USITC Report Portrays Lackluster TPP Economic Benefits


The U.S. International Trade Commission (USITC) issued its long-awaited report on the potential outcome of the Trans-Pacific Partnership (TPP) trade agreement on May 18, 2016. The report shows the TPP potentially resulting in “small gains in U.S. gross domestic product and a very slight uptick in employment over the 30-year implementation period of the deal.”

Here are some of the report’s projected economic results of the TPP:

  • By year 15 (2032), U.S. annual real income will be 0.23% higher than baseline projections. (That’s a less than one-quarter of one percent increase in real income, over 15 years.)

  • By year 15 (2032), U.S. GDP will be 0.15% higher than baseline projections. (That’s a less than two-tenths of one percent increase in GDP, over 15 years.)

  • By year 15 (2032), U.S. employment will be 0.07% higher than baseline projections. (That’s a less than one-tenth of one percent increase in employment, over 15 years.)

  • By year 15 (2032), U.S. exports are expected to grow 1.0%, and U.S. imports are expected to grow 1.1%, thereby increasing the U.S. trade deficit.

  • U.S. agriculture, food and services industries will grow.

  • U.S. manufacturing, textile, apparel, energy, and natural resources industries will shrink. 

The report uses a “best case scenario” economic model, which assumes:

  • full employment;

  • absence of foreign currency manipulation;

  • and absence of unfair trade practices (e.g. below-market loans to industry, illegal dumping, etc.).

Historically, economic predictions of the effects of trade agreements have been woefully misleading, when later compared to actual results of trade agreements. So it’s important for the reader to understand that this relatively unexciting — or dismal — report likely represents an overly optimistic expectation of economic benefits. Sort of like when your six-year-old child begs for a new puppy, amid promises that he will walk the dog, pick up its poop, and give it food and water on a regular basis. In the end, results fall short of promises, and mom and dad end up performing the bulk of the pet chores.

In an April 2016 report, the Center for Economic and Policy Research blasted previous economic analyses of free trade agreements, saying they “not only failed to predict major changes in the trade balance, they also have been largely unsuccessful in identifying the industries that win and lose following the implementation of recent trade pacts. In other words,” the paper adds, “the unpredicted impact of the rise in the trade deficit was far larger than any of the predicted effects from these models.” (Source: New Paper Finds Unpredicted Rise in Trade Deficit Overwhelmed Predicted Impact of Reduced Trade Barriers in Korea-US Free Trade Agreement)


Here are a few reactions to the USITC report from key Congressional leaders:

House Ways & Means Chairman Kevin Brady — “We cannot move forward until the Administration has addressed Member concerns on key aspects of the agreement…” (Source: press release, May 18, 2016)

Senate Finance Committee Chairman Orrin Hatch — “I’m hopeful that the Obama Administration will work actively with members to resolve outstanding substantive and implementation concerns.” (Source: press release, May 18, 2016)


There are, of course, additional rosy statements from pro-TPP factions, and gloomy statements from anti-TPP factions. But I listed comments from Chairmen Brady and Hatch because they were each proponents of the TPP, and are now making statements that allow them to back away from the trade agreement.

Quite a few industries did not achieve what they wanted from the TPP negotiations, including the pharmaceutical, tobacco, and financial services industries. The TPP will not be renegotiated, and various heads of state have said so, including leaders from Peru, Mexico, Canada, New Zealand and the U.S.

When the Chairmen refer to working with the Obama administration to resolve problems within the TPP, they are referring to problems which include those of the aforementioned industries. I perceive these discussions with the Obama administration as a political dance. Everybody involved is aware that the TPP will not be renegotiated, and that the Obama administration does not have the power to resolve the various industries’ conflicts with our potential TPP trading partners.

The U.S. Trade Representative’s negotiation failures are a large part of the reason why sentiment toward the TPP has soured in Washington D.C. Certainly, POTUS campaigns have added fuel to the anti-TPP mood in Congress, because all current POTUS candidates feel obligated to voice disapproval of the TPP, in order to win the November election.

Between negotiation failures for tobacco, financial services, and pharmaceuticals; ongoing U.S. industry production crises (steel, aluminum, coal, textiles); chronic U.S. manufacturing job loss and bankruptcies; and growing U.S. trade deficits, the American people are well-aware that U.S. free trade agreements have not resulted in fair trade, nor in national economic prosperity.

My stance on the TPP remains consistent: “First, do no harm.” Please join me in asking your state’s Congressional delegation to vote “NO” on the TPP.

I would like to close with a statement from a United Steelworkers press releaseon the USITC report:

“The ITC should be commended for its thorough evaluation of the proposed TPP and the open process that it pursued. It is clear that they listened to the array of voices that asked to be heard. But in the end, this may be the most damning government report ever submitted for a trade agreement. It is clear that the TPP will be DOA if Congress ever decides to bring it up.”



Trans-Pacific Partnership Agreement: Likely Impact on the U.S. Economy and on Specific Industry Sectors, United States International Trade Commission, May 2016

ITC Analysis Of TPP Shows Small Gains In GDP, Employment Over 30 YearsInside U.S. Trade, 05-19-16)


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