The Trans-Pacific Partnership (TPP) would marginally boost job growth, income levels and exports in the United States, according to an exhaustive 792-page economic impact study published earlier this week by the U.S. International Trade Commission (ITC) as mandated by provisions of the Trade Promotion Authority legislation enacted last year.
In the report, the commission estimates that the trade deal, if ratified and implemented, would likely add a net of 128,000 full-time jobs, nudge the wage rate up by roughly 0.19% and increase the GDP by a projected 0.15% or $42.7 billion over the course of 15 years.
“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 in force: Brunei, Japan, Malaysia, New Zealand, and Vietnam,” the report states.
U.S. exports would be $27.2 billion or 1% higher, while imports would increase 1.1% or $48.9 billion in year 15 relative to the commission’s baseline projections. U.S. exports to TPP parties would grow by 5.6% or $57.2 billion and U.S. imports from those countries would grow by 3.5% or $47.5 billion.
The study indicates that the country’s agriculture and food industries would see the greatest economic benefits under the deal, with their output going up by 0.5% or $10 billion by 2032. The services sector would also see the benefits of the agreement, taking in gains of $42.3 billion in output over 15 years. However, U.S. manufacturing, natural resources and energy industries would take a 1% hit as result of the deal, coming in $10.8 billion less than baseline projections.
A statement issued by U.S. Trade Representative Michael Froman understandably sought to turn the modest gains estimated by the commission into positive encouragement for ratification of the Obama administration’s embattled trade deal.
“The ITC report provides another strong argument for why TPP should be passed this year. It is part of a growing body of evidence that shows that TPP will benefit our economy at home and allow the U.S. to help set the rules of the road for trade in the Asia Pacific,” Froman said.
“While the ITC report underscores the economic benefits of TPP, the perils of not acting may be even greater. Earlier this year, the Peterson Institute projected that delaying the passage of TPP for just one year would cost the U.S. economy $94 billion.
“What cannot be quantified in this study or any other is the cost to American leadership if we fail to pass TPP and allow China to carve up the Asia-Pacific through their own trade agreement. If we allow China to beat us in defining the rules for trade it will undercut our workers and businesses and prevent us from taking badly needed steps to improve worker rights, bolster intellectual property protections, and protect the environment through TPP.”
Just as predictably, opponents of the TPP like the anti-trade group Public Citizen seized on the limited gains and negative aspects of the commission’s report, claiming that it “spotlights how damaging the TPP would be for most Americans’ jobs and wages,” warning “that if ever implemented, the TPP could really be disastrous.”
While commending the ITC “for its thorough evaluation of the proposed TPP and the open process that it pursued,” in a statement United Steelworkers (USW) International President Leo W. Gerard said the report “validates that the TPP is not worth passing” and speculated that it “may be the most damning government report ever submitted for a trade agreement.”
In stark contrast to that opinion, Peter Petri and Michael Plummer at the Peterson Institute for International Economics, whose own study of the TPP estimated income gains more than twice the amount found by the ITC, praised the report as “excellent, if cautious” in terms of quantifying gains, that it suggested were “arguably too low.” Nonetheless, they described it as “a treasure trove of new information on the nuts and bolts of the TPP” that “strengthens the story emerging from most serious TPP research: The agreement will likely mean positive and significant gains in wages and incomes for a large majority of U.S. workers.”
The two scholars hopefully, if unrealistically, proffered that: “The ITC report will help Americans look beyond the political debate to understand what the TPP could really mean for them.”