CATO’s Griswald Agrees with my Immigration conclusion

Last month I wrote a post in which I showed the number of undocumented workers vs. how much we spend on border security.  My conclusion was that the amount spent on border security had little effect on immigration.  The numbers are the best evidence:

undocument_workers_vs_gdp

Daniel Griswald over at CATO’s liberty blog comes to the same conclusion in his post, What’s Behind the Decline in Immigration?  It’s the economy, Stupid. He writes:

The more obvious explanation is the steep economic recession that began to bite in 2008. The downturn has been especially brutal in the housing and construction industries where many illegal immigrants found employment during the previous boom. As evidence, the decline in the number of illegal immigrants has been steepest in those states, such as Nevada, California, and Florida, where the housing downturn has been the most severe.

Libertarians.  What can I say, we disagree on macroeconomics, but can agree on this and the need for comprehensive immigration reform.

India Claims New Law Violates WTO Agreements

As I discussed last week, the $600 million that congress wasted on additional Border Security was paid for entirely by raising visa fees on companies(primarily India-based) whose main purpose is importing cheap labor using H1-b and L-1 visas.   India is not taking this lying down.  They are claiming that it violates our WTO treaties.

India’s Commerce Secretary Rahul Khullar told reporters in Delhi on Tuesday that the visa fee hike is incompatible with the WTO.

Nasscom’s president Som Mittal warned on Monday in an interview that the hike in visa fees could lead to a trade spat, and could also affect U.S. companies that are negotiating access to Indian markets.

The WTO is an organization of several countries dedicated to free and open trade.  Joining the WTO requires not just agreeing to 1 agreement, but almost 60.

The WTO oversees about 60 different agreements which have the status of international legal texts. Member countries must sign and ratify all WTO agreements on accession. A discussion of some of the most important agreements follows. The Agreement on Agriculture came into effect with the establishment of the WTO at the beginning of 1995. The AoA has three central concepts, or “pillars”: domestic support, market access and export subsidies. The General Agreement on Trade in Services was created to extend the multilateral trading system to service sector, in the same way the General Agreement on Tariffs and Trade (GATT) provides such a system for merchandise trade. The Agreement entered into force in January 1995. The Agreement on Trade-Related Aspects of Intellectual Property Rights sets down minimum standards for many forms of intellectual property (IP) regulation. It was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1994.

The Indian government is claiming that the visa fees unfairly target foreign companies.  The specific agreement that it claims is being violated, according to The Hindu Business Line,  is Article VI of the General Agreement on Trade in Services(GATS).

They said Article VI of the WTO’s General Agreement on Trade in Services specifies that domestic regulations of all countries should be administered in a reasonable, objective and impartial manner. The sources said domestic regulations also should not be more burdensome than necessary to ensure the quality of the service, adding that they should also not cause restriction on the supply of the service.

Here is Article VI of the GATS:

 

1.        In sectors where specific commitments are undertaken, each Member shall ensure that all measures of general application affecting trade in services are administered in a reasonable, objective and impartial manner.

2.        (a)        Each Member shall maintain or institute as soon as practicable judicial, arbitral or administrative tribunals or procedures which provide, at the request of an affected service supplier, for the prompt review of, and where justified, appropriate remedies for, administrative decisions affecting trade in services. Where such procedures are not independent of the agency entrusted with the administrative decision concerned, the Member shall ensure that the procedures in fact provide for an objective and impartial review.

(b)        The provisions of subparagraph (a) shall not be construed to require a Member to institute such tribunals or procedures where this would be inconsistent with its constitutional structure or the nature of its legal system.

3.        Where authorization is required for the supply of a service on which a specific commitment has been made, the competent authorities of a Member shall, within a reasonable period of time after the submission of an application considered complete under domestic laws and regulations, inform the applicant of the decision concerning the application. At the request of the applicant, the competent authorities of the Member shall provide, without undue delay, information concerning the status of the application.

4.        With a view to ensuring that measures relating to qualification requirements and procedures, technical standards and licensing requirements do not constitute unnecessary barriers to trade in services, the Council for Trade in Services shall, through appropriate bodies it may establish, develop any necessary disciplines. Such disciplines shall aim to ensure that such requirements are, inter alia:

(a)        based on objective and transparent criteria, such as competence and the ability to supply the service;

(b)        not more burdensome than necessary to ensure the quality of the service;

(c)        in the case of licensing procedures, not in themselves a restriction on the supply of the service.

