ITC Issues Report on Potential Effects of DR-CAFTA on U.S. Economy and Selected Sectors
The International Trade Commission (ITC) has released a report entitled the U.S.-Central America-Dominican Republic Free Trade Agreement: Potential Economywide and Selected Sectoral Effects.
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According to the ITC, this report assesses the likely impact of the U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) on the U.S. economy as a whole and on specific industry sectors and the interests of U.S. consumers.
Highlights of ITC's Quantitative Analysis of DR-CAFTA's Economywide Effects
In its report, the ITC states that it has employed an approach that combines quantitative and qualitative analyses. Using quantitative analysis, which focuses on the liberalization of tariffs and tariff-rate quotas (TRQs), the ITC found that the following are the likely economywide effects (partial list):
Effects of tariff removal likely to be minimal. According to the ITC, the effects of tariff removal under the DR-CAFTA on U.S. economic welfare and GDP are likely to be minimal (less than 0.01% of U.S. GDP). Actual simulation results are between $135.0 million and $248.0 million.
(The ITC notes that most U.S. imports from the DR-CAFTA countries already enter free of duty under various U.S. programs.)
Exports. After full phase-in of tariff elimination, U.S. world exports are likely to be higher by $1.9 billion or 0.16%. For U.S. exports to the DR-CAFTA countries, the largest increases are expected to be in textiles, apparel, and leather products; petroleum, coal, etc.; machinery and equipment; other manufactures; motor vehicles; and grains.
Imports.After full phase-in of tariff elimination, U.S. world imports are likely to be 0.07% higher or an increase of $1.2 billion. For U.S. imports from the DR-CAFTA countries, the largest increases are expected to be in textiles, apparel, and leather products and in manufactured sugar.
Production likely to remain mostly unchanged. The ITC states that there is likely to be little or no change in U.S. production in distinct industry sectors. The largest proportional increase is in grains, output of which increases by 0.25%; the largest decrease in production is for manufactured sugar and sugar crops, output of both would likely decrease by 1.09%.
Employment likely to remain mostly unchanged. According to the ITC, little or no change is likely in U.S. employment in distinct industry sectors.
Consumers likely to experience little or no impact. There is likely to be little or no impact on U.S. consumers (household prices).
(See the ITC's report for the results of the qualitative analysis method, sector-specific findings (e.g., sugar and sugar-containing products), etc.)
(See ITT's Online Archives or 08/10/04 news, 04081005, for BP summary on the U.S.' signing of the FTA with the Dominican Republic, which contains a link to BP summary of the U.S.' signing of the FTA with the five Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.)
ITC News Release 04-095 (dated 08/26/04) available at http://www.usitc.gov/er/nl2004/er0826bb2.htm
ITC report (Investigation No. TA-2104-13, USITC Publication 3717, dated August 2004) available at ftp://ftp.usitc.gov/pub/reports/studies/pub3717.pdf