As a leading trading nation and the world’s largest economy, since the mid-20th century, the U.S. has consistently pursued opportunities to expand trade contributing to national economic prosperity and promoting economic development and peace abroad. In an increasingly interconnected global economy, with other major trading nations securing trade liberalization to promote economic prosperity and competitiveness, a U.S. trade policy to pursue further reductions in global trade barriers remains vital.

Unfortunately, the U.S. has fallen into an observer role when it comes to trade agreements allowing our trade rivals to define the path of global trade rules, standards, and practices.

Trade Landscape

Since 2010, several leading trading nations have overtaken U.S. leadership in setting the terms of global trade by entering into new free trade agreements.

In comparison, the U.S., #3 in international trade, has concluded just four trade agreements, the most significant of which was the USMCA, a “modernization” of the 25-year-old predecessor, the North American Free Trade Agreement (NAFTA). The other U.S. trade agreements are with Colombia, Peru, and South Korea.

Several key U.S. trade partners are outpacing the U.S. in the level of trade benefitting from lower tariffs and reductions in non-tariff barriers contained in formal trade agreements.

In the vast majority of the trade agreements, existing tariffs for 98-99% of traded goods between the trade partners are eliminated immediately or reduced to zero within ten years.

Consequences

• The U.S. absence from large bilateral and multilateral trade agreements allows other countries to set global trade rules.
• The United States and other countries that aren’t party to the regional or multilateral agreements will experience diminished competitiveness and investment opportunities in the region.
• United States’ trade partners are pressing forward with new trade agreements without us.
• When countries forge new trade pacts without U.S. engagement, the U.S. forgoes the opportunity to encourage a deeper alignment on the rules of trade and enhance or create new strategic economic relations.

Read CRA’s full analysis of the trade landscape in the report “Trade Agreements and U.S. Competitiveness.”