5.        (a)         In sectors in which a Member has undertaken specific commitments, pending the entry into force of disciplines developed in these sectors pursuant to paragraph 4, the Member shall not apply licensing and qualification requirements and technical standards that nullify or impair such specific commitments in a manner which:

(i)        does not comply with the criteria outlined in subparagraphs 4(a), (b) or (c); and

(ii)        could not reasonably have been expected of that Member at the time the specific commitments in those sectors were made.

(b)        In determining whether a Member is in conformity with the obligation under paragraph 5(a), account shall be taken of international standards of relevant international organizations(3) applied by that Member.

6.        In sectors where specific commitments regarding professional services are undertaken, each Member shall provide for adequate procedures to verify the competence of professionals of any other Member.

I’m not a lawyer or an expert on international law, so I’ll have to let somebody else tell you whether or not these threats are real or idle.  I will offer this though, the case to me doesn’t appear to be a slam dunk for either side which means that the proceedings could drag out for years.

Of course this could seriously put off track the border control bill.  If the visa’s are found to violate WTO, congress would either have to borrow the money for the extra border control, find another way to fund it, or rescind the law.  Of course, one way that it could remove the burden could be to lower the fee, but extend it to all H1-b and L-1 visas.  If it targets all companies and visa holders, then India can’t claim the United States is playing favorites.

Of course if India does take legal action, India isn’t exactly guilt free when it comes to free and open trade.  Several companies are having some trouble with providing Internet services there.  (see here and here).  This customs & border bill keeps getting more and more interesting.

Increased Border Security Doesn’t Stop Immigration

Immigration reform is a hot topic right now.  There’s a lot of calls for more border security and increased enforcement.  However, do these policies work to actually reduce the number of illegal immigrants in the country.  Every year we spend more on enforcement and almost almost every year the number of undocumented workers living in the country still  grows.

I wanted to create a graph that showed the number of undocumented workers in the country vs. the amount we spend on immigration enforcementborder security over time.  The problem is that there is surprisingly little data that estimates the number of illegible immigrantsundocumented workers living in the country.  The Department of Homeland Security created official estimates(pdf) for the years 2000, 2006, 2007, 2008, and 2009.  The rest of the years I would have to find other sources.  Fortunately, a website called procon already did that.  They compiled a list of illegal immigrant estimates from several different sources.  The data goes back to as early as 1969, but doesn’t have separate numbers for each year.  However, I think that’s the best we can do so I’ll have to make do.

Here is the graph of the amount we spend on immigration enforcement vs. number of undocumented workers living in our country.  The amount spent has been adjusted for inflation and made into 2009 dollars.

immigration_enforcement_vs_undocumented_workers
(Click chart for larger image. Click here for the numbers)

As you can see the amount we spend on enforcement – even adjusting for inflation – has been going up since the mid 80′s.  However, the number of immigrants keeps going up.  It is not until the enforcement spending skyrocketed in 2008 and 2009 that the number of immigrants actually decreased.  That is the only time there has been a correlation between increased border patrol spending and a decrease in illegal immigrants.  The rest of the time there is no correlation between increased spending and falling undocumented immigrants.  In fact, the numbers almost seem to rise and fall at the same time.

Some might argue that we’re finally spending enough on border control and immigration enforcement that we can finally see the results.  However, let’s take a look at the graph above.  This time, however, I’ve added in the United States GDP (also adjusted for inflation) into the mix.  (Border Patrol spending is in thousands of dollars, GDP is in millions of dollars)

undocument_workers_vs_gdp
(Click chart for larger image. Click here for the numbers)

Looking at this graph we can see 3 instances where a decrease or a flatline of U.S. gdp(i.e. a recession) has been a leading indicator to fewer undocumented workers.  If there weren’t so many gaps in the historical data of illegal immigrant populations, we’d probably see even more.

I think the case for an enforcement only immigration policy is pretty thin for two reason. One, only once has increased spending lead to fewer immigrants, and that may yet still prove to be because of the recession.  Two, look at how much we’ve increased spending on enforcement since 1962.  We’ve been using an enforcement only policy for years and do you think  its working?

Finally, one last interesting statistic.   The federal government spends more on border patrol and immigration enforcement than the rest of it’s law enforcement activities combined.  In 2009 we spent  $27.5 billion total on law enforcement activities.  $17.2 billion of that was spend on border patrolcustoms and immigration enforcement(see numbers here).  So the FBI, Secret Service, DEA, ATF, and U.S. Marshals all combined cost less than our current immigration enforcement policies.

There must be a better solution for dealing with undocumented workers than to spend 62% of all federal law enforcement.  Based on these numbers I find it hard to see how an enforcement only policy can work.