada and Indiana facilities have multiple and redundant physical barriers to prevent eggs and fish from escaping, including metal screens on tank bottoms, stand pipes, and incubator trays to prevent the escape of eggs and fish during hatching or rearing. The tanks also have covers, nets, jump fences, and screened overflow tanks to prevent escape over the sides of the tanks or incubators. The facilities in Canada are indoors. All tank drains and stand pipes have covers or sleeves permanently attached to them. In order to prevent eggs or small fish from passing through the pipes or plumbing, there is a closed septic system and additional screens and chlorine pucks are used to kill any escaped fish or eggs in the main drain area.”

Product of Massachusetts-based AquaBounty, the salmon was the second major biotech fish launch, following the 2005 introduction of Florida-farmed glow-in-the-dark aquarium fish. Both in turn are the output of a U.S. biotech world reported by the Bureau of Labor Statistics to employ 286,000 R&D scientists, up 45,000 from the BLS’ January 2021 tally and double the 134,000 counted in 2012. The OECD’s most recent measurement of research commitments finds the U.S. contributing about $88 billion of about $115 billion in known private-sector biotech R&D as of 2020. (Note though OECD’s figures don’t include government research, and also don’t try to estimate the possibly substantial R&D commitments in China, India, and Russia.) A quick rundown of current biotech products and plantings:

(1) Medicines: The FDA reports suggest 117 biologic medicines were on the market by 2000 and 334 (if we’re counting correctly) are available now. Roughly speaking, then, the array of biotech medicines grew by about 6 per year from 1980 to 2000, accelerating to about 10 per year since the turn of the century. Examples from the 2022 approval list include a hepatitis C medicine, a blood coagulant, mRNA vaccines, thalassemia, and a relapsed leukemia treatment.

(2) Agriculture: U.S. farmers grow biotech crops on about 175 million acres of farmland, up from 4 million acres in 1995 and accounting for about a third of the world’s 470 million acres of biotech planting. They produce 11 biotech crops — alfalfa, apples, canola, corn, cotton, papaya, pineapples (pink variety), potatoes, soybeans, summer squash, and sugar beets — and U.S. planting has risen from 4 million acres in 1995 to 175 million acres over the last decade, and includes 93% of U.S. corn, 95% of U.S. cotton, and 95% of U.S. soybeans. Worldwide, the U.S. is the largest of 29 biotech producers, accounting for about a third of 470 million acres in world biotech planting as of 2019, according to the most recent count by biotechnology industry group ISAAA.** Latin American countries — Brazil and Argentina in particular — combine for about 206 million acres, with smaller totals (see below) in Canada, India, China, Pakistan, and South Africa. Their initial survey in 2003 found 17 countries and 167 million acres.

* A pig, a rabbit used to produce treatments for hemophilia, a goat, and a chicken along with the AquAdvantage salmon and the aquarium fish.

** “International Service for Acquisition of Agri-Biotech Applications”

ABOUT ED

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

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PPI’s Trade Fact of the Week: China’s population likely began to fall this year

Posted on November 2, 2022September 18, 2024 by The Progressive Policy Institute

FACT: China’s population likely began to fall this year.

THE NUMBERS: Median ages by country –

Japan	47.8
EU	44.0
U.K.	40.6
United States	38.5
China	38.4
Thailand	37.7
Vietnam	31.9
WORLD	30.9
Indonesia	30.2
Mexico	29.3
India	28.7
Egypt	23.9
Pakistan	22.0
Ethiopia	18.6
Congo (DRC)	16.7

WHAT THEY MEAN:

A demographic note from Science* last January:

“China’s population could begin to shrink this year, suggest data released yesterday [i.e. January 17, 2022] by China’s National Bureau of Statistics. The numbers show that in 2021, China’s birth rate fell for the fifth year in a row, to a record low of 7.52 per 1000 people. Based on that number, demographers estimate the country’s total fertility rate — the number of children a person will bear over their lifetime — is down to about 1.15, well below the replacement rate of 2.1 and one of the lowest in the world.”

The Science article finds short-term explanations in reduced child-bearing and collapsed immigration during the COVID crisis, plus an unenthusiastic Chinese public reaction to various incentives for childbirth. Demographers, though, have predicted a downward turn for some time; and the Chinese experience looks like part of a larger tectonic shift, in which the world’s population center is moving southwest, away from the Pacific littoral to south Asia, the Middle East, and Africa.

By way of context, about half the world’s people today live in Asia. China remains (probably) the world’s most populous nation at 1.42 billion, 200 million people live in Japan and Korea, and the ten ASEAN countries are home to 700 million. A bit southwest, India is close to 1.4 billion and will probably surpass China next year; Pakistan, Bangladesh, Sri Lanka, and Nepal combine for about 500 million. Among the rest, Africa is at about 1.2 billion, Europe and North America 1.1 billion, Latin America/Caribbean 650 million, and the Middle East 500 million. Put another way, the “center” of world population might be somewhere around Guangzhou or Yunnan.

East Asian societies, however, are already on average “older” (by median age rather than history) than most. In Japan, the world’s “oldest” major economy, the median person is a 48-year-old, perhaps with a child already out of college and thinking about retirement. Korea’s median is a slightly younger 42, Taiwan’s 41, and China’s 38. And as the Science anecdote suggests, wealthy Asian societies are aging rapidly in comparison to equally mature western Europe, the U.S., Canada, Australia and New Zealand, as they not only have few children but permit little immigration. Japan’s population accordingly began a slow decline about a decade ago, falling from a 128.5 million peak in 2009 to a current 125 million; UN demographers suggest it will be around 105 million by 2050. Korea is down about 100,000 from 52 million in 2020, and will likely be 45 million in 2050. ASEAN countries (mainly the Philippines and Indonesia) will offset some of East Asia’s population drop, but only partially.

Meanwhile trends in Europe are slightly down (stable in the north, dropping sharply in the Mediterranean and Eastern Europe), while trends in the western hemisphere are slightly up. And the populations of much “younger” countries in South Asia, the Middle East, and Africa are surging — the hypothetical median-age African is just out of high school and preparing for her 19th birthday — and likely to account for 90% of the next generation’s population growth. The UN’s projections for population changes to 2050 look like this:

World	+1.745 billion
Sub-Saharan Africa	+940 million
South/Central Asia	+500 million
Middle East/North Africa	+120 million
Latin America/Caribbean	+90 million
Europe/North America/Aus/NZ	+9 million
East/Southeast Asia	-25 million

By that point, India — now either just below or just above China at 1.4 billion — is likely to reach 1.7 billion people by 2050. (The entire world population in 1950 was 2.5 billion.) Moving westward, Pakistan will grow from 230 million to 365 million, Egypt from 104 million to 160 million, and Ethiopia from 105 million to 215 million. Nigeria is expected to reach 375 million — tying a still-growing United States as the world’s third-largest by population — and the Democratic Republic of the Congo from 95 million to 215 million. All this suggests a next-generation “center” of population perhaps in northern India or Karachi, with patterns of consumer demand, youth culture, and goods production as different as today’s are from those of 1990.

* Magazine published by the American Association for the Advancement of Science

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

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PPI’s Trade Fact of the Week: Taiwanese (on average, according to the U.N.) are the happiest people in Asia.

Posted on October 26, 2022September 18, 2024 by The Progressive Policy Institute

FACT: Taiwanese (on average, according to the U.N.) are the happiest people in Asia.

THE NUMBERS: U.N. 2022 World Happiness Report rankings –

1. Finland, 7.821
2. Denmark, 7.636
3. Iceland, 7.557
16. United States, 6.977
23. Costa Rica, 7.257
26. Taiwan, 6.512
54. Japan, 6.039
59. Korea, 5.395
72. China, 45,585
81. Hong Kong, 5.425
144. Zimbabwe, 2.995
145. Lebanon, 2.955
146. Afghanistan, 2.404

WHAT THEY MEAN:

Can you put a number on happiness? The United Nations is trying. The 10th edition of its “World Happiness Report,” out last March, ranks 146 countries and territories by a four-digit “happiness” score. This is a number drawn from annual polling by the Gallup organization on immediate emotions (“did you smile or laugh yesterday?”; “are you anxious or worried?”, etc.) plus longer-term assessments of satisfaction with life. Accepting a lot of uncertainty* in such matters, a look at the survey results on their own and against some more easily measured things:

Happiest: The happiest people in the Report’s list live in northern Europe. Finns are at the very top with a score of “7.821,” followed closely by Danes, Icelanders, Swiss, and Dutch. All of the 20 happiest countries are wealthy democracies, including Australia and New Zealand, Israel, Canada and the U.S. (in 16th, just below “7”), the U.K., France, Germany, Belgium, and Czechia.

