FACT: U.S. Geological Survey: 33,000 tons of gold out there under the hills.

THE NUMBERS: Quantity of gold “above ground” worldwide – 

2024:	212,582 tons*
2000:	144,000 tons?
1950:	70,000 tons?
1900:	30,000 tons?
1500:	~5,000 – 15,000 tons?

* World Gold Council estimate.

WHAT THEY MEAN:

Previewing the betrayals, the shattered dreams, and the body count as The Treasure of the Sierra Madre opens, author B. Traven has some look-homeward-angel, be-content-with-what-you’ve-got advice:

“The treasure which you think not worth taking trouble and pains to find, this one alone is the real treasure you are longing for all your life.”

Still: The August U.S. Geological Survey reports last week in its 2024 Gold Commodity Summary that as much as 33,000 tons of gold is lying around under rocks and hills in the U.S. alone. (Including 3,000 tons of currently recoverable reserves, 12,000 tons of known but currently unrecoverable ore, and another 18,000 tons of undiscovered lodes.)  This in turn is “only a small portion” of total global reserves. With a price this week above $2,000 per ounce, the U.S. share alone would be worth about $2.2 trillion.

Should you quit your job and buy a shovel?

The sages of economics join Traven in loudly saying “No!” Here’s 18th-century econ. pioneer Adam Smith condemning speculators, amateur treasure-hunters, and professionals alike as “destined to bankruptcy and ruin,” in the appropriately titled Chapter 11 of The Wealth of Nations: 

“Of all those expensive and uncertain projects which bring bankruptcy upon the greater part of the people who engage in them, there is none perhaps more perfectly ruinous than the search after new gold and silver mines. … [W]hen any person undertakes to work a new mine in Peru, he is universally looked upon as a man destined to bankruptcy and ruin, and is upon that account shunned and avoided by everybody.”

From another tradition entirely, 14th-century Tunisian polymath ibn Khaldun scornfully rejects persistent rumors that sixth-century Byzantines, or alternatively djinns and wizards, had buried huge lots of gems and precious metals in caves.  He says the only ones who get rich on gold are con men swanning about the Maghreb selling phony maps and shares in non-existent mines. As to their dupes:

“Trying to make money from buried treasure is not a natural way to make a living.  Many weak-minded persons hope to discover riches under the earth and profit from them … Their motive is their inability to earn money normally, through commerce, farming or crafts.  They trust instead that they can grow rich without effort or trouble.”

In practice, ibn Kh. may have been basically right about get-rich-quick dreamers, but Smith was off-base on professional mining. The World Gold Council (a trade association of 32 of the world’s big gold-mining companies) reports 4,899 tons of gold ‘used’ in 2023, the largest annual total they have on record. About two-fifths of this, 2,168 tons, went to jewelers; investors bought about the same amount, with 1,040 tons going to central banks and 1,190 to private buyers. The rest divides between 298 tons to tech businesses for semiconductor wire bonding, infrared sensors, thermal protection for aerospace technologies, photovoltaics and solar cells, reflective satellite mirrors, etc.; 40 tons or so to dentists, and the rest to miscellaneous buyers. The WGC says that 1,800 of the 4,899 tons came from recycling, and the other 3,100 tons from mines.

Therefore, Smith is incorrect and lots of professionals make money digging up gold. The Council’s figures imply that a third of all currently circulating gold has been dug up since 2000, and the total — “about 212,852 tonnes” by their count — rises about 1% each year.  Production is pretty diffuse by country: the Council and the USGS disagree slightly on totals, but concur that four countries produce more than 200 tons a year (China, Australia, Russia, and Canada), and another 10 or so are above 100 tons:  the U.S. at 170 tons (124 tons from Nevada, 20 from Alaska), joined by Burkina Faso, Ghana, Indonesia, Mali, Mexico, South Africa, and Uzbekistan.  USGS has the Peruvian mines Smith scoffed at 250 years ago producing 90 tons a year.  Gold trade comes to about $450 billion per year — not far behind the WTO’s figure of about $625 billion in iron and steel exports, and about 2% of world goods trade — as metal flows through the London Bullion Market, the slightly smaller New York, Zurich, and Tokyo exchanges, Swiss metal refineries and financial institutions, Indian and Hong Kong investor portfolios and so forth. Switzerland is the largest trader, often both importing and exporting $90 billion worth in a year.

Could you, realistically, get a bit of this? Well, there’s still lots more gold beneath the ground than above it. World “reserves” in the technical sense of “recoverable without loss under current technology and mining and other costs” are 3,000 tons in the U.S. and 59,000 tons worldwide; adding in veins and lodes too expensive to get at, and extrapolating the USGS’ figure for currently unrecoverable and unknown lodes in the U.S. to the world suggests a world total above half a million tons.

But even the ore everybody knows about is hard and expensive to dig up. As an extreme but illustrative example, the Mponeng mine near Johannesburg is a hole 4 kilometers deep. The World Gold Council puts the current AISC (“All-In Sustaining Cost,” the average cost of digging up an ounce of gold) at $1,276. This allows substantial profits given a $2,076/oz. market price, but you’d need lots of capital to keep going, as well as very high up-front capital for opening a mine. So even if you could find one of USGS’ 33,000 tons, it might not pay to try for it.

Still, even Traven is equivocal. If his first sentence tells you that you’ll regret trying, his second wistfully suggests that you might want to make one last try:

“The glittering treasure you are hunting for day and night lies buried on the other side of that hill yonder.” 

FURTHER READING

Data:

The U.S. Geological Survey’s 2024 gold report.

The U.S. Geological Survey has U.S. production, world production, trade, and price data for gold and eight-three other minerals — everything from platinum-group metals and gemstones through iron and tin and on to salt, gravel, and peat — from the early 20th century to 2023.

All the gold in the world: 

USGS says there are 59,000 tons of currently recoverable gold “reserves” worldwide underground, including the 3,000 tons in the U.S. Gold being resistant to tarnish, it stays around, except for the fraction hidden in booby-trapped tombs, buried in pirate chests, or dropped down manholes. The World Gold Council helpfully illustrates their “around 212,852 tonnes” estimate with a picture of a 212,000-ton solid gold cube 73 feet on each side. It would be worth about $15.5 trillion.  One ton of gold would be a cube with sides about 15″ long.

A counterpoint, attempting to estimate the total gold available to kings, sultans, pirates, merchants, &c. from 1492 to the present, guesses pre-1900 stocks were quite low.

The Swiss news service looks at Switzerland’s gold vortex, human rights compliance, money laundering, and policy.

And the Mponeng mine, deepest in the world.

Nothing new under the sun:

Ibn Khaldun’s Muqaddimah.

Smith’s Wealth of Nations.

Ibn Khaldun’s con men have modern descendants: the Nevada Mining Commission warns a gullible public to steer clear of get-rich-quick schemes and “dirt pile swindles.”

And last:

If you must — The U.S. Geological Survey has advice on where to go to find gold, and how to do it.

But be warned — B. Traven’s Treasure of the Sierra Madre.

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: WTO members will decide whether to preserve “duty-free cyberspace” by February 29.

THE NUMBERS: Internet users as a share of the worldwide population – 

2024:      67%
2018:      49%
2012:      34%
1998*:       3%

The WTO membership approved ‘duty-free cyberspace’ in May 1998.

WHAT THEY MEAN:

In PPI’s latest policy paper, Tech Policy Director Malena Dailey and Ed Gresser urge the World Trade Organization members to support music lovers, heed Taoist policy advice, encourage teenage influencers, and help small businesses participate in trade, by continuing their 25-year practice of not taxing flows of information over the internet. By way of background:

On February 26, the WTO will meet in Abu Dhabi for “MC-13” (the group’s 13th Ministerial Conference; the first was in 1996). Their docket extends from the seas (fisheries subsidies), to the land (agricultural stockpiling), the lab (medicines and medical technology intellectual property post-COVID pandemic), and the law (revival of the Dispute Settlement system).  The sky is not absent: one of the marquee MC-13 decisions is whether the members will extend the “moratorium” they imposed on applying tariffs to electronic transmissions, “duty-free cyberspace” for short, at “MC-2” in the spring of 1998. The 14-word moratorium is one of the simplest and most easily understood of all trade agreements, reading as follows:

““Members will continue their current practice of not imposing customs duties on electronic transmission.”

Dailey and Gresser call up Taoist sage Lao Tzu, not always a perfect guide to policymaking, but quite right in this case:

“Those who would gain all under heaven by tampering with it — I have seen that they do not succeed. Those that tamper with it, harm it; those that lose it.”

Translating this into data-flow and taxation, internet transmissions are fundamentally ways to exchange information. Allowing people and businesses to exchange information without taxing them for it will encourage them to exchange more.  Taxing this flow of ideas and knowledge, meanwhile, will mean they exchange less of it. The analogous if more prosaic present-day economist’s saying about this sort of situation is “don’t just do something, stand there.”

That’s essentially what WTO members have done for the last generation. Over their 25 years of refraining from grabbing and tampering, benevolently standing there, and maintaining the “duty-free cyberspace” principle, trade has visibly ‘democratized’ as electronic commerce has boomed and barriers to small business and individual participation in exports have diminished. Some figures illustrate:

* Massive growth in internet access and use: The world internet user population has grown from 150 million, mostly in the U.S. and other wealthy countries in 1998, to a third of the world’s people by 2012, half by 2019, and 5.4 billion or two-thirds of the world’s people (and 79% of the world’s young people, according to the International Telecommunications Union).

* High-tech infrastructure boom: The infrastructure necessary to serve this large number of users has grown, in the case of submarine fiber-optic cables from 84 in the late 1990s to 574 of much better quality as 2024 begins; in the case of satellites, from under 1,000 birds then to nearly 8,000 now.

* Data flow: The volume of data traversing these wires and beams, as calculated by Cisco in their fondly remembered “Visual Networking Index,” had by 2017 risen from the trillions of bytes to the quintillions before it became too hard to count.

* Electronic commerce: Much of this data has commercial as well as intellectual or entertainment purposes: the value of electronic commerce just within the United States, according to the Commerce Department, has risen 50-fold from $700 billion to $36 trillion, about 40% above the U.S.’ $26 trillion GDP.

* “Democratization” of trade and small business exporting (U.S.):  As the price of finding overseas customers has dropped, the Census Bureau’s count of exporting American small businesses has grown from about 170,000 to 250,000. This is likely a large understatement, as the Census counts only “goods” exporters of things like farm products and manufactured goods. They are not yet able to tally services exporters such as musicians, Instagram influencers, clinics supplying telemedicine, artists and comedians, distance educators, and other large and active Internet users.

