Trade Agreements Yield Small Improvements for Trade and Economy, CBO Reports
Trade agreements’ impacts on the federal budget are unclear, but they yield small positive impacts on total U.S. trade and the U.S. economy, according to a study by the Congressional Budget Office (here). The U.S. has negotiated deals with mostly…
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much smaller economies, and tariffs and other barriers were already limited when the agreements entered into force, CBO said. Trade deals have had minimal effects on the U.S. trade balance, and have spurred more U.S. investment in member countries’ economies, which has helped catalyze foreign direct investment into the U.S., CBO said. Empirical estimates show that the agreements have had small, positive effects on U.S. productivity, output and employment, CBO said. “But those estimates are uncertain and may be understated, because the effects of nontariff provisions are hard to measure and because issues with data keep researchers from identifying how [Preferential Trade Agreements] affect the service sector," CBO said.