Economic Update on the Trans-Pacific Partnership

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The United States International Trade Commission (USITC) released a report detailing the likely impact that the Trans-Pacific Partnership would have on the U.S. economy and specific industry sectors, including manufacturing (electronic equipment) and technology services. The Trans-Pacific Partnership is a proposed free trade agreement between 12 countries that will reduce the costs of international trade by 1) eliminating tariffs and tariff-rate quotas for imported goods, 2) eliminate or reduce cross-border non-tariff barriers to trade, and 3) reducing barriers to investment in specific sectors.

Main findings:

  • General: The economic model estimated that TPP would have positive effects. By year 15 (2032), U.S. annual real income would be $57.3 billion (0.23 percent) higher than baseline projections, real GDP would be $42.7 billion (0.15 percent) higher, and employment would be 0.07 percent higher (equivalent to 128,000 new full-time positions).U.S. exports to new free trade partners would grow by $34.6 billion (18.7 percent) while U.S. imports from those countries would grow by $23.4 billion (10.4 percent).
  • The manufacturing, natural resources, and energy sector growth will contract by 0.1 percent. Please note that this does not mean TPP will cause a contraction; only that it will grow at a slower rate.The USITC believes the negligible contraction is due to the fact that manufacturing, natural resources, and energy are already liberalized sectors and that under TPP domestic resources will be diverted to other, more profitable sectors of the U.S. economy.
  • Computer services: The e-commerce policies will remove almost all significant barriers to trade and investment and strengthen market access, national treatment, and regulatory transparency. Most of U.S. export gains would likely be to Japan, Vietnam, and Malaysia.

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