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PPI on the SOTU: Trade

Posted on February 6, 2023September 18, 2024 by The Progressive Policy Institute

The U.S. needs a new driver of growth as COVID-era fiscal stimulus is set to be replaced by deficit-cutting, and the consumer boom of 2021 and early 2022 fading. Exports should fill this need, but over the past six years, the United States has lost market share abroad and exporting companies at home. Between 2016 and 2021, the U.S.’ share of world exports fell:

From 8.6% to 7.3% in manufacturing
From 10.4% to 9.4% in agriculture, and
From 15.2% to 12.9% in commercial services

Meanwhile, the count of U.S. exporting businesses dropped from 290,600 to 277,500.

We hope President Biden will take the State of the Union opportunity to launch an ambitious program to rebuild America’s export economy in the aftermath of the Trump administration’s retreat. This includes a return to efforts to reduce tariffs and other barriers to U.S. exports, strong support for the Ex-Im Bank’s export financing mission, and export promotion programs. American allies such as Japan, the U.K., and others have expressed hopes for closer trade and investment links to the United States, and officials such as Treasury Secretary Yellen have sketched out the outline of a “friendshoring” program that can achieve it, and there’s no better place to launch this than the SOTU.

This post is part of a series from PPI’s policy experts ahead of President Biden’s State of the Union address. Read more here.

PPI’s Trade Fact of the Week: The U.S. has 13,200 fewer small/medium business exporters since 2016

Posted on February 1, 2023September 18, 2024 by The Progressive Policy Institute

FACT: The U.S. has 13,200 fewer small/medium business exporters since 2016.

THE NUMBERS: U.S. export share of GDP –

2022 11.6%

2016 11.9%

2013 13.6%

WHAT THEY MEAN:

A worried look at the American export economy this afternoon, taking as a point of departure the Bureau of Economic Analysis’ first full-year 2022 estimates for American GDP:

(1) Export share of U.S. GDP is down: BEA’s “first estimate” of GDP finds $2.98 trillion in American exports last year, in a $25.5 trillion economy. The export figure combines $2.06 trillion in “goods” (cars, oil, wheat, semiconductors, planes, beef, etc.) with $0.92 trillion in “services” (software downloads, fees for architecture and telemedicine, tourism student tuition, international air cargo earnings, etc.), and made up 11.6% of U.S. GDP. The total, though above the COVID low of 10.2%, remains noticeably below not only the mid-2010s peak (13.6% in 2012, 2013, and 2014) but the 2007-2018 average of 12.6%.

(2) U.S. share of world exports is also down: The World Trade Organization and IMF have not yet published tallies of worldwide exports for 2022. But comparing their figures for 2021 with those of 2016, the WTO’s World Trade Statistical Review report shows that in 2016, the U.S.’ share of the year’s $16.0 trillion in world goods exports was 9.1%, and the U.S.’ share of the $4.8 trillion in commercial services exports was 15.2%. In 2021, the comparable figures were 7.9% of $22.3 trillion in goods and 12.9% of $6.0 trillion in services. Sifting a little more finely, from 2016 to 2021 the American share of world manufacturing exports fell from 8.6% to 7.3%, and of agricultural exports from 10.4% to 9.4%. Or by region, the IMF’s “Direction of Trade Statistics” database reports that in 2016 American factories, farms, and mines supplied 8% of exports to Asia, 33% of exports to Latin America, and 5.3% of exports to sub-Saharan Africa, while (b) in 2021, the figures were 7%, 31%, and 5.1%.

(3) Most recent U.S. export growth in natural resources: Looking more closely at the things Americans were selling, the eleven months of Census Bureau trade data available for 2022 show that nearly half of all U.S. export growth since 2016 — about $290 billion of $610 billion, unless the December figures reveal some unexpected and drastic shift in direction — is in crude oil, natural gas, and refined petroleum. This has reordered the top tier of American exports. Where in 2016 the top five U.S. exports* were airplanes, refined oil, and automobiles, followed by auto parts and integrated circuits; and in 2022 the top five were refined petroleum products, crude oil, and natural gas — together accounting for about $380 billion of the $2.07 trillion in goods exports — with planes and cars now ranked respectively fourth and fifth.

