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December 14, 2004

Cato Expert Comments on New Trade Deficit Numbers
Says that rising deficit "testifies to the continued expansion of the U.S. economy"

Dan Griswold, the Cato Institute's director for trade policy studies, questions the persistent allegation that trade deficits, and more specifically imports, mean fewer jobs in the U.S. economy. In fact, a growing trade deficit is typically associated with more output and more jobs. Below are Griswold's thoughts on the news that the U.S. trade deficit grew to $55.5 billion. Says Griswold:

This morning's trade deficit report, far from being bad news, testifies to the continued expansion of the U.S. economy. Growing domestic demand stimulates both domestic production and the growth of imports from China and elsewhere. As usual, rising imports have been accompanied by rising GDP, industrial output, and employment. Meanwhile, import competition keeps inflation down and raises real living standards for American workers.

The other piece of good news in the report is that monthly exports of goods and services reached another record. Total exports are up nearly 13 percent so far this year compared to 2003, another sign of an expanding global economy. America's growing volume of imports and exports reminds us that trade and prosperity are a package deal.

Dan Griswold is available for comment. For further reading on the benign nature of the trade deficit, see the following studies by Dan Griswold: America's Maligned and Misunderstood Trade Deficit, America's Record Trade Deficit: A Symbol of Economic Strength, and The U.S. Trade Deficit and Jobs: The Real Story.

November 4, 2004

Griswold comments on Trade Policy After the Elections
CTPS director addresses hoped for trade moves by the new Congress and administration

On Trade & Outsourcing:

The president and new Congress should re-affirm America's post-war commitment to trade expansion by enacting the Central American Free Trade Agreement (CAFTA). The agreement would reduce barriers to trade with a region that is the second largest market for U.S. exports in Latin America, behind only Mexico. CAFTA would also reward and consolidate the economic and political liberalization that has swept that region since the 1980s. A second Bush administration should resist any protectionist pressures from Congress to restrict outsourcing and should seek a comprehensive agreement in the WTO to dramatically reduce trade barriers and subsidies for agriculture at home and abroad.

On Immigration:

President Bush should follow through on his solid proposal last January to reform America's dysfunctional immigration system. He should work with Sen. McCain, Rep. Flake and other pro-immigration members of Congress to create a new visa for foreign workers who want to fill jobs American's shun and to legalize the millions of peaceful, hardworking but undocumented immigrants already in the country. This issue will require presidential leadership to overcome resistance from a vocal minority within his own party.

September 21, 2004

Promoting Freedom and Democracy in Central America
New Cato Institute paper supports CAFTA, despite flaws

Signed earlier this year, the Central American Free-Trade Agreement (CAFTA) is one of the most controversial trade agreements to come before Congress in years. In their newest paper, "The Case for CAFTA: Consolidating Central America's Freedom Revolution," Cato Institute trade experts Dan Griswold and Dan Ikenson show that, despite its imperfections, CAFTA would promote freedom, development, and higher standards in a region vitally important to America's national interests.

CAFTA will benefit the American economy, the authors conclude. Taken together, the nations of CAFTA-Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and, as of August, the Dominican Republic-compromise America's 13th largest trading partner and second largest export market in Latin America. "Upon implementation, 98% of imports from the CAFTA countries to the United States would enter duty free. For U.S. companies, CAFTA would offer guaranteed, reciprocal access for our most competitive exports, including agricultural products."

Two glaring exceptions to free trade in the agreement are sugar and the textiles and apparel industry. "A better agreement would have liberalized virtually all trade immediately," the authors admit. "The agreement is less ambitious than it could and should have been. But despite these shortcomings, CAFTA is an affirmative step toward the policy goal of free trade."

The authors demonstrate that trade liberalization helps create a world of higher standards-a "race to the top." "Nations open to trade tend to grow faster and achieve higher incomes, and higher incomes promote higher labor and environmental standards," the paper states. "Perversely, withholding trade benefits because of allegedly low standards would in effect punish those countries for being poor."

