How did the U.S. Free Trade Agreements Fare? A Comparative Study

US Free Trade Agreements

By Dr. Andreas Udbye

University of Puget Sound, Seattle, WA

Washington State DEC

As of 2015, the United States has Free Trade Agreements (“FTA’s”) with twenty partner countries. The main purpose of these agreements is to promote bilateral trade in the form of exports and imports. Their success can be gauged by measuring whether the FTA’s boosted trade at a higher rate than that with comparable non-FTA countries. This paper investigates whether the exports and imports between the U.S. and the twenty partner countries showed higher growth rates after the implementation of the FTA’s, and whether the growth rates were individually and collectively higher than compared to a control group consisting of 82 non-FTA trading partners. The measuring tool is Compound Annual Growth Rates (CAGR). Simpler than an econometric model based on gravity theory, and more accurate than comparing average growth rates, the CAGR is a suitable comparison measure. Older studies investigating international FTA’s have used versions of the gravity model to show significant increases in bilateral trade following the agreements. Unlike this report, none of those studies focused solely on the FTA’s that the U.S. has entered into over the past twenty years.

Compared to the control group, our analysis shows a positive effect of the FTA’s on U.S. exports, but a slightly negative effect on imports. Some of the FTA’s are only a few years old, and a complex global macroeconomic scene over the past ten years makes it harder to generalize. Each country has a different economic story to tell. However, from a trade policy standpoint it may appear that the FTA’s have the intended, incrementally positive effect on U.S. exports. While FTA’s may have significant positive or negative effects on specific sectors and industries, they do not appear to cause dramatic improvements in bilateral trade. In the conclusion of the paper we offer some possible reasons for the FTA’s lackluster performance.

Free Trade Agreement paper

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USTR Launches New Effort to Help U.S. Small Businesses Export to the European Union-Small Businesses to Offer Suggestions for Increasing Exports under the Transatlantic Trade & Investment Partnership

Washington, D.C. – U.S. small businesses currently exporting to the European Union (EU) will have the opportunity to voice their concerns on existing barriers to trade with the EU through a series of roundtables across the country. The roundtables will be held as part of broader outreach efforts under the recently launched U.S.-EU Transatlantic Trade and Investment Partnership (T-TIP) (link is external) negotiations. The objective of the roundtables is to listen to and better understand small business’ suggestions on how to reduce and eliminate those barriers, and help expand U.S. small business exports to the EU.

In July, the United States and the European Union held the first round of T-TIP negotiations aimed at increasing jobs, economic growth, and international competitiveness on both sides of the Atlantic. The transatlantic economic relationship is already the world’s largest, accounting for one third of total goods and services trade and nearly half of global economic output, while supporting 13 million U.S. and EU jobs. In both the United States and the EU, small and medium businesses are critical motors of growth, job creation, and innovation. Negotiators intend to conclude an agreement that recognizes the important role small businesses play in the transatlantic relationship and enhances their ability to participate in and benefit from new trade and investment opportunities.

The roundtables were commissioned by the Office of the United States Trade Representative (USTR), which asked the U.S. International Trade Commission (USITC) to conduct a study on the existing trade barriers that disproportionately affect U.S. small business exporters. Since the President’s National Export Initiative (NEI) goal to double exports by the end of 2014 has focused on increasing the current base of 295,000 small business exporters, an increase in small business participation could result in increased trade between two regions whose two-way trade already exceeds $630 billion.

USITC responded by organizing the T-TIP roundtables, which will be held from September 9th through September 27th in key cities. If you’d like to take part in a roundtable, please contact sme@usitc.gov (link sends e-mail) for more information.

In addition to participating in the roundtables, exporters will have other means to convey their concerns and suggestions through public hearings in San Jose, California (September 26th) and Washington, D.C. (October 8th). Business owners who are interested in having their voices heard but cannot attend the roundtables or public hearings can submit written statements by sending an email to sme@usitc.gov (link sends e-mail) (by October 15, 2013) or by mail to EU-SME Project, U.S. International Trade Commission, 500 E Street, S.W., Washington, D.C. 20436 (no later than September 30, 2013).

For more detailed information, visit ww.usitc.gov/secretary/fed_reg_notices/332/332_541_notice07252013sgl.pdf .

