ITC report on economic effect of trade agreements

ITC report on economic effect of trade agreements

The U.S. International Trade Commission (ITC), an independent, nonpartisan fact-finding federal agency, released a report that examines the economic effect of U.S. trade agreements.

Related content

Read the ITC’s 378-page report [PDF 3.38 MB]: Economic Impact of Trade Agreements Implemented Under Trade Authorities Procedures, 2016 Report 

Background

The ITC conducted the investigation pursuant to a provision of 2015 legislation. As requested, the ITC's report estimates the economic impact on the United States of all trade agreements passed under trade authority procedures since January 1, 1984. These agreements include:

  • The Uruguay Round Agreements
  • The North American Free Trade Agreement (NAFTA – Canada and Mexico)
  • 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

Overview of findings

According to an ITC release, a variety of approaches to analyze the effects of these agreements was used. Highlights from the report include the following:

  • The ITC estimated that in 2012, the agreements increased total U.S. exports by 3.6%, total U.S. imports by 2.3%, real GDP by 0.2%, total employment by 0.1%, and real wages by 0.3%. 
  • In 2012, U.S. bilateral and regional trade agreements expanded bilateral trade flows with partner countries by 26.3% on average across the traded goods and services sectors.
  • Model results 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.
  • 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% in 2010.
  • The agreements had a mixed effect on foreign direct investment, in some cases increasing and in other cases decreasing inbound and outbound investment flows.
  • 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.
  • Some of the agreements increased the variety of products imported by the United States. 
  • Industry-specific agreements had a larger impact than agreements that cover many sectors. For instance: (1) the Information Technology Agreement increased annual U.S. exports of the information technology products covered by the agreement by 56.7% in 2010; (2) the Uruguay Round and NAFTA tariff reductions increased annual U.S. steel imports by 14.7% in 2000; and (3) 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.

 

For more information, contact a professional with KPMG’s Trade & Customs practice:

Douglas Zuvich | +1 (312) 665-1022 | dzuvich@kpmg.com

Andrew Siciliano | +1 (631) 425-6057 | asiciliano@kpmg.com

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