ITC Report on TPP: A Mixed Bag for the U.S. Economy
An independent assessment of the Trans-Pacific Partnership recently released by the International Trade Commission, an independent federal agency, generally presents a positive view of the economic benefits of the Unites States’ participation in the trade agreement.
But the report noted that the TPP’s positive effects would be small as a percentage of the overall U.S. economy.
While trade, including exports of goods and services would grow by year 15 of the agreement, according to the report, the U.S. trade deficit would also likely increase. The report projects that 128,000 new jobs would be created as a result of TPP by 2032, but the U.S. manufacturing sector would take a small hit.
The Trans-Pacific Partnership agreement was concluded late last year among the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Together, these countries accounted for 36 percent of global gross domestic product (GDP) in 2014.
The report concluded that the U.S. GDP would grow by $42.7 billion, a difference of 0.15 percent compared to baseline projections without TPP. The jobs created would represent a 0.07-percent hike in employment.
U.S. imports would grow faster than exports to the world at large, although the opposite would be true of trade with TPP partners. In the latter case, U.S. exports to the new FTA partners would grow by $34.6 billion, or 18.7 percent, while U.S. imports from those countries would grow by $23.4 billion, 10.4 percent.
Fifteen years after TPP’s entry into force, total U.S. exports and imports for each of the sectors of the U.S. economy examined “would exceed the level of the baseline estimate,” according to the report.
Agriculture and food would see the greatest percentage gain from TPP because that is where the greatest scope of trade liberalization would be taking place under the agreement.
Output in the manufacturing, natural resources, and energy (MNRE) sector would be $10.8 billion—or 0.1 percent—lower with the TPP Agreement than without it it and employment in the sector would also be lower, by 0.2 percent. Exports and imports in the MNRE sector would both grow under TPP, with imports outpacing exports by some $24 billion.
“Under TPP, the MNRE sector would not grow as quickly as the projected baseline, primarily because trade barriers are already low in many of these industries,” the report noted.
The services sector, representing the largest share of the U.S. economy, would expand the most under TPP. According to the report U.S. imports and exports of services would be 1.2 percent and 0.6 percent higher in 2032, respectively, while output and employment would both be 0.1 percent higher.
The report was attacked by the Communications Workers of America (CWA) which said that it “demonstrates that the TPP would not deliver the economic benefits promised by the U.S. Trade Representative.”
The CWA pointed to the conclusions that the TPP would increase the U.S. trade deficit and that it would decrease manufacturing output and employment.
“The ITC has a long history of being overly optimistic about our trade deals,” said Shane Larson, CWA’s legislative director. “Yet, even the ITC’s rosy projection paints a picture of the TPP that would be bad for American workers.”
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