The well-known and respected Peterson Institute for International Economics published a report last week that estimates that implementation of the Trans-Pacific Partnership deal will raise U.S. annual incomes by $131 billion and annual exports by $357 billion, 9.1%, in 2030, with similar gains to follow. Estimates for the U.S. growth under TPP are 35% higher than those reported by Peterson in 2012, primarily because of the inclusion of new data such as the effects of non-tariff barriers on trade in existing agreements.
Officials were quick to point to these results. “This independent analysis shows that TPP will raise wages for American workers, grow our economy, and help farmers and businesses export more American products, according to US Trade Representative Michael Froman. The new economic report was described and discussed by The Hill last week.
In addition, the report says that delaying enactment one year from the expected implementation date of 2017 would mean a damaging blow to the economy to the tune of an estimated one-time loss of $77 billion, or about a $600 loss on average for every household.
Froman said the analysis “offers clear evidence that TPP is an answer to challenges on how middle-class workers will compete at home and how our nation’s economy will compete abroad. Importantly, it also shows that sitting on the sideline and delaying TPP, even for a short time, will cost us dearly,” he said.
President Obama says he wants Congress to pass the agreement this year but is encountering pushback on the deal from members of his own party. Many congressional Democrats argue that the deal hurts U.S. workers and lowers their wages.
The Peterson report disputes such claims and concluded that, “while the TPP is not likely to affect overall employment in the United States, it will involve adjustment costs as U.S. workers and capital move from less to more productive firms and industries,” the report said.
The report estimates are that 53,700 U.S. jobs will be affected each year during implementation of the TPP. In 2014, 55.5 million American workers changed jobs in that manner “so the transition effects of the TPP would represent less than 0.1% increase in labor market churn in a typical year,” it said.
But the report notes that “some workers may face more difficult transitions” and that the costs to them could be higher than for others, so U.S. policymakers would need to step in to make sure programs are available to help them during the process.
Overall, the report concludes that the TPP appears to have met its two most important negotiating objectives: it will substantially benefit the 12 trading partners and it sets out an ambitious set of global trade rules that have “raced far ahead of the WTO rulebook, including services, investment, telecommunications, the digital economy and other critical industries.”
“If the TPP is ratified and implemented smoothly, these rules will renew progress, now stalled for more than two decades, in strengthening the world trading system,” the report said.