Friday, June 03, 2005
[IWS] USITC: IMPACT of TRADE AGREEMENTS under TRADE PROMOTION AUTHORITY [1 June 2005]
IWS Documented News Service
_______________________________
Institute for Workplace Studies Professor Samuel B. Bacharach
School of Industrial & Labor Relations Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor Stuart Basefsky
New York, NY 10016 Director, IWS News Bureau
________________________________________________________________________
United States International Trade Commission (USITC)
The Impact of Trade Agreements Implemented Under Trade Promotion Authority
Investigation No. TA-2103-1
Publication 3780
1 June 2005
http://hotdocs.usitc.gov//docs/pubs/332/pub3780.pdf
[full-text, 142 pages]
ABSTRACT
This report was prepared in response to a requirement of the Trade Act of 2002. The
Commission was required by section 2103(c)(3)(B) of the Trade Act to submit a report
to Congress on the economic impact on the United States of all trade agreements
implemented since enactment of the Trade Act of 2002. In that period, trade
agreements have been negotiated and implemented with Singapore, Chile, and
Australia.
Assessing the impact on the United States of the three agreements is complicated by
two factors. First, the effect of the agreements on the U.S. economy can be expected to
be rather small because Singapore, Chile, and Australia account for a relatively small
share of U.S. trade; because prior to the agreements trade with these partners was
already quite open; and because the terms of the agreements have not yet been fully
implemented. Second, the agreements have not had time to establish an empirical
record that would allow their effects to be detected and isolated econometrically from
other events influencing trade and the U.S. economy, because so little time has passed
since implementation of the agreements (17 months for Singapore and Chile, and five
months for Australia).
Findings contained in the report are derived from several sources, many of whichwere
available before the implementation of the agreements. A review of economic
literature, all of which dates from before implementation, covers estimates of likely
effects of the agreements. An analysis of selected industry sectors examines the
implications of the agreements for trends in their trade and output. And a
mathematical simulation analysis of patterns of trade provides an estimate of the
potential long-term impact of the three agreements on U.S. trade, output, and
employment. The principal findings are that the three agreements will collectively have
very little effect on the the U.S. economy in the aggregate, though trade in some sectors
(notably meat products, and textiles and apparel) with the three partners will increase
substantially. Even in these sectors, the change is small relative to U.S. trade with the
world and to U.S. output.
Principal Findings
The Commission simulation of the quantifiable tariff components of the three trade
agreements suggests that the welfare value to the United States of the tariff
liberalization under the agreements is $464 million. This means that, when fully
implemented, the FTAs would provide annual benefits to consumers worth $464
million, in the economy of 2004. This represents an increase of less than 0.01 percent
of welfare in the baseline year. Total imports increase by a little over $1.3 billion (0.08
percent) on a landed-duty paid basis and total exports increase by about $1.8 billion
(0.15 percent) on a free on board (f.o.b.) basis.
The trade volumes with the three FTA partners increase substantially more than
aggregate trade with the world. Simply put, the increase in imports from the three FTA
partners diverts some of the imports from other sources. U.S. imports from the partners
increase by about $2.2 billion, with increases of about $1.1 billion, $0.3 billion, and
$0.9 billion from Australia, Chile, and Singapore respectively. Comparing these
findings to the aggregate change in U.S. imports of about $1.3 billion, the simulated
FTAs divert the difference of about $930 million of trade away from countries other
than the three FTA partners.
In general, the sectors facing the greatest trade barriers are the ones experiencing the
greatest import effects of eliminating the trade barriers. U.S. imports of goods in five
categories—meat products (which includes beef); other processed foods and tobacco;
textiles, apparel, and leather products; petroleum and chemicals; and other
machinery and equipment such as industrial machinery—increase substantially,
accounting for about $2 billion of the total increase in imports.
The three FTAs are likely to result in expansion in the output of industries that
experience increased export demand owing to the removal of tariffs abroad, and
indirectly in the expansion of those industries that provide inputs to them. In addition,
the reallocation of resources and direct competition from imported goods that are
given preferential import treatment into the United States likely will indirectly cause
declines in some U.S. industries. In the simulation, the biggest proportional increase in
output quantity, 0.1 percent, is felt by themotor vehicles and parts industry. The biggest
decline (-0.18 percent) is in the meat products sector.
The qualitative analysis of industry characteristics and likely effects of the trade
agreements shows that, in general, the trade agreements are expected to have small
effects on trade in the covered sectors. Some increases in imports of fruits and
processed (but not raw) macadamias are expected, as well as of meat from Australia
and textiles and apparel from Chile. Effects on exports are expected to be negligible or
very small.