(4) Fewer exporting businesses: And perhaps reflecting this greater concentration of exports in energy, the U.S. export community has shrunk from a mid-2010s peak of 305,000 exporting companies to 290,600 by 2016, and (again with some rebound from a Covid low in 2020), to a preliminary count of 277,500 in 2021.

What to make of this?

Dramatic terms like “inflection point” or “crisis” feel premature. The GDP share of exports is not far below the pre-pandemic level. With growth in 2021 and 2022 heavily driven by federal fiscal stimulus and the post-crisis consumer boom, some erstwhile U.S. exporters may simply have decided to concentrate on local customers for a while. And despite un-robust export figures in the second half of 2022, American manufacturers hired pretty enthusiastically and farmers got reasonably good income. Perhaps, with fiscal stimulus fading and consumers now pulling back, companies will return to exporting and the trade stats will improve in 2023.

On the other hand, perhaps not. If there isn’t yet a case for “drama” and “crisis,” one for “concern” and “guarded pessimism” seems reasonable. In this reading of the trends, policy is taking a toll. On one hand, the tariff increases in 2018 and 2019 mainly fell on industrial inputs, and so to some extent raised costs for U.S. factories and ag producers as well as eliciting foreign retaliations against U.S. exports. On the other, the trade policy environment, especially in Asia, is turning against U.S.-based farms and factories as intra-Asian tariffs fall and technical standards become more compatible through the implementation of the two big regional trade agreements CPTPP and RCEP. All grounds, at least, to look back at the trends of the last five years, and ahead to the next years, with concern.

* At HTS-4 level. Using NAICS-4 the top-five count is slightly different: aerospace, petroleum and coal products, automobiles, pharmaceuticals, and auto parts in 2016; oil and gas, petroleum and coal products, aerospace, pharmaceuticals, and basic chemicals in 2021.

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: Scandinavia has the world’s highest union-membership rates

Posted on January 25, 2023September 18, 2024 by The Progressive Policy Institute

FACT: Scandinavia has the world’s highest union-membership rates.

THE NUMBERS: Labor union membership as a share of the workforce for OECD countries –

2020 15.8%

2010 17.8%

2000 20.9%

WHAT THEY MEAN:

PPI President Will Marshall, writing in 2007 for the online journal Democratic Strategist, imagines some new directions for American labor unions after 25 years of falling membership:

“[New-model unions] could help workers acquire valuable marketable skills and create “virtual hiring halls” to match them to employers. They could also provide services like portable pensions and health insurance, which would smooth workers’ transitions from job to job. And they could experiment with novel concepts like wage or mortgage insurance, which aim at keeping families’ living standards from collapsing when workers lose their jobs. … Modern labor associations could help workers bargain with their employers for a better work-family balance — for flextime, paid leave, telecommuting and part-time jobs with decent benefits. They could operate, in short, like a back-to-the-future update on the old craft unions, which were defenders of quality workmanship as well as workers’ interests.”

Appealing though this vision may have been (and still might be), no such large-scale transition took place. Instead the trends of the ensuing 15 years looked about the same as those of the previous quarter-century. The Bureau of Labor Statistics’ first systematic survey of union membership in 1983* had reported 11.9 million private-sector workers enrolled in unions, which was 19% of that year’s 92 million private-sector workers. A decade later, in 1993, BLS found 9.6 million union members among 85.5 million private sector workers (11.2%). The 2003 release then reported 8.5 million or 8.2% of 102.6 million; the 2010 and 2015 releases, a sharp financial crisis drop to 7.1 million of 103 million workers (6.9%) and then a recovery to 7.6 million of 113.1 million (6.7%) by 2015. The COVID pandemic brought another drop, to 7.03 million of 115.8 million private-sector workers (6.1%) in 2021. And last Thursday’s release brought the figures to 2022, with a modest rebound in total enrollment to 7.2 million private-sector union members, or 6.0% of their 120.4 million private-sector worker total. This is the lowest share noted in the BLS release archives and possibly (though not certainly, since data collection methods have changed) the lowest since the 1890s. Looking at “industrial sectors” rather than economy-wide totals, alternatively, since 1983 unionization rates have fallen from 28% to 7.8% in manufacturing, from 40% to 14.5% in transport, and from 41% to 8% in telecommunications.

