Trade between the United Kingdom and the United States would increase if a free trade arrangement were to be instituted among the United Kingdom and the three North American Free Trade Agreement partners (the United States, Canada, and Mexico), reports the U.S. International Trade Commission (ITC) in its publication, The Impact on the U.S. Economy of Including the United Kingdom in a Free Trade Arrangement with the United States, Canada, and Mexico.

The ITC, an independent, nonpartisan, factfinding federal agency, recently completed the report for the U.S. Senate Committee on Finance. Following are highlights of the report:

• In 1998, the United Kingdom (UK) imported over $100 billion in goods and services from the three North American countries and exported about $65 billion to North America. The United States is the UK's single largest trading partner and accounts for about 90 percent of the UK's trade with North America.

• The United States and the UK are the world's largest providers of foreign direct investment and are also the largest recipients of foreign direct investment. They are also each other's largest source of foreign investment.

• Tariffs and other trade barriers between the UK and the North American countries are already rather low, so eliminating these barriers is likely to have a small effect on trade and output in the countries involved.

• Depending on what assumptions are made about the UK's trade with the rest of the European Union, an elimination of tariffs on products traded between the United States and the UK would increase U.S. imports from the UK by between 7 percent and 12 percent and U.S. exports to the UK would increase by between 11 percent and 16 percent.

• The effect on both the U.S. and the UK Gross Domestic Product (GDP) is measurable but negligible; as a percent of GDP, it is close to zero for both countries. Results are also small for the other countries.

ITC general factfinding investigations, such as this one, cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the Senate Committee on Finance, or the House Committee on Ways and Means. The resulting reports convey the Commission's objective findings and independent analyses on the subjects investigated. The Commission makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the ITC submits its findings and analyses to the requester. The ITC subsequently releases general factfinding investigation reports to the public, unless they are classified by the requester for national security reasons.