* “Democratization” of trade and small business exporting (developing countries): And similar booms spring up around the world. Dailey and Gresser cite Indonesian musicians, Bangladeshi web-site designers, Albanian social media account managers, and more, as examples of the way the falling costs of communications help small firms and entrepreneurs find potential partners, suppliers, and customers around the world.

In sum, the ‘foundational’ WTO decision 25 years ago to leave the Internet tariff-free, refrain from tampering and grabbing, stand there, etc.,* has worked very well. Good job. Keep it up.

* Asterisk: Note of course that this approach isn’t always best. Lao Tzu points out after all in Chapter 1 that “the Way is not an unvarying way.” Per Dailey and Gresser, while it’s best to refrain from taxation and tariffs, it’s also important to have active policies for privacy protection and law enforcement, to have appropriate content moderation, and to ensure access for the 2.5 billion people worldwide, including about 25 million Americans, who don’t now have the connection they want.

FURTHER READING

Dailey and Gresser on duty-free cyberspace.

PPI’s digital policy project.

At the creation:

Then-U.S. Trade Representative Charlene Barshefsky set out digital trade policy in 1998. Core graph, with the foundational value of duty-free cyberspace the “do-something” policy agenda in privacy, security, access, and so forth both still very current:

“Moving on from the foundational commitment we won from the WTO members in 1998 on the principle of “duty-free cyber-space” – that is, ensuring that electronic transmissions over the Internet remain free from tariffs – we are moving on to a longer-term work program. Its goals include ensuring that our trading partners avoid measures that unduly restrict development of electronic commerce; ensuring that WTO rules do not discriminate against new technologies and methods of trade; according proper application of WTO rules to trade in digital products; and ensuring full protection of intellectual property rights on the Net.  At the same time, we are working with individual trading partners on a series of related questions – for example, on privacy issues where we have worked closely with the European Union to create a model that both protects consumer privacy and prevents unnecessary barriers to transatlantic economic commerce.”

… and now: 

The White House’s “Declaration for the Future of the Internet,” signed by the U.S. and 61 other countries, sketches out an agenda for privacy, law enforcement and public-interest regulation, universal access, and encouragement for growing data transfer.

The WTO on digital trade as a development tool.

The Joint Initiative on electronic commerce.

… and on this topic, a highly concerned & critical PPI look at the U.S.’ sudden and mysterious loss of direction on data flow and related issues.

Data:

ITU counts Internet users, end 2023.

And a counterpoint:

Why, with all this in mind, would someone want to breach the moratorium? Proposals, mainly from India and South Africa, rest on the idea that refraining from tampering and grabbing means that developing countries lose tax revenue. A UNCTAD staff paper of 2018 to this effect argues current tariff rates in developing countries, if imposed on digital products, could yield about $10 billion in tax money is a frequent point of reference. (India is the paper’s top hypothetical tax recipient at about $400 million.) Dailey and Gresser note (a) that this sort of thing — taxing music downloads? who pays? the artist? the platform? the submarine cable or fiberoptic owner? — not only may fail in practice, but (b) that the money involved in UNCTAD’s speculation is pretty trivial, and (c) the arithmetic almost certainly works against governments considering this sort of thing:

*    For India, the $400 million high-end estimate would be about 0.1% of that year’s ~$324 billion in Indian government revenue. This is almost certainly well below the losses the Indian Finance Ministry would incur as other governments tax and shrink India’s services export industries, and VAT and other income tax receipts accordingly fall.
*    For “developing countries” generally, also about 0.1%.

Not at all a good exchange. See pp. 8-12 on the folly of putting small revenue gains above large GDP, technological, and employment advances.

The UNCTAD staff paper is here.

And the India/South Africa submission.

And last:

Lao Tzu (Waley translation); see Chapter 29 for the grabbing and tampering piece, and Chapter 1 as a caution against over-reliance on policy minimalism.

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: Senegal is the U.S.’ fourth-largest source of wigs.

THE NUMBERS: U.S. imports of wigs from Senegal – 

2022:	23.5 million
2020:	19.2 million
2017:	0.1 million
2012:	0.2 million

 

WHAT THEY MEAN:

A sad prediction by an eminent economist, about a decade ago – In The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It (2008), Paul Collier says the poorest countries — over 50 of them, with a combined population of 1 billion — had entered a development trap.  The light-manufacturing-export success of Asia and Latin America had blocked the “trade rout” out of poverty for others, particularly in Africa. Geography, regional conflicts, and resource dependence made economic growth difficult and domestic economic reform often futile. Absent major unexpected change, their future looked bleak:

“In the modern world of globalization, there are some fabulous ladders; most societies are using them.  But there are also some chutes, and some societies have hit them.  The countries at the bottom [ed. note: about 58 in his count, with a population of a billion] are an unlucky minority, but they are stuck.”

The alternative book, Charles Kenny’s Getting Better: Why Global Development is Succeeding (2012), proposed the contrary: basic domestic-policy measures in the poorest countries were visibly succeeding, incomes were rising and social indicators improving, and life at the “bottom” was not stuck:

“[T]hose countries with the lowest quality of life are making the fastest progress in improving it across a range of measures including health, education, and civil and political liberties.  The progress is the result of the global spread of technologies and ideas – technologies like vaccinations, and ideas like ‘send your daughter to school.’”

With the intervening decade’s experience, Kenny’s optimistic side of the debate has gained some strength.  Anecdotally, cases like Senegal’s sudden bloom as a wig exporter to the U.S. — 200,000 wigs ten years ago for $4 million, nearly 24 million wigs in 2022 for $44 million, and just a bit fewer in 2023, fourth in the world as a wig supplier behind only China, Indonesia, and fellow-LDC Bangladesh — suggest that the trade route is not blocked.  Rather, unique local industries like Dakar’s inventive hair-sculpting salons and wig factories can, with a bit of luck and advertisement, quickly attract international attention, scale up, and become large export earners and employers.  (See below for a few mini-case studies: coffee from Timor-Leste, clothes from Cambodia and Haiti, and diamonds from ex-LDC Botswana.)  More generally, the World Bank’s estimate of the actual number of poor people in the “bottom” tier — those in absolute poverty, scraping out a living on $2.15 a day or less — has fallen by about 40%, from 1.13 billion in 2010 to 690 million in 2022, as their (real-dollar) per capita income has risen from $896 to $1,117.

From a different angle, the suddenly rapid shrinking of the United Nations’ official list of “least-developed” countries (“LDCs”), suggests a similar national-level trend.  The UN has been keeping this list since 1971, with updates every three years to add new countries or remove ones that have grown out of LDC status. (More detail on how it works below.)  An observer studying the list 15 years ago would have to conclude along with Dr. Collier that it had a flypaper-like quality of almost never releasing anyone – in the 35 years from 1971 to 2006, only Botswana “graduated” (the U.N.’s term), having managed a surge of diamond wealth particularly well.

In the 18 years since, though, six countries have exited the list – Cabo Verde in 2007, the Maldives in 2011, Samoa in 2014, Equatorial Guinea in 2017, Vanuatu in 2020, and Bhutan last December. A cautious person might be still skeptical that this signifies a trend. The six recent graduates are all quite small, combining for 4.7 million people or 0.5% of the worldwide LDC population; four are tropical island countries able to tap tourism revenue; and the fifth, Equatorial Guinea, has a lot of oil, and the number of people living in LDCs remains above 1.1 billion people and an eighth of the world’s population.  But this noted, the U.N. has already scheduled five more graduations in the next three years — Sao Tome e Principe this December; Bangladesh, Laos, and Nepal in December 2026; the Solomon Islands in December 2027 — which will not only shrink the list but reduce the global LDC population by over 200 million.

Looking only slightly further ahead, the U.N.’s spring 2024 “Triennial Review” of the LDC list will consider nine more potential graduates with 110 million more people for 2027 and 2028, including Cambodia, Comoros, Djibouti, Kiribati, Myanmar, Timor-Leste, Tuvalu, and Zambia.   Senegal, with its suddenly booming wig industry, is also on the possible-graduate list, with a Senegal’s figures mirror this, with the same GNI per capita up from $1,117 to $1,410, literacy up ten points, life expectancy three years longer, and the count of Senegalese people in deep poverty down from 42% to 9%.

Not all are likely to go through — Myanmar’s economy has spiraled downward since the coup d’etat late in 2020, and Tuvalu and Kiribati have extreme climate-change vulnerability. But the list by 2028, along with the count of  looks likely to be a lot smaller.  To borrow Kenny’s phrase, it does seem that things are getting better.  And not slowly.

FURTHER READING

The UN’s Least-Developed Country list.

… its explanation of LDC graduation and Triennial Reviews.

… its most recent graduate, the Himalayan monarchy Bhutan, six weeks ago (Dec. 13, 2023).

And the World Bank’s poverty-reduction data-snapshot for Senegal.

Some more explanation:

By “least-developed country,” the UN does not mean “poorest relative to other countries” — say, the twenty poorest as against the 20 richest of the world’s 197 countries.  Rather, the term “LDC” is meant as an objective descriptor, using a stable set of three metrics for income, health and education, and economic and environmental “vulnerability” to describe a country in difficult straits.  The metrics as of the 2021 “Triennial Review” are:

(a)     A national per capita income below $1,088, essentially $3 per person per day;
(b)     A low “Human Assets Index” number which combines three health indicators (maternal mortality, under-five mortality, stunting) and three education indicators (middle school graduation, adult literacy, and gender parity in middle-school-level education); and
(c)     An “Economic and Environmental Vulnerability Index” similarly calculated from a set of five economy-related topics (the agriculture + fisheries + mining share of GDP, “remoteness and landlockedness,” high export reliance on single products or industries, and export volatility), and four environmental or geographical issues (share of people in low-lying coastal areas and arid zones, instability of farm production, and number of disaster victims).

To get off the LDC list, a country must exceed the indicators in two of these three areas. This can involve bringing GDP per capita up above $1,388 and reaching designated above-LDC scores on one of the two indexes, or meeting the indexes without the GDP growth.  (Though this latter option seems quite rare.) Having done it once, the country gets a second review three years later.  If it passes this second exam, it can “graduate” (in the U.N.’s phrasing) and leave the list. A quick table of the list’s extent since its first edition 53 years ago, and the beginnings of dramatic change around 2020:

2028:	33-40?
2027:	42
2024:	45
2020:	47
2010:	48
2000:	51
1971:	52**

* Note that the numbers in this list are anachronistic, as over half of the current LDCs were colonies or parts of other countries in 1971. The original list had 24 countries at the time, and tended to grow larger for about 40 years as countries became independent.  For example, the U.N. added Eritrea, Timor-Leste, and South Sudan after their official independence dates in 1993, 2002, and 2011. 