Least happy countries: The lowest numbers are those assigned to least-developed and war-torn or autocratic countries, mostly in Africa and the Middle East. Three countries get happiness numbers below “3.000”: Afghanistan, whose 2.404 is the lowest in the Report, with Lebanon 145th and Zimbabwe 144th occupying the next two notches up. Eight countries fall between “3.000” and “4.000,” with Rwanda, Botswana and Lesotho occupying the next spots. India turns up at 136th, with a 3.777, making it the least-happy democracy in the Report’s list.

Regional exceptions: The five East Asian polities in the list seem glummer than one would predict by income alone. Within this group, Taiwanese are clearly the “happiest” and Hong Kong people least, while Japanese and Koreans should probably cheer up.** Latin American democracies, by contrast, punch well above their per-capita-income weight for happiness: Costa Rica, which ranks 67th in the world for Gross National Income per capita, places 23rd in the Report’s happiness table; likewise, but on a larger scale, Brazil ranks 87th for per capita income but 38th for happiness.

A couple of thoughts here:

The top end of the Report’s rankings looks a lot like the top ends of three other indexes. One is the World Bank’s annual “GNI per capita” list, where Switzerland is 2nd (behind Bermuda, not included in the Happiness Report), Norway 3rd, and the U.S. 7th. Another, Freedom House’s “Global Freedom” index, puts Norway, Sweden, New Zealand and Canada at the top. And Transparency International’s “Corruption Perceptions Index” likewise has Denmark first, Finland second, and New Zealand third. On the other hand, the happiest-countries list does not much resemble a list of countries with especially equal incomes. In the World Bank’s Gini Index database, the five most “income-equal” countries are all Central and Eastern European countries — Slovakia, Belarus, Slovenia, Armenia, and Czechia — which spanning the range from “wealthy liberal democracy” at the western Prague end, which ranks 18th for happiness, to “impoverished dictatorship” in Minsk in the east in.

Likewise at the bottom of the list, poverty, autocracy, and corruption appear to be unsurprisingly strong generators of unhappiness, though the strongest correlation seeming to be with poverty. The 11 countries with happiness numbers below “4.000” include 7 least-developed countries, only three rated by Freedom House as “Not Free.” Again income inequality seems at least less powerful than these; the World Bank’s least equal economies as measured by Gini are a mix of southern African states with relatively low U.N. happiness scores, and Latin American countries with relatively high ones.

* For example, even if the theory of happiness ranking works, are surveys reliable in authoritarian or very rural and least-developed countries? Does a given question take on a new emotional resonance when translated into a different language? Etc.
** Asia-wide, the “South Asian” region generally comes off as very down — Pakistan 121st, Sri Lanka 127th, India 137th, while ASEAN members vary from 27th-place Singapore through the Philippines and Thailand at 60 and 61, to Burma/Myanmar at 126.

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

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PPI’s Trade Fact of the Week: Haiti exported half a billion clothing articles to the U.S. last year

Posted on October 19, 2022September 18, 2024 by The Progressive Policy Institute

FACT: Haiti exported half a billion clothing articles to the U.S. last year.

THE NUMBERS: Haitian clothing exports to U.S. (2021) –

~10% of GDP
~20% of wage-paying jobs

WHAT THEY MEAN:

A vivid passage from Pamela White, an Obama-era U.S. Ambassador to Haiti, testifying to the House Foreign Affairs Committee on life in Port-au-Prince in late September:

“No legitimate government, no judiciary, no parliament, and a weak police force incapable of stopping the gangs that now rule over 60% of the capital. … Haitians are living in hellish conditions — all social services were terminated months ago. Port-au-Prince has the highest number of kidnappings in the world.”

And a very careful State Department comment last Friday:

“[T]he question of a security presence is obviously an area where we are treading very carefully to make sure that we are doing the right things and not doing the things in the past that have not worked…”

In such circumstances, neither outsiders nor Haitians have easy ways to find the “right things”. A relatively easy place to start, though, is to identify and preserve things that have worked. With this in mind, here is some opaque stuff about clothing trade, from the U.S. Commerce Department’s Office of Textiles and Apparel:

“Unlimited duty-free treatment for various apparel products [from Haiti], with certain restrictions regarding the source of the yarns and fabrics used in the apparel, and duty-free treatment for certain apparel products up to certain annual quota levels, known as trade preference levels (TPLs).”

The programs Commerce describes, designed in the late 2000s and known as “HOPE” and “HELP,”* mean in practice that a Haitian-made pullover shirt normally subject to tariffs of 16.5% (if cotton) and 32% (if polyester) is not only (a) duty-free but (b) in contrast to the intricate rules imposed on T-shirts arriving under free trade agreements, can be made of fabric from whatever country makes most economic sense.

The result is that each year up to this summer, Haiti’s clothing business has been a success and a factor providing some degree of economic stability. In brief, 29 factories in three industrial parks — Port-au-Prince, Cap Haitien, and Ouanaminthe — have been shipping about 475 million articles of clothing valued at $1 billion (279 million T-shirts, placing Haiti 6th in the world as a supplier to the U.S. last year, along with 93 million of the pullovers and sweaters, 730,000 track suits, 36 million pieces of women’s and girls’ underwear, 2 million face-masks, etc) to Americans via a 40-hour boat ride to the Port of Miami. At the individual level, these factories employ about 60,000 workers, which is about a fifth of all the formal-sector wage-paying jobs in Haiti. These start at a minimum wage of about $2000 per year (as against a national per capita income around $1,650 before this year’s crises). On the “macro” scale, clothing exports account for 6.8% of Haiti’s $20 billion GDP,** a figure roughly comparable in American terms to the Bureau of Economic Analysis’ combined figures for the U.S. agricultural, entertainment, automotive, air freight, and energy industries.

The clothing factories are pretty durable, equipped with their own generators and security services. After the 2010 earthquake, for example, they reopened in hours. But two of the three parks are closed; last month gangs began blocking factory-to-port roads, depriving the factories of fabric, fuels, or replacement parts, and making them unable to move finished products out to their customers. Looming up in 2025 is the statutory end to HOPE & HELP tariff waivers and TPLs. The combination of an immediate and indefinite interruption of trade, and the programs’ limited term, raises the prospect that this until-now healthy part of the Haitian economy will not recover from this crisis, and one of the ‘things that work’ will not return.

In these circumstances, whatever unpleasant security policy steps the outside world — the United Nations Security Council, the U.S./France/Brazil/Spain/Germany/EU “Core Group”, or something else — may take to stabilize the situation and restore public services will likely prove harder to sustain. Which is to say that Congress, thinking about possible trade bills this coming December, can do something very useful and valuable by extending, ideally permanently, the HOPE and HELP programs.

* Acronyms for “Haitian Hemispheric Opportunity through Partnership Encouragement” and “Haitian Economic Lift Program.”
** Using a 2021 World Bank estimate; link below. Take this figure as a well-educated WB guess, given the scarcity of statistics.

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

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PPI’s Trade Fact of the Week: The largest payers of 2018-2022 “232” and “301” tariffs appear to be U.S. manufacturers and construction firms

Posted on October 12, 2022September 18, 2024 by The Progressive Policy Institute

FACT: The largest payers of 2018-2022 “232” and “301” tariffs appear to be U.S. manufacturers and construction firms.

