FACT: 4.85 billion people have been vaccinated against COVID-19 worldwide

THE NUMBERS: Vaccination rates for adults, by world income group*

Upper-middle income countries       78%
High-income countries                      73%
United States                                     67%
World                                                  61%
Lower-middle income countries        55%
Low-income countries                        19%

Source: Ourworldindata.org for percentages by income level. World Bank definitions for these classifications are above $13,205 in Gross National Income per capita for ‘high-income, $4,206 – $13,204 for upper-middle income, $1,086 – $4,205 for lower-middle income, and under $1,085 for low-income.

WHAT THEY MEAN:

The world’s first COVID vaccine jab, delivered by nurse May Parsons, went to a 91-year-old Margaret Keenan at University Hospital Coventry in England, on December 8, 2020. That was 331 days after the first publication of the coronavirus’ DNA sequence. With another 589 days have gone by since Ms. Keenan’s first shot, where do we stand?

According to the Johns Hopkins University Coronavirus Information Center, health care providers like Ms. Parsons have given 11.84 billion vaccine shots worldwide. This has “fully vaccinated” 4.84 billion people, or 61% of the world’s population. (“Fully vaccinated” by JHU’s definition: two mRNA shots or one Johnson and Johnson shot.)  A study last month conducted by the British medical journal The Lancet calculates that these vaccinations have cut worldwide COVID-19 deaths by a range from 14.4 million to 19.8 million, in the context of an epidemic of 565 million known cases and 6.4 million known deaths. Each day the total rises a bit, as providers administer about 9 million more shots. This is a remarkable, even stunning, achievement of government and private-sector science, transnational manufacturing and logistics, and health-provider delivery.  But it remains an achievement with gaps; and these may grow more important as new variants emerge and immunity conferred through early vaccination fades.

One gap is that of income. People in rich and upper-middle income countries are somewhat more likely to be vaccinated than people in lower-middle-income countries, and low-income countries are far behind both. Low-income countries also appear to be relatively more reliant on Chinese- and Russian-produced vaccines that offer lower levels of protection than U.S./European vaccines. There are also some gaps by region – vaccination rates appear relatively high in South America, East Asia, ASEAN, the Pacific Islands and western Europe, and relatively low in southern and eastern Europe, the Middle East, the Caribbean, South Asia, and Africa. These general patterns have many exceptions — low-income Asian countries including Cambodia and Bhutan are near the top of the vaccination-rate tables, for example — and some countries in very similar circumstances report quite different results. As an extreme case, the world-low vaccination rate in JHU’s table is Burundi’s 0.1% of the population (13,800 of 12 million people); next-door Rwanda is at 65%, essentially the same as the United States.

The U.S. in a way mirrors the international pattern, with vaccination rates by state varying widely, and modestly correlating with state median income levels, political divisions, and larger geography. New England, where vaccination rates are in the 75% to 84% range, is comparable to the rates in Japan, France, and Australia, and taken as a distinct region would be near the top of the high-income spectrum. D.C., Hawaii, Puerto Rico, New York and New Jersey are also in the top ten. The “least vaccinated” group includes Wyoming and a set of deep South states; here, rates are in the 51%-55% range and at par with lower-middle income countries such as Tajikistan, Bolivia, and Honduras (and upper-middle income Russia). Explanations for relatively high U.S. state rates of vaccination may include lower public “vaccine hesitance”, strong outreach from state governments, high health-provider-to-population ratios and low levels of uninsured people.  Explanations for lower rates, the reverse.

A table illustrates, with vaccination levels in sample countries and U.S. states drawn from the Johns Hopkins University Coronavirus Information Center:

Much, then, achieved. But with 3 billion still unvaccinated around the world, mortality counts still at 15,000 weekly, new variants emerging every few months, and many early vaccination recipients needing booster shots, much still to do.

* Using the District’s own 77% count; JHU has a perplexing 100% rate for D.C.

FUTURE READINGS:

The Lancet calculates that vaccinations have saved between 14.4 million and 19.8 million lives

And the Royal College of Nursing on Parsons, Keenan, and the first COVID shot.

Data on vaccination rates, new cases, death rates by country and U.S. state, etc. 

Ourworldindata.org has an interactive site allowing selection of particular countries and regions.

Johns Hopkins U. Coronavirus Information Center reports 6.4 million deaths among 560 million cases since December 2020.  The mortality count has diminished to a still-high 12,000 deaths per week worldwide, from levels in the range of 50,000-100,000 deaths per week from mid-2020 through late 2021.

At home:

Rhode Island’s 84% vaccination rate is the highest in the U.S.

Washington, D.C., is at 77% by its own count; the JHU list somehow credits the District with a 100% vaccination rate. Either way, one of the top U.S. vaccination performers.  Mayor Muriel Bowser explains vax requirements.

The Centers for Disease Control and Prevention COVID-19 site.

Overseas:

USAID outlines its COVID aid program in low- and middle-income countries.

The WTO explains the state of debate on intellectual property rules and COVID.

The African Union outlines vaccination trends and policies in Africa.

The Rwanda Biomedical Centre has Q&A on vaccination.

And the OECD reviews the supply chains that produce and deliver vaccines.

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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FACT: World shipping container capacity has grown six-fold since 2000

THE NUMBERS: World container-shipping fleet capacity, in TEUs* –

2022         25.8 million TEU
2010          12.8 million TEU
2000          4.3 million TEU
1990            1.2 million TEU
1980            0.5 million TEU

* “Twenty-foot Equivalent Units.” A TEU represents one 20 x 8 x 8.5 foot shipping container; a 40-foot container is two TEUs.

WHAT THEY MEAN: 

A quick modern maritime trade history, in three ships:

1. The Warrior: In 1954, the National Academy of Sciences studied the voyage of a “general cargo” freighter from New York to Hamburg. The Warrior, measuring 142 meters long, 19 wide, and 32 deep, had a crew of 44. On this voyage it carried 194,582 individual pieces of cargo, which weighed 5,015 tons and arrived at the port in a kaleidoscopic 15 types of “packaging.” The study’s author counted 24,036 bags, 10,671 boxes, 717 cartons, 74,908 cases, 5 “reels”, 815 barrels, 888 cans, 15,38 drums, 2,877 packages, 2,634 pieces, 21 crates, 10 transporters, 2,880 bundles, 53 wheeled vehicles, and 1,525 “undetermined” types of packages. A 22-person “longshore gang” took 35 days to pack this cargo in wooden pallets in New York and load it onto the ship. The German crew at the other end of the trip needed 4 days to unload it after arrival.

2. The Ideal-X: The first container ship, a retrofitted World War II freighter renamed Ideal-X, launched in April 1956 from Newark on a trip to Houston. It was about the same size as the Warrior — 160 meters long, 9 wide, and 21 deep — and carried 58 proto-containers holding 10,572 tons of cargo. Malcolm McLean, the North Carolina trucking executive who designed it, is said to have calculated that traditional “breakbulk” loading of Warrior-type ships cost $5.83 per ton of cargo. (“Breakbulk”: Loading individual cargo items into ship holds after packing them in wooden pallets; see below for a real-life case study in this.) Simply disconnecting a truck’s trailer from the chassis and putting it on deck, by contrast, cut this cost by 97%, to 16 cents per ton. Ideal-X took eight hours to load.

By 1990, a worldwide fleet of 1169 container-ships was carrying around over 1.2 million TEU, or an average of over 1,000 twenty-foot containers per ship. A decade-old but still striking paper (Daniel Bernhofen, Zouheir el-Sahli, Richard Kindner) investigated the effects of the shift from break-bulk to containerized cargo, concluding that it had been about twice as powerful a driver of trade growth as tariff cuts and trade agreements. Specifically:

a. Participation in the two multilateral GATT agreements of the era — the “Kennedy Round” of 1968 and the “Tokyo Round” of 1979, which applied to 94 countries as of 1990 — raised trade volume 285%, or three-fold.

b. Participation in free trade agreements (meaning in practice the creation of the European Economic Community in the late 1950s, its expansion from the original six members to 12 between 1973 and 1985, plus the U.S.-Canada auto pact of 1965, the U.S.-Israel FTA of 1985, and the U.S.-Canada FTA of 1988) raised trade about 45% or half-fold. (If “half-fold” is a word).

c. Adoption of container shipping raised trade 790%, or nine-fold.

3. The Ever Alot: Since Mclean’s ingenious low-tech innovation, container shipping has followed a sort of Moore’s Law-like expansion curve, with capacity at least doubling every decade. By 2000, fleet capacity had reached 2400 ships carrying 4.3 million TEU, and by 2010, 4700 ships and 12.8 million TEU. The 6,406 container ships active as of mid-2022 carry 25.8 million TEU, meaning an average of over 4,000 containers per ship. A median-size container vessel is said to take about 15 hours to load and unload.