Trade routes out:

Cambodia: Congress reopened normal trade with Cambodia in 1992. A generation later, Cambodia is the U.S.’ seventh-largest source of clothing, at $11 billion for about 1.25 billion articles of clothing weighing 240,000 tons. Better Work Cambodia, the International Labour Organization’s flagship garment-industry monitoring and training program, is the brainchild of former Commerce Minister Cham Prasidh and negotiations with the Clinton administration in the garment industry’s early 1990s days. Launched in 2001 and replicated in seven other countries, it provides safety inspection and training, rights on the job, and skill development for women workers in 703 garment factories around Phnom Penh.

Timor-Leste: Independent since 1999, Timor-Leste sells Americans about 1700 tons of top-tier coffee each year. The U.N’s look at Timor-Leste’s potential graduation later this decade worries about the possible loss of special LDC trade benefits (in this case the EU’s “Everything But Arms” duty-free program), as the EU oddly applies a 7.5% tariff to roasted coffee (though zero for non-roasted). The U.S. is zero-tariff all the way down for coffee and tea.

Botswana: The Diamond Technology Park just outside Gaborone looks to help Botswanans add value to the stones before they leave Africa. Space for cutters, jewelry-makers, gem and mineral research, and more.

Haiti: The U.S.’ HOPE & HELP programs provide duty-free treatment for about $1 billion in Haitian-made clothing each year, supporting most of Haiti’s industrial jobs and about 7% of GDP.  The program is set to expire in just over a year. PPI’s take last summer.

Senegal: Not much written on Senegal’s wig-export boom so far, but QZ has an in-depth and prescient look at Dakar’s very large domestic hair-sculpting, wig-making, and salon industry just before the international takeoff.

And some data and intellectual background on the “bottom billion”:

Paul Collier is worried (2008).

Charles Kenny thinks it’s going better than many realize (2012).

… and a 2023 data update from the World Bank, estimating the number of people in absolute poverty through 2022 and assessing the impact of the COVID-19 pandemic as three lost years for poverty reduction.

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: 55 countries have ratified the WTO’s 2022 fishery subsidies agreement. They need 55 more by late February.

THE NUMBERS: ‘Capture fisheries’ annual tonnage by country, 2021 –

Country	Total	Ratified WTO Fisheries Agreement?
World:	92.2 million tons	—
China	13.1 million tons	Yes
Indonesia	7.1 million tons	Not yet
Peru	6.6 million tons	Yes
Russia	5.2 million tons	Not yet
India	5.0 million tons	Not yet
U.S.	4.3 million tons	Yes
European Union*	3.7 million tons	Yes
Vietnam	3.5 million tons	Not yet
Japan	3.1 million tons	Yes
Norway	2.6 million tons	Not yet
All other	~34.5 million tons	26 yes, 104 not yet
Non-WTO members**	~1.5 million tons	n/a

* Represents itself and the 27 member states.
** Among countries and territories outside the WTO, top capture fisheries include Iran at 0.8 million tons, Micronesia 0.2 million tons, North Korea 0.2 million tons (World Bank’s estimate), Marshall Islands 0.10 million, Nauru 0.1 million tons, and a group of smaller fisheries countries – Ethiopia, South Sudan, Somalia, Tuvalu, Kiribati, Bahamas – collectively at about 0.3 million tons.

WHAT THEY MEAN:

It’s been sadly difficult to get countries to agree on good things in this century, but as the 164 members of the World Trade Organization prepare for their 13th Ministerial Conference at the end of February, they have a chance.  It has to do with fish:

Fish, Boats, and Money: The world’s fishing fleet — 45,000 big factory-style vessels and 4.1 million small boats — hauls in 80 million tons of “capture” on the high seas and off the world’s seacoasts, and 10 million tons from lakes and rivers. To put this figure in context, all humans put together weigh about 500 million tons (~60 kilos per person x 8 billion people). Various gloomy studies report the consequences: About 100 million sharks are taken each year, declines of up to 90% in counts of large fish, and more than a third of the world’s fishing grounds are unsustainably depleted.

What to Do? In a world of 8 billion humans and their need for protein, shrinking forests and land habitat, and limited new farmland options, no single solution for pressure on marine life seems likely. Aquaculture, limits on particular species, bycatch reduction, bans on especially destructive fishing technologies, etc. all have their part. For the last 25 years, though, the WTO members have been circling around a partial solution, which at least in principle is among the simplest and easiest of all: stop paying people to fish more than they should.

Subsidies: One reason fish counts fall is that governments are paying fishing fleets to get bigger and catch more of them. A widely used count of world subsidies to fishing fleets, done in 2019 by a group of academics at the University of British Columbia (Sumaila et al), yields a figure of $35.4 billion. This is about a tenth of the world’s $400 billion annual fishing industry, and a quarter of the $150 billion in annual fish trade. About $28 billion goes to large boats — pretty easily identified as the least needy recipients; by purpose, $22 billion goes to make fishing fleets larger, and another $7 billion to give them cheap fuel.  By region and top eight countries (counting the EU as a single economy), their rundown of subsidies looks like this:

World Total	$35.4 billion
Asia	$19.5 billion
China	$7.5 billion
Korea	$3.2 billion
Japan	$2.9 billion
Thailand	$1.1 billion
Indonesia	$0.9 billion
Europe	$6.4 billion
EU members	$3.8 billion
Russia	$1.5 billion
U.S./Canada/Mexico	$4.4 billion
U.S.	$3.4 billion
South/Central America	$2.0 billion
Africa	$2.1 billion
Pacific countries	$0.8 billion

 

The WTO: The WTO is well-placed to do something about this, given its mission and since its members includes 49 of the world’s top 50 capture fishery countries, and account for about 97% of world fishing. (The one big fishing country not in the WTO is Iran, whose fisheries account for 0.8 million tons annually or 1% of the total.)  Having debated fishery subsidy controls since 1998, they took a big first step at the 12th Ministerial Conference in June 2022, which “prohibits support for illegal, unreported and unregulated (IUU) fishing, bans support for fishing overfished stocks, and ends subsidies for fishing on the unregulated high seas,” and now have two opportunities this February:

(a) Bring the 2022 agreement into force. So far, this remains an agreement on paper rather than something that is actually starting to bring down subsidies.  Its entry into force requires ratification by two-thirds of the WTO’s 164 members, or 110 in total.  As of mid-January, 55 have done so. Another 109 — including five of the world’s ten largest fishery countries – have not. Five of the top ten capture fishery countries including the U.S., China, EU, Japan, and Peru have ratified; the other five so far have not. India, Vietnam, Russia, Norway, and Indonesia — and a bit further down the scale, the Philippines, Bangladesh, Thailand, and others — you have 40 days left before the Ministerial.

(b) Finish the work left incomplete last year: The 2022 agreement did not include limits on subsidies contributing to “overcapacity” in national shipping fleets, or to overfishing.  The WTO members (or at least the right-minded ones) hope to complete this by the Ministerial conference in February, working from a text that requires members (with exceptions for least-developed countries and countries such as small islands whose fishing tonnage is very low) to abandon eight kinds of subsidies contributing to overcapacity — ship construction; machinery and technology purchases; fuel, ice, and bait; subsidies for required benefits; salaries and income support for crew; fish prices; at-sea support; and vessel loss or damage — and regular notifications to the WTO of all subsidies with justification for sustainability.

As a final exclamation point, the 2022 agreement — if actually brought into force — lasts only four years and self-terminates if the WTO members can’t agree on the overcapacity limit. If successful, the fisheries subsidy agreements will be something people remember quite a long time into the future, as an example of governments willing to make modest political sacrifices for the general good. If not, well, that would also be something to remember about this generation of political leaders.

FURTHER READING

The WTO:

The WTO’s 2022 agreement on fishery subsidies reduction.

… Director-General Ngozi Okonjo-Iweala takes recent ratifications from the U.K. and Gambia.

… and Fisheries Committee Chairman Gunnarsson updates on progress toward a broader agreement.

Subsidy counts:

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

… while NGO Oceana reports that $5.4 billion worth of subsidies, or a fifth of the world total, goes to support fleets operating in other countries’ water, and $800 million for high-seas operations.

… and UNCTAD looks at subsidies and sustainability.

Fish & boats:

The World Bank has ‘capture’ fishery totals by country, in tons.

The UN Food and Agricultural Organization’s State of World Fisheries and Aquaculture 2022 reports on fish take, fleets and employment, sustainability, and more.  The 80 million tons of ocean capture looks like this:

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

It concludes that “the fraction of fishery stocks within biologically sustainable levels decreased to 64.6% in 2019” from nearly 90% in 1974, and that 35.4% of world fisheries are overfished — take the dead Atlantic cod grounds off New England and Canada as an example — while 57.3% are at “maximum yield” and only 7.2% are “underfished.”

UNCTAD’s World Maritime Review 2023 tracks the world’s merchant fleet.

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: PPI’s Trade Fact of the Week: A quarter of Ohio’s manufacturing workers work for international businesses.

THE NUMBERS:

U.S. private-sector employment, 2021:	124.38 million
… at foreign-owned businesses:	7.94 million
… U.K.-owned:	1.22 million
… German-owned:	0.92 million
… Canadian-owned:	0.87 million
… Japanese-owned:	0.96 million
… all other countries:	3.97 million

 

WHAT THEY MEAN:

Anxiety-filled comment from Sen. J.D. Vance, an Ohio Republican, last month in response to U.S. Steel’s acceptance of a $14 billion purchase offer from Tokyo-based Nippon Steel:

““Today, a critical piece of America’s defense industrial base was auctioned off to foreigners for cash …”

In fact of course the company was not at “auction” as a sort of estate sale or distressed asset, Japan is not a random group of unknown foreigners but a core U.S. ally, and Nippon Steel is a long-term participant in U.S. metals production. A more temperate comment from Lael Brainard, running the White House’s National Economic Council, says these sorts of transactions can have implications beyond the capital markets, and that the U.S. government has a well-established process for examining them:

“This looks like the type of transaction that the interagency committee on foreign investment Congress empowered and the Biden Administration strengthened is set up to carefully investigate. This Administration will be ready to look carefully at the findings of any such investigation and to act if appropriate.”