_____________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky *
Director, IWS News Bureau *
Institute for Workplace Studies *
Cornell/ILR School *
16 E. 34th Street, 4th Floor *
New York, NY 10016 *
*
Telephone: (607) 255-2703 *
Fax: (607) 255-9641 *
E-mail: smb6@cornell.edu *
****************************************
_______________________________
Institute for Workplace Studies
School of Industrial & Labor Relations
Cornell University
16 East 34th Street, 4th floor
New York, NY 10016
________________________________________________________________________
United States International Trade Commission (USITC)
The Impact of Trade Agreements Implemented Under Trade Promotion Authority
Investigation No. TA-2103-1
Publication 3780
1 June 2005
http://hotdocs.usitc.gov//docs/pubs/332/pub3780.pdf
[full-text, 142 pages]
ABSTRACT
This report was prepared in response to a requirement of the Trade Act of 2002. The
Commission was required by section 2103(c)(3)(B) of the Trade Act to submit a report
to Congress on the economic impact on the United States of all trade agreements
implemented since enactment of the Trade Act of 2002. In that period, trade
agreements have been negotiated and implemented with Singapore, Chile, and
Australia.
Assessing the impact on the United States of the three agreements is complicated by
two factors. First, the effect of the agreements on the U.S. economy can be expected to
be rather small because Singapore, Chile, and Australia account for a relatively small
share of U.S. trade; because prior to the agreements trade with these partners was
already quite open; and because the terms of the agreements have not yet been fully
implemented. Second, the agreements have not had time to establish an empirical
record that would allow their effects to be detected and isolated econometrically from
other events influencing trade and the U.S. economy, because so little time has passed
since implementation of the agreements (17 months for Singapore and Chile, and five
months for Australia).
Findings contained in the report are derived from several sources, many of whichwere
available before the implementation of the agreements. A review of economic
literature, all of which dates from before implementation, covers estimates of likely
effects of the agreements. An analysis of selected industry sectors examines the
implications of the agreements for trends in their trade and output. And a
mathematical simulation analysis of patterns of trade provides an estimate of the
potential long-term impact of the three agreements on U.S. trade, output, and
employment. The principal findings are that the three agreements will collectively have
very little effect on the the U.S. economy in the aggregate, though trade in some sectors
(notably meat products, and textiles and apparel) with the three partners will increase
substantially. Even in these sectors, the change is small relative to U.S. trade with the
world and to U.S. output.
Principal Findings
The Commission simulation of the quantifiable tariff components of the three trade
agreements suggests that the welfare value to the United States of the tariff
liberalization under the agreements is $464 million. This means that, when fully
implemented, the FTAs would provide annual benefits to consumers worth $464
million, in the economy of 2004. This represents an increase of less than 0.01 percent
of welfare in the baseline year. Total imports increase by a little over $1.3 billion (0.08
percent) on a landed-duty paid basis and total exports increase by about $1.8 billion
(0.15 percent) on a free on board (f.o.b.) basis.
The trade volumes with the three FTA partners increase substantially more than
aggregate trade with the world. Simply put, the increase in imports from the three FTA
partners diverts some of the imports from other sources. U.S. imports from the partners
increase by about $2.2 billion, with increases of about $1.1 billion, $0.3 billion, and
$0.9 billion from Australia, Chile, and Singapore respectively. Comparing these
findings to the aggregate change in U.S. imports of about $1.3 billion, the simulated
FTAs divert the difference of about $930 million of trade away from countries other
than the three FTA partners.
In general, the sectors facing the greatest trade barriers are the ones experiencing the
greatest import effects of eliminating the trade barriers. U.S. imports of goods in five
categories—meat products (which includes beef); other processed foods and tobacco;
textiles, apparel, and leather products; petroleum and chemicals; and other
machinery and equipment such as industrial machinery—increase substantially,
accounting for about $2 billion of the total increase in imports.
The three FTAs are likely to result in expansion in the output of industries that
experience increased export demand owing to the removal of tariffs abroad, and
indirectly in the expansion of those industries that provide inputs to them. In addition,
the reallocation of resources and direct competition from imported goods that are
given preferential import treatment into the United States likely will indirectly cause
declines in some U.S. industries. In the simulation, the biggest proportional increase in
output quantity, 0.1 percent, is felt by themotor vehicles and parts industry. The biggest
decline (-0.18 percent) is in the meat products sector.
The qualitative analysis of industry characteristics and likely effects of the trade
agreements shows that, in general, the trade agreements are expected to have small
effects on trade in the covered sectors. Some increases in imports of fruits and
processed (but not raw) macadamias are expected, as well as of meat from Australia
and textiles and apparel from Chile. Effects on exports are expected to be negligible or
very small.
_____________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
# posted by SBasefsky : 12:24 PM