How does this experience look in an international context? Is the U.S. different, or do American trends resemble those elsewhere? In one sense, labor laws differ widely and overall U.S. union membership rates are below the figures the OECD reports for most European countries. Trends over time, though, look pretty similar. The OECD’s statistics, which cover 37 upper- and middle-income country members, show an overall drop in union membership from 20.9% of workers (combining government and private-sector workers) in 2000 to 15.8% as of 2020. I.e., a decline slightly slower than the one the BLS reports in the United States, but not a fundamentally different trend. Among individual countries, OECD figures show unionization rates dropping from 24.6% to 16.3% in Germany from 2000 to 2021; from 24.9% to 13.7% in Australia; 23.5% to 13.4% in Poland; 21.5% to 16.8% in Japan; 29.8% to 23.5% in the U.K.; and from 16.5% to 12.5% in Spain. OECD’s Latin American members are a bit of an exception, with sharply different trends by country: stable at about 11% in Chile, up from 14% to 20% in Costa Rica, down from 16.5% to 12.4% in Mexico and also down from 12.5% to 9.5% in Colombia.

The similarity across countries suggests that BLS’ annual U.S. releases are picking up something general about work in upper- and middle-income countries. Perhaps, as Marshall was suggesting 16 years ago, this reflects a broad shift away from long careers in single companies and seniority-based promotion, and consequently an erosion of the appeal of traditional collective bargaining-based unionization among workers.

The big exception is in Europe’s far north. Scandinavian unionization rates, though also dropping a bit since 2000, are vastly above those in other countries. Unions continue to enroll more than 60% of workers in Denmark, Sweden, and Finland, are barely lower at 59% in Norway, and are a startling 91% in Iceland. The difference may reflect different approaches. Though Scandinavian unions are obviously concerned with contracts and retirement benefits, they appear to give more weight than unions elsewhere to career service and support policies such as skill development programs, financial support during periods of unemployment, and job placement services enabling workers to move to find new or higher-paying jobs. To some extent this approach recalls Marshall’s ideas 16 years back, suggesting that while they may not have taken root back then, they likely still carry value.

* One partial exception, linked below, is a 1985 report with some figures drawn 1980 survey (14 million union members among 71.4 million private-sector workers, or 20% of the total, though this probably isn’t strictly comparable to the post-1983 reports), and still higher figures from earlier decades though these are definitely not directly comparable.

** Trends in public employee unions are quite different: steady growth from 5.7 million in 1983 to a peak of nearly 8 million in 2012, followed by a drop back to 7.1 million as of 2022.

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 number of extremely poor people has fallen by two-thirds since 1990

Posted on January 18, 2023September 18, 2024 by The Progressive Policy Institute

FACT: The number of extremely poor people has fallen by two-thirds since 1990.

THE NUMBERS: Number of people in extreme poverty* in Pakistan –

2018 10.5 million (5% of the population)

2010 16.8 million (9% of the population)

2000 48.6 million (33% of the population)

1990 70.1 million (65% of the population)

* At or beneath the “extreme poverty” line is defined by the World Bank, at $2.15 per day, PPP basis, in constant 2017 dollars. World Bank estimates; 2018 is the most recent available year.

WHAT THEY MEAN:

Looking back at the post-Cold War/globalization era, what should we see first? Four obvious nominees: the launch of the internet and the creation of the digital world; the China boom; the acceleration of climate change and biodiversity loss; an extended and historically anomalous time of peace among great powers? Here’s a fifth and less visible candidate: the best period in human history for the very poor.

