Properly negotiated and with strong enforcement, trade agreements can bring substantial benefits for American workers, farmers, ranchers, and companies. Negotiating strong new agreements that provide a level playing field for trade should be a priority of U.S. international economic policy.
U.S. trade agreements signal the commitment of the United States to lead the way in establishing the rules of international trade. On the other hand, failure to do so creates opportunities for other nations to set international trade rules in a way that risks tilting the playing field against U.S. interests. Trade agreements also serve to promote American values internationally, from the rule of law and transparency to ensuring a firm basis for regulatory measures in scientific evidence — all of which brings further economic benefits for American workers and exporters.
The record of past U.S. trade agreements is worthy of close study. While America’s 20 trade agreement partners represent less than 10% of the world’s GDP outside the United States, in recent years they have purchased nearly half of all U.S. exports, according to the U.S. Department of Commerce. It should come as no surprise that eliminating the tariffs and other trade barriers that foreign governments have imposed on U.S. exports enables trade to expand—often turning small economies into major U.S. export markets. The Chamber has estimated that the increased trade unleashed by these agreements supports more than 5 million American jobs.
The Chamber and its members have long supported comprehensive trade agreements. Indeed, U.S. trade agreements have eliminated duties on more than 99% of tariff lines and include dozens of chapters addressing U.S. priorities such as intellectual property protection, digital trade, non-tariff barriers, and a host of issues relating to services trade. The Chamber supports the negotiating objectives included in the Bipartisan Congressional Trade Priorities and Accountability Act of 2015. By contrast, “mini deals” that address the priorities of one sector may deliver benefits for some but sap momentum toward a broader agreement of greater long-term economic consequence.
One example of a key U.S. priority advanced by comprehensive trade agreements is the protection of international investment. U.S. investment in other countries is often the only way for American companies to do business abroad in sectors where a domestic presence is required (as in many services) or where exporting is not feasible, and international investment makes firms more resilient and innovative. The United States should pursue more bilateral investment treaties (BITs) based on the U.S. 2012 model BIT, which provides protection from discriminatory treatment as well as direct and indirect expropriation, and continue to include these provisions in trade agreements. The model BIT offers a balanced approach to minimum standard of treatment, including fair and equitable treatment, and performance requirements, and it guarantees free transfers and affords all sectors the same level of protection. These obligations are best enforced through an investor-state dispute settlement (ISDS) mechanism that does not require using local courts prior to proceeding to ISDS.
Finally, interest persists in reviving the Trade in Services Agreement negotiations, which aimed to create a high-standard free-trade agreement in services among countries representing more than two-thirds of world trade in services. Negotiations were well advanced before stalling in 2016. Officials should revisit this enticing opportunity given that services trade is growing 60% more rapidly than trade in goods and the United States is home to thousands of highly-competitive services providers.