Chapter 4 Manufactured Goods and Natural Resource and Energy Products365 Introduction
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Chapter 4 Manufactured Goods and Natural Resource and Energy Products365 Introduction The TPP Agreement is likely to have a limited impact on U.S. production and trade of manufactured goods and natural resource and energy (MNRE) products. The U.S. manufacturing sector is already more liberalized than other sectors, such as agriculture and services, and duties are generally low. The value of dutiable U.S. MNRE imports from TPP partners in comparison to the size of total U.S. trade and production is small. The Commission expects that U.S. production in all sectors modeled will increase on an absolute basis over time. Model results indicate that TPP would result in an increase in exports of $15.2 billion (0.9 percent) above the projected 2032 baseline, and an increase in imports of $39.2 billion (1.1 percent) above the baseline. Output would be $10.8 billion (0.1 percent) less than the projected 2032 baseline and employment 0.2 percent less. Given the gains projected in many of the agricultural and services industry sectors, this model feature results in the already more liberalized U.S. manufacturing sector generally projected to post less output growth with TPP than would be expected in its absence. Some individual industries (e.g., titanium metal) may experience more adverse impacts from TPP than other MNRE sectors, while others such as passenger vehicles may benefit from TPP. This chapter will first provide a brief overview of U.S. trade and market access provisions. It will then examine in more depth five sectors for which there will be significant U.S. trade liberalization with the full implementation of TPP: (1) passenger vehicles; (2) textiles and apparel; (3) footwear; (4) chemicals; and (5) titanium metal. Finally, it briefly discusses several sectors that do not have significant U.S. tariffs, but for which TPP might have substantial implications. 365 This chapter covers all U.S. trade in goods except agriculture, fish, and fish products (covered in chapter 3). In addition, while computers and electronic products are covered in this chapter, e-commerce and computer services are covered in chapter 5. U.S. International Trade Commission | 215 Chapter 4: Manufactured Goods and Natural Resources and Energy Products Trade Overview U.S. Exports U.S. MNRE exports to the 11 other TPP parties increased from $472.4 billion to $525.5 billion (11 percent) during 2011–14, then fell by 8 percent to $484.5 billion in 2015—due, in part, to lower commodity prices. U.S. exports of these products to TPP parties accounted for 44 percent of U.S. exports in 2015. Canada and Mexico were the largest export markets in 2015, accounting for a combined 75 percent of U.S. exports to TPP parties (figure 4.1). Exports 366 increased to two TPP parties, Mexico and Vietnam, during 2011–15. Figure 4.1: U.S. domestic exports to TPP parties, 2011–15 Canada 202.3 30 25.6 Mexico 160.9 25 Japan 43.6 20 15 (billion $) Singapore 22.5 – Australia 20.0 15 Chile 12.9 10 Malaysia 9.2 5 Peru 6.3 1.8 Vietnam 4.2 0 -0.05 -0.1 -0.04 New Zealand 2.7 -2.8 -0.5 -0.9 -5 -1.9 -3.7 Brunei 0.1 Change in U.S.exports, 2011 Peru Chile Japan Brunei Mexico 0 50 100 150 200 250 Canada Vietnam Malaysia Australia U.S. exports, 2015 (billion $) Singapore New Zealand Source: USITC DataWeb/USDOC (accessed February 17, 2016). Corresponds to appendix table J.13. The MNRE category can be divided into durable products, nondurable products, and other MNRE products (table 4.1). U.S. exports of durable MNRE products367 to TPP parties grew by 7 percent during 2011–15, while exports of mining, forestry, and other MNRE products grew by 2 percent. Exports of nondurable goods, on the other hand, fell by 5 percent. In 2015, moreover, U.S. exports in all North American Industry Classification System (NAICS) industry 366 USITC DataWeb/USDOC (accessed February 17, 2016). 367 Durable goods are “those that can be stored or inventoried and that have an average life of at least 3 years”; nondurable goods “are all other commodities that can be stored or inventoried.” Seskin and Parker, “A Guide to the NIPA's,” March 1998. 