The World Bank’s definition of “absolute” or “extreme” poverty is life at “$2.15 per person per day in constant 2017 dollars as measured in purchasing-power parities.” This is not necessarily “income,” but consumption of a minimal level of food, clothing, and shelter in very poor countries. To illustrate: estimates of annual per capita income in Burundi, currently thought to be the world’s poorest country, range from $700 to $865. This is $1.92 to $2.37 per day, essentially the $2.15 level. A Bank database calculates the cost of a minimally “energy-sufficient” diet at $1.10 per day, about half the typical daily spending of a rural Burundian. A “nutrient-adequate” diet, at $2.93 per day, would be out of reach.

Just after the breach of the Berlin Wall in 1990, about 2 billion of the world’s 5.3 billion people lived this sort of life. A bit more than half, 1.055 billion by the Bank’s estimate, lived in East and Southeast Asia. Another 563 million were close by in South Asia, among them 70 million of Pakistan’s then 115 million people. Sub-Saharan Africa counted 271 million, Latin America and the Caribbean 73 million, just past-Soviet Eastern Europe and Central Asia 15 million, and the Middle East and North Africa 14 million. Over the next three decades:

1990-2000: In the decade of democracy promotion, trade liberalization, and the early Internet, the count of extremely poor people fell by about 200 million as world population grew by 800 million. This left 1.8 billion extremely poor, or 29% of the world’s 6.1 billion people.

2000-2010: As the China boom and its gravitational effects in Southeast Asia, South America, and Africa took hold, another 650 billion moved above the line. Extreme poverty counts fell by two-thirds in East Asia and Southeast Asia, and by half in Latin America, the Middle East, Eastern Europe and Central Asia, to end at 16.9% of world population in the midst of the financial crisis of 2010.

2010-2019: In the decade just passed, extreme poverty fell by another 350 million, nearly vanishing in East and Southeast Asia — down 98% from the 1.06 billion of 1990 to 24 million — and showing the largest absolute-number drop in South Asia (from 430 million to 157 million; as Pakistan’s population topped 230 million, the number of extremely poor Pakistanis fell to 10.5 million). = The global total just before the COVID-19 pandemic was 649 million, or 8.4% of a worldwide 7.8 billion people.

To 2023: The COVID pandemic interrupted this steady downward curve, but perhaps only temporarily. The Bank’s early estimate is that 70 million people fell back into extreme poverty in 2020, but that by last year the total was nearly back to the levels of 2019. With estimates for 2020-22 still tentative, the numbers look like this:

2022 ~655 million of 8.0 billion?

2020 ~714 million of 7.9 billion?

2019 649 million of 7.8 billion

2010 1127 million of 7.0 billion

2000 1782 million of 6.1 billion

1990 1995 million of 5.3 billion

To move above an extreme-poverty line, of course, is to escape destitution and chronic hunger, but to remain poor. But poverty at higher income levels has also fallen, if a bit more slowly — from 56% of the world’s people living on $3.65 per day or less in 1990, for example, to 23% as of 2019%; turning back to Pakistan, 91% lived below this level in 1990, and 40% now. This suggests not only a worldwide reduction in extreme deprivation and chronic malnutrition, but a broader shift toward lower-middle-class life. Social indicators bolster this impression, with world infant mortality down by two-thirds since 1990, girls’ literacy in low-income countries up by half, from 48% to 69%; and life expectancy up 7 years worldwide and 13 years in low-income countries.

Searching for a verdict on the post-Cold War world, then, the creation of the digital world, the growth of Chinese power and industry, environmental stresses, and the era’s then-unappreciated and now-vanishing geopolitical calm remain strong candidates. But the escape of a third of the world’s people from destitution easily stands with them.

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 U.S. has not in the past defaulted on debt

Posted on January 11, 2023September 18, 2024 by The Progressive Policy Institute

FACT: The U.S. has not in the past defaulted on debt.

