Should the United States Rejoin the Trans-Pacific Trade Deal?

Forthcoming in International Economics and Economic Policy (DOI: 10.1007/s10368-023-00559-8).

28 Pages Posted: 15 Apr 2023

See all articles by Ken Itakura

Ken Itakura

Nagoya City University - Graduate School of Economics

Hiro Lee

Osaka University; Osaka University - Osaka School of International Public Policy (OSIPP)

Date Written: January 1, 2023

Abstract

Before the Trans-Pacific Partnership (TPP) was scheduled to enter into force, the United States withdrew from the trade accord. Eleven other TPP signatories decided to revive the agreement, which led to the implementation of the Comprehensive and Progressive Agreement for TPP (CPTPP). The objectives of this paper are threefold: (i) estimating economic welfare effects under alternative scenarios of the TPP/CPTPP, (ii) evaluating the extent of losses to the US from its withdrawal from TPP and expected gains from rejoining the Trans-Pacific trade accord, and (iii) examining whether the US economy would have to undergo extensive sectoral adjustments from its participation. To examine these issues, we employ a dynamic computable general equilibrium (CGE) model that incorporates agent-specific import preferences. The results suggest that the US loses an opportunity to gain approximately $100 billion per year in its long-run economic welfare by withdrawing from the TPP. However, it could recover most of its projected welfare gains by re-engaging with the CPTPP. Since sectoral output adjustments in the US are relatively small, its adjustment costs from participation in the CPTPP would be limited.

Keywords: TPP, CPTPP, US, GTAP, CGE model

JEL Classification: F13, F14, F15, F17

Suggested Citation

Itakura, Ken and Lee, Hiro, Should the United States Rejoin the Trans-Pacific Trade Deal? (January 1, 2023). Forthcoming in International Economics and Economic Policy (DOI: 10.1007/s10368-023-00559-8)., Available at SSRN: https://ssrn.com/abstract=4406781 or http://dx.doi.org/10.2139/ssrn.4406781

Ken Itakura

Nagoya City University - Graduate School of Economics ( email )

Hiro Lee (Contact Author)

Osaka University ( email )

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Osaka University - Osaka School of International Public Policy (OSIPP) ( email )

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