216 | www.usitc.gov TPP Agreement: Likely Impact on the U.S. Economy and on Specific Industry Sectors subsectors368 except transportation equipment declined from 2014 levels.369 The decrease in export values in 2015 was largely a result of strong dollars and lower prices due to the drop in oil and natural gas prices, which contributed to lower prices for downstream products such as petroleum products and chemicals.370 The leading export industry subsectors in 2015 were transportation equipment, chemicals, machinery, computer and electronic products, and petroleum and coal products.371 The composition of U.S. exports to TPP members reflects the overall composition of U.S. exports and production. Table 4.1: U.S. MNRE domestic exports, TPP parties, 2011–15, million dollars 2011 2012 2013 2014 2015 Durable MNRE products Computer and electronic products 46,640 47,273 46,701 46,538 45,621 Electrical equipment, appliances, and 18,303 20,090 20,560 25,834 24,692 component Fabricated metal products, nesoi 19,848 21,883 22,695 24,024 22,681 Furniture and fixtures 2,883 3,335 3,319 3,335 3,105 Machinery, except electrical 60,989 67,436 61,751 60,368 55,587 Miscellaneous manufactured commodities 15,153 16,104 16,118 16,202 15,576 Nonmetallic mineral products 5,175 5,317 5,271 5,658 5,525 Primary metal manufacturing 26,107 25,939 25,637 26,199 22,461 Transportation equipment 93,828 106,135 107,936 111,067 113,404 Wood products 3,181 3,387 3,428 3,573 3,260 Subtotal durable MNRE products 292,107 316,898 313,418 322,799 311,910 Nondurable MNRE products Apparel and accessories 1,657 1,727 1,750 1,676 1,532 Chemicals 67,279 70,034 69,662 70,352 65,545 Leather and allied products 1,277 1,335 1,595 1,580 1,471 Paper 12,610 13,030 13,316 12,646 12,466 Petroleum and coal products 43,159 46,159 48,571 46,682 33,955 Plastics and rubber products 17,444 19,270 19,666 21,213 20,275 Printed matter and related products, nesoi 3,924 3,777 3,643 3,387 3,045 Textile mill products 1,775 1,919 1,969 1,971 1,854 Textiles and fabrics 3,918 4,090 4,339 4,638 4,502 Other 3 2 2 2 2 Subtotal nondurable MNRE products 153,047 161,344 164,514 164,146 144,646 368 NAICS industry subsectors are NAICS 3-digit numbers (e.g., 334: computer and electronic product manufacturing). 369 USITC DataWeb/USDOC (accessed February 17, 2016). 370 For many products, the quantity of exports increased in 2015 despite the drop in the value of exports. USITC DataWeb/USDOC (accessed February 17, 2016); Federal Reserve Bank of St. Louis website, “Trade Weighted U.S. Dollar Index: Major Currencies,” https://research.stlouisfed.org/fred2/series/DTWEXM (accessed February 12, 2016); Hong, Musso, and Simons, “Oil-Price Shocks,” May 2015; King, “Oil Slump,” February 9, 2016; USDOL, “PPI Detailed Report,” January 2016, 42–43. 371 USITC DataWeb/USDOC (accessed February 10, 2016). U.S. International Trade Commission | 217 Chapter 4: Manufactured Goods and Natural Resources and Energy Products 2011 2012 2013 2014 2015 Mining, forestry, and other MNRE products Forestry products, nesoi 779 815 910 903 834 Minerals and ores 7,285 6,745 6,768 7,568 6,620 Oil and gas 9,796 9,177 13,731 22,962 14,638 Other MNRE products 9,393 7,849 6,772 7,169 5,835 Subtotal mining, forestry, and other MNRE products 27,253 24,586 28,181 38,603 27,927 Total MNRE products 472,408 502,828 506,112 525,548 484,483 Source: USITC DataWeb/USDOC (accessed February 10, 2016). Notes: Nondurable goods exclude most food, beverage, and tobacco products, which are included in the agriculture chapter. Other MNRE products include waste and scrap, used goods, goods returned to Canada, and special import provisions. Totals may not sum due to rounding. Nesoi = not elsewhere specified or included. U.S. Imports U.S. imports from TPP member countries increased from $717.5 billion to $736.9 billion (3 percent) during 2011–15, though 2015 imports were down 6 percent from the 2014 total of $783.0 billion. The 2015 decline was primarily a result of a drop in the value of U.S. oil and gas imports, which fell by $55.7 billion (46 percent). The three largest TPP sources of U.S. imports in 2015 were Mexico (35 percent), Canada (34 percent), and Japan (17 percent) (figure 4.2). However, imports from Vietnam (up 127 percent), Malaysia (up 43 percent), New Zealand (up 18 percent), and Mexico (up 10 percent) grew the most rapidly during 2011–15.372 Figure 4.2: U.S. imports for consumption from TPP partners, 2011–15 30 23.2 Mexico 261.6 19.1 20 Canada 253.9 9.5 Japan 125.7 10 15 (billion $) – 1.5 0.2 Vietnam 34.2 0 Malaysia 31.7 -1.2 0.0 -1.3 -1.8 -1.3 -10 Singapore 15.4 Australia 5.9 -20 Chile 4.4 -30 Peru 3.0 -28.5 New Zealand 1.0 -40 Change in U.S.