THE NUMBERS: Countries defaulting on debt obligations in this decade

2023? United States??
2022       Ghana
2022       Sri Lanka
2022       Russia
2020       Zambia
2020       Argentina
2020       Ecuador
2020       Lebanon

WHAT THEY MEAN:

Alexander Hamilton’s Report on Public Credit (January 1790) recommends borrowing for public investment and rigorous commitment to pay the bills. His take on defaults:

“[W]hen the credit of a country is in any degree questionable, it never fails to give an extravagant premium, in one shape or another, upon all the loans it has occasion to make. Nor does the evil end here; the same disadvantage must be sustained upon whatever is to be bought on terms of future payment. From this constant necessity of borrowing and buying dear, it is easy to conceive how immensely the expenses of a nation, in a course of time, will be augmented by an unsound state of the public credit.”

Hamilton’s 77 successors as Treasury Secretary have followed this guidance, paying the bills steadily (with a minor, technical, and instructive exception in 1979) through troubles ranging from the extinction of Hamilton’s Federalist Party in 1808 to the foreign military occupation of Washington in the War of 1812, the Civil War, the Depression, etc. Rogoff & Reinhart list 15 other governments in a relatively small group of never-defaulters: Canada, Denmark, Belgium, Finland, Hong Kong, South Korea, Malaysia, Mauritius, New Zealand, the Netherlands, Norway, Singapore, Switzerland, Thailand, and the United Kingdom.

The post-Hamilton streak is now in some danger, as Congressional Republicans threaten to refuse to raise the U.S.’ “debt ceiling” later this year. This is an accounting device unique to the United States, invented during World War I to avoid separate Congressional votes on every Treasury bond issue; its thesis is that Congress must not only authorize spending and borrowing but later and separately authorize repayment of borrowed money. PPI’s budget and tax director Ben Ritz explains:

“This vote is separate from the decision to set tax and spending policies — raising the debt limit merely allows the Treasury to borrow money to cover the difference between spending and revenue levels as determined by legislation Congress previously enacted.”

What would it mean to go into default? Even the theoretical possibility can be costly: similar threats to block a debt-ceiling increase in 2011 led ratings agency Standard & Poors to cut the U.S.’ credit rating from AAA to AA+, on the grounds that though that summer’s agreement “removed any immediate threat of payment default,” the agreement itself meant that “the statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy,” thus making the U.S. less credit-worthy. The U.S. has not since regained its AAA rating. Alternatively, the 1979 event, when the Treasury Department missed an interest payment not deliberately but because its check-writing machines freakishly broke down and took a few hours to fix, led to an 0.6 percent increase in U.S. interest rates lasting almost a year.

Obviously, a deliberate and prolonged default would carry much higher costs. In practical terms, after 23 default-free decades, this week’s ten-year Treasury bonds carry yields of 3.58 percent and U.S. government net interest payments for 2022 were $399 on $30.9 trillion in debt. Analysts guess that each additional interest point would raise U.S. taxpayers’ interest bill by about $180 billion per year, and as one point of reference, Greece’s financial crisis default left the country with a bond yield of 10.14%. Borrowing Hamilton’s vocabulary, this could probably reasonably be termed an “extravagant premium,” an “immense augmentation” of public expense, and an “evil” that would not end quickly.

Nor would interest rates and payments be the only consequence. The International Monetary Fund’s terse summary of Lebanon’s 2022 economic outlook reads “sovereign default in March 2020, followed by a deep recession, a dramatic fall in the value of the Lebanese currency, and triple-digit inflation”. Should the U.S. enter a Lebanon- or Sri Lanka-like situation after a Congressional failure to raise the debt ceiling, the details are unpredictable but the outlook for the domestic economy would be broadly similar, amplified by a potential global financial crisis given the scale of the U.S. economy and the role of Treasury bonds as a foundation of worldwide finance.

With all that in the offing, here is Ritz’s advice for the administration.

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: American families have cut their bills for clothes and shoes by nearly two-thirds in 50 years

Posted on January 4, 2023September 18, 2024 by Alyssa Brown

FACT: American families have cut their bills for clothes and shoes by nearly two-thirds in 50 years

THE NUMBERS: Average purchases per person –

2021: 69 garments, 7.4 pairs of shoes; 2.6% of family budgets
2000: 66 garments, 6.6 pairs of shoes; 4.9% of family budgets
1991: 40 garments, 5.4 pairs of shoes; 5.9% of family
1972/3: 28 garments, shoes n/a (3 to 4 pairs?); 7.8% of family budgets

* Purchasing totals from American Apparel & Footwear Association; budget share from BLS Consumer Expenditure Survey. As noted below, the 1972/3 survey (like other pre-1991 Consumer Expenditure surveys) was a two-year composite.

