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Peterson Institute Says TPP A Boon For United States

by Mike Godfrey,, Washington

26 January 2016

The Peterson Institute for International Economics has sought to quantify the benefits for the United States from the implementation of the Trans-Pacific Partnership agreement.

The IIE said tariffs will fall dramatically: "TPP will eliminate three-quarters of non-zero tariffs immediately on entry into force, and 99 percent when fully implemented. … By 2030, nearly all tariffs among TPP members will be eliminated. Most products are assumed by then to have regional supply chains that make them eligible for preferences, [although] a few tariffs, like the 25 percent US tariff on trucks and SUVs, remain for as long as 30 years."

The IIE's new estimates suggest that TPP will increase annual real incomes in the United States by USD131bn, or 0.5 percent of gross domestic product (GDP), and annual exports by USD357bn, or 9.1 percent of exports, by 2030, when the agreement will be almost fully implemented.

However, the report also warns that delaying the launch of the TPP by even one year would represent a USD77bn permanent loss to the US economy by giving up gains that compound over time.

Annual income gains by 2030 are estimated by the IIE at USD492bn for all TPP participants. The United States will be the largest beneficiary of TPP in absolute terms, but it is also projected that the agreement will generate substantial gains for Japan, Malaysia, and Vietnam, and solid benefits for other members.

The IIE also noted that, "once in place, TPP is likely to promote additional integration in the Asia-Pacific region and beyond, with larger attendant gains. It is potentially a pathway to the Free Trade Area of the Asia-Pacific, which could include all Asia-Pacific Economic Cooperation members, and, based on our earlier studies, more than double the gains for the United States."

In 2014, TPP member countries – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam – had a combined GDP of USD28 trillion, or 36 percent of global GDP, and their exports were worth USD5.3 trillion, or 23 percent of the world total.

TAGS: tax | gross domestic product (GDP) | tariffs | trade treaty | agreements | United States | import duty | trade | Asia-Pacific

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