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Benefits of Trade Agreements: U.S. Exports

May 12, 2016

From the Office of Trade and Economic Analysis, International Trade Administration

Free Trade Agreements (FTA) are an important tool to our nation’s economic growth and prosperity. As you know, an FTA is an agreement between two or more countries regarding certain obligations and protections in areas such as trade in goods and services, intellectual property, and investment. FTA objectives include the reduction of barriers to U.S. exports, protection of U.S. interests, and enhancement of the rule of law in partner countries. The reduction of trade barriers and the creation of a more stable and transparent trading and investment environment facilitate and reduce the costs of U.S. company exports to partner markets.

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U.S. Export Growth

The U.S. currently has FTAs in force with 20 markets worldwide. In 2015, U.S. merchandise exports to FTA partners totaled $711 billion. This comprised almost half (47%) of total U.S. goods exports in 2015.

The importance of FTAs in promoting trade growth is evident in recent trends. From 2009-2015, goods exports from the U.S. to FTA partners increased at a faster rate (53%) than goods exports to the rest of the world (34%). Further, the share of U.S. goods exports to FTA countries has increased in five out of six years since 2009. Bilateral trade results are positive as well – exports increased for 19 out of 20 FTA partners during the 2009-2015 period. And at the sectoral level, the US had a $13 billion surplus in manufactured goods trade with FTA partners in 2015. Thus, both over time and currently, FTAs have encouraged trade growth, often at levels exceeding results for the rest of the world.

In 2015, the U.S. and its FTA partners contributed 34% of global Gross Domestic product (current U.S. dollars). The remainder presents opportunities for FTA expansion and continued trade growth.

The success we have seen with our current FTA partners bodes well for the success of the Trans-Pacific Partnership. The TPP is a regional FTA that has the potential to transform U.S. trade with the Pacific region, the fastest growing region in the world. In 2015, U.S. merchandise exports to TPP countries totaled $680 billion comprising approximately 45% of U.S. goods exports.

As with current FTA partners, goods export growth (49%) for TPP partners exceeded rest of world results from 2009 to 2015. The largest sectoral increases were transportation equipment ($54 billion increase to a record $537 billion), computer and electronic products ($25 billion increase), and petroleum and coal products ($18 billion increase).

Passing TPP is a priority of the Obama Administration and can benefit our businesses by reducing up to 18,000 tariffs on Made-in-America goods and services. Leveling the playing field for American businesses will make our products and services more affordable to the millions of consumers who desire our quality goods.

The economic forces at work globally make supporting U.S. exporters, particularly smaller companies, more important than ever. FTAs are a key way to support our workers and businesses. The International Trade Administration is committed to providing high-quality export assistance and programs as well as working to level the playing field through trade policies and 21st Century agreements.

To learn more and to take advantage of any of these important trade agreements be reach out to ITA’s professional staff  in offices in more than 100 U.S. cities and 75 international markets . We stand ready to help U.S. companies succeed in the global marketplace.

 

 

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