THE NUMBERS: Extra tariff collection via “232” and “301” tariffs, 2021

Electrical equipment ~$7.0 billion
Fabricated metal products ~$4.0 billion
Steel & aluminum: ~$2.5 billion
Auto parts ~$2.5 billion
Chemicals ~$1.5 billion

WHAT THEY MEAN:

Since the imposition of “301” tariffs on a swath of Chinese goods, and “232” tariffs on steel and aluminum, the U.S. has had a sort of two-part tariff system. One is the permanent “MFN” tariff system, which ranges from 0% (natural gas, computer, perfume) to 48% (cheap sneakers), and brings in most of its money from clothes, shoes, fashion accessories, silverware, and other consumer products. The other half is the administratively levied Trump-era tariffs, which draw their “232” and “301” nicknames from the two laws used to impose them, and include 25% on three “tranches” of Chinese goods and 7.5% on a fourth “tranche,” 25% on various steel items, and 10% on aluminum. The basic figures, with estimated 2022 figure drawn from the eight months of currently available trade data:

2021: $84 billion in tariff revenue, or just under 3.0% of $2.85 trillion in imports.
2017: $33 billion in tariff revenue, or 1.4% of that year’s $2.,35 trillion in imports.

In 2021, the two halves of this system raised more or less the same amount of money, $42 billion each. So far in 2022 the pattern is the same, though a post-COVID import boom has pushed up the figures to a likely $100 billion in tariff payments on $3.4 trillion in imports.

If the MFN system is mainly a way of taxing clothes and other consumer goods, what does the 301 and 232 system look like? A list covering about three quarters of the roughly $42 billion in extra tariffs shows nine major sources:

And if families and retailers are the main payers of MFN tariffs, who are the main 232 and 301 payers?

Academic studies typically say that the higher costs of tariffs falls on “consumers”; the lay reader of these studies usually takes this as economics-profession vernacular for “people like me!” This works for the permanent “MFN” tariff system: for example, the Bureau of Economic Analysis’ intricate Input-Output tables for 2021 imports, which track buyers of different types of products, report that about 96% of clothes come in for personal use, and these “personal users” presumably bear the cost. The 301 tariffs on furniture, which make up about a tenth of the extra tariff payments, are much the same.

But families and shoppers are not the only “consumers” in the technical economic sense. Another group is composed of businesses buying “intermediate goods” to produce finished products — say, wiring for home-builders, metals for ship-building, rubber for bicycle and truck tires. These latter industrial consumers, especially manufacturers, appear to be paying much more of the administratively imposed 232 and 301 tariffs than they do in the permanent MFN system.

“Electrical equipment, appliances, and components,” for example, is the category in which the “232” and “301” tariffs raised tariff payments most dramatically, from $1.2 billion in 2017 to $8.7 billion last year. These are things ranging from home appliances to industrial batteries, generators, switchboards apparatus, and power transformers. Assuming that purchases of specifically Chinese-made electrical goods more or less mirrored overall U.S. import patterns, BEA’’s tables show that 26% of electrical equipment imports went via retailers and hardware shops to individuals and families; 63% went to businesses for intermediate goods; and 12% went to businesses for capital goods purchases. The “capital goods” imports regrettably aren’t broken out by industry buyers, but using the intermediate goods alone, BEA’s table finds manufacturers the largest single buyer at 21% of imports, followed by construction at 18%, and farmers at 4%. Presumably the tariff payments split more or less the same way.

Likewise in “fabricated metal products” likewise, manufacturers appear to have bought 32% of imports, and construction firms 18%, and the two together would pay about half of the $4 billion or so in extra tariffs. Etc., etc. for chemicals, metals, machinery, and so on.

A likely consequence of this is that the 232s and 301s have, at the margin, imposed costs on U.S. manufacturers that producers abroad don’t face. Thus they will likely cause some a loss of competitiveness vis-a-vis imports as manufacturers sell to American customers, and more difficulty succeeding as exporters abroad. Something to consider as the Biden administration continues to think this over.

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

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Gresser to Warren and Jayapal: Don’t charge people with bad faith unless you have evidence of it. Progressives can do better.

Posted on October 7, 2022September 18, 2024 by The Progressive Policy Institute

A quick response after reading last Wednesday’s lengthy, startling, and troubling letter from Sen. Elizabeth Warren and Rep. Pramila Jayapal to Commerce Secretary Gina Raimondo: Don’t charge people with bad faith unless you have evidence of it. Progressives can do better.

By way of introduction, the two Members’ letter continues a correspondence begun in July whose point of departure is a disagreement on digital trade policy matters such as cross-border data flows, divergences in national privacy regulation, and data localization. Sen. Warren and Rep. Jayapal object along left-populist lines to potential Biden administration negotiating positions on some of these topics in trade venues such as the Indo-Pacific Economic Framework and U.S.-EU Trade and Technology Council.

Were these disagreements the core of their letters, this would be the standard stuff of Congressional correspondence and advocacy. Digital trade issues are intellectually and technically complex. Conclusions about the best way to define U.S. interests on them can vary in good faith. And while Sen. Warren and Rep. Jayapal may be mistaken, dissent is perfectly legitimate and their rights to their opinions are obvious.

But the core of their letter is not the substance of policy but an insinuation – unsupported by evidence – that the Commerce Department is forming its positions in an improper or even a corrupt way and is likely pursuing specifically tech-industry goals rather than acting on good-faith Biden administration judgments about American interests. The letter uses two quite troubling lines of argument to back this up:

(1) Charges without evidence: For the Commerce Department as a whole, the letter notes that “several former employees” of tech firms work at the Department, and uses this bare fact to claim that “Big Tech” has an “untoward influence” on trade negotiations and may be “exploiting the revolving door with the Department” to set policy from outside. Apart from noting that several Department officials once held tech-sector jobs, the letter provides no evidence that the Commerce Department has taken any decision on any grounds other than its best assessment of U.S. interests and policy goals.

(2) Guilt by association: For individual officials, the letter cites past tech sector employment as evidence of “Big Tech’s current influence within the Department”, and a likelihood that “the Department’s revolving door with Big Tech firms will provide those companies the avenue they need to push their proposals across the finish line.” That is to say, some Department officials are pushing for goals they know are not in the general interest. Again, the letter does not cite any specific case in which any individual might have acted in bad faith, or provided advice that he or she did not sincerely view as good policy

The October letter, as did the July letter, then concludes by asking for lengthy lists of names – all Commerce appointees and civil servants who have previously held tech-sector jobs; all who left the Department after President Biden’s inauguration for tech-industry work – and accompanying lists of all tech-industry meetings these officials attended, or for which they helped in preparation and follow-up work. Again, no such list would provide any evidence of bad faith or improper policymaking.

Two thoughts on this:

First, as a practical matter, the letters’ premise leads to an absurd conclusion about policymaking and government personnel. To wit, U.S. government agencies should never employ people from sectors in which they have any oversight or policy responsibility, because such a person will inevitably put the interest of former employers above the national interest and his or her sworn duties. Applied to the Department of Agriculture, for example, such a standard would bar hiring farmers or people who might want to work in production agriculture later on. At the Centers for Disease Control, the presumption would be against hiring doctors and public health professionals. The Labor Department would likewise be well advised to avoid union members, and the Transportation Department should steer clear of airplane pilots and bridge architects, and even the Justice might need to stay away from anyone with a law firm background.

Second and more fundamentally, this premise – past employment with tech firms should entail presumption of bad-faith policymaking, and the Department and the individual officers need to disprove it – is wrong and unfair. Accusations of bad faith policymaking should require evidence of wrongdoing. American government officials, whether civil servant or political, qualify for their jobs based on three things: (1) they take an oath of office; (2) they pass an FBI security clearance investigation at the appropriate clearance level; and (3) they understand and respect national ethics laws and administration policy, for example by recusing themselves in cases these laws and policies define as posing a conflict of interest. If there is evidence that any official has fallen short on these responsibilities, provide it. If not, keep your argument to the merits. But neither letter provides any evidence that any Administration official has fallen short on any of these responsibilities.

The digital trade agenda as such is important in immediate economic terms, and more basically as a question of future world Internet policy. Obviously it has lots of implications for growth, for science, and for individuals. There’s no reason to shy away from spirited debate over it. But there’s also no reason at all to substitute attacks on character and integrity for this sort of debate. Progressives really need to do better.

PPI’s Trade Fact of the Week: World patenting has quadrupled since the conclusion of the WTO’s TRIPs agreement

Posted on October 5, 2022September 18, 2024 by The Progressive Policy Institute

FACT: World patenting has quadrupled since the conclusion of the WTO’s TRIPs agreement.

