TPP Agreement: Likely Impact On The U.S. Economy And On Specific Industry Sectors
Via FFTF followed by the study itself
The Trans-Pacific Partnership (TPP) is not about trade, it’s about corruption and corporate control. If it passes, it would be a backdoor for companies to attack our Internet freedom and basic free speech rights.
Now, a new study shows that TPP could be even more devastating than we thought. Click here to tell Congress to vote no on this secret deal that opens the floodgates for Internet censorship!
The U.S. International Trade Commission (USITC), an obscure Federal agency that enthusiastically rubber-stamps destructive trade deals like NAFTA [1], just released its report projecting the economic effects of the TPP in the US. These bureaucrats almost always give trade deals a 5 star review, but even they are not convinced by the TPP.
That shows just how bad the TPP really is. Even the government admits it. But corporations are pouring millions into lobbying. if we don’t speak out Congress will pass it anyway.
Email Congress to vote NO on TPP
So what did the USITC say about TPP?
The study indicates that in the TPP’s first fifteen years:
- The United States’ global trade deficit would actually increase by $21.7 billion;
- That there would be a decline in output for U.S. manufacturing, natural resources and energy of $10.8 billion [2]
TPP supporters have already started spinning pieces of this report to their advantage. Let’s make sure Congress isn’t fooled.
The TPP’s intellectual property chapter would globalize the worst of US copyright law, limit freedom of expression, threaten internet security and privacy, and adopt harsh criminal sanctions that could be used against journalists and whistleblowers. [3]
Main Findings
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 percent) higher than the baseline projections, real GDP would be $42.7 billion (0.15 percent) higher, and employment would be 0.07 percent higher (128,000 full-time equivalents). U.S. exports and U.S. imports would be $27.2 billion (1.0 percent) and $48.9 billion (1.1 percent) higher, respectively, relative to baseline projections. U.S. exports to new FTA partners would grow by $34.6 billion (18.7 percent); U.S. imports from those countries would grow by $23.4 billion (10.4 percent).
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 percent, higher by year 15. The services sector would benefit, with a gain of $42.3 billion (0.1 percent) in output. Output in manufacturing, natural resources, and energy would be $10.8 billion (0.1 percent) 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.
Executive Summary
In accordance with section 105(c) of the Bipartisan Congressional Trade Priorities and Accountability Act of 2015, this report, by the U.S. International Trade Commission (Commission or USITC), assesses the likely effects of the Trans-Pacific Partnership Agreement (TPP, TPP Agreement, or the agreement) on the U.S. economy as a whole and on specific industry sectors. It encompasses TPP’s impact on the United States’ gross domestic product (GDP), exports, and imports; U.S. aggregate employment and employment opportunities; the production, employment, and competitive position of U.S. industries likely to be significantly affected by TPP; and the interests of U.S. consumers. The report also reviews other assessments of TPP’s economic effects available in the literature, and discusses areas of consensus and divergence between the Commission’s analyses and conclusions and those in the literature reviewed.
This executive summary gives an o verview of the agreement; presents the Commission’s principal findings as to the likely economy-wide effects of TPP, specific sectoral effects, and the expected effects of TPP’s cross-cutting rules and other provisions; and briefly summarizes the relevant economic literature.
TPP Agreement: Overview of Findings
Economy-wide Assessment
The TPP Agreement would affect the trade and investment relationship between the United States and the region in many areas. In addition to the United States, the parties to the agreement are Australia, Brunei Darussalam,1 Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Together, these countries accounted for 36 percent of global GDP in 2014. The United States already has FTAs in force with Australia, Canada, Chile, Mexico, Peru, and Singapore. The agreement would influence bilateral trade in goods and services, rules governing trade and investment, and the regulatory environment facing U.S. exports to the region. The overall impact of the TPP Agreement would be small as a percentage of the overall size of the U.S. economy; it would be stronger with respect to countries with which the United States does not already have a free trade agreement (FTA) in force: Brunei, Japan, Malaysia, New Zealand, and Vietnam.
The quantitative assessment in this report estimates the economic effects of TPP provisions related to tariffs and tariff-rate quotas; selected nontariff measures affecting trade in goods and cross-border trade in services; and restrictions affecting foreign investment, compared to a baseline estimate of economic growth in the absence of the TPP Agreement. Table ES.1 summarizes the agreement’s estimated macroeconomic effects on the U.S. economy, based on Commission economic model simulations.
The Commission estimates that by 2032, U.S. real GDP would be $42.7 billion (or 0.15 percent) higher than a baseline scenario that reflects expected global economic conditions without TPP.3 Real income, a measure of economic welfare that measures consumers’ purchasing power, would be $57.3 billion higher (or 0.23 percent) over the same time period. Employment would be 0.07 percent higher, or close to 128,000 full-time equivalents. These gains would be slightly higher after 30 years (that is, 2047), when all provisions of the agreement would be in force. By 2047, real GDP would rise by $67 billion (0.18 percent); real income, by $82.5 billion (0.28 percent); and employment, by 0.09 percent, or nearly 174,000 full-time equivalents, compared to the baseline.
According to Commission estimates, U.S. exports to TPP partners will grow faster than U.S. exports to the rest of the world. U.S. imports from TPP partners will grow faster than overall U.S. imports, but not as fast as exports to TPP partners. By 2032, under the agreement, total U.S. exports to the TPP parties would be $57.2 billion (5.6 percent) higher than the baseline and U.S. imports from the TPP parties would be $47.5 billion (3.5 percent) over the baseline (table ES.2). Some of this impact would represent trade diversion from other trading partners to TPP parties. According to Commission estimates, U.S. exports to the world would be $27.2 billion higher (1.0 percent), while U.S. total imports would be $48.9 billion higher (1.1 percent).
Sector-specific Assessments
Fifteen years after TPP’s entry into force (2032), total U.S. exports and imports for each of the broadly defined sectors of the U.S. economy would exceed the level of the baseline estimate (table ES.3). Both exports and imports in the food and agriculture sector would experience the largest impacts from TPP in percentage terms. The Commission estimates that U.S. output and employment for the sector would both be 0.5 percent higher than the baseline estimate. This sector would experience the largest growth because it would experience the broadest liberalization under the agreement.
In dollar terms, however, the manufacturing, natural resources, and energy (MNRE) sector, which accounts for the largest share of U.S. trade with the TPP parties, would see the largest absolute expansions in total exports and imports under TPP, although these changes represent smaller shares than for agriculture owing to the MNRE sector’s much larger relative size. U.S. exports of MNRE products would be higher by an estimated $15.2 billion and U.S. imports would be $39.2 billion higher than the 2032 baseline. Nonetheless, U.S. MNRE output would be 0.1 percent lower by 2032, relative to the baseline in that year, and employment would also be lower, by 0.2 percent. 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; liberalization would have a stronger positive effect in other sectors of the economy, which would likely cause resources to be reallocated away from MNRE. The model does not capture the costs associated with employment transition or temporary unemployment.
The services sector represents the largest share of the U.S. economy, and it would expand the most, in dollar terms, under TPP. U.S. imports and exports of services would be 1.2 percent and 0.6 percent higher in 2032, respectively, compared to the baseline. U.S. output in the services sector would be $42.3 billion higher in 2032, relative to the baseline, while output and employment would both be 0.1 percent higher.
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