By promoting trade and development, the agreement also strengthens democracy and civil freedoms in a region that, two decades ago, was one of the major trouble spots in the Western Hemisphere. Griswold and Ikenson note that each of the CAFTA nations is a "functioning, multi-party democracy represented by elected governments," and that, "Enactment of a free trade agreement between the United States and the countries of Central America and the Dominican Republic would reward and consolidate the region's remarkable transformation-a development profoundly in America's foreign-policy interest."

Trade Briefing no. 21 (/pubs/briefs/tbp-021es.html)

August 31, 2004

WTO Authorizes Retaliation Against Byrd Amendment
But renewed commitment to the rules, not sanctions, is needed

A long-overdue announcement from the WTO was issued today authorizing specific levels of retaliation on behalf of Japan, Europe, Korea, and others for U.S. failure to comply with WTO rulings against the Continued Dumping and Subsidy Offset Act, also know as the "Byrd amendment."

The Byrd amendment directs the distribution of antidumping and countervailing duties collected by the U.S. Customs and Border Protection agency into special accounts for disbursement to companies that supported the original petitions in these cases. Before the Byrd amendment became law, such duties were commingled with other government revenues in the general treasury.

In September 2002 a WTO dispute settlement panel found the Byrd amendment in violation of several provisions of various WTO agreements. Four months later the WTO Appellate Body upheld most of the panel's findings. And today, 19 months later, retaliation for U.S. failure to comply with those rulings was announced.

"It is unfortunate that this dispute has come as far as retaliation authorization," said Daniel Ikenson, trade policy analyst at the Cato Institute. "While it is well within the rights of any sovereign WTO member to ignore dispute settlement findings, such non-compliance will only invite retaliation against other U.S. interests, inspire similar disregard for WTO decisions from other members, and ultimately undermine the rules-based system of trade."

"By compensating petitioners and supporters of petitions, the Byrd amendment provides an additional financial incentive to file antidumping and countervailing duty cases," remarked Ikenson. "Furthermore, by excluding from compensation those companies or unions not supporting the petitions, the law encourages companies that might otherwise decline to support petitions to do so simply to maintain eligibility for compensation."

While petitioning industries and their representatives tend to deny any linkage between the Byrd amendment and support for trade remedy petitions, the WTO case included as evidence a letter from a U.S. law firm urging a company to register support for the countervailing duty case against lumber from Canada in order to qualify for Byrd amendment payouts.

"Despite opposition to the law at its inception from President Clinton and advocacy for repeal from President Bush, the U.S. Congress seems to have drawn a line in the sand over this issue," Ikenson explained. "It is proving difficult to pry Congressional hands from a tool that allows them to quietly subsidize their business constituents. Unfortunately, the relatively low levels of retaliation authorized--about $150 million this year--will do little to inspire a change in that mindset."

The dispute over the Byrd amendment is not an isolated event. There are a number of outstanding WTO rulings against U.S. laws and policies--including the Foreign Sales Corporation/Extraterritorial Income Tax provision and the Antidumping Act of 1916--that the United States has yet to implement. This mounting record of noncompliance must call into question the commitment of the United States to a rules-based trading system.

August 4, 2004

Dan Griswold Made New Director of Cato's Trade Center
Associate director Griswold promoted to director of the Center for Trade Policy Studies

Dan Griswold has been named director of the Cato Institute's Center for Trade Policy Studies. He has served since 1998 as associate director of the center.

Griswold is a leading authority on trade and immigration policy. He has authored or co-authored studies on, among other subjects, globalization, the World Trade Organization, trade and manufacturing, immigration, and trade and democracy. He appears frequently in major print and electronic media, and he has testified before congressional committees and federal agencies on the U.S. trade deficit, steel trade, immigration, and the costs of protectionism.

Before joining Cato, Griswold served as a congressional press secretary and a daily newspaper editorial page editor. He holds a degree in journalism from the University of Wisconsin at Madison and a diploma in economics and a master's degree in the Politics of the World Economy from the London School of Economics.

August 4, 2004

Brink Lindsey Named Cato's New VP for Research
Director of the Center for Trade Policy Studies promoted to Vice President

Brink Lindsey has been named the Cato Institute's vice president for research, a new position. He has served since 1998 as the director of Cato's Center for Trade Policy Studies. In his new position, Lindsey is responsible for developing new research programs for Cato as well as helping to oversee the institute's current research agenda.

