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This week, the U.S. International Trade Commission (USITC) issued a report on the expected economic impact of the Trans-Pacific Partnership (TPP), estimating it will boost U.S. annual real income by $57.3 billion by 2032.
The USITC is charged by Congress with preparing “a report assessing the likely impact of the agreement on the United States economy as a whole and on specific industry sectors” in advance of congressional consideration of a new trade agreement.
Interestingly, a more comprehensive study by the Peterson Institute for International Economics issued in January estimated the TPP will have benefits more than twice as large, increasing annual real incomes in the United States by $131 billion and boosting annual exports by $357 billion in the same time period.
What accounts for the difference? The ITC report shows smaller benefits because it looked mostly at tariff elimination and made a more limited attempt to quantify the benefits of the TPP’s provisions eliminating non-tariff barriers, protecting U.S. intellectual property, and unleashing the digital economy.
As U.S. Trade Representative Michael Froman observes: “When the full impact of TPP’s intellectual property rights protections, services sector benefits, disciplines on state owned enterprises, reduction of non-tariff barriers, and many provisions on digital trade are included, other studies, including from the non-partisan Peterson Institute, have found that the benefits are even higher.”
The conservative tack of the ITC report is no surprise. Its studies have historically tended to underestimate the benefits of new trade agreements such as their boost to U.S. exports of goods and services by factors ranging from four to ten.
Adding to the conversation, the World Bank in January released its own report projecting the potential economic impact of the TPP. Like the Peterson scholars, the World Bank researchers estimated the TPP would boost U.S. incomes by more than $100 billion.
In any event, it is bizarre to hear anti-trade voices from organized labor belittling the “small” expected benefits of the TPP. In fact, it’s difficult to name another public policy initiative that is largely budget neutral and expected to bring such large benefits to the U.S. economy.
Let’s put that in context, as my colleague J.D. Harrison did in January:
One hundred billion dollars is more than annual economic output of approximately 130 countries, based on the World Bank’s figures, including Ecuador, Libya and Costa Rica. It’s more than the GDPs of Paraguay, Jordan, Afghanistan and Honduras, combined.
One hundred billion dollars is more than the annual economic output of 14 states. In a sense, the economic implications of not approving the Pacific trade deal would amount to forfeiting the entire annual economic contributions of Maine, Idaho, New Mexico or New Hampshire.
One hundred billion dollars is more than all but one federal agency paid to government contractors last year (the lone exception, the Department of Health and Human Services). It’s more than the combined amount of funds appropriated this year for use by the Departments of Education, Agriculture, Energy, Transportation, State and Homeland Security.
One hundred billion dollars is also more than the net worth of any individual on the planet - yes, even Bill Gates (which Forbes’ pegs at $79.2 billion). It’s more than Amazon’s Jeff Bezos, Facebook’s Mark Zuckerberg, and Google’s Larry Page are worth combined. It’s also more than venture capitalists and angel investors collectively invest in American companies every year.
One hundred billion dollars also happens to be more than the combined profits of the three most profitable companies on this past year’s Fortune 500 (Apple, Exxon and Wells Fargo). It’s more than the total combined annual revenues of the National Football League (NFL), the National Basketball Association (NBA), Major League Baseball (MLB), the National Hockey League (NHL), NASCAR and the National Collegiate Athletic Association (NCAA). And it’s roughly double the combined U.S. sales from every movie, every album and every book released in 2014.
Still sound like a potentially “small” win for the U.S. economy?