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International Trade Commission Releases Report on TPP Impact

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TPP_USTR report

The U.S. International Trade Commission’s (USITC) long-awaited assessment on what the Trans-Pacific Partnership (TPP) will mean for America has arrived.

To make the report, released late Wednesday and titled “Trans-Pacific Partnership Agreement: Likely Impact on the U.S. Economy and on Specific Industry Sectors,” the USITC looked at how the deal would affect U.S. GDP, exports and imports, employment and production in the country.

In short, the nearly 800-page report says TPP’s effect on the U.S. will be a positive one. The Commission compared the impact of TPP to a baseline projection that doesn’t 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,” the report noted.

By 2032, U.S. annual GDP would be $42.7 billion, 0.15% higher with TPP than baseline projections point to, and employment would be 0.07% higher, or 128,000 more full-time jobs.

U.S. exports would total $27.2 billion, up just 1 percent, and imports would reach $48.9 billion, a 1.1% pick-up from non-TPP projections. U.S. exports to its new trading partners, however, would jump 18.7% (a $34.6 billion increase), and imports from those countries would grow by $23.4 billion, or 10.4%.

The agriculture and food sectors are expected to realize the biggest gains from the deal, with output expected to reach $10 billion by 2032, a 0.5% increase over projections.

“The services sector would benefit, with a gain of $42.3 billion in output,” according to the report. “Output in manufacturing, natural resources, and energy would be $10.8 billion (0.1%) lower with the TPP agreement than it would be compared with baseline estimates without the agreement.”

Stakeholders, according to the report, say the two new e-commerce provisions that protect cross-border data flows and prohibit data localization “crucial” to developing cross-border trade in services and will be key for large and small U.S. companies to optimize global operations.

For textiles and apparel, the largest changes would likely be in U.S. imports of apparel, and the Commission says U.S. demand for both imported and domestically produced apparel would increase over the baseline.

All textiles and apparel duties between member countries would eventually be eliminated under the TPP, and more than 70 percent of the U.S. textile and apparel 8-digit rate lines would be duty free from the date the deal takes effect.

“These lines are estimated to account for about 28 percent of dutiable imports from TPP countries in 2015,” according to the report.

TPP would result in an estimated 1.4% ($1.9 billion) increase in U.S. imports of apparel.

“Imports of apparel would be expected to grow most significantly from Vietnam, the second-largest supplier to the United States, while those from China, the largest U.S. apparel supplier, would be expected to decline,” according to the report.

And contrary to popular fears that the deal would diminish rekindling prospects for American manufacturing, the Commission said U.S. output in the apparel sector would increase by 1 percent and employment by 0.9% by 2032.

“High-end, niche products, replenishment or quick turnaround products, and other items that generally do not compete with imports are among the types of products being produced domestically,” according to the report. “Examples of such products include those that require customized, often smaller orders, such as sports team uniforms, test market products or reorders, and fast-fashion items.”

For textiles, TPP should result in U.S. exports 1.3% ($257 million) higher than the baseline estimate that doesn’t include TPP, and imports would be 1.6% higher. Output and employment in the textiles sector would likely be slightly lower than they would without the agreement.

“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,” according to USITC. “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.”

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