The largest container ship yet built — unpoetically but accurately named Ever Alot – is owned by Taiwan’s Evergreen lines, and went into service on June 22. It is 400 meters long, 61.5 meters wide, and 100 meters deep; requires a crew of 25; and can carry 24,004 TEU. At maximum weight, this would be about half a million tons of cargo, equivalent to 100 Warriors or 50 Ideal-X’s. Ever Alot arrives at Malaysia’s Tanjung Pelepas port tomorrow.

FURTHER READINGS:

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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FACT: ‘Globalization’ is not so new 

THE NUMBERS: Merchandise trade as share of GDP –

2022       22.1%
1790       22.7%?

WHAT THEY MEAN:

After the Fourth, Yorktown, the Treaty of Paris, and the Constitution, they began to argue …

Nobody really knows how large America’s early-republic economy was. The website www.measuringworth.com, an economic history project at the University of Illinois, nonetheless makes an admirable try, estimating a U.S. GDP of $189 million in 1790. We do know trade figures, though: that year, Alexander Hamilton’s newly hired Customs agents counted $23 million in imports and $20 million in exports.

Assuming the GDP estimate is about right, goods trade would have been equal to a bit less than 23% of the economy. Today’s trade and GDP stats, counted in trillions rather than millions of dollars, are about 100,000 times bigger. But measured against one another, they make the 21st-century and 18th-century economies look eerily similar. With the Bureau of Economic Analysis estimating U.S. GDP at $25 trillion this year and Census trade data suggesting $3.5 trillion in goods imports and $2.1 trillion in exports, the 2022 goods-trade-to-GDP ratio is just above 22%, almost identical to that of 1790.

Similar circumstances can elicit similar ideas and responses. In this post-Fourth week, here are some post-Independence perspectives, each with its own contemporary echoes and advocates:

1. Alexander Hamilton’s Report on Manufactures (1791) the first U.S. government paper on trade policy, was also the first on the topic now termed “competitiveness.” Then serving as Treasury Secretary, Hamilton rebuts arguments that low-wage foreign competition (from textile, machinery, and other factories in Industrial Revolution Britain and Europe) made it impossible for the U.S. to compete in manufacturing:

“While in the article of wages the comparison certainly turns against the United States … the degree of disparity is diminished in proportion to the use which can be made of machinery. To illustrate this last idea: let it be supposed that the difference in price in two countries of a given quantity of manual labor requisite to the fabrication of a given article is as ten, and that some mechanic power is introduced into both countries which, performing half the necessary labor, leaves only half to be done by hand, it is evident that the difference in the cost of the fabrication of the article in question, as far as it is connected with the price of labor, will be reduced from ten to five.”

The balance of the Report calls for a program of importing labor-saving machines, passage of a patent law to stimulate American inventors, incentives for high-skilled immigration, cash prizes for innovative American factories, and an infant-industry trade protection scheme using temporarily high tariffs or exclusions for products ranging from starched wigs, bell-metal, and glue to whiskey, whale-oil, pewter cups and bowls, furniture, chocolate, rifles, and books. Hamilton’s former Federalist Papers partner, James Madison, was by then leader of an opposition party in the House of Representatives, and made sure the program got nowhere.

2. Thomas Jefferson’s Report on Foreign Commerce (1793), from a different angle two years later, is the first U.S. government catalogue of foreign trade barriers. Reviewing tariff rates, product exclusions, state trading monopolies, and shipping (“navigation”) restrictions in the U.K., France, Spain, Portugal, Denmark, Sweden, and the Netherlands along with their colonial possessions in Latin America, Canada, and the Caribbean, Jefferson as Secretary of State combines theoretical support for open markets with reciprocity in practice:

“Instead of embarrassing commerce under piles of regulating laws, duties, and prohibitions, could it be relieved from all its shackles in all parts of the world, could every country be employed in producing that which nature has best fitted it to produce, and each be free to exchange with others mutual surplusses for mutual wants, the greatest mass possible would then be produced of those things which contribute to human life and human happiness; the numbers of mankind would be increased, and their condition bettered. Would even a single nation begin with the United States this system of free commerce, it would be advisable to begin it with that nation; since it is one by one only that it can be extended to all. … But should any nation, contrary to our wishes, suppose it may better find its advantage by continuing its system of prohibitions, duties and regulations, it behooves us to protect our citizens, their commerce and navigation, by counter prohibitions, duties and regulations, also. Free commerce and navigation are not to be given in exchange for restrictions and vexations; nor are they likely to produce a relaxation of them.”

A sample of the findings:

“Our bread stuff is at most times under prohibitory duties in England, and considerably dutied on re-exportation from Spain to her colonies. Our tobaccoes are heavily dutied in England, Sweden and France, and prohibited in Spain and Portugal. Our rice is heavily dutied in England and Sweden, and prohibited in Portugal. Our fish and salted provisions are prohibited in England, and under prohibitory duties in France. Our whale oils are prohibited in England and Portugal. And our vessels are denied naturalization in England, and of late in France. … Spain and Portugal refuse, to all those parts of America which they govern, all direct intercourse with any people but themselves. … We can carry no article, not of our own production, to the British ports in Europe, nor even our own produce to her American possessions.”

3. Thomas Paine and economic integration as a support for peace: And from a non-government, dissenting-intellectual perspective, Paine argues in The Rights of Man (1790) for international economic integration as a deterrent to war:

“I have been an advocate for commerce, because I am a friend to its effects. It is a pacific system, operating to cordialise mankind, by rendering nations, as well as individuals, useful to each other. If commerce were permitted to act to the universal extent it is capable, it would extirpate the system of war, and produce a revolution in the uncivilised state of governments. … Commerce is no other than the traffic of two individuals, multiplied on a scale of numbers; and by the same rule that nature intended for the intercourse of two, she intended that of all. For this purpose she has distributed the materials of manufactures and commerce, in various and distant parts of a nation and of the world; and as they cannot be procured by war so cheaply or so commodiously as by commerce, she has rendered the latter the means of extirpating the former.”

FURTHER READINGS:

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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FACT: The U.S. collects about as much tariff money on Pakistani goods as on British goods. 

THE NUMBERS:

WHAT THEY MEAN:

Looking at the U.S. tariff system as domestic tax policy for an International Trade Commission hearing last week, PPI’s Ed Gresser found much to dislike. In this role, it turns out to be mainly a way to tax cheap clothes, shoes, and other consumer goods, many of them not made in the United States for decades. As such, it is a remarkably regressive way to raise money, and not obviously effective as a job or production protector.

How does it look from the other side of the border? The complicated answer is, it basically depends where you are on the other side. For most countries U.S. tariffs turn out to be pretty modest, in a range from close to zero to about 5%. For low-income Asian countries reliant on clothing and textile exports, it is very restrictive; for China and to some extent for the world, it has changed a lot since 2017. As a starting point, a quick list (using trade-weighted averages, i.e., tariff payments divided by the value of goods imports) illustrates the world averages of 2017 and 2021, and the variation among countries:

What explains these patterns?

High tariffs on low-income Asia: The low-income Asian countries at the top of the list — Bangladesh, Cambodia, Pakistan, and Sri Lanka — specialize in exports of clothing and home textiles. Tariffs on these goods average over 11%, and spike to 32% (as one example, for polyester shirts). By comparison, IT goods, medical equipment, natural resources like oil and fish, and primary agricultural commodities are zero, while heavy-industry and sophisticated consumer goods generally get low tariffs.  Thus the startling fact that buyers of Pakistan’s modest $5.3 billion worth of shirts, towels, and similar goods pay almost as much as buyers of $56.6 billion in British medicines, aircraft parts, automobiles, and art auction prizes. Likewise, buyers of struggling Sri Lanka’s underwear and clothing paid $325 million last year; the bill for buyers of Norway’s $6.7 billion in salmon, oil, and pharmaceuticals was $34 million, an order of magnitude smaller.

Low-to-medium rate on others: If the highest rates show up in low-income Asia, the lowest are for countries of several different types: (a) energy and natural resource exporters (oil for Kuwait, fish for Fiji, and so on); (b) the 20 U.S. FTA partners, where Canada, Jordan, El Salvador and Colombia stand in for the larger group; and (c) countries enrolled in the African Growth and Opportunity Act or the Caribbean Basin Initiative, such as Kenya, South Africa, Liberia, Haiti, and Jamaica.  Larger wealthy and middle-income countries (the U.K., Germany, Brazil, Argentina, Thailand, Japan, etc) have diversified export mixes, typically with a lot of zero-tariff products, a lot of mid-tariff products, and some high-tariff goods, and typically wind up in a range from 1% to 3%.

Changing rates for the world and China: Finally, the system has changed substantially over the last five years, with the worldwide average rate doubling from 1.4% in 2017 to 3.0% in 2021.  This is principally due to the Trump administration’s “301” tariffs on Chinese goods. The “232” tariffs on steel and aluminum, though equally controversial, affect only about 1.5% of imports, and changed overall averages only very modestly for the world or large partners like the EU or Japan. For Chinese goods specifically, average rates have jumped from 2.7% in 2017 to 11.3% in 2021 – very high in comparison to the vast majority of countries, but still actually below the normal, permanent rates for products from Bangladesh.