WHAT THEY MEAN:

A look at affluence through a couple of shopping stats:

(1) According to the American Apparel & Footwear Association, American families bought 69 garments and 7.4 pairs of shoes in 2021. And
(2) the Bureau of Labor Statistics “Consumer Expenditure Survey” (“CEX”), which has tracked spending on these items for 121 years, reports that in that year the average family spent $1,754 on this wardrobe upgrade, which was about 2.6% of their year’s total $66,928 budget.

To scroll back through a half-century of CEX archives* is to see, as time passes, these life necessities taking up steadily smaller shares of family spending as the vanished exotic world of the early 1970s (black-and-white TV, AM radio, phone booths, energy crises, smoky air) evolved into 2020s America. Changes in logistics, retail practices, and trade policy (computer networks, on-line shopping, and big-box stores; goods carried in slow and small break-bulk shipping rather than large-scale container lines; emergence of large light-manufacturing industries in Asia, Latin America, and Africa; elimination of a complex clothing import-quota system and some tariff-cutting mainly in luxury goods) mean that annual clothing and shoe spending in dollar terms has barely changed even as incomes rose, inflation nibbled at dollar value, and mall trawls and on-line shopping binges returned larger and larger sacks of shirts, shoes, socks, brassieres, etc. The figures look like this:

2021: 2.6% of family budget ($1,754 of $66,298)
2011: 3.5% of family budget ($1,740 of $49,705)
2006: 3.9% of family budget ($1,835 of $48,398)
2001: 4.4% of family budget ($1,743 of $39,518)
1991: 5.9% of family budget ($1,735 of $29,614)
1984/5: 6.0% of family budget ($1,319 of $21,975)
1972/3: 6.8% of family budget ($565 of $8,270)

* The 1972/1973 and 1984/1985 editions are two-year surveys. Regular annual CEX’s begin in the late 1980s.

Thus Americans (a) buy about twice as many garments and pairs of shoes as their grandparents did 50 years ago but (b) have cut their budgets for these products by almost two thirds. This is the equivalent of shifting about 4.2% of family spending in 2021 –$2,800, the equivalent of two weeks’ worth of income — away from necessities and toward savings, education, entertainment, and so on. On a shorter scale since 2001, the shift is about 1.8% of spending, or about $1,200.

The families most in need of help — single parents — see slightly larger benefits from this evolution than wealthier households. The CEX reports show that in 2021 the 9 million single-parent families spent an average of $49,811 to spend, with $2,254 or 4.5% of the family budget** used for shoes and clothes. These figures don’t go back quite as far as whole-family reports, but the comparable single-parent figure was $1,763, or 8.1% of a $21,653 budget, on shoes and clothes; thus single parents have been able to re-purpose about 3.6% of their budget.

Note: PPI staff thanks the AAFA for providing the figures on shoe and apparel purchasing, and BLS Consumer Expenditure Survey staff for quick and efficient help in sending archived CEX surveys.

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: New Year’s Eve in American Samoa comes 24 hours after New Year’s Eve in the Republic of Samoa

Posted on December 21, 2022September 18, 2024 by The Progressive Policy Institute

FACT: New Year’s Eve in American Samoa comes 24 hours after New Year’s Eve in the Republic of Samoa.

