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USITC Releases Report Estimating the Historical Impact of U.S. Trade Agreements

June 29, 2021
News Release 21-084
Inv. No. 105-008
Contact: Peg O'Laughlin, 202-205-1819
USITC Releases Report Estimating the Historical Impact of U.S. Trade Agreements

U.S. bilateral, regional, and multilateral trade agreements have had a small, positive effect on U.S. output, income, exports and imports, and employment, according to the U.S. International Trade Commission (USITC) report Economic Impact of Trade Agreements Implemented Under Trade Authorities Procedures, 2021 Report.

The USITC, an independent, nonpartisan factfinding federal agency, conducted the investigation pursuant to Section 105(f)(2) of the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (19 U.S.C. § 4204(f)(2)). This is the second of two reports that are required by the statute.

As requested, the Commission's report assesses the economic impact on the United States of trade agreements for which Congress has enacted an implementing bill under trade authorities procedures since January 1, 1984.

Over time, U.S. trade agreements have expanded in depth and breadth. U.S. trade agreements have maintained or expanded market access through both tariff and nontariff provisions, which both lowered barriers to trade and reinforced market certainty that such free trade regimes will remain in effect.  U.S trade agreements have also included provisions designed to address systemic problems within U.S. FTA partners’ supply chains related to workers’ rights and the environment.

Throughout the report the Commission has used a variety of quantitative and qualitative approaches to analyze the impacts of these agreements, and specific provisions within them, on U.S. industry and workers. The Commission traced the evolution of key provisions, developed economic models that estimate the magnitude of the agreements’ impacts, assessed how individual provisions and provision types have impacted specific industries through a series of case studies, and summarized the empirical literature estimating the effects of trade agreements.   

Following are highlights from the report:

  • The Commission estimates that, to the extent quantifiable, the agreements have had a small but positive effect on the U.S. economy as a whole.  In 2017 (the base year), they led to an estimated increase in U.S. real GDP of $88.8 billion (0.5 percent) and in aggregate U.S. employment of 485,000 full-time equivalent (FTE) jobs (0.3 percent), based on a model that assumes the economy is at its long-run full employment level.

However, the employment gains were not distributed evenly, with the biggest gains estimated for college-educated male workers.

  • The success of two provisions examined in this report – one under the U.S. Peru FTA to combat illegal logging and deforestation in Peru and the other in a NAFTA side agreement to improve collective bargaining rights in Mexico – have been limited.

However, more recent developments under the USMCA provide the opportunity for improvement in terms of the ability of agreements to address labor and environment concerns.  For example, robust labor and environment provisions under USMCA have established new mechanisms for combating these problems, although it is still too early to assess the impact of these new measures.

  • Due to the Peru and Colombia FTAs, U.S. yellow corn exporters have enjoyed a tariff advantage and reduced uncertainty over competing exporters, allowing U.S. exporters to develop these markets and establish business relationships with Colombian and Peruvian purchasers.
  • U.S. energy product exports to Korea rose sharply in both value and volume in recent years, as U.S. producers and exporters took advantage of broad reductions in trade barriers under the U.S.-Korea Free Trade Agreement (KORUS).

Economic Impact of Trade Agreements Implemented Under Trade Authorities Procedures, 2021 Report (Investigation No. TPA 105-008, USITC Publication 5199, June 2021) is available on the USITC website at https://www.usitc.gov/publications/332/pub5199.pdf. The Commission will be providing a limited modeling release underlying the analyses associated with this report in a few weeks.  The modeling release will be available at https://www.usitc.gov/publications/332/pub5199_appendix_f_modeling.pdf.

USITC general factfinding investigations cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the House Committee on Ways and Means, or the Senate Committee on Finance.  The resulting reports convey the Commission's objective findings and independent analyses on the subjects investigated.  The Commission makes no recommendations on policy or other matters in its general factfinding reports.  Upon completion of each investigation, the USITC submits its findings and analyses to the requester.  General factfinding investigation reports are subsequently released to the public, unless they are classified by the requester for national security reasons.

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