THE NUMBERS: Research and development spending as share of world GDP –

2018-2020 3-year average: 2.39%
1996-1998 3-year average: 1.97%

* World Bank database

WHAT THEY MEAN:

The 164 WTO members, having agreed in June on a five-year waiver of patent rules for COVID-19 vaccine production, are discussing a next question: should a similar waiver apply to a wider array of “therapeutics and diagnostics”? Their self-imposed decision point for this is December 17th. As this date approaches, some background on the WTO’s intellectual property rules, their aims, and their possible effects:

Per the U.S. Constitution, the core goal of intellectual property laws is “[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” U.S. laws on these topics date to the 1790s; international IP agreements and treaties, to 1883 for patents and 1887 for copyright. The WTO’s 73-article IP agreement, known as the “Agreement on Trade-Related Aspects of Intellectual Property Rights” or “TRIPs,” dates to 1995 and requires WTO members to adopt baseline IP patent, copyright, and trademark laws, enforcement procedures, and so on. Subsequent decisions provide exemptions for patenting rules for least-developed countries, and note that TRIPS rules do not prevent WTO members from acting on public health emergencies. Two data points on the intervening 28 years:

Research and Development: R&D spending, according to a World Bank database, averaged 1.97% of world GDP* in the mid-1990s. Between 2018 and 2020, R&D averaged 2.39% of world GDP. In practical terms, this now means about $2.5 trillion per year. Had the 1.97% figure remained constant, therefore, world governments, businesses, and universities would be spending about $400 billion less per year on science. By income group, high-income country R&D spending has risen from 2.3% of GDP to 2.8%. Low- and middle-income country spending has grown a bit faster, from 0.65% of GDP in 2000 (the first year in the World Bank’s database) to an average of 1.6% in 2018-2020. Based on the estimates in the table, about half of low-middle income country R&D spending growth was in China, and half in other countries.

Patenting: More research does seem to have meant more new inventions, or at least more patent awards. The World Intellectual Property Organization in Geneva reported 943,000 applications for patents around the world in 1994, 2.0 million applications in 2010, and nearly 3.3 million in 2020. The rise in actual patent grants has been faster, up four-fold from 450,000 patent awards in 1994 to 1.6 million in 2020: mRNA vaccines, touch-sensitive glass for smartphones, disposable satellite-launch rockets, biodegradable garbage bags, etc.

What to make of this? Causality is obviously hard to determine, and to some extent R&D investment likely rises with national wealth as well as responding to IP incentives. But the post-TRIPS world does appear to be one in which, as the Constitution’s references to incentives for useful Arts and Sciences” hoped, investment in science has grown (and grown especially rapidly in developing countries) and new inventions have cropped up.

Turning back to the WTO and its next steps, the June waiver for COVID vaccines is a highly specific one, and consistent with the existing 2005 “Declaration on TRIPS and Health,” on action during public health emergencies. No country so far, however, appears to have used this waiver (and the U.N.’s voluntary Medicine Patent Pool has arranged voluntary production licenses for 14 COVID medicines and therapies). This seems to indicate that the major challenges in raising vaccination rates are related to logistics and delivery to patients in low-income countries rather than to IP rules. “Diagnostics and therapeutics” are less specific terms, suggesting that a waiver for these products could apply to a variety of multipurpose medical devices and medicines yet to be invented. The data on R&D and patenting, meanwhile, suggest that the TRIPs agreement has at least contributed to a long-term upturn in scientific research and invention, a public good well worth preserving; which makes this next decision one that raises some systemic questions.

* The World Bank reports R&D spending at 2.33% of GDP in 2019, and 2.63% in 2020. We’re using a recent average on the assumption that the large one-year jump in 2020 was not an actual R&D increase but a COVID-related anomaly, reflecting less a jump in actual R&D than the temporary GDP effect of closing restaurants, hotels, construction sites, etc. for public health reasons.

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

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PPI’s Trade Fact of the Week: U.S. trade with Russia is down by 80% since February

Posted on September 28, 2022September 18, 2024 by The Progressive Policy Institute

FACT: U.S. trade with Russia is down by 80% since February.

THE NUMBERS: American imports from Russia, 2022 –

January: 8.3 million barrels of crude oil, 35,700 carats of diamonds, 2,100 tons of Arctic crab
June: 0 barrels of oil, 0 carats of diamonds, 0 tons of Arctic crab

WHAT THEY MEAN:

Reporting on the impact of sanctions, war, and conscription on Russia now tends by force of circumstance to be anecdotal, sometimes hard to verify, and relate to larger systemic trends: A tank factory halting production in March as a result of parts shortages, retail chains and international auto manufacturers departing, 98,000 young Russian men leaving for Kazakhstan last week and lines of cars at Georgian and Mongolian border crossings, and so on. Macro forecasting provides some context for these individual stories but is very abstract: The International Monetary Fund’s World Economic Outlook update this July projects a contraction of -6.0% this year (comparable to the 2008 financial crisis experience) and -3.5% in 2023.

Visible trade flows also provide only a partial picture (and an unusually limited one since Russia has declined to publish monthly trade data since the invasion), and can perhaps bolster anecdotes and macro vistas with some of the information in between. Two international sources, and a more detailed look at the post-February trends in U.S.-Russia trade flows, seem to show (a) a significant, but far from total disengagement, from world goods trade, and (b) in the context of the IMF’s overall prediction, probably a sharp domestic-economy effect given that Russia’s energy revenue remains high:

(1) The IMF’s “Direction of Trade Statistics,” a standard source for top-line goods trade totals, has country-by-country data for exports through May of 2022. Their figure for “world exports to Russia” reports $23.6 billion in exports to Russia in January, and $14.6 billion — i.e. a drop of about 38% — in May. Reporting on individual countries suggests that this may understate the total decline in Russian imports, as the IMF database finds Chinese exports to Russia down from $7.3 billion in January to $4.3 billion in May, the EU’s from $8.1 billion to $4.2 billion, Japan’s from $600 million to $190 million, Korea’s from $813 million to $339 million. These trends are not universal; Kazakhstan’s and Turkey’s Russia export figures, though smaller than those of the big economies, were both slightly up. The database unfortunately does not seem to have 2022 figures for “imports from Russia.”

(2) Analysts at Bruegel, an economic think-tank in Brussels, carry this a bit further, collecting national trade data through June from 34 countries accounting for about 75% of Russian trade, and adding imports as well. This concurs with the IMF’s less up-to-date finding, with Russian purchases from the relevant countries dropping from $18 billion in January to a low of $8 billion in April, then bumping up to $12 billion in June. Bruegel finds Turkey the only major economy whose Russian exports are at or above pre-invasion levels. Russia’s sales to other countries have been less affected: Russian energy exports rose a bit as world prices rose (from $26 billion in January to $27 billion in June, with the other months in between), but non-energy exports dropped by slightly more, from $17.5 billion to $13.4 billion. This matches EU data, showing less purchasing of Russian manufactures and farm products offsetting higher energy prices.

(3) The U.S. data is complete through July and quite detailed, showing drops of 80% in both the export and import accounts. U.S. exports to Russia have dropped from $500 million to $83 million, with sales to Russian industrial buyers now close to zero: semiconductor sales, for example, fell from $8 million in January to $0.25 million in July, computer equipment from $8.3 million to $0.4 million, motors and generators from $6 million to $0.2 million. The remaining significant U.S. exports to Russia appearing to be mostly medicines and medical equipment. Imports are likewise down by about 80%, from $2.5 billion in February to $484 million in July. The month-by-month figures looks like this, with energy-price related jumps in February and March followed by steady decline:

January: $1.96 billion
February: $2.56 billion
March: $2.76 billion
April: $2.08 billion
May: $1.13 billion
June: $0.66 billion
July: $0.48 billion

Overall, energy and luxury-good bans have eliminated almost all U.S. purchases of Russian oil and gas, diamonds, and seafood. The remaining Russian exports to the U.S. are mostly metals (exempted in most cases from the import bans and also little affected by withdrawal of MFN tariff rates) and fertilizer. Aluminum imports in fact are up from $41 million to $89 million, and nickel from $9 million to $52 million.