Here’s some background:

Steel Output: The world’s steel mills pour about 1.9 billion glowing tons of metal a year.  The World Steel Association’s “World Steel in Figures 2023” summary places China’s 1.018 billion tons at more than half of 2022’s 1.885 billion-ton total, with India a distant second at 125 million tons, Japan third at 89 million tons, and the U.S. fourth at 80.5 million tons.  Six of the world’s 10 largest producers are Chinese; the remaining four include two Japanese firms, one Korean company, and the equivocal Arcelor-Mittal, which is based in Luxembourg but Indian by origin and management. Nippon Steel’s 44.4 million tons of output placed it fourth in the world.  U.S. Steel’s 14.5 million tons ranked 27th worldwide and third in the U.S. after Nucor’s 20.6 million tons and Cleveland-Cliffs’ 16.8 million.

Foreign Investment in the United States: The Commerce Department’s Bureau of Economic Analysis, meanwhile, tracks U.S. business investment abroad and foreign investment here. Its most recent annual tally, out last August and covering the year 2021, reports that international businesses employed 7.94 million American workers in 2021 – that is, a modest 6.2% share of that year’s 124.3 million private-sector workers. The international role in U.S. manufacturing is a lot larger, though: 2.81 million American manufacturing workers — about 23% of 2021’s 12.35 million total — go to work daily for international businesses. This includes 153,000 of Ohio’s 675,000 manufacturing workers, mirroring the national 23% employment share and the fourth-largest total of any state.  In Ohio as nationwide, Japanese firms are the top employer and Germans second. By country of origin, the largest groups are:

All manufacturing workers:	12.35 million
U.S.-based firms:	9.54 million
International firms total:	2.81 million
Japanese firms:	0.54 million
German firms:	0.32 million
British firms:	0.24 million
French firms:	0.21 million
Swiss firms:	0.18 million
Canadian firms:	0.15 million

 

By industry, the single largest group of workers at international manufacturers — 512,000 — are in automaking, followed by 426,000 in chemicals and 334,000 in food production.  In “primary metals” (which in BEA’s reports are combined as a group – steel, copper, aluminum, lead, etc.) BEA finds international firms producing $7.1 billion of 2021’s $74 billion in value-added U.S. output and employing 62,000 of the 357,000 total American metal workers. As an example, the Calvert mill in Alabama, with a 5.3 million ton annual capacity, has operated as a joint venture by Nippon Steel and Arcelor-Mittal since 2014, after its 2010 launch by German industrial conglomerate Thyssen-Krupp.

BEA’s “primary metals” employment figure is actually a bit low in historical terms — noticeably down from the 95,000 workers of 2000 and the 92,000 of 2019.  The post-2019 decline appears mainly to reflect Arcelor-Mittal’s 2020 sale of most of its U.S. steel assets (but not the Alabama site) to Cleveland-Cliffs. This event wasn’t especially unusual for FDI transactions, in which ownership occasionally shifts back and forth among the U.S., Canada, Europe, and Japan.  In autos, for example, Fiat’s current ownership of the venerable Chrysler Motors factories — now operating under the name “Stellantis”, with French producer Peugeot also a partner – followed a period of sole U.S. ownership from 2007-2014; and this in turn succeeded the company’s 1998-2007 incarnation as DaimlerChrysler.

U.S. Policy & Institutions: With all this in the background, (a) international participation in U.S. heavy industry in general, or metals specifically, isn’t new, and (b) some purchases, of course, are sensitive by the nature of the industry or the prospective buyer.  To examine and answer the questions they raise — for the defense industry, critical infrastructure, intellectual property, and research, or other reasons — and take such action as might be necessary (if any is needed), the U.S. government uses the long-functioning interagency group Dr. Brainard’s comment cites.

Known as the Committee on Foreign Investment in the United States, “CFIUS”, this is a permanent executive-branch expert group composed of nine agencies — the Treasury Department as the chair, along with the Departments of State, Justice, Commerce, Homeland Security, Energy, and Defense, plus the U.S. Trade Representative and the White House’s Office of Science and Technology Policy. CFIUS reviewed 154 FDI deals in 2022 (some easily decided to be non-controversial, others requiring more investigation), a total slightly below the 164 reviews of 2021 and a bit above the 120 of 2020.  These involved facilities and enterprises ranging from auto parts, metalworking, pharmaceuticals, and boat-building through the information sector such as software publishing and data processing to telecommunications, financial services, and medical labs.

In sum: International businesses are a large and lively part of the U.S. economy, particularly in manufacturing. They carry on lots of research, make lots of cars and a significant amount of metal, and employ about a quarter of the American factory workforce. It’s perfectly reasonable nonetheless to examine new purchase proposals.  And given U.S. Steel’s unusually evocative history — sepia-tinged images of Carnegie, Morgan, and Schwab; mid-20th-century black-and-white reels tagged “Rooting for the Yankees is like …” — emotional reactions aren’t surprising. But neither the basic issues, nor Nippon Steel as a particular company given its significant participation in U.S. metals production over time, are novelties. As Brainard suggests, the government has a perfectly functional way to examine any questions the transaction might raise, and a hyperventilating response probably isn’t very useful.

FURTHER READING

Perspectives on metals:

Sen. J.D. Vance worries.

National Economic Council Chair Brainard suggests a review.

The World Steel Association’s most recent stat summary, with top producing and consuming countries, companies, and trends.

And the Alabama Department of Commerce on international steel investment at Calvert.

Data:

BEA’s summary of foreign multinationals’ U.S. affiliates.

… and data back to 2007.

Looking the other way, U.S.-based multinationals produced about $5.1 trillion worth of goods and services in the U.S. in 2021, and $1.5 trillion abroad, while employing 28.9 million workers in the U.S. and 14.0 million overseas.

And UNCTAD’s World Investment Report has global context.

And CFIUS explained:

U.S. Treasury Department’s background and foreign investment policy guidance.

… and CFIUS’ annual reports with stats and investigation summaries back to 2008.

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 price of a 40-inch TV set has fallen by 99% in 25 years.

THE NUMBERS: Price of a 40-inch flat-screen TV –

2023	$150 – $300 (Best Buy and Amazon range)
2005	$4,000 (Sony)
1997	$22,900 (Fujitsu’s first 40″ plasma TV)

WHAT THEY MEAN:

The election year 2024 opens with many questions, but one is basic: Can a person, who has attempted to overthrow a settled election and has called for “termination” of unspecified parts of the Constitution, in good faith take an oath to “faithfully execute the office of President of the United States” and “preserve, protect, and defend the Constitution”?

Policy choices fall pretty far beneath this. (If they’re wrong, they can always be changed.)  But they aren’t irrelevant and are sometimes connected to this large constitutional matter. Here, for example, is the former U.S. Trade Representative Amb. Robert Lighthizer, defending Trump campaign proposals for a 10% worldwide tariff and a sharp break in economic relations with China to a team of New York Times political writers by making a more general plea:

“If all you chase is efficiency — if you think the person is better off on the unemployment line with a third 40-inch television* than he is working with only two — then you’re not going to agree …  There’s a group of people who think that consumption is the end.  And my view is that production is the end, and safe and happy communities are the end.  You should be willing to pay a price for that.” 

The apparent idea is that if everyone’s cost of living rises and families buy fewer things, the country as a whole will be better off because it will make more things and unemployment will decline. More simply, if Americans are to be “rich” and secure, living standards must fall.

The flaw here is pretty obvious — if people are less affluent they will buy fewer things, and production of things will not rise but drop. Two illustrative examples of how this works, and then a thought on how this might relate to the really basic question:

1. TVs, Efficiency, Productivity, & Innovation: People buy TV sets, and by extension lots of things, on the basis of quality and price. An “efficient” firm will reduce costs through productivity, develop new products through innovation, and offer high-quality sets at low prices. Back in the 1970s, for example, Sony’s 19-inch color Trinitron introduced flatter screens with better visual resolution, and the company’s efficiency and productivity allowed it to sell them at the same prices its competitors charged for blurrier and heavier consoles. Late-1970s anti-dumping suits and import quotas didn’t change these facts. A generation later in 1997, a 10% tariff on Fujitsu’s inaugural $22,900 40-inch plasma might have been daunting even for the few hedge-funders and studio execs interested in showing one off, but wouldn’t have affected production much. Since then, efficiency has cut the cost of a 40-inch TV by 99% to a current range of $150-$300,* making today’s much better versions easily available to Amb. L’s supposedly spendthrift waitresses and bus drivers. The same tariff today would set them back about $20 (or $60 if they wanted to buy three). Over the entire TV-making and -selling world, this would likely put some retail clerks out of their jobs, but likewise wouldn’t affect production.

2. Metals, Tariff Payments, and Production: In the event of a 10% tariff, someone will pay and it’s pretty clear who it will be.  The aluminum and steel tariffs the Trump administration imposed in March of 2018 (10% and 25% respectively, with some exclusions) offer a modest case study of the economy-wide effects of higher input prices and consequently reduced efficiency.  The U.S. International Trade Commission’s March 2023 report summarizes their effects five years on:

“U.S. importers bore nearly the full cost of these tariffs.  The USITC estimated that prices [of the metals] increased by about 1 percent for each 1 percent increase in tariffs. … U.S.  production of steel was $1.3 billion higher due to Section 232 tariffs.  U.S. production of aluminum was $0.9 billion higher in 2021 due to Section 232 tariffs.  U.S. production in downstream industries [Editors note: the ITC’s major examples are machinery manufacturing, auto parts, hand tools, and cutlery] was $3.5 billion less in 2021 due to Section 232 tariffs.” 

So the ITC’s finding is (a) a $2.2 billion increase in output of the metals (about 5%), compared to the model’s guess at an economy continuing on the same course without tariffs, (b) a somewhat larger decline of $3.5 billion in the machinery, auto parts, and tool-making industries using metals to make their products, and therefore (c) an overall slightly smaller manufacturing sector, though one in which the modestly diminished machinery- and parts-makers buy somewhat more metal from local mills.

In fairness, the administration’s stated reason for imposing the tariffs five years ago was not a hope for “generally higher manufacturing output.” Rather it was an argument that metals production is important enough to national security to sacrifice the interest of machinery and auto parts makers, plus a hope that tariffs would mean a large increase in metal output and mill capacity utilization. More on this in a few weeks (and a few stats below), but the many metal-tariff experiments over the last half-century suggest some skepticism about the latter point.

