Sep 20, 2016 - 9:00am

The Case for the TPP: The Record of Past U.S. Trade Agreements

Senior Vice President for International Policy

What is the Trans-Pacific Partnership (TPP) all about? With debate over this 12-nation trade agreement now underway, the Chamber is publishing this series making the case for the TPP’s approval. This installment looks at the benefits of past U.S. trade agreements.

What is the real record of America’s trade agreements? This question has been much debated in recent months—colorfully, and not always accurately, on the campaign trail, and more soberly in a recent report by the U.S. International Trade Commission. And the answer is certainly relevant to today’s debate over the TPP.

The Chamber has been a vocal champion of the benefits of America’s trade agreements, which today cover our trade with 20 countries around the globe. We’ve examined these issues at length in reports including The Open Door of Trade: The Impressive Benefits of America’s Free Trade Agreements (March 2015), NAFTA Triumphant: Assessing Two Decades of Gains in Trade, Growth and Jobs (updated October 2015), and Opening Markets, Creating Jobs: Estimated U.S. Employment Effects of Trade with FTA Partners (March 2010).

The rationale for these agreements is simple. While the United States receives substantial benefits from trade, the international playing field is sometimes tilted unfairly against American workers. The U.S. market is largely open to imports from around the world, but many other countries continue to raise steep tariffs and other barriers against U.S. exports.

In this context, the record of America’s trade agreements is one of remarkable success. While America’s 20 trade agreement partners represent just 6% of the world’s population 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.

In fact, on a per capita basis, the citizens of these 20 countries buy 13 times as many made-in-the-USA goods and services as other countries. It should come as no surprise that eliminating tariffs and other trade barriers enables trade to expand—often turning small economies into major export markets.

Further, U.S. exports to new trade agreement partner countries have grown roughly three times as rapidly on average in the five-year period following the agreement’s entry-into-force as the global rate of growth for U.S. exports, as Chamber research shows. U.S. exports to Chile and Morocco quadrupled in the five years after U.S. trade agreements with those countries entered into force. This boost to U.S. export growth is especially pronounced with more recent agreements, which are front-loaded to eliminate tariffs rapidly, open services markets, and eliminate nontariff barriers more comprehensively than earlier trade agreements.

The trade balance is a poor measure of the success or failure of any particular trade policy, but the trade deficit is often cited by opponents of the TPP as a principal reason why the United States should not negotiate additional trade agreements. However, with regard to manufactured goods, the United States ran a cumulative trade surplus with its trade agreement partner countries of more than $280 billion over the past eight years (2008-2015), according to data from the U.S. Department of Commerce. The United States also has global trade surpluses in services and agricultural products.

Together, these facts reveal that the U.S. trade deficit arises from trade in manufactured goods with countries where the United States has no trade agreement in place. It’s ludicrous to say trade agreements are contributing to the deficit.

The logical conclusion is that the United States needs more trade agreements. In fact, leveling the playing field and opening markets abroad to the products of American workers, farmers, and companies should be a higher priority than ever before. The best way to do so is to enter into strong, new trade agreements based on openness, accountability, and fair play.

See additional details here or in the Chamber reports linked above.

About the Author

About the Author

Senior Vice President for International Policy

Murphy directs the U.S. Chamber’s advocacy relating to international trade and investment policy.