FURTHER READINGS:

Gresser on the tariff system and American underserved and underrepresented communities.

A long view: The U.S. International Trade Commission tracks U.S. tariff rates from the McKinley Tariff of 1890 to 2020.

… and analyzes the 11,414 U.S. tariff lines — How many are zero? How many duty-free under FTAs and preferences? How many are “specific duties,” or flat fees, instead of percentages? — etc.

The U.S. tariff system.

International comparisons

The World Bank’s interactive table of average tariff rates worldwide and by country uses “simple averages” (the rates for each single tariff line in a country’s “schedule” added up, then divided by the total number of tariff lines) rather than the “trade-weighted” averages above. This approach has grown less useful as a gauge generally (as more countries use FTAs and other special programs), and especially for the U.S. since the 301 and 232 tariffs.

This noted, the table reports a worldwide average of 5.2% as of 2017, down by about 2/3 from the 15.6% average of 1993, and by about half from the 10.8 percent world average of 2000. The world’s highest rate is the Bahamas’ 23.7%, with a few other small islands and countries (the Cayman Islands, Bermuda, and Djibouti) next. The lowest are the zeroes for Hong Kong and Macao, with very slightly higher 0.1% averages in Brunei and Singapore.

The WTO’s World Tariff Profiles 2021 has a much more detailed look, with simple averages, trade-weighted averages, “tariff peak” counts, ag vs. non-ag., and more for 151 countries.

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 ProgressiveEconomy 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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FACT: The WTO has overseen two new international trade agreements in the last decade.

THE NUMBERS: GATT/WTO agreements since 1990 –

1994    Uruguay Round Agreements

1996    Information Technology Agreement

1997    Financial Services Agreement

1998    Basic Telecommunications Agreement

1999    “Moratorium” on Tariffs on Electronic Transmissions

2013    Trade Facilitation Agreement

2022    Agreement on Fisheries Subsidies

WHAT THEY MEAN:

Wrapping up their 12th Ministerial Conference (“MC-12”) at 4:30 a.m. last Friday after a 48-hour negotiating marathon, WTO members announced a set of agreements on electronic commerce, fisheries subsidies, and other matters. Temporarily stepping a long way back from their content, here is context from Franklin Roosevelt’s March 1945 letter to Congress announcing the opening of the world’s first “multilateral” trade negotiations:

“The point in history at which we stand is full of promise and of danger. The world will either move toward unity and widely shared prosperity or it will move apart into necessarily competing economic blocs. We have a chance, we citizens of the United States, to use our influence in favor of a more united and cooperating world. Whether we do so will determine, as far as it is in our power, the kind of lives our grandchildren can live.”

Two years later, these first set of talks ended without achieving all Roosevelt or Truman (whose administration completed them) had hoped for, but with a 23-country tariff-reduction accord known as the General Agreement on Tariffs and Trade.  This, the “GATT,” is the direct ancestor of the modern, 164-member World Trade Organization. Whether the “grandchildren” in question — say, those born in 1980 and afterwards — have in fact lived in a world of “widely shared prosperity” is a controversial subject, though they have incontestably lived in a world of steadily falling poverty.*

Unity is another question. After eight agreements of steadily escalating scope from 1947 through 1994, and four in the later 1990s, the WTO has spent most of the 21st century in increasingly bitter policy stalemate. The organization’s most ambitious goal — the Doha Round, launched in 2001 — never got done, as the membership deadlocked between a liberalizing wing and an India/South Africa/Brazil/China “policy space for developing countries” wing. Up to last week its members had managed only one new agreement (the 2013 Agreement on Trade Facilitation) since the turn of the century. Since then, the Trump administration’s blockage of the WTO’s dispute function eroded the group’s ability to settle arguments over existing agreements; and U.S.-China tariff confrontation, inward policy turns and rising nationalism in a series of major economies, and finally the unprovoked invasion of one WTO member by another raised direct questions about the organization’s ability to function, and more broadly whether appeals to common interests and liberal internationalist ideals of Roosevelt’s type still find listeners.

Last week’s events suggest the cautious answer is that yes, they probably do. A slightly more detailed review of the “MC-12” decisions includes: (1) extension of the 23-year-old international “moratorium” on impositions of any tariffs on electronic transmissions; (2) a compromise text on intellectual property waivers for Covid-related vaccines, diagnostics, and therapeutics; (3) a program for ‘institutional reform’ meant to be concluded by 2024; (4) guidelines for agricultural stockpiles and export controls, and (5), a wholly new agreement on worldwide fisheries subsidy controls, completed after two decades of discussion, as follows:

• Subsidies prohibited to illegal, unreported, unregulated fishing fleets.
• Subsidies prohibited to fishing in depleted fisheries
• Subsidies prohibited to fleets outside national jurisdiction
• Further negotiations on subsidies contributing to overcapacity in fishing fleets, with a deadline for conclusion by 2023

All in all, a reminder that even in times of distress and division, governments with good will can reach common goals through good-faith negotiation, and address common threats through pragmatic agreement.  Roosevelt’s fear of a world divided into “necessarily competing economic blocs” (or one that simply fractures and fragments) remains very relevant today; but the aspiration he expresses for widely shared prosperity has resonance still.

* World Bank data: 43% of the world’s people lived in absolute poverty in 1980; 27% in 2000; 8.6% in 2018, the last year for which the Bank has an estimate.

FURTHER READING

The WTO membership’s MC-12 decisions.

Direct-General Dr. Ngozi Okonjo-Iweala (pictured above) closes the Ministerial.

And Deputy Director-General Anabel Gonzalez has an inside-the-WTO assessment.

Fishery subsidies:

Governments subsidize fishing fleets at about $20 billion a year, with the largest sums coming from China, the U.S., the European Union, Japan, and Korea. The idea of a WTO agreement to cut or eliminate subsidies contributing to over-fishing was first raised in the 1990s during the Clinton Administration, and WTO talks on the topic officially began in 2001 with the Doha Declaration. (Its wording: “The ministers mention specifically fisheries subsidies as one sector important to developing countries and where participants should aim to clarify and improve WTO disciplines”). Here’s an estimate of fishery subsidies.

An informed reaction from International Institute for Sustainable Development.

NOAA on illegal, unreported, or unregulated fishing.

A comment from U.S. Trade Representative Katherine Tai.

And a reminder of the point of it all:

Roosevelt to Congress on the launch of the first multilateral trade negotiations.

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 ProgressiveEconomy 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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FACT: Immigrant players have hit 32 of the Washington Nationals’ 50 home runs this year. 

THE NUMBERS: Immigrants as share of population

WHAT THEY MEAN:

In this evening’s Nationals-Braves game, the Nats’ 26-man roster features 10 foreign-born players: four from the Dominican Republic, three from Venezuela, and one each from Panama, Cuba, and Nicaragua. Soto (pictured below), Cruz, Franco, Hernandez, Robles, and Ruiz account for two-thirds of the team’s admittedly modest 50 home runs this year. The visiting Braves have eight international players — Venezuela three, Curacao two, Mexico, Cuba, and the D.R. one each. Both teams pretty well reflect MLB’s overall 28% share of international players. Meanwhile, before and after the game someone has to take care of the grass; while the Nats reasonably decline to publish stats on their groundskeepers, about 33% of all U.S. groundskeepers and building maintenance people are foreign-born. This small window on the U.S.’ immigrant workforce illustrates a sort of national “smile curve,” in which the immigrant workforce is especially large in tough, physical blue-collar work, and also in high-end glamor jobs. More generally:

The current edition of the BLS’ Labor Characteristics of the Foreign-Born Workforce, out May 22, found 26.4 million immigrant workers — combining foreign-born U.S. citizens, green card holders, employees on work visas, and undocumented — in the United States as of 2021. Their 17.3% share of America’s 152.6 million employed men and women is high in historical terms – more than triple the 5% of Nixon-era 1970 — though below the 20.5% peak President William Taft’s statisticians recorded in 1910. Definitional differences make the U.S. data hard to compare precisely to experience in other countries, but based on the World Bank’s figures for immigrant shares of population, the U.S. appears (a) far below the majority-immigrant populations of the Persian Gulf, (b) well above the mostly local East Asian workforces, and (c) fairly similar to other large, wealthy western countries. Parsing out BLS’ rather aggregated figures, and adding a few other sources, three particularly international sections of the American workforce are as follows:

Glamor Jobs: A lot of TV and prestige press exposure here. About 28% of major league baseball players and an identical 28% of professional basketball players were born abroad. In Hollywood, 45% of this year’s Oscar acting nominees, using the Best Actor/Actress and Best Supporting Actor/Actress nominations, are either immigrants or temporary visitors; in elite academia and culture, 43% of the U.S.’ Nobel Prize winners since 2000.

Labor-intensive Services: Blue-collar physical work seems very similar to the glamor jobs. At the peak, 50% of hired farmworkers (and 73% of crop pickers) are immigrants, and mostly non-citizens. Construction, and groundskeeping/building maintenance are a tier below, at 33% of construction workers and groundskeepers/building maintenance workers; next come food preparation workers, at 22% of the labor force.

