The Truth about Trade Agreements—and Why We Need Them. Peterson Institute for International Economics. Chad P. Bown. November 21, 2016
US trade agreements could be the first economic casualty of the 2016 election. One of President-elect Donald Trump’s signature campaign promises was to renegotiate the North American Free Trade Agreement (NAFTA) and even potentially pull the United States out of the World Trade Organization (WTO). And as Democratic leaders now contemplate their party’s future, they, too, are questioning the wisdom of such international deals.
Existing US trade agreements rose from the ashes of World War II and the Great Depression. Understanding how they protect the US economy, American workers, and consumers is critical to avoiding a repeat of the policy mistakes of the 1930s. [Note: contains copyrighted material].
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U.S. Trade with Free Trade Agreement (FTA) Partners. Congressional Research Service, Library of Congress. James K. Jackson. November 9, 2016
The United States is considering two mega-regional free trade agreements that its participants argue are comprehensive and high-standard: the recently concluded Trans-Pacific Partnership (TPP) among the United States and 11 other countries, and the U.S.-European Transatlantic Trade and Investment Partnership (T-TIP), still under negotiation. The 12 TPP countries signed the agreement in February 2016, but the agreement must be ratified by each country before it can enter into force. In the United States, this requires implementing legislation by Congress. Discussions of these and other FTAs often focus on trade balances, particularly U.S. bilateral merchandise trade balances with its FTA partner countries, as one way of measuring the success of the agreement. Although bilateral merchandise trade balances can provide a quick snapshot of the U.S. trade relationship with a particular country, most economists argue that such balances serve as incomplete measures of the comprehensive nature of the trade and economic relationship between the United States and its FTA partners. Indeed, current trade agreements include trade in services, provisions for investment, and trade facilitation, among others that are not reflected in bilateral merchandise trade balances.
This report presents data on U.S. merchandise (goods) trade with its Free Trade Agreement (FTA) partner countries. The data are presented to show bilateral trade balances for individual FTA partners and groups of countries representing such major agreements as the North America Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement and Dominican Republic (CAFTA-DR) relative to total U.S. trade balances. This report also discusses the issues involved in using bilateral merchandise trade balances as a standard for measuring the economic effects of a particular FTA.
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NAFTA at 20: Overview and Trade Effects. Congressional Research Service, Library of Congress. M. Angeles Villarreal and Ian F. Fergusson. April 16, 2014.
The North American Free Trade Agreement (NAFTA) entered into force on January 1, 1994. The agreement was signed by President George H.W. Bush on December 17, 1992, and approved by Congress on November 20, 1993. The NAFTA Implementation Act was signed into law by President William J. Clinton on December 8, 1993 (P.L. 103-182). The overall economic impact of NAFTA is difficult to measure since trade and investment trends are influenced by numerous other economic variables, such as economic growth, inflation, and currency fluctuations. The agreement may have accelerated the trade liberalization that was already taking place, but many of these changes may have taken place with or without an agreement. Nevertheless, NAFTA is significant because it was the most comprehensive free trade agreement (FTA) negotiated at the time and contained several groundbreaking provisions.
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