As with the macro forecasts and anecdotal reporting, the goods-trade figures suggest an economy (a) contracting sharply though not in free fall, (b) continuing to raise money through energy sales, and (c) possibly seeing somewhat sharper industrial declines than the macro figure suggests.

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PPI’s Trade Fact of the Week: Per the International Labour Organization, ‘Uzbek cotton is free from systemic child labour and forced labour’

Posted on September 21, 2022September 18, 2024 by Alyssa Brown

FACT: Per the International Labour Organization, “Uzbek cotton is free from systemic child labour and forced labour.”

THE NUMBERS: ILO estimates of forced labor worldwide –

2021: 27.6 million
2016: 24.9 million
2011: 20.9 million

WHAT THEY MEAN:

A grim series of statistics, drawn from last week’s International Labour Organization report on worldwide forced labor in 2021:

“49.6 million people were living in modern slavery in 2021, of which 27.6 million were in forced labour and 22 million in forced marriage. Of the 27.6 million people in forced labour, 17.3 million are exploited in the private sector; 6.3 million in forced commercial sexual exploitation, and 3.9 million in forced labour imposed by states.”

The 27.6 million total — up by 2.7 million from the 24.9 million estimated in the ILO’s 2017 report — combines several different conditions under the broad term “forced labor.” The most common of these, found in 36% of cases, involves workers trapped in jobs by withholding of pay; others involve debt bondage, entrapment of migrant workers, threats of violence by criminal enterprises, and in 1% of cases, chattel slavery. Reacting to this report, the U.S., European Union, and Japanese Trade and Labor ministers express joint commitment “to eradicating all forms of forced labour, including state-sponsored forced labour, from our rules-based multilateral trading system, and resolve to strengthen national and international efforts to meet this commitment.”

How exactly would they do this? Perhaps more fundamentally, would “removing forced labor products from international trade flows” also eliminate forced labor as such, or simply shift the destination of the products? In thinking through these questions, it might be useful to look at a recent example of large-scale success: the elimination of a state-run program of seasonal forced labor in cotton harvesting in Uzbekistan. Some background and tentative conclusions:

Background: Largest of the Central Asian republics at 34 million people, Uzbekistan is the world’s sixth-largest cotton producer, harvesting about 3 million tons per year in a global total usually around 25 million tons. Having served in the Soviet era as the provider of cotton for Russia-based textile mills, as an independent country since 1991 Uzbekistan now grows cotton both for local factories and for exports to clothing-producers elsewhere in the world.

According to a series of ILO surveys begun in 2016, about 2.8 million people worked in Uzbekistan’s annual autumn cotton harvest in the early 2010s. Roughly 14% of these harvesters — almost 400,000 people – were forced laborers required by local governments to leave school or jobs for unpaid fieldwork during harvest season until regional harvest quotas were filled. The 2016 survey reported that those “most ‘at risk’ of forced labour were medical and education staff, people employed elsewhere, and university/college students.” Five years later, the January 2021 report declared that “systemic forced labour and child labour has come to an end in Uzbekistan,” and the March 2022 report found no return.

Eliminating this system appears to have involved at least three factors:

(a) A large and sustained international activist effort through the “Cotton Campaign” involving businesses, labor unions, and human rights groups, which provided information on forced labor practices in the cotton harvest and pressured textile and apparel industry buyers worldwide not to use Uzbek cotton.

(b) International government pressures, in the U.S. case including human rights reports published by the State and Labor Departments, and a ‘review’ of the tariff waivers Uzbekistan received through the Generalized System of Preferences entailing possible revocation.

(c) Contingent factors, in particular the death in office of post-Soviet leader Islam Karimov and his replacement by a new leader, Shavkat Mirziyoyev, whose government hoped to avoid the reputational and potential economic damage associated with forced labor and was willing to put sustained effort, with ILO advice and monitoring, into reshaping the cotton industry.

Tentative conclusions: In drawing lessons from this experience, it’s likely important to be aware that the term “forced labor” covers many different forms of coercion, and these may require different approaches. The Uzbek cotton harvesting system appears an unusual, both as a state-run program and as one designed mainly for economic/industrial purposes. The policies that succeeded in eliminating it may be less useful with respect to state forced labor systems used by militaries or for other political purposes. State-required forced labor in turn is a relatively small part of forced labor generally, accounting in the ILO’s estimates for about 15% of the worldwide 27.6 million forced laborers. Most forced labor (see data below) appears to be in small-scale private businesses and criminal enterprises, where the policy challenge will often be effective law enforcement, often at local levels. But some general features of the effort to eliminate forced labor in Uzbekistan’s cotton harvest may be generally useful.

Publicity: The Cotton Campaign’s work, and the publication of credible data and reports by the U.S. government and ILO, appear to have had a major impact on both international opinion and Uzbek government policy. The U.S.’ GSP review likely added to this; its economic importance was modest — in the mid-2010s it applied to $2.5 million in imports of dried peppers, apricots, and other agricultural goods, out of $100 million to $300 million in annual Uzbek exports to the U.S. — but the reputational impact of the case and potential loss of benefits may have been high. This is especially relevant since, as our January report on GSP notes, the system lapsed almost two years ago and is not now available for the six Ministers’ efforts on forced labor, but can be restored whenever Congress acts.

Patience and persistence: The Cotton Campaign began working in 2007, and remained focused specifically on Central Asian cotton harvesting for a decade before the change of government in Uzbekistan and the subsequent relatively rapid abolition of forced labor in cotton harvesting.

Optimism: In this case, some combination of government policies, activism, and changing perceptions within the Uzbek government worked. Different circumstances elsewhere may require different methods, but the fact of one success means others are also possible.

FUTURE READINGS:

The ILO on forced labor worldwide as of 2021.

And via the Uzbekistan Embassy in D.C., remarks from Tanila Narbaeva (Chair of National Commission on Combatting Human Trafficking and Forced Labor) on the abolition of forced labor and next steps in labor reform.

Forced labor commitment from U.S./EU/Japan Trade and Labor Ministers.

And the U.S. Customs and Border Patrol explains forced labor-product interdiction.

Data:

Over the last decade, the world labor force has grown from 3.20 billion to 3.45 billion, and the ILO estimates of forced labor has risen from 20.9 million in 2011, to 24.7 million in 2016, to the 27.6 million cited in last week’s report. Basic statistics from last week’s report:

Industries: About two thirds of forced labor, totaling 17.3 million people, is in the “private sector.” This includes 5.5 million in a broadly defined “services” sector, and an additional 1.4 million in domestic work; 3.2 million in manufacturing, 2.8 million in construction; 2.1 million in agriculture; 0.2 million in mining and quarrying; and 0.1 million in fisheries. Child forced labor is most common in services, especially for domestic maid work.

Prostitution and pornography: 6.3 million forced laborers appear to be performing forced sex work (which in the ILO report is considered separately from ‘private sector’ industries). Of this total, 4.9 million are female and 1.4 male. Over a quarter of the 6.3 million people, 1.7 million, are children.

Government: 3.9 million people are held in labor camps or forced to work by governments. (Not including prisoners required to work as part of legitimate sentences for crimes). This total is nearly double the 2.2 million the ILO estimated for 2011, but slightly lower than the 4.1 million estimate for 2016. The ILO does not cite specific governments involved.

International trade: The report offers no guess at how much forced labor production enters international trade flows, but notes that the sectors where the risk of forced labor is “highest in severity and scale” are “informal micro- and small enterprises operating at the lower links of supply chains in high-risk sectors and locations”.

Geography: Forced labor estimates appear roughly consistent with shares of the world labor force, except that Africa’s share of forced labor is relatively low and the “Europe/Central Asian” share high. About half of all forced labor — 15.1 million people — is in Asia. Elsewhere, the ILO estimates 3.6 million people in forced labor in the Western Hemisphere, 0.9 million in Arab states, 3.8 million (and the lowest rate relative to population) in sub-Saharan Africa, and 4.1 million in Europe and Central Asia.

Case history in success: Uzbek cotton 2015-2022:

ILO’s 2016 report (first in the series, covering the 2015 harvest), with analysis on the nature of forced labor in cotton harvesting seven years ago.

And the March 2022 report announces an end to “systemic forced labour and child labour” in Uzbek cotton harvesting.