Lindsey is one of the country's leading experts on international trade policy and globalization. In addition to his many Cato studies, op-eds, and magazine articles, he is the author of the widely praised Against the Dead Hand: The Uncertain Struggle for Global Capitalism (Wiley & Sons, 2002). He is currently working on a new book, The Realm of Freedom: The Rise of Mass Affluence and How It Transformed American Culture, Politics, and Religion (HarperBusiness). Before coming to Cato, Lindsey worked as an attorney specializing in international trade regulation. He has an A.B. from Princeton University and a J.D. from Harvard Law School.

July 6, 2004

Kerry and Edwards: A Trade Policy Odd Couple
The two don't see eye-to-eye on trade, says Cato scholar

Washington - This Tuesday, Democratic presidential candidate John Kerry selected John Edwards as his running mate. According to Dan Griswold, associate director of Cato's Center for Trade Policy Studies, the match makes for an odd couple with regards to trade policy.

"While their rhetoric on trade sounded similar during the primaries, John Kerry and John Edwards have been on opposite sides on a number of major trade votes in Congress," Griswold noted. "For example, Kerry voted for final passage of trade promotion authority in 2002, while Edwards voted against it. Kerry voted for the African Growth and Opportunity Act in 2000, while Edwards opposed it. Kerry voted against imposing steel quotas in 1999, while Edwards voted in favor. Kerry voted for the North American Free Trade Agreement in 1993, while Edwards said he would have opposed it had he been in Congress at the time."

Griswold has analyzed congressional voting records in respect to trade, and recently spoke at a Cato policy forum comparing the Bush and Kerry economic platforms.

Dan Griswold is available for comment, and you can access a transcript of his "Bush and Kerry: Comparing Their Economic Platforms" remarks. Also available are Griswold's "Free Trade, Free Markets: Rating the 107th Congress," and "Free Trade, Free Markets: Rating the 106th Congress," which contain the major trade votes cast by Kerry and Edwards from 1999 through 2002.

June 22, 2004

Ready to Compete
Cato study calls for completing the steel industry's rehabilitation

In December 2003, President Bush removed the steel tariffs he had imposed under Section 201 of the Trade Act of 1974. Since then, prices for most major steel products have achieved or are flirting with record highs and one steel company after the other has reported strong earnings and profit estimates.

Yet, while steel consumers endure the highest prices for steel in recent memory-a development that is contributing to rising inflation in the general economy-imported steel is hampered by the existence of 188 antidumping and countervailing duty measures against major producers from 35 different countries.

In "Ready to Compete: Completing the Steel Industry's Rehabilitation," Cato Institute trade policy analyst Daniel J. Ikenson urges the president to undertake "changed circumstances" reviews of all outstanding antidumping and countervailing duty orders on steel products. Many have been in place for over a decade, a period during which circumstances have undoubtedly changed. Says Ikenson, "with record high prices and record profits for some producers, the notion that the steel industry is materially injured-a prerequisite to imposing trade remedy relief-is dubious at best."

Meanwhile, domestic steel-consuming industries, employing a far greater number of people than steel producers, have been caught in a tightening vise. Their steel costs have risen dramatically, and the remaining antidumping and countervailing duty measures against foreign producers offers them few alternatives to domestic producers, who exploit the artificial restrictions on competition to set high prices.

Ikenson says that lifting, even temporarily, some of the measures in place against raw and finished steel products would "help alleviate the hardship being endured by the country's steel-using industries and would be a shot in the arm for U.S. manufacturing. It would also be the next logical step toward restoring real competition in the vital steel market."

With the recent consolidation of domestic steel producers, thanks in large part to the unloading of more than $8 billion in legacy costs to the quasi-federal Pension Benefits Guarantee Corporation (PBGC), the industry is on firmer footing and is ready to compete.

As Ikenson concludes, "The steps have been taken and the costs borne by many to make the U.S. steel industry more competitive. It is now time to complete the process by inviting real competition."

Trade Briefing Paper no. 20 (/pubs/briefs/tbp-020es.html)

June 21, 2004

U.S. Sugar Program "a Four-Time Loser"
Cato expert says time ripe to cut loan subsidies

Cato Institute trade scholars, who have consistently criticized the U.S. sugar quota and subsidy regime, are encouraged this week by a renewed effort in Congress to limit the economic damage of this costly program. On Wednesday, the full House Appropriations Committee is expected to vote on an amendment by Rep. Mark Kirk, R-Ill., to suspend the sugar storage facility loan program.