For more information on the Transatlantic Trade and Investment Partnership and U.S trade with the European Union, visit http://www.USTR.gov/TTIP

U.S. Lawmakers Propose Fast-Track Bill for Trade Agreements

By REUTERS
Published: Jan 10 2014 at 01:25 PM

U.S. lawmakers proposed a bill to give the White House power to fast-track international trade agreements as the United States gears up for a hectic year of trade negotiations.

The bill would let the administration put trade deals before Congress for an up or down vote without amendments, a move backed by big business and farmers but viewed with caution by others. Without that assurance, trading partners could be less willing to sign deals.

The fast-track power would help the United States in negotiations this year with Pacific Rim and European Union countries on two separate pacts that would encompass nearly two-thirds of the global economy and trade flows.

Under the bipartisan Trade Promotion Authority (TPA) proposal, avoiding currency manipulation would be set as a goal for U.S. trade negotiators, a controversial measure that may upset major trading partners. Aides said the bill would also strengthen rules for agriculture.

“The TPA legislation that we are introducing today will make sure that these trade deals get done, and get done right,” said Democrat Max Baucus, chairman of the Senate Finance Committee, which has jurisdiction over trade.

The committee’s senior Republican, Orrin Hatch, and Representative Dave Camp, the Republican chairman of the House Ways and Means Committee, which also oversees trade issues, joined Baucus in backing the bill.

But passage is not assured. Representative Sander Levin, the top Democrat on the Ways and Means panel, declined to join the proposal and said he was working on separate legislation.

Critics of the fast-track power say it erodes transparency and accountability and does not protect local workers, which unions say is of particular concern with the Trans-Pacific Partnership, or TPP.

“More U.S. jobs would be shifted overseas and U.S. workers would suffer lower wages as companies look to countries like Vietnam, where the average hourly wage is 75 cents,” Communications Workers of America President Larry Cohen said in a statement. Vietnam is a TPP partner.

The White House welcomed the proposal and said failing to act could leave the United States at a competitive disadvantage.

“We need to use every tool we have to knock down trade barriers,” it said in a statement. “If we don’t seize these opportunities, our competitors surely will.”

The U.S. Chamber of Commerce has said it will lobby lawmakers to support the fast-track power, which lapsed in 2007, and said sealing the trade pacts was vital for jobs and growth.

Trade deals can lower the cost of goods imported into the United States and boost markets for U.S. exports, which Obama said in 2010 he wanted to double by 2015.

Currencies in Focus

The bill would give members of Congress access to negotiating texts of trade agreements and allow them to participate in talks as advisers to the U.S. negotiating team, a change from earlier fast-track laws.

Levin said it did not go far enough to involve lawmakers in trade talks or to prevent currency manipulation by trading partners, adding that the TPP should include a specific currency clause.

U.S. automakers, worried that Japanese competitors may gain an edge in the local market, said earlier all TPP signatories should pledge not to manipulate currencies(link is external), on pain of having tariff benefits under the pact suspended.

“If Japan is going to be part of this, it has to open up its market,” Levin said.

Including a currency goal in the TPA does not mean a similar provision will be included in all U.S. trade agreements. But Senate aides said U.S. negotiators would be expected to show progress toward meeting the objective.

Ted Truman, a Treasury official under former President Bill Clinton, said it made no sense to burden trade talks with a currency provision. “My concern is that I don’t think you can get anything that means anything and it’s likely to be a deal-breaker,” he said.

Other negotiating objectives set out in the proposal may also raise eyebrows among trading partners. Senate aides said the bill would seek “robust and enforceable” rules on food safety and animal and plant health regulations – sticking points in relations with China(link is external) and Europe, among others.

The bill would also set a “high standard” for intellectual property protection. Developing countries complain that strong patent protection for drug companies makes medicines too expensive.

National Foreign Trade Council President Bill Reinsch said he was confident that TPA would be approved but said he hoped the fight would not be as bitter as in 2001 and 2002, when it passed with a slim margin and only after last-minute concessions.

“What worries me about it is not that they won’t get it done. What worries me about it is that it’s going to end up being the same kind of nasty, partisan fight it was 13 years ago,” he told reporters.

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