USITC Reports on Impact of Trans-Pacific Partnership Agreement

The U.S. International Trade Commission (USITC), Washington, D.C., USA, this week released its report assessing the likely impact of the Trans-Pacific Partnership (TPP) Agreement that the President has entered into with Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

The USITC's report, Trans-Pacific Partnership Agreement: Likely Impact on the U.S. Economy and on Specific Industry Sectors, provides an assessment of the likely impact of the Agreement on the U.S. economy as a whole and on specific industry sectors and the interests of U.S. consumers, as requested by the U.S. Trade Representative and required by the Bipartisan Congressional Trade Priorities and Accountability Act of 2015.

In making its assessment, the Commission investigated the impact the agreement will have on the U.S. gross domestic product; exports and imports; aggregate employment and employment opportunities; and the production, employment, and competitive position of industries likely to be significantly affected by the agreement. In preparing its assessment, the Commission also reviewed available economic assessments regarding the Agreement, including literature concerning any substantially equivalent proposed agreement. 

The Commission provides a description of the analytical methods used and conclusions drawn in such literature, and a discussion of areas of consensus and divergence between the Commission’s analyses and conclusions of other economic assessments reviewed.

The Commission used a dynamic computable general equilibrium model to determine the impact of TPP relative to a baseline projection that does not include TPP. The model estimated that TPP would have positive effects, albeit small as a percentage of the overall size of the U.S. economy. By year 15 (2032), U.S. annual real income would be $57.3 billion (0.23%) higher than the baseline projections, real GDP would be $42.7 billion (0.15%) higher, and employment would be 0.07% higher (128,000 full-time equivalents). U.S. exports and U.S. imports would be $27.2 billion (1.0%) and $48.9 billion (1.1%) higher, respectively, relative to baseline projections. U.S. exports to new FTA partners would grow by $34.6 billion (18.7%); U.S. imports from those countries would grow by $23.4 billion (10.4%).

 

Among broad sectors of the U.S. economy, agriculture and food would see the greatest percentage gain relative to the baseline projections; output would be $10.0 billion, or 0.5%, higher by year 15. The services sector would benefit, with a gain of $42.3 billion in output. Output in manufacturing, natural resources, and energy would be $10.8 billion (0.1%) lower with the TPP Agreement than it would be compared with baseline estimates without the agreement.

 

Many stakeholders consider two new electronic commerce provisions that protect cross-border data flows and prohibit data localization requirements to be crucial to the development of cross-border trade in services, and vital to optimizing the global operations of large and small U.S. companies in all sectors. TPP would generally establish trade-related disciplines that strengthen and harmonize regulations, increase certainty, and decrease trade costs for firms that trade and invest in the TPP region. Interested parties particularly emphasized the importance of TPP chapters addressing intellectual property rights, customs and trade facilitation, investment, technical barriers to trade, sanitary and phytosanitary standards, and state-owned enterprises.