Publication Number: 3519

Report Title: The Economic Effects of Significant U.S. Import Restraints, 3rd Update 2002

Investigation Number: 332-325

Author's name(s): Kyle Johnson, Sandra A. Rivera, Alan K. Fox

Date Published: June 2002

Report Description/Introductory Text: USITC economic assessment of the impact of significant U.S. import restraints on U.S. firms, workers, and consumers and on the net economic welfare of the United States. The USITC report provides an assessment of the effects of liberalizing trade barriers in all U.S. sectors covered by significant import restraints.

In this report, the U.S. International Trade Commission (USITC) assesses the impact of significant U.S. import restraints on U.S. firms, workers, and consumers and the net economic welfare of the United States. The analysis reports the expected effects of liberalizing restraints on U.S. manufacturing, agriculture, and services.

The primary tool used to analyze the economic effects of significant import restraints is the USITC computable general equilibrium (CGE) model of the U.S. economy. Where CGE model analysis was not feasible, a partial equilibrium model is instead used to assess the welfare implications of U.S. import restraint removal. USITC’s quantitative analysis finds that if all the trade barriers considered in this report would have been simultaneously eliminated during the base year of 1999, the result would have been equivalent to an approximate welfare gain of $14.35 billion to the U.S. economy. The welfare gain represents less than one-tenth of 1 percent of GDP. Consistent with previous reports, the largest effect is in the individual liberalization of textiles and apparel, which is expected to cause an estimated economy-wide welfare gain of about $13.0 billion, assuming that both peak tariffs and quotas are removed simultaneously. The second largest expected liberalization effect is with the complete liberalization of maritime cabotage services under the Jones Act, where the estimated gain would be slightly more than $656 million. Additionally, liberalization of two high-profile agricultural sectors–sugar and dairy–once again show the largest sector-specific benefits, creating economywide welfare gains of $420 million and $109 million respectively.

This report is the third update in a series that was initiated in 1992 in response to a letter from the United States Trade Representative (USTR) requesting an investigation under section 332(g) of the Tariff Act of 1930.

Topics Covered: USITC economic assessment, import restraint, tariffs, tariff-rate quota, trade barriers, trade liberalization, labor transitions, displaced workers

Countries: United States

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