The sugar storage facility loan program, instituted under the 2002 Farm Bill and intended to subsidize the construction of warehouses to store surplus sugar, encourages the surplus production of sugar. This is blatantly inconsistent with the stated goals of the 2002 sugar program, which aims to prevent surpluses. In addition, the program throws taxpayer money away by paying USDA employees to administer a program under which not a single loan has been made since its inception.

Dan Griswold of Cato's Center for Trade Policy Studies had this to say:

"The U.S. sugar program is a four-time loser for the American people. The program hurts American families by driving up sugar prices at the grocery store. It hurts American taxpayers by charging them to buy and store excess domestic production. It hurts American workers by forcing confectionary companies offshore where they can buy sugar at lower, world prices. And it hurts American exporters by blocking efforts to negotiate agreements to lower tariff barriers abroad. A good place to start dismantling this failed program would be to end all taxpayer support for the loan and storage program."

Dan Griswold is available for comment, and for further reading on the damage caused by sugar subsidies, see A Sticky State of Affairs: Sugar and the U.S.-Australia Free-Trade Agreement by Aaron Lukas, America's Bittersweet Sugar Policy by Mark Groombridge, and Dan Griswold's article, Sugar Program Brings Bitter Taste to Holiday Season

May 7, 2004

Employment Up by 288,000 in April; March Numbers Revised Upward to 337,000
Cato trade expert: improved numbers belie fears of permanent job losses

The Bureau of Labor Statistics reported today that nonfarm payroll employment increased by 288,000 in April. Revised numbers for March were also released today, showing a gain of 337,000 (29,000 higher than the 308,000 previously stated).

Brink Lindsey, director of the Cato Institute's Center for Trade Policy Studies, had this to say about the new employment figures: "The job market looks to be recovering, finally, from the 2001 recession. The recent surge in productivity growth delayed the recovery, but an eventual rebound was inevitable."

Lindsey predicted the turnaround in his March paper, "Job Losses and Trade: A Reality Check." Lindsey commented: "Serious and influential voices have raised the cry that the sky is falling. It never does. The root of their error is always the same: confusing a temporary, cyclical downturn with a permanent reduction in the economy's job-creating capacity."

Indeed, Lindsey points out that the unreasonable fear of permanent job losses has popped up in America many times before. "Time and again, over many decades, cyclical downturns in the economy have prompted predictions of permanent job shortages. And each time, those predictions were belied by the ensuing economic expansion."

Brink Lindsey is available for comment. His paper, "Job Losses and Trade: A Reality Check," and related material can be accessed on our Outsourcing and Offshoring page.

April 28, 2004

Cato Trade Expert Recommends "Clean and Simple" Fix for FSC/ETI Impasse
Replace provision with lower rates for all U.S. corporations

WASHINGTON – The U.S. Senate will try to resolve an impasse next week over repealing the Extraterritorial Income Exclusion Act (ETI). The ETI and its predecessor, the U.S. Foreign Sales Corporation tax law (FSC), have been successfully challenged in the World Trade Organization as illegal tax subsidies for U.S. exporters, subjecting the United States to sanctions from the European Union. Unfortunately, the FSC/ETI replacement bill, facing more than 80 amendments, has been called by Sen. John McCain, "another pork-laden bill. It's disgraceful."

Cato Institute trade expert Dan Griswold recommends "a clean and simple escape" from both sanctions and congressional pork-barreling. In a Cato Free Trade Bulletin published last year, Griswold advocated that the FSC/ETI provision be eliminated and that the $5 billion in tax savings it represented be returned to U.S. producers in the form of an across-the-board cut in the corporate income tax rate of 1 or 2 percentage points.

"The beauty of this approach is that it would be absolutely immune from any further challenge in the WTO, cleanly dodging the sanctions bullet, and would at the same time move the corporate tax code incrementally toward the flat-tax ideal of greater neutrality at lower rates," Griswold wrote in his May 2003 paper, "A Clean Escape from $4 Billion in FSC Sanctions."

