New TPP study shows few threats, more benefits to US economy

A new US economic study on the impact of the Trans-Pacific Partnership (TPP) shows a boost for American agriculture and the services sector but a decrease in manufacturing output.

The report from the US International Trade Commission, a nonpartisan government agency, shows food and agriculture would get a big boost from lower barriers to US exports to Japan.

The services sector would get a $US42.3 billion lift by 2032, including $US11.6 billion for business services and $7.5 billion for retailers and wholesalers.

But output in manufacturing would decrease slightly as some US companies would face greater competition.

If ratified, the 12-nation trade agreement would probably lift US gross domestic product by a small amount – 0.15%, or $US42.7 billion, by 2032 – and increase employment by a net of 128,000 full time jobs.

The US trade balance with TPP countries would improve over 15 years, the ITC says, but the overall US trade deficit is unlikely to change much due to the TPP.

TPP's future uncertain
The future of the TPP is uncertain as it has fallen victim to the presidential nomination campaigns. The presumptive Republican nominee Donald Trump and the Democratic contenders Hillary Clinton and Bernie Sanders have all rejected the TPP.

They have slammed past trade agreements and blamed US trade policy for the loss of manufacturing jobs and stagnant incomes.

The Congress has yet to consider the deal, which requires majority votes in the House and Senate, before the November election.

The ITC report confirms previous reviews that say the impact of the TPP is likely to be extremely small on the overall US economy and most industries.

But overall it could reduce the worst fears and help claw back some congressional support for President Barack Obama to advance his trade policy before his term ends.

Mr Obama will travel to Vietnam next week with US trade representative Mike Froman to promote the TPP in its least developed member country.

“What cannot be quantified in this study or any other is the cost to American leadership if we fail to pass TPP and allow China to carve up the Asia-Pacific through their own trade agreement,” Mr Froman says in a statement issued with the report

Meanwhile, the Obama administration says the ITC study doesn’t take into account all the TPP’s benefits, including the reduction in regulatory barriers to trade that can’t be measured in the same way as tariffs.

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