Decades of trade deals brought only ‘small, positive effect to US economy’, commission says
- The 2015 Trade Promotion Authority law, which expires on Thursday, allows the president to submit trade agreements to Congress for a vote
- One big trade deal outside the ITC report’s scope was the agreement struck by the US to pave the way for China to enter the WTO in 2001
This story is published in a content partnership with POLITICO. It was originally reported by Doug Palmer on politico.com on June 29, 2021.
Nearly four decades of United States trade agreements have had only a “small, positive effect” on US economic growth and employment, the US International Trade Commission said on Tuesday in a report ordered by Congress.
Using 2017 as its base year, the ITC estimated the trade deals had increased US economic output by US$88.8 billion or 0.5 per cent. The trade pacts increased overall US employment by 485,000 full-time equivalent jobs or 0.3 per cent, based on a model that assumes the economy is at its long-run full employment level.
Why the report matters: That conclusion will hurt those pressing for freer trade rules and seems unlikely to spur the Biden administration to negotiate new trade deals. It may not bode well for negotiations with the United Kingdom and Kenya started by the Trump administration, if those pacts are only examined on their potential to boost the US economy and create jobs.
The size of the US economy, now at nearly US$23 trillion, makes it difficult for any single trade deal to have a major impact on growth. But previous administrations have touted how some pacts are important tools for strengthening relationships with allies and to boost exports for specific sectors, such as agriculture or financial services.
What the ITC examined: Congress ordered the report as part of the 2015 Trade Promotion Authority law. That legislation, which expires on Thursday, facilitates the approval of trade agreements by allowing the president to submit them to Congress for a straight up-or-down vote without any amendments.
Former President Barack Obama used the TPA law to finish negotiations on the Trans-Pacific Partnership. However, his successor, Donald Trump, withdrew from the agreement on his third day in office.