THE NUMBERS:

Number of countries agreeing to World Standard Time, 1884: 25
Number of countries operating on World Standard Time, 2022: All

WHAT THEY MEAN:

10 … 9 … 8 …

Ten days from now, the residents of the atolls, fishing towns, tourist resorts, and farm communities of the island countries just west of the International Date Line’s odd east-lobe will be the first happy few to cross into 2023: Fiji, Kiribati, Tonga, and Samoa. Precisely an hour after the fireworks in Samoan capital Apia come larger events in Auckland and Wellington, which lie one meridian to the west of the Date Line. Then as meridian lines flash by, Sydney and Tokyo turn up after another hour; then Bangkok and Ulan Baatar, Muscat and Tehran; Ankara, Jerusalem, and Nairobi; Geneva, Paris, and Lagos; and London on the Prime Meridian exactly twelve hours off the Date Line. Canada’s Maritime Provinces follow five hours later, then come Washington, Mexico City, Callao and Los Angeles, etc. The very last New Year’s event, on the east edge of the Data Line, turns out to be in Pago Pago, the capital of American Samoa, which forty miles southeast of the first midnight in Apia. So an enterprising American Samoa resident can charter a plane to test out 2023, see what’s like, and return for nearly a day to 2022.

More on the odd Samoan anomaly in a bit. But how is it that everyone, everywhere in the world, knows exactly when when the clocks hit midnight and their New Year begins?

The global system of time zones and meridian lines is a legacy of 19th century “globalization” in the era of steamships, Suez Canal-digging, the first undersea telegraph cables, and the questions they posed. Though clocks date back to classical times, and watches to the 15th century,* no standardized times existed at all until the early 19th century, and even by the 1870s different governments, towns, and private companies kept their own individual times. A survey in the U.S. found at least 144 different city, town, railway, and bank times; nor did national times, to the extent they existed, in Europe, match well. High noon in Victorian London, for example, was 12:09.21 in Paris. This brought risk as 19th century “globalization” accelerated, as different times in different towns meant confusion, missed railway connections, and accidents as trains or boats using different ‘times’ arrived simultaneously in ports and terminals.

The inspiration of President Chester A. Arthur** was to call an international conference in Washington to settle on a common time, drawing on earlier international-standardization agreements, such as those on international patent and copyright conventions, and especially the 1875 Paris Conference which decided how long a “meter” would be, the volume of water in a liter, and how much a “gram” would weigh. Mr. Arthur convened a 26-nation International Meridian Conference on October 13, 1884, in the old State Department building, now the Eisenhower Executive Office Building, on 17th Street, involving ten Latin countries, ten Europeans (with the UK delegation also representing Canada and India), the U.S., Japan, Liberia, the Ottoman Empire, and the Kingdom of Hawaii. It closed on the 22nd with the basics of the modern global time system in place: 24 world time zones (originally a Canadian concept), each an hour apart, with the international standard “noon,” or Prime Meridian, set for 12:00 p.m. at the Greenwich Naval Observatory near London.***

Fourteen decades later the Conference standards are still used almost everywhere.**** and its outcome remains the foundation of 21st century air traffic control, just-in-time production networks, and Canal transits, as well as synchronized New Year’s Eve events. The role of the two Samoas as the dividing line between years turns out to be a very recent innovation: The Republic decided to jump across the Date Line ten years ago to synchronize its work week with Australia and New Zealand, and will therefore live for a day in 2023 before its American sister arrives.

… 4 … 3 … 2 … 1

*Babylonians get credit for the 60-minute hour, Egyptians the 24-hour day; Song dynasty Chinese astronomers for the first fully mechanical clock, and 16th-century Germans the personal watch.

**Elected Vice President in 1880; succeeded James Garfield after Garfield’s death in 1881; not re-nominated.

***The choice reflected the fact that three-quarters of international shipping used it already. The U.S. had adopted the Greenwich meridian for all railway time in 1883. Disgruntled France, supported by Brazil and Haiti, wanted a ‘neutral’ Prime Meridian in the middle of the Atlantic, and held out against Greenwich time until 1911.

**** With some partial exceptions. Iran, Afghanistan, India and Burma, plus bits of Australia and Canada operate a half hour off the rest of the world. Nepal runs either fifteen minutes slow or forty-five minutes into the future. All still, however, operate in the Conference framework, so the minutes and hours start tat the same time.

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: High-seas pirate attacks are at their lowest in 30 years

Posted on December 14, 2022September 18, 2024 by The Progressive Policy Institute

FACT: High-seas pirate attacks are at their lowest in 30 years.

