[CTC] TPP would increase budget deficit by $28B over next decade, according to White House

[Arthur Stamoulis]

TPP would increase deficit by $28B over next decade, according to president's budget

By Victoria Guida, POLITICO
02/09/2016 11:07 AM EDT

The Trans-Pacific Partnership would cost the U.S. about $28 billion in lost tariff revenue over the next 10 years, assuming it takes effect next year, according to President Barack Obama's proposed 2017 budget <http://go.politicoemail.com/?qs=308ae71de3398a24c2801b3021964a8147a2b8c945d8f2eba685ee7b6b60e3e8>. Under House rules, that increase would have to be offset before it got congressional approval.

That lost revenue would add about $1.7 billion to the deficit in 2018, and that number is estimated to steadily increase each year, reaching $4.3 billion in 2026. These amounts accumulate to add roughly $9.5 billion during the first five years, and $28 billion total over 10 years.

While other factors, such as a potential increase in GDP, could affect the deal's impact on the deficit, those are not included in the forecasts of the Office of Management and Budget.

"Through TPP, the United States will lead the way in revitalizing the open, rules-based economic system that will boost American exports while creating jobs at home by promoting strong labor, environmental, and intellectual property protections," the document says.

Lost tariff revenue would exceed $50 billion over the next decade if all the duties were immediately eliminated. However, many of those levied on autos and auto parts from Japan and clothing from Vietnam are subject to long phase-out periods under the pact. That is expected to significantly reduce the cost of implementation in the first decade.

The budget also includes the president's yearly proposal to shorten the exclusivity period for biological drugs from 12 to seven years, which it estimates would lower the deficit by $7 billion over 10 years.

That proposal runs counter to Senate Finance Committee Chairman Orrin Hatch's (R-Utah) position on data protection in the United States, as well as his efforts to require TPP countries to provide the full 12 years of protection. But neither Hatch nor the pharmaceutical industry pushed for a change in the budget language because they don't expect the document to get any political traction, lobbyists told POLITICO last week.

Obama proposes boosting funding <http://go.politicoemail.com/?qs=308ae71de3398a2460591206cc785e037c214800dd199d0400e302867f42c3bf> for the Office of the U.S. Trade Representative from its current $54.5 million to $59 million in FY2017, increasing every year to reach $71 million in 2026.

It also calls for a funding increase for the Commerce Department's International Trade Administration, which investigates anti-dumping and anti-subsidy cases. Currently at $483 million, the agency would see its funding increased to $521 million in fiscal year 2017 under the proposal. Commerce's Bureau of Industry and Security, which administers export controls and has been involved in a reform effort regarding those controls, would see its budget increase from $112.5 million currently to $127 million in fiscal year 2017 under the proposed budget.

The budget again proposes "consolidating business and trade promotion into a single department," though Commerce Secretary Penny Pritzker has in the past said that proposal was unlikely to come to fruition.

It also emphasizes that security the Asia-Pacific is central to "regional and global prosperity," and therefore "aligns resources and activities to strengthen U.S. alliances and partnerships with emerging powers, promote regional economic cooperation, and build a constructive relationship with China that simultaneously supports expanding practical cooperation on global issues while candidly addressing differences."
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