According to Griswold, the ETI is a "relic of a bygone era…aimed explicitly at boosting U.S. exports in the mistaken belief that they would narrow the U.S. trade deficit." As Griswold put it, "The implicit export subsidies of the FSC/ETI are not only WTO-illegal, they are economically unnecessary."

An amendment sponsored by Sens. Don Nickles of Oklahoma and John Kyl of Arizona closely mirrors the Cato proposal. It would replace a proposed tax-rate reduction targeted to manufacturers with an across-the-board tax rate reduction for all U.S. companies.

Dan Griswold is available for comment, and his paper, "A Clean Escape from $4 Billion in FSC Sanctions," is available online.

April 8, 2004

Protection Without Protectionism
New Cato study looks at how to balance homeland security and open trade

The United States is by and large a very open economy, with the free movement of goods across U.S. borders a key pillar of national prosperity. In today's world of global conflict, however, our dynamic trading system can also be exploited by terrorists seeking to attack the country. In his new study, "Protection Without Protectionism: Reconciling Trade and Homeland Security," policy analyst Aaron Lukas of Cato's Center for Trade Policy Studies examines ongoing efforts to make international trade more secure.

Lukas believes it is a matter of when, not if, terrorists will use the mechanisms of global trade to launch an attack on the United States. "The challenge for U.S. policymakers is to improve security while minimizing the loss of liberty and the benefits of economic openness," he says. "Trade is the lifeblood of the U.S. economy and cannot be curtailed without greatly restricting U.S. standards of living. Exchanging the possibility of a terror attack for the certainty of a poorer nation is not a wise course of action."

Lukas reports that the Bush administration has made progress in improving trade security, but that the jury is still out on how effective its initiatives will ultimately be. He cautions that while guarding against terrorism is important, it is also vital that security does not become an excuse for domestic protectionism-a real danger given legislation currently pending in Congress. Lukas also points out how the Department of Homeland Security wastes scarce resources on efforts to "protect" Americans from low-priced goods rather than from terrorists.

Lukas argues that not all security measures should be the responsibility of the government. "Just as 'national defense' does not entitle every homeowner to a federally funded burglar alarm, it does not relieve private businesses from the responsibility of providing much of their own security," he notes. "Federal rules and regulations are often necessary, but should be as open-ended as possible, setting security goals and verifying how well the private sector meets them, rarely mandating specific technologies or processes."

The paper concludes with a warning to those who would respond to the threat of terrorism with higher barriers to trade: "Economic openness is a progressive force in global affairs. Trade brings nations together in peaceful cooperation, offers hope to the world's poorest people, and spreads new ideas and ways of doing things. Trade promotes democracy, private property, and the rule of law. Our enemies know this. They targeted the World Trade Center because they recognized-and continue to believe-that trade is a threat to the tyranny they represent."

Trade Policy Analysis no. 27, "Protection Without Protectionism: Reconciling Trade and Homeland Security"

April 1, 2004

Cato Immigration Expert Testifies Before Congress
Scholar urges reform to enhance border security

Washington - Dan Griswold, associate director of the Cato Institute's Center for Trade Policy Studies and a leading expert on American immigration, urged members of a Senate subcommitte to reform America's dysfunctional immigration system so that Homeland Security resources can be redirected to the war on terrorism.

Griswold testified at a hearing today on "Securing Our Borders Under a Temporary Guest Worker Program" before the Senate Judiciary Committee's Subcommittee on Immigration, Border Security, and Citizenship. In his testimony, Griswold urged Congress to respond postively to President Bush's plan to create a temporary worker program. "Legalizing and regularizing the movement of workers across the U.S.-Mexican border could enhance our national security by bringing much of the underground labor market into the open, encouraging newly documented workers to cooperate fully with law enforcement officials, and freeing resources for border security and the war on terrorism," he stated.

"Our Department of Homeland Security should concentrate its limited resources and personnel on tracking and hunting down terrorists instead of raiding chicken processing plants and busting janitors at discount stores," he testified.