3. And the Constitutional issues: Apart from the economics, how exactly would this happen?  Constitutionally, only Congress has the right to “lay and collect Taxes, Duties, Imposts and Excises.” Asked by the Times’ political team about how a President could create an entirely new tariff system by himself, the Ambassador cites some existing trade laws that might enable a President to declare a “national emergency” and impose it by decree. Which, sounding pretty consistent with the “termination” of parts of the document, makes these policy issues look quite relevant to the year’s really basic question.

* $200 is about 0.2% of America’s $74,850 median household income. Not an extravagance at all, and even three would be manageable for a lower-middle-income household.

FURTHER READING

From the National Archives, the official Constitution transcript (see Article I, Section 8, #1 for “Taxes, Duties, Imposts, and Excises”).

… and ex-USTR Lighthizer in the New York Times (subs. req.) on a second Trump program, national wealth through forgoing new TV sets, etc.

Metals:

The U.S. International Trade Commission models the effects of steel and aluminum tariffs five years later.

Or, from a different source — The U.S. Geological Survey’s record of steel use, trade, and production by year reports actual use and output rather than trying to model a non-tariff economy.  Their 2022 summary reports 82 million tons of “raw steel production,” 8 million tons exported, 30 million tons imported, and 96 million tons “consumed” throughout the economy. By comparison, the 2017 report has 81.6 million tons produced, 9.5 million tons exported, 34.6 million imported, and 102 million tons used throughout the U.S. economy. The Bureau of Labor Statistics likewise reports employment essentially unchanged, at 83,000 in late 2017 and 82,600 at the end of 2022.

TVs:

CNET looks at TV prices, 1950-2017.

The Institute of Electrical and Electronics Engineers remembers Fujitsu’s first flat-screen TV.

And from the Washington Post archives (also subs. req.), a report on a 1977 TV “price war,” featuring Japanese innovation, import competition, and U.S. trade law.

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: Pirate attacks are at their lowest in 30 years.

THE NUMBERS: Annual pirate attacks on shipping* – 

2023	120?
2023	115
2013	264
2012	439
2000	471

* Totals from International Maritime Bureau

WHAT THEY MEAN:

How many ships are on the water? UNCTAD’s Review of Maritime Transport 2023 counts precisely 105,395 large cargo ships, defined as vessels of 100 deadweight tons or more.  Other less exact sources find the world’s navies operating about 10,000 boats; wealthy individuals and tourists sailing around in about 10,800 cruise ships and pleasure yachts; and (per the UN’s Food and Agriculture Organization) about 45,000 large factory-style fishing ships.  So, altogether about 170,000 large ships.

And how often do pirates attack these ships? Since 1992, the International Maritime Bureau, a consortium based in Kuala Lumpur, has been answering this question with quarterly reports based on notifications by shipowners. In 2022 IMB found 115 attacks, ranging from unarmed burglaries of ships in berth to gunpoint hijacks of ships on the high seas. This year they report 99 attacks from January through October 2023, which is about the same as the 97 attacks reported from Jan.-Oct. 2021, and a bit more than the 90 in Jan.-Oct. 2022. So pirate attacks have been pretty stable over the last three years at about two each week.  Some more context on this:

Piracy attack rates have fallen sharply: From 2000 to 2014, IMB was reporting between 300 and 500 pirate attacks per year.  The 115 attacks in 2022 were the lowest in its records, down nearly 75% from the 439 reported in 2012.  The largest reason for this drop is the near-elimination of attacks off the Horn of Africa, after the suppression of Somalia’s industrial-scale pirate fleet by an international naval consortium, Combined Task Force 151, between 2012 and 2015.  Attacks in Southeast Asia and West Africa, always more opportunistic and smaller scale than the Somali pirate industry, have also declined.

High-seas piracy accounts for about 40% of all pirate attacks: Somalia’s pirate industry involved large-scale organized attacks on high-seas shipping passing through the Bab-el-Mandeb strait (separating Yemen and Somalia) and the Gulf of Aden, aiming to take control of the targeted vessels, sell their cargoes, and hold their crews for ransom. This involved operations far offshore, in which pirate gangs used converted fishery vessels to carry fleets of speedboats for attacks on ships using automatic weapons. The typical current attack is much less ambitious, usually involving an opportunistic effort by a small group, often with knives rather than guns, to rob a ship at anchor or sailing close to shore. IMB’s count through October included 51 attacks on ships either anchored offshore or berthed at a dock, and 37 en route. Thirty of these 37 high-seas attacks took place in the Singapore Strait, and three involved actual hijackings – up from one hijacking each in 2021 and 2022m but still far below the 49 hijackings of 2012. A sample report from IMB two weeks ago describes a standard 2023 attack:

22.11.2023: 2135 UTC: Posn: 01:43.20N – 101:26.72E, Dumai Anchorage, Indonesia.
Four robbers armed with knives boarded an anchored tanker. They threatened and took hostage the duty AB while the OS managed to escape and inform the Duty Officer. Alarm raised and crew mustered. Seeing the crew alertness, the perpetrators escaped empty handed.

Pirate attacks are now most common in maritime Southeast Asia: Thirty-three of IMB’s 99 reported pirate attacks took place in the Singapore Strait, a 65-mile stretch of water which (per the Lowy Institute) handles about 1,000 ship transits daily.  Maritime Southeast Asia generally is the site of nearly half — 51 of 115 — of this year’s attacks.  (And Singapore-based RECAAP has a higher tally, of 98 attacks in Southeast Asia through the end of November.) Elsewhere, IMB reports 23 pirate attacks off Africa, 16 off South America, and none in the Mediterranean or North Atlantic.

Cargo ships are most frequently attacked: Most pirate attacks, by IMB’s count, target large ships carrying cargo, presumably as they are lightly defended — a very large container ship carrying 8,000 or more boxes may have only 20 crew members — and carry potentially valuable goods. The 99 attacks so far this year included 37 on tankers, 40 on bulk carriers, 14 on container ships, and 8 on all other kinds of shipping. IMB has no record of an attack over the last five years on a large fishing boat, a cruise ship or yachts, or a naval vessel.

Special note: PPI’s Trade and Global Markets staff will be on vacation next week, and the Trade Fact service will take the week off.  We wish friends and readers a happy holiday season, and will be back next year.

FURTHER READING

Data:

The International Maritime Bureau, noting the lowest piracy rate in a generation, is concerned about a rise in violent attacks this year.

Singapore-based Information Sharing Center for the Regional Cooperation Agreement on Combating Piracy (RECAAP) reports incidents and helps coordinate anti-piracy operations in Southeast Asia.

UNCTAD’s Review of Maritime Transport counts ships (in Chapter 2).

Policy:

Command Task Force 151, led this spring by Korea and now by the Philippines, patrols Somali waters.

And the U.S. Navy monitors the “Houthi” militia now threatening the Bab-el-Mandeb passage and Red Sea shipping from the Yemeni side.

NATO on counter-piracy missions.

And Sydney-based Lowy Institute looks at piracy in the Singapore Strait.

And some look-backs:

The Brookings Institution has background on the Somali pirate industry.

The standard dates and geography for the “Golden Age of Piracy” — Edward “Blackbeard” Teach, unlucky Captain Kidd, famous female pirates Anne Bonny and Mary Reade, master of the game Henry Avery — are respectively (a) 1650-1720 and (b) much of the world. Kidd’s especially well-documented pirate voyage took him from Boston to London, then to Madagascar and the Indian Ocean littoral (where he unwisely targeted one of Emperor Aurangzeb’s ships), and back to the Caribbean before he got caught.  The Royal Maritime Museum in Greenwich has lots of good material.

For the big picture on pirate life, David Cordingly’s Under the Black Flag: The Romance and Reality of Life Among the Pirates.

And Robert Ritchie’s Captain Kidd and the War Against the Pirates zooms in on William Kidd, his murky connections with the Whig Party leadership in London and the Boston city government, and his allegedly lost treasure (don’t bother to look).

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 number of “chronically undernourished” people has grown by 163 million since 2017.

THE NUMBERS: Estimated count of “undernourished” world population –

2022	735 million; 9.2% of world population
2021	739 million; 9.3% of world population
2017	571 million; 7.5% of world population
2015	589 million; 7.9% of world population
2010	598 million; 8.6% of world population
2005	793 million; 12.1% of world population
1996	825 million; 14.9% of world population

* UN Food and Agricultural Organization.  

WHAT THEY MEAN:

Charles Dickens’ A Christmas Carol, marking its 180th anniversary next Tuesday, is more watched on TV than read. The TV versions hold up pretty well to the actual story — after the three Spirits show awful, avaricious Scrooge his past mistakes, his present isolation, and his lonely future grave, he reforms, recovers his own happiness, gives the Cratchits a raise, and so forth. But they do miss some of Dickens’ larger concern, which goes beyond Scrooge’s personal redemption to a more general critique of an affluent society’s indifference to the lives of its poor.  A relevant passage at the end, but first a current parallel in the large, recent, and rapid rise in worldwide “food insecurity”:

The UN’s Food and Agricultural Organization defines “undernourishment” as follows:

“Undernourishment means that a person is not able to acquire enough food to meet the daily minimum dietary energy requirements, over a period of one year. FAO defines hunger as being synonymous with chronic undernourishment.”

FAO’s definition of “minimum dietary energy” varies by age, body size, etc. — an 18-year-old girl on average needs 2,500 calories daily and an 18-year-old boy 3,400 — but is about 2,410 calories across the population. By way of context, Americans get about 3,500 calories per day, and the world average is about 2,960. Alternatively, a standard hamburger delivers about 375 calories, a single chapati 70, a pupusa 300, and a serving of jollof rice 390.

The FAO has published annual estimates of the number of people living beneath this threshold since the late 1990s. Its first “Food Insecurity in the World” report, released in 1999 and covering the year 1996, reported 825 million chronically undernourished people. This was 14.9%, or one in seven, of a world population then estimated at 5.6 billion. Divided regionally, the total included 525 million Asians (177 million in East Asia, 284 million in South Asia, 64 million in Southeast Asia), 180 million in sub-Saharan Africa, 53 million in Latin America and the Caribbean, 33 million in the Middle East and North Africa, and 34 million in “developed” countries.