Science and Technology: Immigrants, finally, play an outsize role in American science, technology and innovation. Overall, by the National Science Foundation’s count, 19% of America’s 36 million science and engineering workers, and 23% of the sci/tech workers with bachelor’s degrees and above, are either immigrants or work-visa holders, with India and China the top countries of origin. The peak, above even the farmworker platoons, comes in PhDs in computer science and engineering, where immigrants are respectively 60% and 57% of the workforce.

FURTHER READING

The Bureau of Labor Statistics’ most recent Labor Characteristics of the Foreign-Born Workforce brief, out May 2022.

And a quick table of the immigrant share of various U.S. occupations:

(Sources: Bureau of Labor Statistics for all workers, National Science Foundation for engineering and science workers; academic paper for patents, and MLB for baseball.)

Some historical data from the Migration Policy Institute.

And a concerned look ahead: Though attempted border crossings draw intense interest, Kansas City Fed researchers believe net immigration to the U.S. has actually dropped sharply since the mid-2010s — from about 1 million per year to 477,000 in 2020 and 245,000 in 2021 — under the combined pressure of COVID-related travel restrictions, reduced granting of work visas, and slower processing of naturalization petitions. Presumably the immigrant share of the workforce has dropped a bit; K.C. Fed staff worry about the implications for innovation, productivity growth, and inflationary pressure.

International perspective

The International Labor Organization counts 169 million “international migrant” workers as of 2019. This meshes imperfectly with the BLS count, as the ILO uses “all foreign-born workers” (including naturalized citizens) for countries which record these figures, but only “migrant” (i.e. non-citizen] workers for some other countries. This noted, the ILO report finds 32% of the world’s migrant workers in Europe, 27% in Canada and the U.S., 15% in the Middle East and 14% in Asia.

Top tier

MLB reports on the “internationally born” players of 2022.

… the Washington Nationals roster, with birthplaces and links to the depressing 2022 pitching and power-hitting stats.

… and a look at Dominican Republic baseball.

The NBA comparison.

Hollywood’s 2022 Oscar nominees.

And the 2021 Nobel Prize winners.

On the land

The USDA on America’s 1.2 million hired farmworkers.

Science and technology 

National Science Foundation on the native- and foreign-born sci/tech workforce.

And Stanford researchers Bernstein/Diamond/McQuade/Pusada on the immigrant role in patenting and innovation.

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 ProgressiveEconomy 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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FACT:

The U.S. trade deficit rose about 50% from 2016 to 2021.   

THE NUMBERS: 

Q1/2022    -4.9%
2021          -4.0%
2016          -2.7%
2005          -5.7%*

* Highest on record; GDP stats begin in 1929. Deficits for 1815-1816 may have been higher, but GDP for those days is guess-work. In dollar terms, the 2016 deficit (goods/services) has grown by about 80%, from $481 billion; to a 2021 deficit of $861 billion.

WHAT THEY MEAN:

The Trump administration’s first “President’s Trade Agenda” report, released in March of 2017, cited U.S. manufacturing trade balance data as an index of the failures of previous administrations:

“In 2000, the U.S. trade deficit in manufactured goods was $317 billion. Last year it was $648 billion — an increase of 100%.”  

The next “President’s Trade Agenda” report of 2018 used “bilateral” trade balance to assert a failure of the North American Free Trade Agreement and set a goal for the “USMCA” which succeeded it:

“Our goods trade balance with Mexico, until 1994 characterized by reciprocal trade flows, almost immediately soured after NAFTA implementation, with a deficit of over $15 billion in 1995, and over $71 billion by 2017.” … “USTR has set as its primary objective for these renegotiations to improve the U.S. trade balance and reduce the trade deficit with the NAFTA countries.”

The two assertions’ use of trade-balance data as a way to judge policies have well-known logical,* data,** and economic theory*** problems. This duly noted, how do they look on their own terms five years later? By 2021, U.S. exports had dropped from the 11.9% share of GDP they held in 2016 to 10.8%; imports, meanwhile, had grown a bit from 14.6% to 14.8% of GDP. Here then are the same two trade-balance statistics for 2021 and (very tentatively, based on one quarter’s worth of trade data) so far in 2022:

1. The U.S. manufacturing deficit in 2021 was $1.07 trillion. The last four months’ data suggest a 2022 total somewhere around $1.3 trillion. If this ends up about right, the 2016 manufacturing deficit noted in the 2017 “President’s Trade Agenda” would have doubled in five years.

2. The trade balance with Mexico (again, goods only) was $108 billion in 2021, a year after USMCA implementation. It looks likely to top $125 billion in 2022, with tariffs on Chinese consumer goods still shifting some purchasing of TV sets, auto parts, etc., to Mexico.

* The “post hoc, ergo propter hoc” fallacy.
** Comparison of nominal-dollar balance in 2000 to the nominal-dollar balance in 2016, unadjusted for inflation.
*** Global trade balance will always equal national investment minus national savings; if tax cuts and large fiscal-stimulus programs reduce savings, trade balances will automatically go into deficit unless investment collapses for some reason. So the 2017 comment is not a useful comment on trade agreements, and the 2018 objective likely not one achievable through policy. 

FURTHER READING

Data

The Census Bureau’s U.S. monthly trade data, through April 2022.

… and the U.S./Canada/Mexico balances.

…  and for the big picture, U.S. exports, imports, and balances from 1960-2021 on one convenient page.

What happened? 

Trumpism leaves a larger deficit overall, and more concentrated in manufacturing than the 2016 figures. Why the jump?

Tax policy, followed by heavy COVID-era fiscal stimulus, are the obvious suspects. Three of the four upward ratchets in U.S. trade deficits since the 1970s followed tax-cut bills — one in the first Reagan term, another in the second Bush administration, and the third in 2017.  With higher fiscal deficits, and without an offsetting rise in family or business savings, overall U.S. savings will fall.  All else equal, the “savings – investment = trade balance” identity means higher trade deficits. The Trump-era tariffs, though not likely the cause of the overall deficit growth, have two likely balance effects:

(a) Shifting import sources: Imports from China, though above pre-tariff levels in dollar terms, were 21.6% of goods imports in 2016, and about 17% in 2021. With clothes, consumer electronics, etc., from Vietnam, Mexico, India, Taiwan, and so forth replacing about $100 billion in Chinese-origin goods, the higher USMCA deficit reflects this shift.

(b) Shifting sectoral composition: Trump-era tariffs on steel, aluminum, and Chinese goods are concentrated in industrial inputs such as metals, auto parts, electrical converters, etc. As U.S. manufacturers — automotive, machinery, beer and soda canners, tool-makers, etc. — absorb these costs, they are likely to lose some marginal competitiveness whether in exporting or competing against imports. This likely pushes more of the U.S deficit into manufacturing.

The two reports:

The 2017 “President’s Trade Agenda.” 

… and the 2018 followup (with a wildly wrong claim that the 2017 tax bill “has the potential to reduce the U.S. trade deficit by reducing artificial profit shifting).

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 ProgressiveEconomy 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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FACT:

There are no shortages of infant formula in Europe, Canada, Australia, or New Zealand.

THE NUMBERS: 

130,000 tons    New Zealand infant formula exports to world, 2021
0 tons               New Zealand infant formula exports to U.S., 2021

WHAT THEY MEAN:

A cautionary tale this spring, as White House officials and Congress consider hopes and plans for supply-chain “reshoring,” “resilience,” and import management: In the U.S., dairy vies with sugar as the most tightly policed trade product. According to the White House, 98% of formula in the U.S. is locally manufactured from milk from American dairy cows. The remaining 2% is mainly from Mexico, otherwise, about 2,000 tons come from Ireland, 1,300 tons from Chile, and 600 tons from the Netherlands. The result is a plausible claim to be America’s most completely on-shored, “post-neoliberal,” localized supply chain.

New Zealand, meanwhile, is (likely) the world’s most dairy-centered country. It is second only to Uruguay in cows-to-people ratio; first in the world for total dairy exports; and second to the Netherlands as an infant formula exporter, sending 130,000 tons per year to China, Australia, Hong Kong, Southeast Asia and other destinations.

New Zealand has a lot of formula.  With American stores suddenly short of it after the recall at the U.S. plant in Sturgis, Mich., we don’t have enough. Here, though, is what grocery store managers hoping to restock with New Zealand formula would need to do:

(1) Fit your purchase, by weight, within an annual global quota limit of “4,105 tons”* “other dairy products.” Most of this is already filled by formula and other non-cheese products from Ireland, Chile and the Netherlands; and in any case, to apply you would need to USDA quota regulations as follows: “A person may annually apply for a nonhistorical license for articles other than cheese or cheese products (Appendix 2) if such person meets the requirements of paragraph (b)(1)(ii) of this section.”

