What Do the US Election Results Mean for Latin America?
What do the election results mean for hemispheric policy and foreign relations?
Q: A bill pending in the U.S. Congress would require money transmitters to verify their customers' immigration status and collect a 7 percent penalty from customers who cannot prove that they are legally in the United States. Is this measure good policy? How would such a law affect companies that offer remittance services? How would Latin American and Caribbean countries that have large immigrant populations in the United States be affected?
A: Adalberto Palma Gómez, member of the Financial Services Advisor board and senior partner at Aperture S.C. in Mexico City: "The ongoing debate over illegal migration in the United States reached a climatic moment with President Obama's executive order on immigration. There is clear intent in the executive order to provide support and protection to millions of illegal migrants who are looking for a way out of poverty for themselves and their families. Levying a tax on remittances sent by illegal workers is a step in the opposite direction, and a threat to their progress toward a better living standard. Eighty-five percent of the money sent to loved ones in their country of origin is dedicated to meeting the most basic needs, such as food, health, housing, clothing and education. A tax of that nature will undoubtedly have a perverse effect on the immigration situation in the United States on several fronts. First, there will be a reduction in the amount of money being remitted by illegal migrants, possibly forcing a number of people to leave their home countries to join relatives in the United States. Second, illegal migrants could be inclined to stop sending money to their homelands through formal channels and revert to riskier and costlier informal means benefiting no one; keeping remittance flows through formal and efficient channels is a relevant tool for economic progress for migrant workers and their families, and a relevant source of financial information for everyone."
A: Dan Stein, president of the Federation for American Immigration Reform (FAIR) in Washington: "Protecting the core economic interests of the American people is one of the primary reasons for immigration laws. Mass illegal immigration takes an enormous toll on American workers and taxpayers in terms of lost jobs and services that must be provided. What receives less scrutiny is the billions of dollars that are drained from our economy in the form of remittances foreign workers transfer outside the United States. The World Bank estimates that in 2012, $123 billion in remittances flowed out of the United States to other countries, with about $54 billion winding up in Mexico and elsewhere in Latin America. While some suggest that the United States should attempt to recoup some of that lost revenue by taxing remittances sent by people who cannot prove legal residency, a far more effective strategy would be to prevent people from working here illegally. In addition to freeing up jobs for American workers who desperately need them, money earned by legal U.S. workers is far more likely to remain here, be spent locally and stimulate economic growth. The United States has the means to force employers to comply with laws barring the employment of illegal aliens. What is required is the political will to mandate the use of the existing E-Verify system by all employers. In an age of e-commerce, implementing a system that electronically verifies Social Security numbers and matches them to workers can be achieved. Curtailing the availability of jobs to illegal aliens, by effectively policing employers, would protect American jobs and limit the outflow of remittances."
A: Earl Jarrett, member of the Financial Services Advisor board and general manager of the Jamaica National Building Society: "The bill as proposed shifts the responsibility of the immigration function to remittance companies operating in the United States, thereby placing remittance companies at the forefront of the immigration debate. While the United States has a right to ensure that its borders are safe from illegal immigrants, the burden of immigration monitoring by remittance companies could become an administrative and operational challenge, both for the government and for the remittance operators. Current rules require remittance companies to request identification information for senders with transactions over $3,000 and to report all suspicious transactions. The draft bill imposes no threshold. As such, all transactions will become subject to the 'immigration test,' which will require remittance companies processing thousands of transactions daily to collect and submit identification information, which would presumably need to be observed, copied and recorded on transaction systems. This will significantly increase the cost of operation and result in increased fees generally, including those for legal migrants who simply wish to support their families living outside of the United States. In addition, the proposed bill does not include provisions to restrict attempts to evade the penalty, such as illegal immigrants requesting that residents or citizens perform transactions on their behalf, or forwarding funds within the United States for onward transmission to a third country by legal residents or citizens. Also of concern is the increased cost of remittances, which approximates to some $60 billion annually to Latin America and the Caribbean, and its impact on economies where remittances can range from 15 percent to 20 percent of these countries' gross domestic products. The migration issue in the United States is a significant one; therefore, it must be addressed in a holistic manner, rather than through punitive measures. These measures will have a negative effect on millions of people, and on an industry supporting many legal residents and citizens who, today, live in an increasingly global world where families remain connected socially, technologically and financially."
A: David Landsman, executive director of the National Money Transmitters Association, Inc.: "No matter how small the transaction, the Remittance Status Verification Act (S. 1176) would require all remittance transfer providers to demand a passport or driver's license from every customer and impose a 7 percent fine on all senders who could not show legal status in the United States. They say it will raise funds for border security (after recouping the cost of this new bureaucracy), but the bill has nothing to do with preventing terrorism or fighting money laundering, per se. This measure is punitive and entirely anti-immigrant in nature. It treats remittances as if they were 'a drain on our resources,' rather than hard-earned money needed to keep families alive. Since immigration has become such a political football, this may be seen as the Republicans' way of checking the powers of the executive branch. But it would reverse all the progress we have made in the last decade in bringing down the cost of remittances. It would drive all undocumented senders to use unlicensed channels. It would force transmitters to say 'Show me your papers.' When you demand someone's papers, it is impossible to distinguish a would-be terrorist or tax evader from a nervous undocumented immigrant—or an honest consumer who is concerned about identity theft. No, to facilitate the separation of good money from bad, we need to provide people with real ID, remove unreasonable taxation and the fear of deportation. This bill would be a public policy mistake and a detriment to the legitimate interests of all parties."
A: Kai Schmitz, senior investment officer of the FinTech Investment Group at the International Finance Corporation: "It is obvious that this country needs a debate and an agreement on immigration. Irrespective of which side of this debate you are on, the proposed legislation does not lead to a solution. It does not even lead to a better outcome for the side that prefers stricter immigration laws. Instead, the regulation burdens the private sector, and in particular the worldwide leader in international remittances which happens to be a U.S. company, with requirements that are driven by populism rather than policy or pragmatism. Most remittance companies work through retailers that act as agents. These agents are in no position to determine whether an immigrant has legal status. Banks have been burdened with identification and monitoring requirements for money transfers and are threatened with high fines. As a result, they are reluctant to provide workers' remittance services and in particular for pay-out in cash. The money transfer companies have filled the void and, arguably, are doing a good job in providing the service. These companies have just been regulated by the CFPB's, in my opinion, mostly ill-advised regulation and are now threatened with further rules that are hard to comply with. Lawmakers need good reasons when restricting legitimate private-sector activity. Making a political statement is not sound justification. The 7 percent penalty shows clearly that the intention is not to protect consumers or the integrity of the financial system, but rather to make life difficult for a part of the population that is on the other side of a political argument. Politicians should fight the political battles before they unleash rules on the population and the private sector."
What do the election results mean for hemispheric policy and foreign relations?
President Obama has overseen some of the strictest enforcement policies of the past several decades.
As the global financial crisis continues to alter US relations with the hemisphere, greater engagement in the region remains critical to US interests.