The Cotton Campaign lifts its boycott of Uzbek cotton, March 2022.

And historical Central Asia perspective:

Sadriddin Aini’s Sands of Oxus (1954), recounting childhood in the Emirate of Bukhara in the 1880s (conquered by imperial Russia in 1865 and no longer independent, but still a “protectorate” and locally self-governing), includes recollection of a temporary forced-labor recruitment episode for road-building.

ABOUT ED

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

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PPI’s Trade Fact of the Week: 42 of the world’s 195 countries are monarchies

Posted on September 14, 2022September 18, 2024 by Alyssa Brown

FACT: 42 of the world’s 195 countries are monarchies.

THE NUMBERS: 21st century monarchies –

Western Hemisphere: Canada, Antigua, the Bahamas, Belize, Grenada, Jamaica, St. Kitts, St. Lucia, St. Vincent.

Middle East: Bahrain, Jordan, Kuwait, Morocco, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

Europe: Andorra, Belgium, Denmark, Liechtenstein, Luxembourg, Monaco, the Netherlands, Norway, Spain, Sweden, United Kingdom.

Asia: Bhutan, Brunei, Cambodia, Japan, Malaysia, Thailand.

Africa: Lesotho and Swaziland.

Pacific: Australia, New Zealand, Papua New Guinea, Solomon Islands, Tonga, Tuvalu.

WHAT THEY MEAN:

Economist editor and poli. sci. pioneer Walter Bagehot explained in 1867 that monarchies hold public support better than republics because, being personal and symbolic rather than abstract and confusing, monarchies are more fun:

“Royalty is a government in which the attention of the nation is concentrated on one person doing interesting actions. A Republic is a government in which that attention is divided among many, who are all doing uninteresting actions.”

Recent TV statistics illustrate his thought in practice: 13.4 million Britons are said to have watched Queen Elizabeth II’s Platinum Jubilee ceremony last year, while a modest 1.3 million watched the 2019 Parliamentary debate on Brexit. Barbara Tuchman’s famous Guns of August introduction evokes the same mood with a bit less cynicism:

“So gorgeous was the spectacle on the May morning of 1910 when nine kings rode in the funeral of Edward VII of England that the crowd, waiting in hushed and black-clad awe, could not keep back gasps of admiration. In scarlet and blue and green and purple, three by three the sovereigns rode through the palace gates, with plumed helmets, gold braid, crimson sashes, and jeweled orders flashing in the sun. After them came five heirs apparent, forty more imperial or royal highnesses, seven queens—four dowager and three regnant—and a scattering of special ambassadors from uncrowned countries. Together they represented seventy nations in the greatest assemblage of royalty and rank ever gathered in one place and, of its kind, the last. The muffled tongue of Big Ben tolled nine by the clock as the cortege left the palace, but on history’s clock it was sunset, and the sun of the old world was setting in a dying blaze of splendor never to be seen again.”

Fifteen decades later, as the U.K. prepares for a similar event for his great-granddaughter next Monday — a moment of “sunset on history’s clock”, with attendant reflections on a life stretching from the Second World War, through the transition from Edward’s empire to Elizabeth’s Commonwealth, 15 Prime Ministers, etc., across seven decade of public service to the third decade of the 21st century — monarchy still seems to catch national and global imagination. Of the world’s 195* independent countries, 42 are monarchies — 15 Commonwealth realms including the U.K. itself, along with eight in the Middle East, one (Tonga) in the Pacific, two in sub-Saharan Africa, six in Asia, and 10 in continental Europe. R.I.P to a unique figure, and our sympathy with U.K. and Commonwealth friends this week.

* Using the State Department’s count of countries.

FUTURE READINGS:

Some looks back:

Then-Princess Elizabeth’s Children’s Hour broadcast during the Blitz in 1940 (pictured above).

The Platinum Jubilee weekend.

More highlights on the life of Queen Elizabeth II from The Commonwealth.

Two takes:

Walter Bagehot explains the populist appeal of monarchy.

And Tuchman’s The Guns of August, in which after the intro the Kaiser takes a lot of interesting actions but non-royals do so as well.

Eight current monarchies:

The British royal household.

The Japanese monarchy is the oldest in the world, predating the fall of the Roman Empire by at least 70 years: Japan’s Imperial Household Agency.

Thailand’s King Rama IX reigned from 1946 to 2016, equalling Elizabeth’s 70 years. Thailand’s Royal Office.

King Letsie of Lesotho marks his 25th year this October 13.

King Tupou IV of Tonga.

King Abdullah II of Jordan.

Oman’s Sultan Haitham bin Tariq.

And Danish Queen Margarethe, who marked 50 years last January, traces her antecedents back to a Viking named Gorm the Old (~ 900 A.D.) She is also queen of Greenland and the Faeroes Islands, technically autonomous realms “under the Danish crown.”

Also:

The current global count of monarchies is a bit less clear than the “42” figure suggests, since many countries retain hereditary ruling kings and queens of regions and ethnic groups incorporated in larger countries. Three examples:

New Zealand’s Maori kingship
Ghana’s Asantehene
Yogyakarta’s Governor/Sultan Hamengkubowono XI

ABOUT ED

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

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PPI’s Trade Fact of the Week: The Trade Adjustment Assistance program expired June 30

Posted on September 7, 2022September 18, 2024 by Alyssa Brown

FACT: The Trade Adjustment Assistance program expired June 30.

THE NUMBERS: TAA beneficiaries by sector, FY2021 –

Total	107,454
Manufacturing	80,588
Wholesaling	3,422
Information	2,227
Mining/energy	1,801
Retail	701
Agriculture	71
Accommodation/food service	0

WHAT THEY MEAN:

As 158 million American workers return from the Labor Day break to shops, offices, restaurants, factories, labs, grocery and retail checkout registers, construction sites, and bedside computer terminals, the Bureau of Labor Statistics abounds with good news. Businesses are hiring 6 million workers per month. Layoffs, contrariwise, are running about 1.3 million per month, 400,000 per month below pre-COVID levels. And the tally of unemployed workers, at 5.67 million last July, was the lowest since the golden summer of 2000 and barely half the 11.23 million currently open jobs.

Against this September’s blue and sunny labor-market skies, a policy cloud: the expiration June 30th of Trade Adjustment Assistance (“TAA” for short), a 60-year-old program dating to the Kennedy Administration which offers job training and other benefits to workers displaced by trade competition or job shifts abroad. The end of these benefits is a challenge. But it is also an opportunity for fresh thinking, laid out in a joint piece today by PPI’s Ed Gresser and Workforce Development Policy Director Taylor Maag, which suggests going beyond simple renewal to make TAA benefits more widely available to displaced workers regardless of the cause of job loss. A couple of quick descriptive points, and then a thought on the reason for a fresh approach:

Scale and Coverage: Over the past decade TAA served an average of 91,000 displaced workers per year. Coverage is nationwide; of the 107,454 workers in the 2021 TAA cohort, 12,638 are in Texas, 11,012 in Oregon, 3,112 in Minnesota, 1,420 in Connecticut, 1,231 in Kentucky, and so on. By sector, about 75% of last year’s TAA beneficiaries (80,588 of the 107,454) were in manufacturing, as compared to 1,809 in mining and energy, 61 in agriculture and 24,966 in variety of services industries (e.g., 701 in retail, 3,422 in wholesaling, 2,227 in information industries, none in accommodation and food service, and so on). Demographically, the 2021 beneficiaries have a median age of 51; two-thirds are men; half have high school degrees, GEDs or less; ethnically they are 65% white, 13% African American, 11% Hispanic, 9% Asian and 2% Native American.

Distinctiveness: After its 18 renewals and revisions, with especially significant ones in 1974, 2002, and 2015, TAA has become a sort of pilot program in active labor-market policy. Its services go well beyond between-jobs income support to include self-help options for workers with widely differing career goals and local opportunities. Workers certified as TAA-eligible receive a menu of benefits: two years of job training for those interested in new career paths; temporary wage insurance for older workers taking lower-paying jobs; health care tax credits; and relocation support for workers planning a move to areas with more employment opportunities.

A comment on results: Examining the results in 2018, New York Fed researcher Ben Hyman found a strong though temporary benefit: “Ten years out, TAA-trained workers have $50,000 higher cumulative earnings, driven by both higher incomes and greater labor force participation. Yet annual returns fully depreciate after ten years. … Returns are further concentrated in the most disrupted regions.”