Paragraph (b)(1)(ii) in turn, related to purchases “where the article is not cheese or cheese product,” says you must be:

“(A) The owner of and importer of record for at least three separate commercial entries of dairy products totaling not less than 57,000 kilograms net weight, each of the three entries not less than 2,000 kilograms net weight;

“(B) The owner of and importer of record for at least eight separate commercial entries of dairy products, from at least eight separate shipments, totaling not less than 19,000 kilograms net weight, each of the eight entries not less than 450 kilograms net weight, with a minimum of two entries in each of at least three quarters during that period;

“(C) The owner or operator of a plant listed in the most current issue of “Dairy Plants Surveyed and Approved for USDA Grading Service” and had manufactured, processed or packaged at least 450,000 kilograms of dairy products in its own plant in the United States; or

“(D) The exporter of dairy products in the quantities and number of shipments required under (A) or (B) above.

“(2) Succeeding in this, you must make sure your supplier meets the Food and Drug Administration’s rules for labeling, ingredients, and preparation, which FDA inspectors verify factory-by-factory. Reasonable in itself, though New Zealand’s child health and food-borne illness statistics compare quite well to America’s.

“(3) Pay a 17.5% tariff. (Or a much higher one, “$1.035/kg + 14.9%”, if you’re trying to buy product that exceeds the quota.)”

In practice, at least on short notice, no one seems able to do all this.  So the fully on-shored, non-global supply chain turns out to be very brittle. With the Sturgis factory down and import quotas already filled, there’s no alternative, the shelves quickly go bare, and Air Force planes fly around the world trying to scrape up whatever they can find in Europe. A tactful comment from Jan Carey of New Zealand’s Infant Nutrition Council:

“I think it does show weakness in their policy. … We can speculate that [this crisis] might make the Food and Drug Administration consider why they make it so difficult for, other entrants to come into the market. Why can’t they make it a bit easier to get it in? We have such fantastic products in New Zealand, our products are highly regulated under the Food Standards code for Australia and New Zealand and they meet all of the nutritional requirements of an infant.”

What do we draw from this? Probably a lot of lessons for formula policy specifically. Also, a case study in “localized” supply chains with tight controls over sourcing, which may have some general relevance.

* Mexico is outside this limit with essentially unlimited rights under NAFTA and its successor the USMCA, and provided 12,000 of the 16,800 tons of formula entering the U.S. last year. Canada, in theory, gets a bit more under the USMCA than it did under NAFTA, but hasn’t used it.

FURTHER READING

We don’t have enough

The FDA explains its regulatory system.

… and announces some easing of import rules.

… while the USDA scrambles to find formula for WIC (Women, Infants, and Children) program users.

… and the Air Force ferries back 35 tons.

President Biden announced actions to address the formula shortage.

They have lots 

The U.S. Department of Agriculture examines the New Zealand dairy industry, with data on infant formula production and trade.

New Zealand’s Infant Nutrition Council on formula shortages in the U.S.

And New Zealand government’s child health and safety stats.

Formula trade policy

Tariff rates from U.S. International Trade Commission, the Harmonized Tariff Schedule. See Chapter 19, heading 190110, for infant formula.

Apply for a “dairy import license” from USDA, here.

… but read up on the regulations first.

And also…

“If you want to scare a room full of [economists], talk about breastmilk” — UC-Davis’ Kadee Russ on inadequate U.S. support for breastfeeding moms.

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 ProgressiveEconomy 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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FACT:

1 in 25 of all humans ever have accessed the internet.

THE NUMBERS: 

All humans, ever:        ~117.0 billion*
All humans, 2022:             7.9 billion
Internet users, 2022:         5.3 billion

* Population Research Bureau estimate, 2021

WHAT THEY MEAN:

Posted three weeks ago, the “Declaration for the Future of the Internet” joins the Biden administration and 60 other governments in an attempt to define the principal challenges to the digital future and set a direction for policies to address them. A few bits of data first:

According to the International Telecommunications Union, 4.9 billion people around the world used the Internet last year. A less official update from WorldInternetStats.com this spring finds 5.3 billion. This is just over two-thirds of the world’s 7.9 billion people, up from 50% at the end of the Obama administration, and about 1% in faraway 2000. Put another way, demographers at the Population Research Bureau calculate the total human population since the origin of the human species about 300,000 years ago at 117 billion.  If this is about right, today’s Internet users make up one in 25 of all the men, women, and children who have ever lived. This year they will:

… transfer roughly 100 zettabytes of data around the world via fiber-optic cable and satellite beam. (A zettabyte is 1 sextillion bytes. The European Space Agency believes the universe contains somewhere between 100 sextillion and 1,000 sextillion stars.)

… conduct $26.7 trillion in electronic commerce, by UNCTAD’s 2022 estimate. (The International Monetary Fund believes global GDP this year is $103 trillion.)

… and spend 4.2 trillion hours on social media. (This sums to 479 million years, roughly the time elapsed since the “Cambrian Explosion.” Alternatively, the longest recorded single lifespan, that of Arles resident Jeanne Calment, 1873-1998, was 0.00000000012 trillion years.)

Another way to put these figures in context: at the birth of the Internet somewhere in the 1980s, a statistician might count a few million bytes of data transferred across early computer networks, about $0 in electronic commerce, and a few thousand academics and government officials berating each other on electronic bulletin-boards.

So, quite a remarkable first generation.

After appropriately noting this fact and recognizing the scientific and technical achievement that enabled it, the Declaration for the Future of the Internet focuses on (a) emerging policy challenges for the second generation, and (b) the values and goals that should inform a response to them. Top concerns include:  escalating use of digital technologies, in some cases by governments, for disinformation and cybercrime; spread of national firewalling and restriction of information, also by governments; fears among many users of loss of privacy and eroding ability to control personal data, whether to governments, unscrupulous businesses, or criminals; and abuse of online platforms to inflame conflict, undermine respect for human rights, and threaten groups vulnerable to prejudice and hate.

The Declaration offers no specific technical measures or agreements to address these concerns, nor new venues in which governments and/or “multistakeholder” fora should develop them. Instead, it sets out a long-term objective — “an environment that reinforces our democratic systems and promotes active participation of every citizen in democratic processes, secures and protects individuals’ privacy, maintains secure and reliable connectivity, resists efforts to splinter the global Internet, and promotes a free and competitive global economy” — and proposes five general principles to inform the actual policies that might deliver this:

1. “Protection of Human Rights and Fundamental Freedoms,” including combatting online violence and exploitation, reducing illegal content, and protecting freedom of expression.

2. “A Global Internet,” in which governments are discouraged from restricting access to lawful content, or shutting down access generally or to specific types of information, and encouraged to support free flows of data, cooperate in research and development, and act responsibly themselves.

3. “Inclusive and Affordable Access,” including through closing digital divides, encouraging diverse cultural and multilingual content, and supporting digital literacy and skills for publics.

4. “Trust in the Digital Ecosystem,” involving common responsibilities to combat cybercrime, protect personal data, use trustworthy technologies, avoid attacks on elections, support open trade and fair markets, and minimize digital contributions to climate change emissions.

5. “Multistakeholder governance,” to support technical advance and avoid undermining technical infrastructure.

FURTHER READING

Via the White House, the Declaration for the Future of the Internet.

A signers list from the State Department: 39 governments in Europe, five in the Pacific, three in Africa, one in the Middle East, and nine in the Western Hemisphere. (Some puzzling non-participants — Korea? Switzerland? Norway?)

And looking back: In the 50-million-internet-user world of 1997, the Clinton administration imagines policies for today’s digital global market.

BEA on the American digital economy in 2020 (with quiet side note to BEA, the dots are three places off to the right on page 4).

UNCTAD on global e-commerce.

The Internet Society’s attempt to document the actual “launch of the Internet” date. Authors settle on the January 1, 1983, transition of U.S.-based academic and government networks to an interoperable TCP/IP protocol:

Geneva-based CERN, on the other hand, looks to Berners-Lee’s 1989 WWW software, and the first web-site launch.
And some fun with 2022 Internet numbers
100 zettabytes – The European Space Agency calculates stars in the heavens.

1 in 25 humans: The Population Research Bureau counts all the people who have ever lived.

4.2 trillion person-hours of social media: Stephen Jay Gould’s Wonderful Life (1989); Gould’s theses on the Cambrian’s possibly wider variety of phyla are not in favor, but still the best ever user-friendly descriptions of Anomalocaris, Opabinia, and the weird world of the first big animals.

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 ProgressiveEconomy 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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FACT:

Solar power installation in the U.S. is suddenly slowing down. 

THE NUMBERS: 

Solar power as share of U.S. electricity generation

2050:    22%*
2021:      4%
2010       1%

* “Annual Energy Outlook 2022”, Energy Information Administration, reference case, assuming no major change in policy or external environment.

WHAT THEY MEAN:

A cautionary tale, unfolding this spring in the American solar power industry, as hopes of “de-carbonization” in electricity begin to clash with an “industrial strategy” meant to promote photovoltaic manufacturing in part through reliance on tariffs, and a recently booming U.S. solar power-generation industry suddenly begins to fade.