Griswold reminded the subcommittee members that none of the September 11 terrorists entered the country through Mexico and no terrorist suspects have been caught at the U.S.-Mexican border since then. "Sealing the Mexican border with a three-tiered, 2,000-mile replica of the Berlin Wall patrolled by a division of U.S. troops would not have kept a single one of those terrorists out of the United States," Griswold said.

Griswold's congressional testimony. Also available is Griswold's influential paper, "Willing Workers: Fixing the Problem of Illegal Mexican Migration to the United States"

March 17, 2004

Job Losses and Trade: A Reality Check
New paper dispels myths of jobs and trade

Is America exporting its best jobs overseas? Many people these days believe so: manufacturing jobs are fleeing to China, they say, and service-sector jobs are being "offshored" to India. But the doomsayers have it all wrong, says Brink Lindsey, director of the Center for Trade Policy Studies. In his new paper, "Job Losses and Trade: A Reality Check," he combats the current job-loss hysteria with a broad array of illuminating facts and figures:

· Job losses are normal. From 1993-2002 total U.S. employment grew by 17.8 million. But during that decade, 310 million jobs were eliminated - and replaced with 328 million new jobs. Job losses are an inescapable part of a dynamic market economy.

· The U.S. is an IT net exporter. The U.S. runs a trade surplus in the IT services most directly affected by offshoring. In the categories of "computer and data processing services" and "data base and other information services," the U.S. ran a trade surplus of $4.2 billion in 2002 (double that of 1995). If politicians declare war on outsourcing, U.S. producers and workers will suffer the most.

The present job scare is nothing new; similar fears have arisen during previous economic downturns. Lindsey states that, "again and again, serious and influential voices have raised the cry that the sky is falling. It never does. The root of their error is always the same: confusing a temporary, cyclical downturn with a permanent reduction in the economy's job-creating capacity." Like the downturns, the rhetoric never lasts. "Each time those predictions were put to rest by the ensuing economic expansion."

Trade Policy Briefing no. 19
(/pubs/briefs/tbp-019es.html)

March 5, 2004

Outsourcing Amendment Would Harm American Workers
Cato expert speaks out against its folly

In a 70 to 26 vote yesterday, the Senate approved an amendment that would prevent companies from sending government work outside the U.S. if those jobs were previously done domestically.

Dan Griswold of the Cato Institute issued a statement today chastening the Senate for its shortsighted and ill-advised passage of an amendment that would, if enacted into law, harm American workers, American companies and American consumers.

Of the bill, Griswold said the following:

"The Senate just voted to make U.S. companies less competitive in global markets, to stifle new product development, to invite foreign retaliation, to squander tax dollars, and to jeopardize well-paying U.S. jobs. The world buys a lot more information technology services from U.S.-based companies than we buy from the rest of the world. If the Senate wants to start a trade war over outsourcing, American workers will be among the first casualties. Congress should be promoting trade with the rest of the world, not raising new barriers that will isolate Americans from global markets and competition."

Dan Griswold, assistant director to the Cato Institute's Center for Trade Policy Studies, is author of "Trading Tyranny for Freedom: How Open Markets Till the Soil for Democracy," and "America's Maligned and Misunderstood Trade Deficit." He is available for comment.

March 1, 2004

Cato scholar: U.S. should 'junk' exporter tax breaks

WASHINGTON--The EU imposed million-dollar sanctions on U.S. imports today in response to controversial U.S. tax breaks on exports. The sanctions could end up costing American industry $315 million this year alone. Dan Griswold, associate director of Cato's Center for Trade Policy Studies made the following comments in reaction to the tariffs:

"Sanctions are almost never the right way to promote trade liberalization, and the EU's tariffs against the United States over the issue of export tax breaks are no exception. Sanctions are fines that everyone pays and no one collects. That said, the U.S. government is only reaping what it has sowed. We were the first to pull the sanctions trigger in 1999 against the European Union over beef and bananas. The U.S. government lost fair and square in the WTO dispute settlement process and should junk its distortionary tax breaks for exporters. How can the United States demand that other governments live up to their obligations when our own government has such a poor record of living up to its own? The tax breaks in question do nothing for the U.S. economy as a whole. They should be scrapped in favor of general tax relief for U.S. producers."

