Should the United States rejoin the Trans-Pacific trade deal?

Before the Trans-Pacific Partnership (TPP) was scheduled to enter into force, the United States withdrew from the trade accord. Eleven other TPP signatories decided to revive the agreement, which led to the implementation of the Comprehensive and Progressive Agreement for TPP (CPTPP). The objectives of this paper are threefold: (i) estimating economic welfare effects under alternative scenarios of the TPP/CPTPP, (ii) evaluating the extent of losses to the US from its withdrawal from TPP and expected gains from rejoining the Trans-Pacific trade accord, and (iii) examining whether the US economy would have to undergo extensive sectoral adjustments from its participation. To examine these issues, we employ a dynamic computable general equilibrium (CGE) model that incorporates agent-specific import preferences. The results suggest that the US loses an opportunity to gain approximately $100 billion per year in its long-run economic welfare by withdrawing from the TPP. However, it could recover most of its projected welfare gains by reengaging with the CPTPP. Since sectoral output adjustments in the US are relatively small, its adjustment costs from participation in the CPTPP would be limited.