Their estimates steadily shrank for nearly two decades. The 2005 report, by then optimistically retitled “State of Food Security and Nutrition in the World,” estimated a 12.1% undernourishment rate; the 2010 report found 8.6%; and the 2017 report 7.5%, or 572 million of 7.6 billion people. During this time, FAO’s estimate of undernourishment in East Asia fell to nearly zero, and that for Latin America and the Caribbean dropped to 38 million, South Asia’s to 167 million, and sub-Saharan Africa’s to 150 million.

Between 2010 and 2017, though, the picture of a general decline in hunger worldwide (if at different rates in different places) had grown equivocal. FAO’s estimates for undernourishment in Southeast Asia dropped by about half during these years. The estimates for Africa and the Middle East, though, began to rise. And since 2017, the two-generation retreat of hunger seems to have ended. By 2019, worldwide undernourishment had rebounded to 7.9% of the world’s population (613 million people).  Then, under the impacts of the COVID-19 pandemic and Russia’s invasion of Ukraine (a large source of corn and wheat in developing countries), the estimate for 2021 came to 9.3% of world population and 739 million people, and the 2022 estimates are only modestly lower at 735 million and 9.2% of the world population. In sum, over the past six years, the count of undernourished people has grown by 163 million, including by 70 million in Africa and 90 million in South Asia.

Back now to Dickens. Most of the Carol’s “Christmas Present” chapter involves the Spirit showing Scrooge the happy parties and friendships he’s missing. Its last passage, though, reveals something that not only Scrooge, but the partiers too, have tried not to see:

From the foldings of its robe, the Spirit brought two children; wretched, abject, frightful, hideous, miserable. They knelt down at its feet, and clung upon the outside of its garment. …

Yellow, meagre, ragged, scowling, wolfish; but prostrate, too, in their humility. Where graceful youth should have filled their features out, and touched them with its freshest tints, a stale and shrivelled hand, like that of age, had pinched, and twisted them, and pulled them into shreds. Where angels might have sat enthroned, devils lurked, and glared out menacing. 

Scrooge started back, appalled. “Spirit! are they yours?” Scrooge could say no more. “They are Man’s,” said the Spirit. “This boy is Ignorance. This girl is Want. Beware them both.”

We wish our friends and readers a happy holiday season, grateful for our blessings and mindful of those who have less.

FURTHER READING

Worldwide:

FAO’s State of Food Security and Nutrition in the World 2023, with archived earlier editions back to 1999.

Why the rise? The report views the COVID-19 pandemic as the largest cause of the recent rise in undernourishment, responsible for raising long-term hunger counts by over 100 million. Russia’s invasion of Ukraine is the second cause, responsible for another 23 million:

“It is projected that almost 600 million people will be chronically undernourished in 2030. This is about 119 million more than in a scenario in which neither the pandemic nor the war in Ukraine had occurred, and around 23 million more than if the war in Ukraine had not happened.”

USDA’s map of food and nutrition support programs.

At home:

A PPI report has ideas for improving the Supplemental Nutritional Assistance Program (SNAP).

USDA’s Economic Research Service estimates about 5.1% of American households, including 12.6% of single-mom households, living with “very low food security” as of 2022.

And the spirit of the season:

Dickens’ A Christmas Carol, 180 years later.

 

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.

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

FACT: U.S. clothing tariffs are unfair to women.

THE NUMBERS: Average U.S. tariff rates* for clothing by gender, 2022 – 

Men’s	13.6%
Women’s	16.7%
No specified gender	12.0%

* Tariff revenue divided by import value.  These calculations includes tariff revenue collected from both imports subject to MFN tariff rates, and from Chinese products subject to “301” tariffs (which often add 7.5% to existing rates). Import value includes clothing from MFN tariff sources, from China, and from countries exempted from tariffs under FTAs and trade preference programs.

WHAT THEY MEAN:

The House New Democrat Coalition’s eight-point trade policy plan — out last month from the NDC’s 11-member Trade Task Force, headed by Rep. Lizzie Fletcher (D-Texas) and co-chaired by Reps. Don Beyer (D-Va.) and Jimmy Panetta (D-Calif.) — has lots of ideas on digital trade, the China relationship, free trade agreements, farm exports, and more.  Included in the NDC’s list is a hope to “advance equity in trade policy by considering solutions to reduce gender bias and regressivity in the tariff system.” Here’s some background on the gender piece:

Our Valentine’s Day Trade Fact last February pointed out the strange fact that the U.S. tariff system taxes women’s underwear more heavily than men’s. Examination of the tariff schedules and import data across the clothing universe over the past few months shows that this underwear diss of women is not a weird anomaly.  Rather, it is a specific case of a larger systemic issue, which the NDC is very right to highlight: the tariff system in general taxes women’s clothing more heavily than men’s, imposing special charge on American women likely extracting above $2 billion per year. Here are the facts:

1. Tariff rates on average are higher on women’s clothes than on men’s: The U.S. Harmonized Tariff Schedule divides goods into 11,414 “lines,” each with a tariff rate. Chapters 61 and 62 cover clothes. Unique in the Tariff Schedule, they divide most clothes by gender and freely impose different tariff rates for similar items based on this division. For instance, men’s and boys’ cotton suit jackets under line 61033200 are taxed at 13.5%. The corresponding cotton jackets in the women and girls’ heading, at line 61043200, at 14.9%. More generally, 17 “headings” in Chapters 61 and 62 cover comparable clothes divided by gender:  men’s overcoats, women’s overcoats, men’s “suits and ensembles,” women’s “suits and ensembles,” men’s “shirts and blouses,” women’s “shirts and blouses,” men’s underwear, and women’s underwear. Here are the tariff rates in 2017* for these items, derived by dividing total tariff revenue by import value:

	Men	Women
Overcoats	12.5%	13.7%
Suits	13.3%	15.1%
Shirts	17.0%	19.7%
Underwear	8.6%	12.8%

 *  Data is calculated using 2017 tariff revenue. The rates for 2022 would be higher, since additional tariffs on China have raised rates overall.

So in each category, tariff rates are higher on women’s clothes than on men’s. Combining all the categories, tariff rates on women’s clothing are on average 16.7%, 2.9 percentage points higher than the 13.6% average for men’s.

2. Free Trade Agreements Don’t Help Much and Might Accidentally Amplify Disparity: In theory, the U.S.’ free trade agreements and duty-free preference programs for developing countries should moderate and in some cases eliminate this disparity, by eliminating tariffs on both men’s and women’s clothes.  In practice, though, FTAs usually have clothing “rules of origin” so complex as to make them difficult to use, meaning they have less impact than most probably guess. Overall, the 14 U.S. FTAs provide 10% of American clothing imports, and the “CBI” and “AGOA” programs, which waive tariffs on Caribbean- and African-produced clothing, another 2%. So about 90% of the clothing brought into the U.S. comes with full tariff payments. Since 96% of clothing sold in American stores is imported, that means the large majority of garments include tariff costs. And on top of this, a group of researchers from the U.S International Trade Commission found that the FTA countries in practice ship more men’s clothing than women’s, meaning that the FTAs are likely saving men more money than women.

3. Women Therefore Pay More than Men for Similar Things: What does this all mean in practice? Last year’s tariff payments totaled $4.7 billion on $31.1 billion worth of women’s clothes, and $3.1 billion for $24.2 billion worth of men’s clothes. Or, in more direct terms, markups and U.S. transport and overhead costs mean that the cost of an average shirt or coat roughly quadruples from arrival at the border to the cashier, the tariff system appears to be raising the price women pay for clothes, relative to men, by an average of an extra dollar per garment. Looking at this another way, a 2018 working paper from the U.S International Trade Commission concluded that the higher rates on women’s clothes — their finding, pre-“301” tariff, was 14.9% for women’s clothes and 12.0% for men’s — plus the fact that women on average tend to purchase more clothing than men, meant that buyers of women clothes shouldered an additional $2.77 billion in tariff burden than buyers of men’s clothes. Gender bias in the tariff system accounted for about $1.8 billion extra burden on buyers of women’s clothing as of 2015, and presumably somewhat more now.

Conclusion: In sum, the US tariff schedule explicitly taxes women more heavily than men for the same sorts of things.  In doing so, it imposes a kind of gender surcharge of at least $2 billion a year.  This appears to be the only federal tax in which rates differ based on gender.  Our V-Day conclusion on U.S. underwear policy — “Seriously?! Boo! Do better! ???????????? — applies in this larger case too. And Rep. Fletcher and the NDC’s Trade Task Force earn enthusiastic applause for bringing this into the Congressional debate.

Special Note: Research and drafting for this Trade Fact by PPI 2023 Policy Fellow Elaine Wei.

FURTHER READING

House New Democrat Coalition’s trade agenda.

Our previous Trade Fact on underwear tariffs.

Mosbacher Institute on the gender bias in tariffs.

Gailes et al. (2019) on the gender bias in tariff burdens.

Katica Roy proposes a solution for the different tariff rates.

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: Working-class Americans on trade policy – no clear consensus on past agreements, little support for new tariffs, strong hope for training and apprenticeships.

THE NUMBERS: “Effects of agreements to lower tariffs and other barriers on me and people like me,” among Americans with less than college education* – 

	Positive	Negative	Not much either way
Race & ethnicity
African American	42	13	44
White	25	40	35
Hispanic	33	29	39
Red v. blue
Self-described liberal	45	18	37
Self-described conservative	20	51	29
Youth v. age
18-29 years old	45	24	32
55-64 years old	20	46	34

PPI poll of Americans without college degrees, released November 2023

WHAT THEY MEAN:

PPI’s two 2023 polls, done this past September and October by YouGov, offer in-depth insights on working-class opinion in the United Kingdom and the United States. Some headline findings from the 46-question U.S. version show respondents –

• Are pessimistic about long-term trends, with 66% saying “the working class” has lost ground in the last four decades as against 21% “better off” and 13% “about the same,” with illegal immigration and automation of worksites the most frequently chosen explanations.

• Consider inflation the “most significant challenge facing the U.S. economy,” with 36% citing “high cost of living” and 33% “inflation” per se.

• View e-commerce and tech sector employment (44%) as the top career choice for young people, with less for government and military (14%) manufacturing (13%), and service-sector work (8%).

• Support activist (though not overbearing) government, with especially high hopes for programs that can help non-college workers build careers and enhance wages, especially via short-term training (46%) and apprenticeship (23%).

