Will there finally be agreement on the Trans-Pacific Partnership (TPP)? What about a new services agreement from the World Trade Organization (WTO)? Is it possible to construct a system in which trade is free of barriers unless specifically negotiated otherwise?
Access explored these topics and more with Edward Alden of the Council on Foreign Relations (CFR).
Alden is the Bernard L. Schwartz senior fellow at CFR, specializing in U.S. economic competitiveness and U.S. trade policy. He also directs the CFR Renewing America publication series.
Access: Is global trade policy keeping pace with digital innovation?
Edward Alden: No. Governments haven’t quite figured out what to do about it. They want to maintain what they see as a reasonable degree of control over the pace of trade liberalization. The history of global trade negotiations is about reducing barriers on a known set of goods for which tariffs or quotas or other trade barriers have been in place for a long time.
That approach dominated throughout the postwar period and accelerated in the ’80s and ’90s. Just as those agreements were being signed, the pace of innovation — especially in digital technologies — really took off. So you have this fundamental mismatch between very rapid technological innovation and slow-moving trade negotiations.
One of the things going on right now in international discussions is whether we can come up with a system that basically says trade will be free of barriers in all new products unless specifically negotiated otherwise. In effect, that means trying to turn the system around from where it is to a system in which new goods are developed with the assumption that they will be traded freely. That’s a big topic in Geneva.
Access: Are future FTAs being discussed in that way as well?
Alden: Yes. This is a big issue in the TPP negotiations that the U.S. is part of with Asian countries. One of the issues they’re trying to deal with is how policy and regulations can be more responsive to the pace of innovation.
I think governments are aware. But policy remains well behind where the market is in this case.
Access: What do you perceive as the major benchmarks in global trade in 2013?
Alden: The TPP is by far the most developed negotiation. One thing to look for, if not completion of the TPP agreement, is something pretty close to it over the course of 2013.
A second area to watch closely are the pluralateral service negotiations through the WTO. A decision has been reached in principle by the U.S. and EU and some other countries that are competitive in service industries to try to negotiate a small group deal in the WTO to further liberalize services trade — and then expand that over time.
The third thing is whether the U.S. and the EU move beyond preliminary talks and enter into full-blown free trade agreement discussions.
Access: What about the H1B work visa cap? Do you foresee any movement there?
Alden: Immigration is different because it’s really handled at the domestic level. There’s no international migration negotiation or international migration bodies. I do think there are better-than-even odds there will be some action out of the U.S. Congress to try to ease high-skilled immigration to the U.S. Probably through expansion of green cards for skilled workers, not necessarily raising the H1B cap. I foresee an effort to make it easier for people to transition from the H1B visa, which is temporary, to permanent residency, which for Indians and Chinese currently takes years and years. We may also see the creation of an entrepreneur’s visa in the U.S.
Access: What would an entrepreneur’s visa look like?
Alden: There’s legislation that’s been introduced calling it the “startup visa act,” and there are various iterations. Basically, if you’re a skilled individual without family ties and want to immigrate to the U.S., you have to persuade an employer to sponsor you under one of the relevant categories.
But if you come to the U.S. to attend MIT, graduate, and really want to go to Silicon Valley and start a company, there’s no way to do that and retain your status. So an entrepreneur’s visa would specify that if you attain a certain benchmark — for instance, if there are venture capitalists willing to invest in your idea — then you can get a temporary visa, with potential for permanent immigration status, to try your hand at starting a company here in the U.S. Other places, including Chile, Singapore, Canada and a number of others, use startup visas pretty successfully.