“De-carbonization”:  One of the Biden administration’s top-tier climate policy goals is to use less coal and other greenhouse gas-producing hydrocarbons, and use more alternative energy sources, to generate electricity.  Solar power, a core element of this effort, provided about 4 percent of U.S. electricity in 2021, up from less than 1 percent a decade ago.  With a battery of tax incentives, government purchases, and other policy tools in place, U.S. homes, buildings, and utilities added 23.6 gigawatts of solar capacity – just under half of all new U.S. electricity generation – last year.  The Energy Department’s yearly “Annual Energy Outlook”, released in March, predicts that all else equal, the solar share of U.S. electricity will reach about 10% in 2030 and 22% – in practical terms, about 1,000 gigawatts of a total just above 5,000 gigawatts – by 2050.

“Industrial strategy”: Meanwhile, the administration also hopes to use U.S. government policy tools to help make the U.S. a large producer of (among many new products) the actual photovoltaic cells, modules, and panels that turn the sun’s light and heat into electricity.  Most of these are now made in and imported from Asia, where rapidly growing capacity has helped to drive down solar panel prices by about 90% over the past decade.  China makes about 70% of the world’s output, Southeast Asia 15%, and Korea 5%.  The U.S. is at about 3% of world production – a small fraction of world output, but not a trivial total, which translates to about 7.5 gigawatts of electricity, or about a third of annual U.S. solar power installation.  A series of trade law complaints from U.S. manufacturers over the past decade have tried to shift this balance through appeals for tariffs.  The outcomes have been equivocal to date; the newest such effort, however – an ‘anti-dumping’ case filed by a small California company – may be enough to set back actual American use of solar power for years.  To review –

(1)    The normal (“MFN”) tariff on photovoltaic cells, modules, and panels is zero.  Beginning in 2012 and 2014, “anti-dumping” and “countervailing duty” suits have imposed tariffs on Chinese-made photovoltaic cells and modules in a range (depending on the company) of 13.3% to 249.95%.  These laws are deliberately depoliticized, with litigation handled by civil servants, and currently oversee “orders” (i.e. tariffs) on 644 products (mostly steel) to offset respectively unfairly low pricing and subsidies defined by the intricate terms of the two laws’ 1994 revision.  Cabinet officers, presidents, and similar individuals have little ability to change these decisions.

(2)    As frequently happens with tariffs, however, the main effect of the 2012 and 2014 decisions seems to have been to shift buyers’ orders a bit south, particularly to Malaysia, Vietnam, Thailand, and most recently Cambodia.  A second suit led the Trump administration in 2018 to impose a complex four-year global “safeguard” tariff lasting for four years, beginning at 30% and scaling down to 15% in 2021, and applied when solar panel imports rose about 2.5 gigawatts.  Known as “Section 201” in trade-bar jargon, the safeguard contrasts with the anti-dumping and countervailing duty laws, as it allows Presidents to set a wide variety of import management or restrictions, or alternatively to decline any action on grounds of larger national interest.  The 2018 tariffs expired last February, and based on a recommendation from the International Trade Commission, the Biden administration decided (a) to extend the safeguard for four years, but (b) raised the duty-free level to 5 gigawatts – more or less the current level of cell and module imports – and eliminated tariffs on the “bifacial” panels especially popular with utilities.

(3?)    Most recently, in April the Commerce Department began investigating yet another anti-dumping suit, from a California company, alleging that the Vietnamese/Malaysian/Thai/Cambodian suppliers of panels are taking Chinese panels and reselling them.  This has opened the possibility of *retroactive* tariffs – in principle, as high as 250 percent, though as with the Chinese case potential outcomes likely would vary by source – as well as higher future costs.  This may be more than the recently strong U.S. market for solar power can absorb:  a survey by the Solar Energy Industry Association three weeks ago, for example, finds Association members delaying or scaling back 318 of their 596 current utility-scale projects out of concern over the costs and penalties this new antidumping case may bring  It has also led to a decision to extend the life of two Indiana coal-fired electricity plants for two years.

In general, then, a lesson in the limits and drawbacks of tariffs as industrial strategy tools; an illustration of the potential resulting clash of industrial strategy and decarbonization, as the cost of tariffs begins to overpower the tax incentives and purchasing policies meant to promote renewable energy; and a sudden question about hopes for rapid “de-carbonization” in electricity.  Not at all an outcome anyone would want; but one, depending on the next steps in this new case, in which the most damaging outcomes can still be averted.

FURTHER READING

The Energy Information Administration has energy data, trends, and projections in “Annual Energy Outlook 2022.”

National Economic Council Chair Brian Deese outlines a broad concept of industrial strategy, with climate change and clean energy as a core example.  A key paragraph:

“By enacting long-term, technology-neutral incentives to generate zero-carbon energy and innovation, we can lay the foundation for more American-made clean-energy technologies and bolster domestic supply chains.  We can partner with allies to expand our collective capacity to produce clean energy, while opening new export markets for American products. And we can do it in a way that lowers immediate costs for Americans, keeps our affordable-energy advantage, and accelerates growth in energy communities transitioning toward industries of the future.”

Full text.

The National Renewable Energy Laboratory has a primer on solar cell, panel and module manufacturing.

Also from the NREL, a very useful summary/timeline of the intricate web of production data, trade flows, and the now-intricate web of anti-dumping, countervailing duty, and safeguard tariffs on photovoltaic cells and modules.

Expert recommendation, December 2021:  The U.S. International Trade Commission’s 593-page report recommending extension of the 2018 ‘safeguard’ tariffs on solar panels, cells, and modules, with analysis and data on production and trade.

“If you’re not into the whole brevity thing”, February 2022:  The White House’s epically verbose announcement (“Proclamation of action to continue facilitating positive adjustment to competition of certain crystalline silicon photovoltaic cells, whether or not fully assembled into other products”) of extension of the safeguard tariffs.

A new suit, April 1, 2022:  the Commerce Department announces a new anti-dumping investigation.

And its impact, April 26, 2022 – The Solar Energy Industry Association surveys worried members, finds sudden pullbacks, delays, and interruptions of solar power projects.

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 ProgressiveEconomy 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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FACT:

Ukraine economy to contract by 35% this year. 

THE NUMBERS: 

Average monthly cargo tonnage for Port of Odesa

Jan.-Dec. 2021:        1.9 million tons
March-April 2022:     0 tons

WHAT THEY MEAN:

From the Commerce Department’s Monday announcement, lifting Trump-era tariffs on Ukrainian steel:

“[T]he United States of America will be temporarily suspending 232* tariffs on Ukrainian steel for one year. Ukraine’s steel industry is uniquely important to the country’s economic strength, employing 1 in 13 Ukrainians with good-paying jobs. … Many of Ukraine’s steel mills have continued to pay, feed, and even shelter their employees over the course of fighting. Despite nearby fighting, some Ukrainian mills have even started producing again. Creating export opportunities for these mills is essential to their ability to continue employing their workers and maintaining one of Ukraine’s most important industries.

A look at the role of trade in Ukraine’s pre-war economy suggests that the Commerce Department’s hope to support Ukrainian exports (and the April decisions by the U.K. and European Union to lift all tariffs on Ukrainian goods) is well-founded. But it is probably incomplete, and the western governments need to be thinking about logistics as well.

By way of introduction, in October 2021, the International Monetary Fund’s semiannual “World Economic Outlook” projected a modest 3.5% growth rate for Ukraine. The April 2022 WEO made no guesses at any of these figures, except for a -35% drop in GDP. Such a contraction is one of the worst ever recorded: Compare, for example, the -10.5% decline in Greek GDP in 2011, and the -7.6% and -13.1% declines for Thailand and Indonesia in 1998, rightly remembered in these countries as national tragedies.

Export losses will likely account for a large part of this contraction. According to the World Trade Organization, exports accounted for 44% of Ukraine’s pre-invasion GDP. ($49 billion in goods exports + $15 billion in services exports, in a $152 billion economy.) This makes Ukraine, though a relatively small economy, roughly as export-reliant as Germany, Korea, or Mexico. The main products were $10 billion in iron and steel, $8.5 billion in corn and wheat, and $5 billion in sunflower oil, and the its main pre-war customers were the EU at 35% of all Ukrainian exports, followed by China at 15%, then Russia and Turkey at about 5% each.

About 75% of Ukraine’s exports gets to buyers through ten Black Sea ports; Odesa, the largest, handled 22.5 million tons of wheat, corn, iron, and other cargo last year. The vast majority of this trade is now blocked, even for grains already harvested or mills still producing metal. Deputy Infrastructure Minister Yurii Vaskov, speaking last week, reports that all ten are closed, either by Russian naval blockade (Odesa) or military occupation (Mariupol, Kherson), while the International Maritime Organization knows of 84 civilian cargo ships trapped in Ukrainian ports. The effects are showing up in U.S. trade data, which already show U.S. imports of Ukrainian steel down by about two-thirds, from 20,700 tons in January to 12,900 tons in February and 6,800 tons in March.

