A government report on the impact to the U.S. economy of an Asia-Pacific free trade deal confirms what the National Pork Producers Council and other agricultural and business groups have known: The Trans-Pacific Partnership agreement will be good for U.S. agriculture, U.S. businesses and the U.S. economy.
The TPP, negotiations on which were initiated in late-2008 and concluded last October, is a regional trade deal that includes the United States, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, which account for nearly 40% of global GDP. The countries combined have more than 800 million consumers.
“The TPP will benefit American consumers, workers, businesses, farmers and ranchers, and we’re confident it will provide enormous new market opportunities for high-quality U.S. pork products,” said NPPC President John Weber, a pork producer from Dysart, Iowa. “America’s pork producers strongly support the TPP, and we urge Congress to quickly pass it.”
NPPC, which has been a leading voice in support of the TPP, believes the deal could be the “biggest commercial opportunity ever for U.S. pork producers.” Iowa State University economist Dermot Hayes estimates the agreement will exponentially increase U.S. pork exports to the Asia-Pacific region and help create more than 10,000 U.S. jobs tied to those exports.
According to a report released yesterday by the U.S. International Trade Commission, the TPP agreement is estimated to increase annual U.S. GDP by nearly $43 billion and to create almost 128,000 U.S. jobs by 2032, the year the agreement will be fully implemented. U.S. agricultural exports would rise by about $7.2 billion a year. The report estimates that 10 years after implementation, annual GDP would be $67 billion and 174,000 jobs will have been created.
► The Commission used a dynamic computable general equilibrium model to determine the impact of TPP relative to a baseline projection that does not 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. By year 15 (2032), U.S. annual real income would be $57.3 billion (0.23%) higher than the baseline projections, real GDP would be $42.7 billion (0.15%) higher, and employment would be 0.07% higher (128,000 full-time equivalents). U.S. exports and U.S. imports would be $27.2 billion (1.0%) and $48.9 billion (1.1%) higher, respectively, relative to baseline projections. U.S. exports to new free-trade agreement partners would grow by $34.6 billion (18.7%); U.S. imports from those countries would grow by $23.4 billion (10.4%).
► Among broad sectors of the U.S. economy, agriculture and food would see the greatest percentage gain relative to the baseline projections; output would be $10.0 billion, or 0.5 percent, higher by year 15. The services sector would benefit, with a gain of $42.3 billion in output. 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.
► Many stakeholders consider two new electronic commerce provisions that protect cross-border data flows and prohibit data localization requirements to be crucial to the development of cross-border trade in services, and vital to optimizing the global operations of large and small U.S. companies in all sectors.
► 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. 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.
“The USITC report confirms what we’ve known about the benefits of an agreement that eliminates tariff and non-tariff barriers to our products,” Weber said. “Not only will the TPP level the playing field for U.S. exports and, in fact, expand them, but it has the potential to become even bigger. For all intents and purposes, the agreement has become the global vehicle for free trade.”
A number of other countries in the region, including South Korea and the Philippines, already have indicated an interest in joining the TPP.
NPPC has expressed concern about a U.S. delay in approving — or even a rejection of — the trade agreement, pointing out that other countries are negotiating free trade deals in the Asia-Pacific region, including the China-led, 16-nation Regional Comprehensive Economic Partnership.
“The U.S. needs to act more quickly to get the TPP approved and implemented,” said Weber. “If we delay, we fall behind. And we certainly cannot afford either economically or geopolitically to walk away from the fastest growing region in the world.”