THE NUMBERS:

High-seas pirate attacks –

2022:	120?
2012:	197
2002:	383
2000:	471

WHAT THEY MEAN:

From the International Maritime Bureau’s Piracy Reporting Centre, a three-party encounter two weeks ago a few miles off Cote d’Ivoire, with an unarmed South Korean oil tanker, a gang of pirates, and the Italian naval frigate Comandante Borsini:

“Owners [of an oil tanker] reported that they had lost communication. The International Maritime Bureau Piracy Reporting Centre broadcast a missing vessel message to all ships in the region to look out for the missing tanker. On November 25, 2022, the Master [i.e. captain of the tanker] contacted the owners and reported that eight armed pirates had boarded the vessel and destroyed all navigation and communication systems. The crew managed to retreat into the citadel. [A secure compartment of the ship, heavily armored.] An Italian navy warship later intercepted and rendered assistance to the vessel until a tow was arranged. All crew reported safe.”

And another one, a week ago Saturday, near Singapore:

“Six robbers armed with knives boarded a bulk carrier underway and entered the engine room. The robbers were spotted by the duty watchman, who immediately informed the bridge. Alarm raised and crew mustered. Seeing the crew alertness, the robbers escaped empty handed. Singapore Coast Guard boarded the vessel to investigate.”

The IMB has tracked pirate attacks like these since the early 1990s. Its 2021 report tallied 132 attacks and attempts, fewer than in any year since 1994. The 2022 figures are down again, to 90 over the year’s first nine months, suggesting a full-year total of about 120. The two events above are typical of the current reports: small groups of pirates, poorly armed in the Singapore Strait event, and quick responses by local or international naval patrols. A quick history and explanation of this unheralded success story:

The early 21st-century pirate boom began with the collapse of the Somali state in the 1990s. The aftermath of this event brought sequential waves of violent gangs, Islamic fundamentalist militias, international interventions, and more violent gangs, culminating in the creation of a large-scale organized pirate industry with little if any modern precedent. Absent a central authority capable of imposing laws, pirates converted a set of fishing trawlers into a kind of pirate fleet, each able to carry a handful of small speed boats from the coast into the nearby shipping lanes.

These are quite busy: the Red Sea, the Gulf of Aden, and the 16-mile-wide ‘Bab-el-Mandeb’ strait separating Somalia from Yemen are the principal commercial and energy link between Asia and Europe, with 50 ship transits and 3.4 million barrels of oil daily. And a big commercial tanker or bulk carrier is not a floating fortress — the typically unarmed crews numbered about 20 — and piracy became for a while lucrative. The speedboats, each carrying a small crew armed with automatic weapons and sometimes grenade launchers, would then attempt to board and capture a targeted commercial ship. At their peak in 2011, pirates captured 49 ships and held over 1,100 crew members for ransoms averaging $5 million. Economists at the time guessed at a global-economy damage figure of about $12 billion per year.

A decade later, international naval patrols have essentially eliminated the threat off Somalia, and greatly reduced the global incidence of piracy. The 29-country Red Sea naval patrol known as CTF-151 (“Combined Task Force 151”) began protecting ships in transit in 2009; the last two successful attacks on vessels off Somalia, both in 2017, are now five years in the past. Smaller similar patrols drawing on this experience, like the Comandante Borsini’s interception of the pirate group off Cote d’Ivoire last month, have also sharply cut back the less organized piracy industries in the Gulf of Guinea. (Though in that case, the pirates succeeded at least in holding up the crew for money.) The most frequent area for pirate attacks is now maritime Southeast Asia, the site of 48 of the 90 events reported in IMB’s 2022 tally.

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. 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.

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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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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 on the SOTU: Trade

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*Babylonians get credit for the 60-minute hour, Egyptians the 24-hour day; Song dynasty Chinese astronomers for the first fully mechanical clock, and 16th-century Germans the personal watch.

**Elected Vice President in 1880; succeeded James Garfield after Garfield’s death in 1881; not re-nominated.

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

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

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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) –

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