Trade Agreements: Impact on the U.S. Economy
February 1, 2011 - RL31932
The United States is in the process of considering a number of trade agreements, including the Trans-Pacific Partnership Trade Agreement (TPP). The Congress also may address the issue of trade promotion authority (TPA), which expired on July 1, 2007. The various trade agreements range from bilateral trade agreements with countries that account for meager shares of U.S. trade to multilateral negotiations that could affect large numbers of U.S. workers and businesses. During this process, Congress likely will be presented with an array of data estimating the impact of trade agreements on the economy, or on a particular segment of the economy. An important policy tool that can assist Congress in assessing the value and the impact of trade agreements is represented by sophisticated models of the economy that are capable of simulating changes in economic conditions. These models are particularly helpful in estimating the effects of trade liberalization in such sectors as agriculture and manufacturing where the barriers to trade are identifiable and subject to some quantifiable estimation. Barriers to trade in services, however, are proving to be more difficult to identify and, therefore, to quantify in an economic model. All of the models incorporate various assumptions that are necessary ...