With this in the background, tariffs are always a consideration but not the primary issue. President Zelensky’s appeal yesterday for help in reopening the ports highlights the core problem; in the meantime, Ukraine’s government is trying to channel as many of its exports as possible through smaller Danube River ports, along with railways connecting to Poland, Slovakia, Hungary, and Romania. By Vaskov’s analysis, this accommodated 3.5 million tons of cargo in April — about a quarter of last year’s 12.5 million tons per month — and may be able to manage 5 million tons a month by fall. With this in the background, the tariff relief programs offered by the Biden Administration, the U.K., and the EU are useful as both practical and easy policy steps and as moral support, but need a complementary plan to help Ukraine find ways to move the actual metal and grain to their buyers.

* “232” referring to “Section 232” of U.S. trade law.

FURTHER READING

The WTO’s snapshot of Ukraine’s trade profile, 2021.

Vaskov of the Infrastructure Ministry on efforts to shift from Black Sea maritime export to rail and river.

U.S. Department of Agriculture on Ukraine’s role in world agriculture (No. 1 in sunflower oil production and exports, No. 4 for wheat exports, No. 5 for corn exports).

The International Maritime Organization’s latest update on cargo ships trapped in Black Sea ports: https://www.imo.org/en/MediaCentre/HotTopics/Pages/MaritimeSecurityandSafetyintheBlackSeaandSeaofAzov.aspx

Ukraine is a principal supplier of grains to Egypt, Indonesia, Bangladesh, Turkey, and other mid- and low-income countries. The UN World Food Program fears 76 million people will begin to go hungry if grain exports do not resume.

And a first-hand late April National Public Radio report from the Odesa Port.

Tariff announcements

The United Kingdom government announces removal of tariffs on Ukrainian goods.

The EU joins.

And Commerce Secretary Gina Raimondo this past Monday announces a year-long suspension of Trump-era steel tariffs.

And GDP figures in context

What does Ukraine’s wartime contraction of -35% mean? Some other points of comparison, drawn from the International Monetary Fund’s World Economic Outlook database (which covers the years 1980-2022):

1932: Great Depression contraction of -12.9% in the United States
1998: Great Recession contractions of -13.1% in Indonesia and -7.6% in Thailand;
2011: Greece’s -10.5% contraction in debt crisis;
2011: Libya’s -67% contraction in government collapse and conflict.  This appears to be the sharpest contraction in the database.
2015: Yemen’s -28% drop as civil war spreads country-wide;
2019: Venezuela’s -35% contraction 2019, as state oil company PDVESA defaults on bond obligations.
2021: Myanmar’s -17% drop after February coup d’etat

The current (April 2022) WEO database.

… and for comparison, the October 2021 edition.

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 ProgressiveEconomy 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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FACT:

World count of child labor, 2020: 160 million boys and girls. 

THE NUMBERS: 

International Labor Organization estimates of child labor worldwide

2020        160.0 million
2016         151.6 million
2012         168.0 million
2008        215.2 million
2004        222.3 million
2000        245.5 million

WHAT THEY MEAN:

Every four years since 2001, the venerable International Labour Organization has published an estimate of child labor* numbers and rates around the world. The first edition, looking at the world of 2000, found 245.5 million of the world’s 1.53 billion children in child labor. The most recent, out in June 2021, reported 160 million child laborers in a slightly larger population of 1.67 billion children. That is, over 20 years the actual number of child laborers fell by 35%, and the share of the world’s children in child labor dropped from 16% percent to 9.6%.

The 2021 report, though, also found something surprising and distressing. Between 2016 and 2000 —for the first time in the series — the ILO’s count of working children rose.  The estimate for 2016 had been 151.6 million boys and girls in child labor; thus the 2020 report’s 160 million (a pre-COVID number) meant about 8.4 million more. Equally striking and perhaps even more discouraging, almost all of this rise in child labor was among younger children aged 5-12.

What has happened? Three closer looks at the 2020 findings suggest a pattern, and perhaps part of a response:

1. Child labor is mostly rural: The American mental image of child labor draws much from America’s 20th-century activism and legislative reforms: Progressive-Era photographs of wan children in coal mines and textile mills; factory-focused state laws and a temporarily successful  national law in the 1910s; the Fair Labor Standards Act drawn up by Frances Perkins’ Department of Labor in the 1930s. Child labor today, however, is mainly agricultural work. The ILO’s report finds 70% of child labor — about 112 million of the world’s 160 million working boys and girls — in rural areas, principally in small family-run farms and enterprises. Another 20%, or 32 million children, are in low-level urban services. “Industry,” which in ILO usage includes construction sites, mines, and factories, accounts for 10.3% or 16 million child workers, and a smaller 6% of child labor among young children aged 5-11.

2. Child labor is mostly family-based: 72% of child laborers are in “family work” as of 2020. This is a much higher share than the 63% the ILO reported for 2016. Employment of child labor in private companies, meanwhile, has dropped from 31.9% in 2016 to 17.3% in 2020.

3. Child labor is growing regionally concentrated: On close reading, the ILO’s 2021 data do not really show a worldwide upward turn, but regional trends that have begun to diverge. In Asia, in the Western Hemisphere, and in rich countries, child labor counts and rates continue to fall; taken together, the child labor count in these regions fell from 82.5 million in 2016 to 58.6 million in 2020.** Counts rose, however, in sub-Saharan Africa and also in the Middle East, and the ILO’s “Europe and Central Asia” region. In pure numbers, most of the growth came in sub-Saharan Africa, where the ILO’s count rose from 70 million in 2016 to 86.6 million — now more than half the world total — in 2020, and from 6.7 million to 10.7 million in the Middle East and Europe/Central Asia.

How might policies, both within countries and internationally, respond? African patterns of child labor mirror the world pattern, except more intensely: 82% of African child labor is in rural areas and in agriculture (with 5.3% in “industry”), and likewise 82% of African children involved work in family enterprises and farms rather than for companies or in itinerant “odd job” work. With this in the background, laws and enforcement programs along the lines of the 20th century U.S. experience are important. But the core challenge appears to be finding ways to ensure that parents have the financial ability and incentives to keep children in school.  Here Latin American experience may offer a model: In the 1990s and 2000s, Brazil and Mexico were able to drive down child labor rates more rapidly than development alone could do, by providing small stipends to families certifying their children were in school for regular hours.

* Covering children from the ages of 5 to 17. “Child labor” is defined as meaning any work for children aged 5 to 14, and work above 14 hours per week for children aged 15 to 17.

** Breaking this out by region, child labor in Asia has dropped from 113 million in 2008 to 70 million in 2016, and 49 million in 2020; in Latin America and the Caribbean, from 14 million to 10.5 million and 8.0 million; in high-income countries, from an estimated 2 million in 2016 to 1.6 million in 2020.)  From 2016 to 2020, child labor counts rose from 1.2 million to 2.4 million in Arab states, and from 5.5 million to 8.3 million in Europe and Central Asia.

FURTHER READING

The ILO’s June 2021 report on worldwide child labor counts and trends in 2020.

Policy

The Department of Labor’s International Labor Affairs Bureau looks at child labor rates and policy around the world.

… and Labor Secretary Martin Walsh outlines U.S. policy to the ILO’s 2021 conference on child labor.

The ILO on lessons from reducing child labor through education policies in low-income countries.

And the Inter-American Development Bank reviews Brazil’s “Bolsa Familia” program, credited with sharply reducing child labor and infant mortality rates in the 1990s and 2000s.

And the American experience

The National Archives reprints Lewis Hine’s classic photographs of child labor in early 20th-century American streets, mines, and factories.

BLS recounts the development of U.S. child labor law, from a Connecticut statute in 1913 through the Fair Labor Standards Act of 1938.

… and the Government Accountability Office, in 2018, looks at physical risks and child labor enforcement for America’s contemporary working children (including in legally permissible summer jobs, family farm work, and so forth as well as illegal “child labor”). In the 2010s, about 700 Labor Department investigations each year found child labor law violations. These were most common in “leisure and hospitality,” but that may reflect more frequent investigations in these industries, as opposed to higher rates of child labor.  GAO does not venture a guess at the scale of child labor in the U.S., but does conclude that “since 2011, data indicate that the number of children working is increasing.”

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 ProgressiveEconomy 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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FACT:

“Section 301” contribution to U.S. inflation rate; range of estimates: 0.3% to 1.3%?

THE NUMBERS: 

U.S. goods imports from China

Jan.-Feb. 2022        $90.1 billion
Jan.-Feb. 2018        $84.6 billion

WHAT THEY MEAN:

Reviewing her limited short-term options for easing inflation, Treasury Secretary Janet Yellen last week noted possible removal of Trump-era tariffs on Chinese goods. Three bits of background data on these tariffs, then some tentative conclusions:

1. Scale: Tariff System Roughly Doubled in Size: In 2017, the last full year before imposition of the administration’s “Section 232” and “Section 301” tariffs,* the U.S. tariff system brought in $32.9 billion in revenue on $2.34 trillion in imports. Dividing tariff revenue by import value, this yields a “trade-weighted” tariff average of 1.4%, though in a system (as PPI’s Ed Gresser noted in testimony last week) very unevenly weighted toward taxation of consumer goods and low-income families. By 2019, the administration had added to this system a battery of administratively imposed tariffs, including:  (a) “232” tariffs of 25% on steel and 10% on aluminum, valued in 2017 at about $50 billion; (b) “301” tariffs of 7.5%, 10%, and 25% on about $350 billion in Chinese goods, and (c) a few smaller decisions such as “201” or “safeguard” tariffs on washing machines and solar panels.