Where to now? The original argument John F. Kennedy made for TAA, as a complement to the Trade Expansion Act of 1962, provides a useful point of departure. His case, made with the standard New Frontier clarity and force, is that reducing tariffs and opening foreign markets promotes growth, fights inflation, helps new industries grow, and raises consumer living standards; but can also increase competition and stress at home. In such cases, he says:

“[C]ompanies, farmers and workers who suffer damage from increased foreign import competition [should] be assisted in their efforts to adjust to that competition. When considerations of national policy make it desirable to avoid higher tariffs, those injured by that competition should not be required to bear the full brunt of the impact. Rather, the burden of economic adjustment should be borne in part by the Federal Government. … Just as the government met its obligation to assist industry in adjusting to war production and again to return to peacetime production, so there is an obligation to render assistance to those who suffer as a result of national trade policy.”

Kennedy’s logic held up for six decades and could be used again for a simple renewal. But it has a couple of weaknesses that suggest the need for a bolder approach. One relates to the particular circumstances of 2022 as opposed to those of 1962, 1974, 2002, or 2015. The other is more basic and troubling.

First, Kennedy and his successors argued for TAA as part of a national trade-liberalizing policy, in which the various benefits of an open market and export growth should be balanced with support for dislocated workers in previously sheltered industries. But with the U.S. at least for now not trying to cut tariffs, trade-related dislocation appears more likely to come from the opposite direction – trade lawsuits of the type that destabilized the solar power industry this spring, the costs that Trump-era tariffs on industrial inputs impose on U.S. machinery and automotive manufacturers, or (indirectly) retaliations against U.S. exporters. In these circumstances the case for a special program for import-related job loss is probably weaker than it was in the past.

Second, Kennedy’s case for special help for trade-displaced workers has always had an unspoken and troubling corollary: some workers in distress, particularly in the manufacturing sector, get more help than others. Specifically, the manufacturing sector accounted for 7.0% of layoffs in 2021, and 6.2% of layoffs over the last decade. Meanwhile, displaced manufacturing workers made up 75% of TAA beneficiaries in FY2021 and 72% over the past decade. Retail, construction, and food service/accommodation workers who make up larger shares of annual U.S. layoffs typically make do with standard unemployment insurance. In more individual terms, TAA’s self-help policy options are much more open to a displaced auto plant worker than to a displaced auto shop worker, or to a textile worker than to a waitress or a gas station attendant.

With these facts in mind, Gresser and Maag suggest that Congress should consider something new: not removing TAA benefits as options for trade-dislocated workers by simply letting the program expire, but making them more broadly available to displaced workers, regardless of sector or cause of job loss. This is a complex question, requiring some budget thinking and possibly some reorganization of job-training and displaced-worker support more generally. But as they note in their post-Labor Day piece today, there is no better time to think about reforming and revising old labor policies than a sunny year in which jobs are plentiful and layoffs rare.

FUTURE READINGS:

TAA data and status

DoL’s TAA database, with counts of petitions and worker certifications from 2010 forward.

The DoL’s Annual Reports on TAA, FY2009 through FY2021.

And a comment on program expiration from Secretary of Labor Marty Walsh.

Policy goals and outcomes, 1962-2021

JFK on tariff-cutting and Trade Adjustment Assistance, January 25, 1962.

Sen. Max Baucus, D-Mont., on renewal and options for reform, 2004.

An evaluation from Ben Hyman of the New York Fed, 2018.

And a Ways and Means Committee renewal hearing featuring workers, firm owners, and state officials, 2021.

ABOUT ED

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

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Why U.S. Policymakers Should Renew TAA (For Everyone)

Posted on September 7, 2022September 18, 2024 by Alyssa Brown

What should the Biden administration and Congress do as Trade Adjustment Assistance expires? Consider a new approach: Renew it but drop the trade clause and reach more workers.

John F. Kennedy’s Trade Act of 1962 marked a watershed in U.S. trade policy, leading after a few years of negotiations to the largest single tariff cut in American negotiating history. It was also, though this is less well-remembered, a watershed in worker adjustment policy. The 1962 Act created the Trade Adjustment Assistance (TAA) program, which helps workers losing jobs to import competition by offering benefits that went well beyond the support available for other displaced workers. Kennedy’s argument for it noted that reducing tariffs and opening foreign markets promotes growth, fights inflation, helps new industries grow, and raises consumer living standards; but can also increase competition and stress at home. To address this, he suggested a new federal support program:

Over the six decades since, TAA has represented a liberal-internationalist bargain, blending trade liberalization and support for exporters with a commitment to vulnerable workers. As Kennedy and each of his Democratic successors recognized, openness to foreign trade helps to catalyze the U.S. economy but can also harm less competitive domestic companies and their workers. They also recognized the value of a federal commitment to an active labor market policy that helps displaced workers develop new skills and find career paths, enabling them to support families and continue their contribution to communities and to the nation’s economy. Congress has reauthorized TAA 18 times since. The renewals in 1974, 2002, 2011, and 2015 were particularly ambitious, with the 21st century renewals adding coverage for workers grappling with internet-based competition, workers displaced by plant shifts abroad, and farmers. The most recent iteration, completed in 2015, offered reemployment services including training (on the job training, academic training, and apprenticeship), income support for those enrolled in training, job search services, relocation, and transportation benefits as well as wage subsides for older workers.

TAA thus pledged that as the U.S. reduced trade barriers, those who lost their jobs due to shifts in production and foreign labor would be adequately supported by the government to find new and often better employment. In FY2021, for example, the Department of Labor certified 801 petitions for TAA support, providing help to over 107,000 displaced workers. A statistical snapshot drawn from the Labor Department’s most recent annual report finds that 80,000 of these beneficiaries or 75% of the cohort come from the manufacturing sector. Their median age is 51; half half high school degrees or GEDs, 31% some additional schooling, and 19% are college graduates. By gender, two-thirds are male; by race and ethnicity, two-thirds are white, 13% African-American, 11% Hispanic, and 9% Asian-American.

However, in the past decade since the 2015 reauthorization, the program has changed little. Most recently, Congress left TAA out of the stimulus and recovery packages passed in response to the COVID-19 pandemic and likewise out of the recently passed CHIPS and Science Act. As a result, TAA officially expired at the beginning of July 2022, and workers displaced by trade competition or job shifts abroad no longer can receive its support.

Where to now? TAA often received criticism, sometimes on budget grounds and sometimes on efficacy grounds. Its critics claim that the program failed to reach eligible workers, due to lack of program awareness and hoops to access services. As Andrew Stettner of The Century Foundation observed in a 2021 appearance before the House Ways and Means Committee, “Workers can only qualify for TAA if a union, local government agency, or a group of three or more workers files a petition that proves that job losses at a specific facility/unit are directly tied to trade. This is a laborious process that takes an average of 61 days from the time a petition is filed (which itself may come after a plant is closed), and as a result many potentially qualified workers do not receive coverage.”

These critiques have some force. To Stettner’s point, TAA’s impact is inherently limited by its qualification rules: A worker seeking help must know first that a special program for trade-related job displacement exists, and then be able to show that trade or jobs abroad contributed to their job loss.

Nonetheless, bipartisan policy analysis shows that TAA has had some significant success over time. New York Fed economist Ben Hyman in 2018 after comparing employment outcomes for TAA beneficiaries with outcomes for non-beneficiaries in similar circumstances, found that “ten- years out, TAA-trained workers have $50,000 higher cumulative earnings, driven by both higher incomes and greater labor force participation,” though earnings converge after a decade. An earlier Peterson Institute for International Economics paper highlighted significant change for the better in the 2002 TAA renewal, including increased uptake in services sectors and increased participation in skill development opportunities by affected workers. On the center-right, a recent AEI report found that TAA generally has had long-term impact on earnings for workers receiving services, especially those that received the full benefit of skills training. Additionally, as part of the 2011 reauthorization, the TAACCCT grant program was created. This program encouraged partnerships between community colleges and the workforce system to develop accelerated pathways to careers for adult learners. And a report by New America found individuals that participated in TAACCCT-funded programs were more likely to complete their training, earn a relevant credential, and find in-demand employment.

