USITC Releases Report Estimating the Historical Impact of Trade Agreements

June 29, 2016
News Release 16-081
Inv. No. 332-555
Contact: Peg O'Laughlin, 202-205-1819
USITC Releases Report Estimating the Historical Impact of Trade Agreements

U.S. bilateral, regional, and multilateral agreements have evolved markedly over the last 30 years, with their provisions often becoming broader, stronger, and more transparent, according to the U.S. International Trade Commission (USITC) report, Economic Impact of Trade Agreements Implemented Under Trade Authorities Procedures, 2016 Report

The USITC, an independent, nonpartisan factfinding federal agency, conducted the investigation pursuant to Section 105(f)(2) of the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (19 U.S.C. § 4204(f)(2)).

As requested, the Commission's report estimates the economic impact on the United States of all trade agreements passed under trade authorities procedures since January 1, 1984. This group of agreements encompasses the Uruguay Round Agreements, the North American Free Trade Agreement (NAFTA – Canada and Mexico), and U.S. bilateral or regional trade agreements with Australia, Bahrain, Canada, Chile, Colombia, the Dominican Republic and five Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua), Israel, Jordan, Korea, Morocco, Oman, Panama, Peru, and Singapore.

The Commission used a variety of approaches to analyze the impacts of these agreements. The Commission traced the evolution of key provisions over the last 30 years, developed economic models that estimate the magnitude of the agreements’ impacts, assessed how individual provisions have impacted specific industries through a series of case studies, and summarized the empirical literature estimating the effects of trade agreements.

The quantitative estimates from the models represent changes relative to the levels of economic outcomes that would have existed absent the agreements.  The estimates offer wide coverage, across many trade agreements and different types of economic outcomes, but they are not comprehensive.  They do not capture all of the economic benefits of the agreements, or all of the economic costs, due to limits on available data and analytic techniques.

Following are highlights from the report.

  • The Commission estimated that in 2012, the agreements increased total U.S. exports by 3.6 percent, total U.S. imports by 2.3 percent, real GDP by 0.2 percent, total employment by 0.1 percent, and real wages by 0.3 percent.  Read More
  • In 2012, U.S. bilateral and regional trade agreements expanded bilateral trade flows with partner countries by 26.3 percent on average across the traded goods and services sectors. Read More  
  • Model results also showed that the bilateral and regional trade agreements had a positive effect, on average, on U.S. bilateral merchandise trade balances with partner countries, increasing trade surpluses or reducing trade deficits by $87.5 billion in total in 2015. Read More   
  • Increases in patent protection since the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) entered into force increased U.S. international receipts for the use of intellectual property by 12.6 percent in 2010.  Read More  
  • The agreements had a mixed effect on foreign direct investment, in some cases increasing and in other cases decreasing inbound and outbound investment flows.  Read More  
  • The bilateral and regional trade agreements resulted in tariff savings of up to $13.4 billion in 2014, with a significant part of these savings benefiting U.S. consumers.  Read More  
  • In addition, some of the agreements increased the variety of products imported by the United States.  Read More 
  • Finally, the report finds that industry-specific agreements had a larger impact than agreements that cover many sectors, and presents estimates of such effects:
    • The Information Technology Agreement increased annual U.S. exports of the information technology products covered by the agreement by 56.7 percent in 2010.  Read More  
    • The Uruguay Round and NAFTA tariff reductions increased annual U.S. steel imports by 14.7 percent in 2000.  Read More 
    • The increase in apparel imports that coincided with the Agreement on Textiles and Clothing accounted for most of the reduction in U.S. employment in the apparel industry between 1998 and 2014.  Read More

Economic Impact of Trade Agreements Implemented Under Trade Authorities Procedures, 2016 Report (Investigation No. 332-555, USITC Publication 4614, June 2016) is available on the USITC's Internet site at https://www.usitc.gov/publications/332/pub4614.pdf.

USITC general factfinding investigations, such as this one, cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the House Committee on Ways and Means, or the Senate Committee on Finance.  The resulting reports convey the Commission's objective findings and independent analyses on the subjects investigated.  The Commission makes no recommendations on policy or other matters in its general factfinding reports.  Upon completion of each investigation, the USITC submits its findings and analyses to the requester.  General factfinding investigation reports are subsequently released to the public, unless they are classified by the requester for national security reasons.

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