The poll’s four trade questions ask in various ways about the effects of past trade agreements and about future options. Three findings, on overall views, divergences by political orientation and demographics, and future options:

1. No Overall Consensus: Asked how “trade agreements to lower tariffs and other barriers have affected you and people like you,” respondents split among three options with a slight negative tilt: 29% positive; 35% negative; and 36% (the highest share) as “not much effect either way.” A similarly-worded question about the effects of past trade agreements “on our country” as a whole, as opposed to the respondents as individuals, drew a somewhat different response: 28%, about the same share as in the more personal question, responded positively; a noticeably higher 44% viewing the effects as negative; and “not much effect either way” shrank to 28%. This suggests a substantial group viewed trade agreements as having little impact on themselves or their communities, but being overall negative for the country.

2. Axes of Divergence: PPI’s poll shows working-class Americans splitting over trade along the same ideological, ethnic, and generational axes earlier trade polls (Pew, Chicago Council on Global Affairs, major news organizations) have found over the last decade for the population as a whole.  That is, the working class’ center-left contingent is on balance positive about trade agreements, and its right more negative. To wit:

• Race and Ethnicity: African American respondents, among the most upbeat groups in the survey in this area, viewed the effects of past trade agreements as positive for themselves by 42%-13%. Hispanic respondents agreed, though by a less emphatic 33%-29%, while “other” ethnicities split 43%-34%. White respondents were the exception (though a big one, as they made up 70% of the respondents), splitting the opposite way with only 25% “positive” and 40% “negative.”

• Red v. Blue:  Self-identified liberals and Democrats viewed the effects of past trade agreements “on yourself and people like you” as positive by 45%-18% and 39%-22% respectively.  By contrast, 51% of conservatives and 49% of Republicans viewed past agreements as affecting themselves and people like them negatively.

• Youth v. Age: Young people view trade agreements quite favorably, with 18-29-year-olds on the “positive” side by 45%-24% and 30-44 year-olds by 32%-24%. Their Gen-X parents aged 55-64 were the survey’s least happy age group — 20% positive and 46% negative — and the over-65 boomers weren’t much warmer at 26%-41%.

Perspective from other surveys: These ideological and demographic divisions resemble those appearing in other surveys done for the population as a whole over the past two decades by Pew, the Chicago Council for Global Affairs, and the major news outlets. (PPI’s poll also echoes these in not finding big differences by gender.) While the positive/negative splits in the earlier polls can vary based on the wording of questions, the patterns have been consistent throughout the century: young, ethnically diverse, and liberal America is generally positive about trade and trade agreements, and older, white, and conservative America is less so. As an additional perspective on PPI’s results, the earlier surveys also often include breakouts by education level, and typically found more support for trade and trade agreements among college-educated Americans than non-college.

3. Toward 2024: Finally, the poll suggests that the policy option put forward by the Trump campaign this fall — a 10% global tariff and a sharp break in economic relations with China — is not popular.  (The question does not mention Trump’s name or associate the option with his campaign, to avoid skewing the answers.) Asked to choose among three policies — this protectionist approach, a non-trade option in which future policy would focus on other issues such as energy and anti-corruption, and a renewed effort to reduce tariffs through agreements with allies and friendly countries — only 23% selected the Trump-like option.  Especially unpopular among young people (14%), liberals and Democrats (9% and 11%), and African Americans (16%), this option didn’t elicit much enthusiasm elsewhere either, as the favored choice of only 26% of white voters, 19% of political independents, 20% of respondents in union households, and 38% of conservatives.

4. And where to from here?  As earlier trade polls found for the American population as a whole, PPI’s poll of working America yields mixed views; a plurality of the electorate’s ‘blue’ side upbeat about trade agreements and the opposite on its ‘red’ side; and little support for new tariffs, while other sections of the poll underline this by showing high sensitivity to inflation.  The answers don’t yield any simple ‘here’s what to do’ conclusion.

But another section of PPI’s poll may, indirectly, suggest a response.  One way to view trade policy is as a branch of economics that creates complex choices which carry both benefits and stresses: export opportunities and competitive challenges, lower inflation but sometimes accelerated change in the job mix.  The poll’s questions on labor policy does seem to find strong and in fact near-consensus views on how best to manage the stress.  That is, rather than traditional ‘adjustment’ programs for competition or automation on one hand, or long-term college commitments on the other (or for minimal-government ideologies), the respondents express strong hope for a third activist approach which doesn’t now exist on a large scale: direct support for workers trying to build careers and raise their wages through easily available short-term training, certification, and apprenticeship programs.  If workers have confidence they will receive support as the economy changes, and that it will be the kind of support they want, solutions to divisions – not only in trade policy but in other complex fields – may be easier to find.

FURTHER READING

Big picture:

Claire Ainsley, U.K.-based Director of PPI’s Project on Center-Left Renewal, on British working-class opinion and the matching U.K. poll.

And the full U.S. poll, with the 46 questions and PPI President Will Marshall’s accompanying assessment of its insights on working Americans’ career hopes and assessments of recent history, views on immigration and education, trade and industrial strategy, climate change, gender identity and book bans, anti-trust, tax and budget, and views on presidents and political parties.  Some top-tier findings:

An unhappy mood: “Working Americans believe the last 40 years have not been kind to people like them. Two-thirds say they are worse off and only 21% say their lives have improved.”

High concern over inflation and strong view that it is related to government budgeting: “These voters overwhelmingly (69%) name the high cost of living as their top worry. In distant but still significant second place (11%) is the concern that government deficits and debt are too high. In fact, the need for fiscal restraint and controlling government spending is a recurrent theme in this survey.”

But the belief that good policies and activist government can make life better: “Democrats can find more support among working-class voters for public policies aimed at fostering more inclusive economic growth, so long as they don’t confuse support for a more active government with support for a bigger government.”

And a political direction: “On all these issues, our poll found space for Democrats to offer pragmatic, common-sense alternatives to the stridently ideological views of right and left-wing populists.”

Elsewhere in trade polling:

For comparisons and population-wide polling, a 2022 Trade Fact looks at major surveys from 2015 through 2021 covering views of trade generally, Trump tariffs, NAFTA renegotiation, the China relationship, and more.

And an update: The Chicago Council on Global Affairs’ October 2023 release on broader U.S. public views of trade shows a very positive view (referring to “trade” as such, rather than to agreements); is also consistent with PPI’s poll showing some enthusiasm among Democrats; and finds support for semiconductor subsidies and concern about economic relations with China. Their summary graph:

“Council polling shows bipartisan support for international trade, as Americans across the board widely recognize its benefits for themselves, the economy, and American workers. Even so, Americans support some restrictions, especially on goods such as semiconductors.”

Trade summary, from the Chicago Council’s full-scale international affairs poll.

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: ‘American’ foods are the base of som tam, goulash, vindaloo, Swiss chocolate, and French fries.

THE NUMBERS: Sample agricultural commodities –

North America:               Squash, pumpkins, blueberries, cranberries
Central America:            Tomatoes, chocolate, vanilla, peanuts, chili peppers
South America:              Cashews, potatoes, vanilla, corn, chilies, etc.

WHAT THEY MEAN:

The Thanksgiving holiday commemorates a specific event — a three-day autumn “entertainment and feast” held somewhere near Plymouth, a more conceptual reminder of mutual regard and common benefit among people of very different backgrounds, and also of western hemisphere food. Some examples of this 402nd  observance week:

North America and Thanksgiving: Only two first-hand accounts describe the 1621 “First Thanksgiving,” and both are brief. Edward Winslow, Plymouth Governor several times in the 1630s, notes codfish and bass, plus corn and the five deer Massasoit and his 90 Wampanoag sagamores brought to the event. William Bradford, the first Governor, mentions ducks, turkey, and “meal” as well. Both are silent on cranberries and pumpkin pie, though that doesn’t mean they didn’t have any. Here’s Winslow’s report (via Pilgrim Hall Museum):

“Our harvest being gotten in, our governour sent foure men on fowling, that so we might after a speciall manner rejoyce together, after we had gathered the fruits of our labours ; they foure in one day killed as much fowle, as with a little helpe beside, served the Company almost a weeke, at which time amongst other Recreations, we exercised our Armes, many of the Indians coming amongst us, and amongst the rest their greatest king Massasoyt, with some ninetie men, whom for three dayes we entertained and feasted, and they went out and killed five Deere, which they brought to the Plantation and bestowed on our Governour, and upon the Captaine and others. And although it be not always so plentifull, as it was at this time with us, yet by the goodness of God, we are so farre from want, that we often wish you partakers of our plentie.”

And Bradford’s:

“They begane now to gather in ye small harvest they had, and to fitte up their houses and dwellings against winter, being all well recovered in health & strenght, and had all things in good plenty; fFor as some were thus imployed in affairs abroad, others were excersised in fishing, aboute codd, & bass, & other fish, of which yey tooke good store, of which every family had their portion. All ye somer ther was no want. And now begane to come in store of foule, as winter approached, of which this place did abound when they came first (but afterward decreased by degrees). And besids water foule, ther was great store of wild Turkies, of which they tooke many, besids venison, &c. Besids, they had about a peck a meale a weeke to a person, or now since harvest, Indean corn to yt proportion. Which made many afterwards write so largly of their plenty hear to their freinds in England, which were not fained, but true reports.”

Forty-one decades later, the turkey, cranberries, and pumpkins traditionally served for Thanksgiving remain New England and North American specialties.  Crops, fruits, and roots originating further south have often spread more widely. Some illustrative lists, with two glamor products:

Mexico & Central America: The middle swath of the western hemisphere is home to the peanuts used in West African groundnut stew, the tomatoes flavoring Italian pasta sauce, and chocolate, vanilla, and corn.  Chile peppers are still more “globalized”: the ancestral ones grew in Mexico (though there’s a case for Brazil too), and their descendants now routinely provide the spike for som tam in Khon Kaen, goulash in Budapest, bean curd in Chongjing, momo (usually in oil) in Lhasa, vindaloo in Goa, berbere in Addis Ababa.

Those looking for more heat this weekend than Bradford, Winslow, and Massasoit had in 1621 can consult the “Scoville Heat Scale” which, named for an early 20th century Massachusetts pharmacist, attempts to organize all the chili pepper varieties by heat content. It runs from zero Scoville Heat Units to two million in the case of artificially amped-up “bear spray equivalent” peppers bred over the last decade. Assuming these — Carolina Reaper, Trinidad Scorpion, etc. — are basically inedible stunts, sample Scoville ratings* from the feeble bell to the mighty habanero look like this:

Habanero	150,000
Thai prik kee nu	75,000
India byadgi	75,000
Ethiopian berbere	40,000
Ghanaian kpakpo	35,000
Peruvian Amarillo	35,000
Lhasa red pepper	23,000
Jalapeno	10,000
New Mexico “Hatch”	2,000
Paprika	500
Pepperoncini	100
Bell Pepper	0

* Using averages rather than the more technically correct range; the generally accepted range for the habanero, for example, is 100,00-350,000 Scoville units.

