Taking Aim at One’s Foot
The New York Times ran an excellent editorial a week ago entitled “Waiting for a Trade Policy”. Of course, any editorial that agrees with me is, by definition, an excellent piece. But there do seem to be more and more of us who realize that President Obama’s trade policy is mostly smoke and mirrors. The Times astutely summarizes the situation:
“… the Obama administration’s trade strategy has been limited to hoping that a world economic rebound and a rising Chinese currency would double American exports in five years. Beyond this new enthusiasm, Mr. Obama’s approach to trade still appears to be hamstrung by strong opposition from his party’s union base.”
That’s hitting the nail on the head. I won’t repeat my rants about the National Export Initiative, but you can read the latest here.
Coming to America? Pricy.
Now comes word that the United States is shooting itself in the trade foot once again. Effective tomorrow, consular fees are being hiked at American embassies and consulates worldwide. The increases are part of laudable efforts to control budgets, though it appears that the State Department is try to recover the full fixed cost of having a consular section at an embassy or consulate, rather than charging for the variable cost of delivering the service, which would be much lower. Here’s a list of the new fees, though the language is typically obtuse.
Let’s consider the potential impacts on business for the United States. The most obvious impact may be the increase in prices charged to apply for a treaty trader or investor visa (an E visa), springing up from $131 to $390 – a rise of 198%! I doubt that this will deter a major investor from applying to come to the United States, but they will see it as the sort of nickle-and-diming that is now practiced by American airlines. It will be an irritant that smacks of price gouging, since most other non-immigrant visas will now cost $140 to apply. Does processing an E visa really cost that much more than a visa for a normal business traveler? I doubt it, but perhaps I am mistaken.
I am more worried about the new $140 charge to apply for a tourist visa. The increase is only $9, but tourists can be extraordinarily price sensitive, so this one could have an adverse impact on the numbers of visitors the United States will receive. It’s tough enough, for instance, for Hawaii to attract Asian tourists across most of an ocean, but even tougher when we charge for visas and competing tropical destinations do not. And bear in mind that these fees are simply to apply for a visa. There is no guarantee that you will actually get one. The visa application fee is on top of the costs engendered by having to go to an American embassy or consulate for a personal interview. Not all potential travelers live in or near a city where the United States has a consular office, so simply applying for a tourist visa can involve substantial expense and inconvenience for the applicant. We don’t make it easy. Why should an Asian gambler go through all this hassle to fly across the Pacific to Las Vegas when they can more easily and enjoyably hit the new casinos in Macau or Singapore?
Full cost recovery sounds a reasonable goal, but the unintended consequences can be killers. It is really a clash between those who view entry to the United States as a privilege, and those who wish to attract visitors who pay for jobs in our country. Most of our competitors come down on the latter side of the argument, and wonder why the world’s richest country can’t foot the bill for its own legal requirements.