Not only have multiple sources and research found that TAA has had considerable and valuable impact for trade-displaced workers, but TAA also has a potentially greater importance as a pioneer of generous benefits that other federal programs do not always consistently offer to displaced workers. These include the length of the training benefit (two years) for workers committed to developing new skills, wage subsidies for those in training or based on age eligibility, and the option for workers in particularly distressed areas to get financial support for relocation and job search elsewhere. This type of holistic approach is increasingly important to ensure people persist and complete in their training to prepare for in-demand opportunities. And it is a good model for a better, more active support program for workers generally.

This last point leads to a final, unsettling fact for advocates of the TAA program. TAA has by nature always included a troubling inequity, inherent in Kennedy’s original case for special support for workers displaced by import competition. That is, workers who lose jobs to trade competition can get more generous benefits than workers who lose jobs to recession or domestic competition. Is there really a strong ethical case to distinguish between (say) a displaced clothing factory worker and a displaced waitress or gas station attendant, and view the former as more in need of benefits or more entitled to benefits than the latter?

So, we return to the expiration of the program this year, and potential next steps. By missing the opportunity to renew and update TAA at all, federal policymakers are yet again forgetting about working Americans and the policies that were designed for them specifically. On the other hand, with the Biden administration so far not seeking to open new export markets and declining opportunities to liberalize the U.S. trade regime, does the historic liberal-internationalist bargain — more open markets, support for displaced workers — still apply? And if it is less applicable in current circumstances, should we not therefore think about an opportunity to generalize the program, so that it supports not only trade-affected workers but other workers in industries that have been hard hit over the past two and a half years from the pandemic and technological advancement?

Looking ahead, here is our take: Since TAA is expired, Congress should take this time to think about ways we can do better. Here are three ideas that could address critiques to the program and make sure it better serves workers in our 21st century economy.

Expand Eligibility: Consider expanding services to reach a broader group of workers — perhaps any worker – facing dislocation, for international or domestic reasons beyond their control. This would still include trade-affected workers but would also open the benefits to those dislocated from industry decline based on automation, climate-related provisions (i.e., coal) and/or fallouts from the pandemic (i.e., retail & hospitality industries).
Market & Streamline Services: TAA Administrators must better ensure that eligible workers know the program exists and are able to access benefits. This means a more robust public relations campaign, better partnership with other systems (i.e., workforce boards, community colleges) and community-based organizations that are reaching people on the ground as well as collaboration with employers so they can accurately communicate opportunities to at risk employees.
Prioritize Skill Development: While reemployment services like job search are important, we need to do a better job of helping people prepare themselves for new in-demand jobs, which often means opportunities to up-skill. Skill development opportunities available through TAA are critical to make sure dislocated workers find employment that helps them find new and better jobs.

To make these changes work, policymakers also must think about the budgetary implications. In FY 2021, prior to expiring, TAA served a total of 107,000 workers with an appropriation of $633.6 million dollars. The precise number of workers a generalized program would serve is unclear, but current statistics on TAA use and the universe of potential new beneficiaries can provide some guideposts. On one hand, the 80,000 manufacturing workers in the FY2021 cohort is about 6% of total manufacturing-sector layoffs, and total layoffs in a year typically average about 1 million. On the other, the most likely users are long-term unemployed workers unable to find new jobs quickly, and the total long-term unemployed population has varied in recent years between the current 1.2 million and 3 million. Such figures suggest that a million displaced workers might be something of an upper bound. To serve this many dislocated workers across an array of disrupted industries and the long-term unemployed, TAA’s budget would have to increase about ten-fold, reaching roughly $6 billion annually. However, that number shouldn’t alarm policymakers and probably can be reduced. Determining whether a particular worker’s layoff is ‘trade-related’ requires a significant investment in administrative overhead and costs. A more generalized program would reduce the time and money spent on proving eligibility. Additionally, with an expanded TAA, other federal workforce programs may be duplicative and unnecessary. This means programs could be consolidated or cut, which could also help reduce costs.

In sum, the TAA program is an important one, delivering valuable benefits to hundreds of thousands of workers each year. Congress should remember this impact and make sure it does not simply disappear. It should also remember, though, that trade is far from the largest cause of job displacement, and all workers — especially those in lower-skilled jobs that are subject to increased disruptions as the economy changes — deserve support. With the program lapsed, federal policymakers should consider ways to improve and broaden it. An updated policy could focus beyond trade and international competition, and provide adjustment assistance for all economic disruption, would help empower working Americans to advance by giving them access to the skills and financial support necessary to find new and emerging in-demand work. This is critical to enhance workers’ confidence, broaden economic opportunity, and help our nation grow from the bottom up and middle out.

World total	470 million acres
U.S.	170 million acres
Brazil	130 million acres
Argentina	59 million acres
Canada	31 million acres
India	29 million acres
Paraguay	10 million acres
China	8 million acres
Pakistan	6 million acres
All Other	33 million acres

PPI’s Trade Fact of the Week: U.S. manufacturing employment has risen in 11 of the last 12 years

FACT: U.S. manufacturing employment has risen in 11 of the last 12 years.

THE NUMBERS: Annual manufacturing job growth* in U.S. –

FURTHER READINGS:

ABOUT ED

FACT: International student enrollment in U.S. colleges and universities is down by 12,000 since 2018.

THE NUMBERS: Drop in international student enrollment for 2018/19-2022 –

FURTHER READINGS:

ABOUT ED

FACT: PPI has published 171 papers, posts, op-eds, and Trade Facts so far this year.

THE NUMBERS:

FURTHER READINGS:

ABOUT ED

FACT: 458 Native American-owned businesses exported in 2019.

THE NUMBERS: Average employment and payroll for Native American-owned businesses* –

FURTHER READINGS:

ABOUT ED

FACT: U.S. employment of biotech scientists has grown by 45,000 since January 2021.

THE NUMBERS: U.S. biotechnology researchers* –

FURTHER READINGS:

ABOUT ED

FACT: China’s population likely began to fall this year.

THE NUMBERS: Median ages by country –

FURTHER READINGS:

ABOUT ED

FACT: Taiwanese (on average, according to the U.N.) are the happiest people in Asia.

THE NUMBERS: U.N. 2022 World Happiness Report rankings –

WHAT THEY MEAN:

FURTHER READINGS:

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FACT: Haiti exported half a billion clothing articles to the U.S. last year.

THE NUMBERS: Haitian clothing exports to U.S. (2021) –

WHAT THEY MEAN:

FURTHER READINGS:

ABOUT ED

FACT: The largest payers of 2018-2022 “232” and “301” tariffs appear to be U.S. manufacturers and construction firms.

WHAT THEY MEAN:

FURTHER READING

Some data sources:

ABOUT ED

FACT: World patenting has quadrupled since the conclusion of the WTO’s TRIPs agreement.

WHAT THEY MEAN:

FURTHER READING

TRIPS:

Research and Development:

The World Intellectual Property Organization — WIPO, which continues to oversee the descendants of the 1883 Paris Convention on patenting — maintains a database which tallies patent applications and grants worldwide. The trend for grants post-1994:

2020: 1,592,000 2010: 914,200 2000: 517,600 1994: 405,355

And direct to WIPO’s database.

ABOUT ED

FACT: U.S. trade with Russia is down by 80% since February.

THE NUMBERS: American imports from Russia, 2022 –

WHAT THEY MEAN:

FURTHER READING

ABOUT ED

FACT: Per the International Labour Organization, “Uzbek cotton is free from systemic child labour and forced labour.”

THE NUMBERS: ILO estimates of forced labor worldwide –

WHAT THEY MEAN:

FUTURE READINGS:

ABOUT ED

FACT: 42 of the world’s 195 countries are monarchies.

THE NUMBERS: 21st century monarchies –

WHAT THEY MEAN:

FUTURE READINGS:

ABOUT ED

FACT: The Trade Adjustment Assistance program expired June 30.

THE NUMBERS: TAA beneficiaries by sector, FY2021 –

WHAT THEY MEAN:

FUTURE READINGS:

ABOUT ED

2020: 1,592,000
2010: 914,200
2000: 517,600
1994: 405,355