February 12, 2004

Cato Scholar Supports Economic Advisor's Candor
Praises Gregory Mankiw's honest and frank comments at White House press conference

Dan Griswold, assistant director to the Cato Institute's Center for Trade Policy Studies, issued a statement today praising Bush's economic advisor, Gregory Mankiw, for his refreshingly honest remarks about outsourcing.

Mankiw delivered his comments at the press conference announcing the release of the Economic Report of the President. Griswold had this to say:

"The president's economic adviser Gregory Mankiw was only speaking the truth about outsourcing at his press conference this week, a truth Washington politicians would be foolish to ignore. Outsourcing is just another name for trading in services. By lowering costs, outsourcing is making information technology more affordable for a broad swath of U.S. industry. While some workers do lose jobs through outsourcing, it creates other jobs by spurring new products and services that keep U.S. companies competitive in global markets."

"Outsourcing is not just a one-way street. The rest of the world outsources billions of dollars of its own IT business to the United States each year. In fact, American companies sell three times more IT services to the rest of the world--more than $10 billion--than they buy. If politicians declare war on outsourcing, U.S. producers and workers will suffer the most."

Dan Griswold has just returned from India, where he was keynote speaker at the technological trade show Nasscom 2004, at which he discussed the benefits of outsourcing.

January 21, 2004

Cato Expert Refutes Daschle's COOL Remarks

In his response to President Bush's State of the Union Address, Senate Democratic leader Tom Daschle took the opportunity to promote country of origin labeling, or COOL, a policy that will "show our patriotism while strengthening agriculture and rural America by labeling all food products with their country of origin."

"A common misrepresentation of what the COOL provision is really about," said Cato trade expert Dan Ikenson, author of the new paper, "Uncool Rules: Second Thoughts on Mandatory Country of Origin Labeling." "The fact is that mandatory country of origin labeling is not about patriotism or about helping rural America. And it's not about food safety. What it amounts to is a way for domestic food producers to gain at the expense of consumers and foreign competition."

For decades, federal law has required most items imported into the U.S. to bear a label identifying their country of origin, while exempting those items for which it would be "economically prohibitive" to label, such as livestock, vegetables and fish, among others. The 2002 farm bill, however, included a provision that mandates COOL for beef and other perishables previously exempt. The regulations are scheduled to become effective on September 30, 2004, though the House of Representatives has voted to impose a moratorium until September 2006.

"The problem with mandatory COOL," says Ikenson, "is the 'mandatory' part. If consumers consider 'buying American' the patriotic thing to do, as Senator Daschle does, then there's a market for such a campaign, and therefore no need to make the labeling mandatory. Domestic producers would seize the opportunity to make a profit by putting a 'made in the USA' label on their goods. So why don't they do that? Because under the farm bill's COOL provision the cost of labeling will fall on foreign producers as well, and mandatory labeling will shift much of the financial burden onto distributors and retailers - and ultimately to consumers themselves."

Ikenson gets to the heart of the issue when he says that, "mandatory COOL boils down to a scheme by U.S. food producers to make imports less attractive and foist the tab for a 'made in the U.S.' marketing program on its competitors and customers."

Ikenson is author of the Free Trade Bulletin, "Uncool Rules: Second Thoughts on Mandatory Country of Origin Labeling."

January 6, 2004

There's Change Afoot in Immigration Law

WASHINGTON--President Bush is expected tomorrow to propose extensive changes to U.S. immigration policy, including the gradual legalization of millions of illegal immigrants currently living in the United States. Cato Institute immigration expert Daniel T. Griswold made the following comments on the heels of the Bush announcement:

"Our dysfunctional immigration system cannot be reformed without leadership from President Bush, so the president's reengagement on this issue is very good news. A legalized system of migration would allow American producers in important sectors of our economy to hire the workers they need to grow. And it would enhance our national security. It would begin to drain the swamp of smuggling and document fraud that facilitates illegal immigration, and would encourage millions of currently undocumented workers to make themselves known to authorities."

Griswold, associate director of Cato's Center for Trade Policy Studies, is the author of "Willing Workers: Fixing the Problem of Illegal Mexican Migration to the United States" and "Mexican Workers Come Here to Work: Let Them!" He has also testified before the House Subcommittee on Immigration, Border Security, and Claims regarding the effect of immigration policy on American workers.

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