South America: Cash crops like cashews, staples like cassava and quinoa, and fruits such as avocado and pineapple.  A nominee for the “most globalized” South American crop is the potato.  Often disrespected with terms like “humble” (BBC) and “lowly” (Smithsonian Magazine), potatoes are the world’s sixth-most-produced crop at 376 million tons a year and root up in at least 150 of the world’s 197 countries. The top seven producers account for two-thirds of annual potato tonnage:

China	94 million tons
India	54 million tons
Ukraine	21 million tons
United States	19 million tons
Russia	18 million tons
Germany	11 million tons
Bangladesh	9 million tons

 

U.S. producers grow about 100 variants including russets, fingerlings, purple-blues, whites, and so forth. By comparison, farmers in the original Andean potato-cultivation areas manage 4,500. By volume, though, the U.S.’ 19 million tons are about three times the output of the 14th-largest producer Peru’s 5.7 million tons, and 39th-place Bolivia’s 1.2 million tons combined. Having been carried to Europe by Spanish entrepreneurs in the 1500s, the potato returned east across the Atlantic to be served boiled or mashed at Thanksgiving events that, though more complex than the impromptu 1621 event, still mean something similar.

FURTHER READING

The Pilgrim Hall Museum of Plymouth has two contemporary notes on the first Thanksgiving.

The Mashpee/Taunton Wampanoag Nation.

Native American agriculture today:

Per USDA, about 79,000 native American farmers and ranchers operate 59 million acres of crop and ranch land, producing about $3.5 billion worth of agricultural output annually. The Inter-tribal Agricultural Council, based in Billings Montana, promotes tribal farm and fishery exports.

And USDA’s statistical deep dive into 21st-century Native farm and ranch life, from the 2017 National Census of Agriculture.

And Mitsotam Café at the Museum of the American Indian has menus and material on contemporary Native American farming and products.

Chile peppers:

The National Institute of Standards and Technology explains the Scoville Heat Scale.

And the Chile Pepper Institute at New Mexico State University plans its 2024 conference.

Potatoes: 

The International Potato Center in Peru.

And Washington’s Potato Commission explains Pacific Northwest potato farming.

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.

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

FACT: U.S. Internet policy is suddenly uncertain.

THE NUMBERS: U.S. export growth, 2012-2022*-

Energy	176%
Information & “potentially digitally-enabled” services:	59%
All goods and services:	34%
Agriculture	34%
Manufactured goods:	19%
Other (non-digitally deliverable) services	-10%

*Sources: WTO for all goods and apparel; UN Food and Agricultural Organization for fish; Stockholm International Peace Research Institute (SIPRI) for arms sales. SIPRI data covers known transfers of “major conventional weapons.”

WHAT THEY MEAN:

A cryptic late-October comment from the American delegation to the World Trade Organization in Geneva quietly withdraws a set of long-held U.S. “digital trade” policy goals — and in doing so raises questions about whether the U.S.’ traditional “open internet,” “pro-consumer,” “internet freedom,” and “public-interest regulation” approach has changed. The brief and impressively opaque comment:

“Many countries, including the United States, are examining their approaches to data and source code, and the impact of trade rules in these areas. In order to provide enough policy space for those debates to unfold, the United States has removed its support for proposals that might prejudice or hinder those domestic policy considerations. The JSI [“Joint Statement Initiative”, the WTO’s name for the relevant discussion] continues to be an important initiative and the United States intends to remain an active participant in those talks.”

How to interpret this? Background first on the big picture, then the “data and source code” in trade policy more specifically; and finally, lacking anything more to go on than the three-sentence comment above, some questions about what this actually means:

1.  Larger context: “Digital trade” issues are part of a larger U.S. policy pretty consistently pursued since the launch of the World Wide Web, meant to encourage the preservation and future development of an open, universal Internet, with a foundation in user rights and liberty, impartial public-interest regulation, and due process. Several digital trade issues get mentioned, for example, in the “Declaration for the Future of the Internet,” posted in August 2022 by the U.S. and 64 other Internet- and speech-friendly countries in the Western Hemisphere, Europe, Asia, Africa, and the Pacific and still up on the White House and State Department websites. This is a 3-page set of principles and goals for next-generation Internet governance, which along with promoting universal access, privacy, consumer protection, common programs to fight electoral disinformation and online bigotry, and other valuable ideas involves commitments to “ensure that government and relevant authorities’ access to personal data is based in law”, “promote our work to realize the benefits of data free flows with trust,” and “refrain from blocking or degrading access to lawful content, services, and applications.” These are, incidentally, contested ideas which have opponents: other governments, inter alia and perhaps most prominently China’s, envision a quite different future with more rights for surveillance and service interruption, less multistakeholder-ism, and fewer limits on government rights to limit access, data transfers, and privacy.

2.  Nature of issues: The now-‘paused’ “data and source code” proposals refers to four topics, which the U.S. until last month had been discussing with 76 other WTO members in a venue called the “Joint Statement Initiative on Electronic Commerce.” They include (a) cross-border flows of digital data in the course of business, shopping, gaming, email, etc.; (b) guidelines for the circumstances in which governments can require local storage of data and when they shouldn’t; (c) cases when governments can direct businesses to disclose their software codes; and (d) ensuring that trade rules don’t discriminate against digital products.

If one were to look for an analogy in “trade policies for goods” like cars or wine, a useful though not exact comparison would be to “trade facilitation” and agreements on Customs procedures.  Typical U.S. trade agreements require Customs agencies to provide online access to import and export forms, accommodate express delivery shipments, and ensure that other governments don’t use different inspection procedures for containers carried by different shipping lines or cars delivered to different ports. These sorts of rules reduce costs and delays, help toys and flowers move through airports and seaports rapidly and easily, encourage the countries and businesses that make or grow them to compete on quality and price as opposed to hidden policy favoritism, and help port officers focus on law enforcement and public health inspections. In the same way, rules encouraging free flows of data, or discouraging mandatory in-country storage and server construction, help make legitimate services trade — say, email connections, exchange of architectural planning, news and entertainment streams, etc. — easier and cheaper while helping government officials focus their work on cyber-security violations, spam prevention, and other threats.

3.  Economics and trade flows: Digitally delivered services arriving via submarine cable or satellite — software, entertainment, computer technologies, professional stuff such as architecture, new earners like telemedicine and distance education — have a plausible claim to be the fastest-growing form of trade. In the U.S. case, they totaled $720 billion in 2022. By various metrics this was (a) up about 60% in the past decade, roughly twice the growth rate of overall U.S. exports; (b) a quarter of the $3 trillion in total U.S. exports in 2022, and a few hundred billion dollars more than the $380 billion for energy and $195 billion for agriculture, (c) easily the largest digital export figure for any country in the world, and (d) a thirtieth of the U.S.’ $26 trillion GDP. More subtly, digital data flows underpin lots of high-end manufacturing sales.  Examples include cars that notify owners of the need for brake repair or oil change; medical devices providing diagnoses and filling prescriptions for rural clinics, agricultural machinery planting rice when the weather is right, etc. So by whatever measurement, digital trade flows support a large and highly remunerative part of the American economy and it’s quite logical for the government to care about them.

4.  Current Agreements and Rules: The U.S. “digital trade” ideas are not actually experimental, but are live parts of several currently active U.S. agreements as well as the WTO’s incomplete “Joint Statement” discussions. These are Chapter 15 of the U.S.-Korea FTA, which “entered into force” as the jargon puts it in 2012; Chapter 19 of the “U.S.-Mexico-Canada Agreement” which revised the North American Free Trade Agreement in 2020; and a 19-page U.S.-Japan digital trade agreement signed in 2019. Their substance:

(a) People and businesses in participating countries have the right to move data across borders freely (e.g. for an online shopper ordering a set of toothbrushes, or an auto manufacturer whose car corresponds digitally with the home office to request software updates or notify police about an accident), with an exception for any government action “necessary to achieve a legitimate public policy objective” (e.g. anti-spam, cyber-security, protection against disinformation campaigns, etc.).

(b) Government power to require companies to turn over software code to agencies (or, often more the point, to local competing firms) is limited to public-policy regulation and good-faith investigations as opposed to arbitrary and/or discriminatory rules.

(c) Governments can’t be required to store data and build servers within a country, so as to reduce costs (and along with this, the power consumption and consequent carbon emissions) of constructing redundant servers and data centers in numerous countries.

5.  What’s going on? What, finally, does the withdrawal of these ideas at the WTO mean?  The three-sentence statement quoted above doesn’t explain. So rather than speculating, we offer a few questions that pretty badly need an answer:

* Does the administration want “policy space,” so as to be able to limit Americans’ data flows or require exposure of source codes for reasons that go beyond “measure[s] needed to achieve a legitimate public policy objective.”  If so, what sort of things are they thinking about, and what law would authorize it?

* If the data and source code ideas are out of favor at the WTO, are the USMCA, Korea-FTA, and U.S.-Japan Digital Agreement provisions now insufficient? If so, is the administration thinking about changes to them?

* Or is the concern more about foreign governments’ “policy space”?  If so, what are these governments hoping to do that Mexico and Canada (and Japan and Korea) are managing to do without?

* And how do any of these concerns relate to the larger hopes for the next-generation digital world — access and technical interoperability, innovation and economic growth arising from future rises in data flow, public-interest regulation, user privacy, and liberty — set out in the Declaration for the Future of the Internet?

Answers awaited, here and in lots of other places.

FURTHER READING

The Declaration for the Future of the Internet.

The WTO’s Joint Statement Initiative on e-commerce.

The U.S. Trade Representative Office’s brief statement.

Highly displeased response from Sen. Ron Wyden (D-Ore. and Finance Committee Chair).

And similar reaction from Digital Trade Caucus Chairs Suzanne DelBene (D-Wash.) and Darin LaHood (R-Ill.).

Current agreements:

USMCA text (see Chapter 19, “Digital Trade”).

U.S.-Japan digital trade agreement text.

Korea-U.S. Free Trade Agreement, see Chapter 15 on “Electronic Commerce.”

And some PPI background on Internet and digital trade policy: 

Gresser on digital trade policy.

Chief Economist Mandel on regulation of digital platforms.

And Technology Policy Analyst Malena Dailey on transatlantic data flows.

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.

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