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Trade BRT Comment on Investigation No. TPA-105-008, Economic Impact of Trade Agreements Implemented Under Trade Authorities Procedures, 2021 Update

Nov 6, 2020

Submitted at http://edis.usitc.gov

The Honorable Lisa R. Barton

Secretary to the Commission

U.S. International Trade Commission

500 E Street SW

Washington, DC 20436

Subject: Comment on Investigation No. TPA-105-008, Economic Impact of Trade Agreements Implemented Under Trade Authorities Procedures, 2021 Update

Business Roundtable (BRT) is an association of chief executive officers of America’s leading companies working to promote a thriving U.S. economy and expanded opportunity for all Americans through sound public policy.[1] We appreciate the opportunity to submit comments for the Commission’s consideration of the economic impact of trade agreements. Please find attached a recent Business Roundtable study that found that over 40 million American jobs depended on international trade in 2018. The study – prepared by Trade Partnership Worldwide, LLC[2] – analyzes the latest-available employment and trade data from 2018 and examines the net impacts of both exports and imports of goods and services on American jobs at both the national and state level.

The attached report demonstrates the significant jobs and economic benefits from trade for U.S. workers before the global pandemic took hold. Although the COVID-19 pandemic has generated significant economic disruption to U.S. workers, farmers, and businesses, the report shows that opening markets to American goods and services around the world and helping American workers and families get the products and services they need at prices they can afford will enable U.S. economic recovery and help Americans get back on their feet. Trade agreements the United States has implemented support jobs, exports, and the benefits of two-way trade. With more than 96 percent of the world’s population and 75 percent of its purchasing power outside the United States, economic recovery, jobs, and future growth for America will depend on international trade and investment.

Key findings of the report include:

  • In 2018, an estimated 40.6 million American net jobs were tied to trade.
  • These American jobs dependent on trade represented 20.2 percent of total employment, or one in five jobs.
  • Trade has a net positive impact on U.S. jobs in the services, agriculture, and manufacturing sectors.
  • All 50 states have benefitted from net employment gains directly attributable to trade. [3]
  • American jobs tied to trade have increased at four times the rate of U.S. employment growth overall. Between 1992 and 2018, trade-dependent jobs increased by 180 percent (from a net of 14.5 million to 40.6 million), compared to 45 percent growth for employment generally.
  • Nearly two times as many jobs were supported by trade in 2018 (20.2 percent) as in 1992 (10.4 percent) – before the accelerated wave of trade liberalization that began with the implementation of NAFTA in 1994.
  • Each of the U.S. free trade agreements (FTAs) implemented over the past three decades helped to increase total U.S. trade, including both exports and imports.
  • In 2018, $782 billion of U.S. goods exports, or 47 percent, went to FTA partners, representing an increase of 68 percent since 2009.
  • The share of total U.S. goods and services exports with bilateral or regional trade agreement partners has increased from less than 1 percent in 1992 (when the United States had just two FTA partners, Israel and Canada), to 39 percent in 2018 (when the United States had 20 FTA partner countries).
  • Customers in 233 countries and territories buy American-made goods and services, including billions of dollars in annual exports to top markets like Canada, Mexico, and China.

Trade continues to support the U.S. economy and American jobs through the COVID-19 pandemic and will continue to support tens of millions of American jobs and economic growth across all 50 States once the pandemic has been overcome. Since the middle of the 20th century through 2018, U.S. exports and imports grew strongly, and by 2018 trade reflected a significant share of U.S. economic activity. From 2011-2018, total trade (exports plus imports) represented nearly 30 percent of U.S. gross domestic product (GDP), up from 10.6 percent when the General Agreement on Tariffs and Trade was launched in 1947. Studies have also demonstrated that trade is a factor in driving economic growth and that countries with higher rates of GDP growth also have higher rates of growth in trade as a share of output. [4]

U.S. trade agreements contribute to growth in trade, particularly during the past two decades. They reduce foreign barriers to American goods and services, open new markets for U.S. exports, and facilitate trade with trade agreement partners that reduce the costs of inputs for American manufacturers and reduce prices and increase options for American families. U.S. FTAs also incorporate strong enforcement tools to ensure that our trading partners live up to their commitments to benefit American workers, farmers, and businesses. Through trade agreements, the United States can set the gold standard rules for digital trade, trade facilitation and customs administration, regulatory transparency, intellectual property protection, and worker and environmental protections. U.S. manufacturers, farmers, and services providers use trade agreements to improve their competitiveness selling American goods and services at home and abroad.

Separately, the United States should work with trade agreement partners, including our North American neighbors within the U.S.-Mexico-Canada Agreement (USMCA), to harness our free trade agreement network to strengthen supply chain resilience. The fast-moving COVID-19 pandemic disrupted global supply and demand significantly and harmed American businesses, farmers, workers, and families through dual public health and economic crises. Throughout the COVID-19 pandemic, industry has partnered with the public sector to adapt supply chains, surge production, and distribute needed goods and services around the country. Diversifying both domestic and international suppliers, developing multi-regional production platforms, better managing domestic stockpiles, developing surge production and supply capacity, and investing in flexible manufacturing capabilities can best prepare for future emergencies. FTAs and negotiations can strengthen supply chain resilience to position American businesses to better respond and compete and to ensure families get the products and services they need.

Thank you for consideration of these comments and for conducting this investigation. Business Roundtable will continue to engage with the Commission, the Administration, and Congress on the benefits of trade and trade agreements for the U.S. economy.

Sincerely,

Paul H. DeLaney, III

Vice President, Trade and International

Business Roundtable

Attachment:

  • Trade and American Jobs, The Impact of Trade on U.S. and State-Level Employment: 2020 Update. Prepared by Trade Partnership Worldwide, LLC for Business Roundtable

Past BRT Trade and American Jobs Reports

First issued in 2007, Business Roundtable has periodically updated the Trade and American Jobs report to provide thorough examination of the impacts of trade on U.S. jobs using the most recent employment and trade data. Please find links to past Trade and American Jobs reports below:

References

  1. Business Roundtable exclusively represents chief executive officers (CEOs) of America’s leading companies. These CEO members lead companies with nearly 19 million employees and more than $7 trillion in annual revenues. As major employers in every state, Business Roundtable CEOs take seriously the responsibility of creating quality jobs with good wages. These leaders join with communities, workers and policymakers to build a better future for the nation and its people.
  2. Trade Partnership Worldwide, LLC is an international trade and economic consulting firm with a global outlook and reach through a network of international economists.
  3. For additional state-specific information, we invite you to see the breakdown at our website: https://www.businessroundtable.org/policy-perspectives/trade-international/benefits-of-trade-data.
  4. For a summary see Esteban Ortiz-Ospina, “Does Trade Cause Growth?,” October 22, 2018, https://ourworldindata.org/trade-and-econ-growth