Report Says Trade Deal Would Boost U.S. Economy, But Opponents Say No
Thursday, May 19, 2016
If Congress were to approve the Trans-Pacific Partnership, it would help the economy, though not by all that much, the U.S. International Trade Commission said Wednesday.
By 2032, TPP would be increasing real GDP by nearly $43 billion annually, and supporting an additional 128,000 full time jobs.
"TPP would have positive effects, albeit small as a percentage of the overall size of the U.S. economy," the ITC concluded.
The biggest winner on a percentage basis would be agriculture and food, which would see a $10 billion boost, up 0.5 percent, by year 15 of the deal.
"It is very difficult for us to find new markets," American Farm Bureau Federation President Zippy Duvall said at a press conference. This trade pact "is good for America," he added.
The biggest loser would be manufacturing, natural resources and energy, which would be down by a collective $10 billion, or 0.1 percent, after 15 years, the ITC said.
Congress asked the independent federal agency to assess the economic impact of the proposed trade deal involving the United States and 11 other countries.
President Obama strongly supports the pact and signed it in February. But the deal is on ice without congressional approval. At this time, no action is planned on Capitol Hill.
Next week, Obama will be visiting Vietnam and Japan, where he will highlight his support for an economic partnership with those two countries, along with Malaysia, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru.
The deal is intended to open markets for U.S. exporters and farmers, and help protect intellectual property. And it is supposed to strengthen the U.S. political position in Asia.
"TPP allows America – and not countries like China – to write the rules of the road in the 21st century, which is especially important in a region as dynamic as the Asia-Pacific," Obama said at the time of the signing.
In general, most economists say TPP would help more than harm the U.S. economy.
But Lori Wallach of Public Citizen says the new report shows the pact could have disastrous effects.
"This report spotlights how damaging the TPP would be for most Americans' jobs and wages given it concludes 16 out of 25 U.S. economic sectors (in selected sectors in agriculture, manufacturing, and services) would suffer losses while the "upside" projection is miniscule gains in economic growth despite these findings being based on the same widely criticized methodology and unrealistic assumptions that have resulted in past USITC reports systematically overstating the benefits from trade deals that ended up causing serious damage."
Last year, Public Citizen said trade deals "have failed to meet their corporate and political backers' glowing promises of job creation."
But the ITC report on NAFTA issued in January, 1993, predicted only modest gains. It said the "estimated long-term gains in U.S. and Canadian real GDP are 0.5 percent or less."
In the post-World War II era, the U.S. economy has average 3.21 percent annual GDP growth rate.
For the 20th anniversary of NAFTA's implementation, the Congressional Research Service found this: "In reality, NAFTA did not cause the huge job losses feared by the critics or the large economic gains predicted by supporters. The net overall effect of NAFTA on the U.S. economy appears to have been relatively modest."
But whether this new TPP forecast will turn out to be right won't be known for a long time. The proposed trade deal "will come into effect anywhere from five to maybe 30 years from now," Brandeis Professor Peter Petri said at the White House briefing earlier in the week. "It's basically a long-term gradual transition in which very small changes will be made along the way, up as long as 30 years in the future."
Trade has become a central issue in this year's election cycle. For example, Republican Donald Trump has called TPP "a horrible deal," while Bernie Sanders, running for the Democratic nomination, regularly refers to trade deals as disasters.
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