In 2021, all this brought in $85 billion on $2.83 trillion in imports, essentially doubling the overall U.S. tariff average to 2.9%. As of early 2022, the Biden administration has unwound some of the metals tariffs through agreements with the EU, Japan, and the U.K.; the tariffs on Chinese goods, though with some promise of a revived “exclusion” process for businesses especially damaged by extra tariff costs remain in place.

2. Effects on U.S. Imports from China Noticeable but Modest: China’s share of U.S. imports has dropped, but the actual value of imports from China is now above pre-tariff levels. More precisely, imports of Chinese-made and -assembled goods totaled $506 billion in 2017, or 21.6% of overall U.S. imports. The Chinese import total dropped temporarily after the 301 tariffs went into effect over the course of 2018 and early 2019, to $451 billion or 18.1% of a $2.493 trillion 2019 total. By 2021, though, they had rebounded to $505 billion — essentially equal to the figure for 2017, though this was a smaller share of a much expanded $2.83 trillion U.S. import total.**

3. Little if Any Effect on China’s Overall Exports: The larger “301” impact on China’s global trade seems very small. Statistics published by China’s Ministry of Commerce show Chinese worldwide exports at $2.42 trillion in pre-tariff 2017, then $2.66 trillion in 2018 and a slightly dented $2.64 trillion in 2019, followed by a post-COVID surge to $3.3 trillion in 2021. This suggests that any damage to China’s export economy was small and quickly healed.

4. U.S. Economy and Inflation: Finally, returning to the Treasury Secretary’s concerns and setting trade flows aside, tariffs are generally an unattractive form of taxation. This is because they not only directly raise the cost of imported goods as a sales or excise tax would, but in contrast to sales or excise taxes, they also enable rent-seeking price increases throughout the domestic economy. These neither increase supply nor move demand towards an equilibrium, and therefore have both growth-reducing and inflation-encouraging effects.

Taken as tax policy, the “232” tariffs on steel and aluminum raised metals-buyers’ tariff payments from $0.3 billion in 2017 to $3.2 billion in 2021, or by about $3 billion per year. The “301” tariffs are likewise focused on industrial inputs bought heavily by manufacturers and construction firms ($3 billion more on auto parts, $2.5 billion on electrical components, $1.1 billion on basic chemicals, and so on) and much more expensive. With Chinese import totals for 2017 and 2021 essentially identical, buyers paid $13.5 billion in tariffs in 2017, and $56.6 billion in 2021. Estimates of the 301 contribution to last year’s 7% spike in U.S. inflation range from 0.3% to 0.5% from higher import prices, to a more recent Peterson Institute estimate of 1.3% with domestic-price-raising effects included.

Hence Dr. Yellen’s interest. Her cautious comment on a potential decision to dial tariffs back: “There would be some desirable effects. It’s something we’re looking at.”

*  “232” and “301” stand for sections of U.S. trade law.  The 232 section enables Presidents to impose tariffs on ‘national security’ grounds; the 301 section enables them to impose tariffs as retaliation for overseas policies which impose a “significant burden on U.S. commerce”.

** On the other side of the trade-balance sheet, U.S. export trends to China followed a similar post-tariff-and-Chinese-retaliation track, dropping from $130 billion in 2017 to $106 billion in 2019, then rebounding to $151 billion in 2021.

***  Had China retained the 21.6% share imports it held in 2017, the 2021 total would have been around $600 billion.  (Assuming all else equal, of course.) Vietnam, whose exports to the U.S. jumped from $46 billion to $102 billion in these years, picked up about half of the missing $100 billion; secondary beneficiaries include India, Mexico, and a few other mid-income countries.

FURTHER READING

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 ProgressiveEconomy 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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FACT:

3 million industrial robots, 100,000 services robots, and 32 million domestic robots are at work worldwide.

THE NUMBERS: 

Operating robots, 2020*

3 million       ‘Industrial’
0.1 million     ‘Professional’ services
32 million     ‘Consumer’

* International Federation of Robotics, 11/21

WHAT THEY MEAN:

Karel Capek’s R.U.R., which introduced the word ‘robot’ to the world’s vocabulary 101 years ago, is a cautionary tale. In Act 1, enthusiastic human inventors and business promoters predict that robots will bring the end of scarcity, the abolition of degrading manual labor, and the opening of an age of universal “freedom from worry.” By Act 3, in a sense, they get their wish, but in a way that comes as an unpleasant surprise.

A century later, and two generations since the first industrial robot* went live, how close are we to either of Capek’s predictions?

World Robotics 2021, the annual survey from the International Federation of Robotics, counts 3 million working industrial robots, 109,000 “professional” services robots, and about 32 million blue-collar “consumer” robots at work around the world last year. By their counts, the heartlands of industrial robotics are in East Asia:

(a)    Japan is the largest robot-maker, producing 136,000 new robots in 2020.  This was over a third of the 384,500 new robots installed worldwide.

(b)    Korea is the world’s most roboticized industrial economy, with nearly 932 robots per every 10,000 factory workers, double the 400-to-10,000 ratio of a decade ago.  Singapore is a relatively close second at 605 robots per 10,000, with Japan third at 390.  Rounding out the top ten are Germany at 371, Sweden at 289, Hong Kong at 275, the U.S. at 255, Taiwan at 248, and China and Denmark at 246 each.

(c)    China is home to the world’s largest operating robot workforce.  Over 800,000 robots were working in Chinese factories at the end of 2019, and 168,400 more came online in 2020. IFR’s worldwide count of new robots was 384,50, meaning that China accounted for nearly half of all new robot installations.  Japan placed a distant second with 38,700 new robots and the U.S. was third at 30,800. By industry, the largest numbers of new robots in China and Korea go to electronics assembly and semiconductor production; in the United States and Germany, they are in the automotive industry; in Japan, automotive and electronics more or less equally.

IFR guesses that 2021 saw 435,000 new robot installations; the count is likely to top half a million for the first time in 2024, with nearly all the projected net growth in Asia.  Meanwhile, about 100,000 more complex services robots are at work (transport and logistics; cleaning; agriculture; hazardous waste disposal); and in homes, about 32 million vacuuming, gutter-cleaning, security, and other domestic robots are in fact at least diminishing the human quotient of manual labor. R,U.R.’s universal plenty and absence of worry (and their sinister hidden meanings) have yet to materialize.

* “Unimate,” at a General Motors auto plant in New Jersey, in 1961.

FURTHER READING

Global highlights from the International Federation of Robotics’ World Robotics 2021.

… or, downloads of highlights for industrial and services robots.

The New York-based Institute of Electrical and Electronics Engineers has a weekly new-robot video. Try the creepy burrowing robot.

… and also a sentimental look back at Unimate.

Industry and research international 

Most roboticized industry: The Korean Association of Robot Industry.

Largest producer: The Robotics Society of Japan.

A semiconductor manufacturing robot.

Singapore has a robot-police patrol dedicated to scolding people.

And from Germany a (slightly dated) video on the bleak human future — passive, outmoded future-man sits glumly in chair as mechanical “DynaMaid” mockingly inquires about his “day at work.”

A few looks ahead, and one look back, from robot arts & lit

Capek’s R.U.R. (1921) invented the word “robot,” and the classic “robot uprising” plot. The title acronym stands for a fictional “Rossum’s Universal Robots” company, and “Rossum” is a slightly modified version of the Czech word for “reason.”  A Penn State robotics academic looks at R.U.R. a century later.

In robot-friendly Japan, by contrast, Astro-Boy (said to be the first anime character) is a helpful friend to humanity.

Stanislaw Lem’s “Mortal Engines” collection speculates about machine intelligence. In “The Hunt,” a well-meaning human pilot volunteers to destroy a supposedly mad robot; next, in “Mask”, a troubled, self-aware female robot-assassin tracks down a political dissident.

Philip K. Dick thought humans and robots would lose the ability to distinguish themselves from one another.

And was Capek really the first? Adrienne Mayer’s “Golds and Robots: Myths, Machines, and Ancient Dreams of Technology” looks at androids, flying cars, computers, and other semi-inventions of classical Greece, with comparators from India, Babylon, and the mechanical men of the Qin Dynasty court.

Laugh while you can

The International Federation of Robotics publishes research papers as well as annual statistical reports. Their research-paper link features a standard human-chauvinist “Captcha” request form; to get one of the papers, you have to certify that “I’m not a robot.” Bad idea! The robots will find out, and they might be angry.

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 ProgressiveEconomy 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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