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Global
investment
In America
HOW TTIP and TPP HAVE THE POWER
TO INCREASE GLOBAL INVESTMENT IN THE UNITED
STATES AND CREATE NEW AMERICAN JOBS
executive summary
T
he United States has embarked on ambitious trade negotiations with partners
in Europe and the Pacific. The Transatlantic Trade and Investment Partnership
(TTIP) and the Trans-Pacific Partnership (TPP) are currently being negotiated and
include most major U.S. trade partners. Collectively, these countries account for
nearly two-thirds of world trade and represent nearly 90 percent of foreign direct
investment (FDI) flows into the United States. The United States is the world’s
largest recipient of FDI flows, yet America’s share of global FDI has decreased in
the past decade. The conclusion of the TTIP and TPP agreements will increase the
attractiveness of the United States as an investment destination.
This report estimates the economic contributions to the U.S. economy regarding
increased investment in the United States by inbound employers due to the TTIP
and TPP agreements. These estimates are scaled to the 2012 U.S. economy and
reflect the long-run contributions of fully phased-in agreements.
findings
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The stock of FDI in the U.S.
economy would increase by
an estimated $173 billion –
a 6.25 percent increase over
current levels.
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More than one-third of the
estimated FDI increase ($61
billion) would occur in the
manufacturing industry.
>
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It is estimated that TTIP and
TPP would increase the employment contribution of
inbound companies by more
than 1.4 million U.S. workers.
Every state would experience positive jobs contributions – most states would
experience an estimated increase of more than 10,000
jobs.
Trade agreements influence FDI flows in several ways. First, comprehensive
agreements such as TTIP and TPP include provisions that directly improve access
and protections for investments by inbound companies, such as lifting local content
requirements and ensuring investments are protected by the rule of law. Second,
reducing tariff and non-tariff barriers and improving regulatory cooperation allow
companies to operate effective global value chains. Reduced trade barriers also
make the U.S. more attractive as an export platform for global companies that
want to reach both domestic and regional customers. Third, the economic growth
produced by trade agreements attracts additional investment to grow America’s
economy.
Investments by inbound companies play an important role in the U.S. economy.
Inbound companies directly employ 5.8 million people in the United States and pay
wages that are 33 percent higher than the national average. Inbound companies
directly employ more than 18 percent of workers in the manufacturing industry.
Direct employment is not the only economic contribution inbound companies
make. There are also indirect and induced employment contributions. When a
major inbound employer establishes operations in the United States, other global
companies in the supply chain may invest nearby. The overwhelming majority of
the supply chain goods and services needed, however, will be provided by local
U.S. companies. These U.S. suppliers employ many workers in order to produce
the goods and services inbound companies buy in the United States. As these
inbound and U.S. companies invest and grow, additional workers are employed
when these direct and indirect employees spend their earnings in the local economy. These direct, indirect and induced employment effects may all increase as
inbound employers increase their investment in the United States.
Table ES-1. Summary of estimated long-run contributions of TTIP and TPP
Billions of US dollars; number of full- and part-time employees (thousands)
TTIP
TPP
Combined
FDI Stock
Direct Employment
Indirect & Induced
Employment
Total employment
$153
$20
$173
334
68
400
865
165
1,030
1,200
233
1,432
Note: Scaled to the 2012 US economy. Estimates are based on fully phased-in agreements. Figures may not appear to
sum due to rounding.
Source: EY analysis; 2012 IMPLAN model of the US economy; Centre for Economic Policy Research, “Reducing Transatlantic Barriers to Trade and Investment: An Economic Assessment,” (2013); Peter A. Petri, Michael G. Plummer and
Fan Zhai, “The Trans-Pacific Partnership and Asia-Pacific Integration: A Quantitative Assessment,” (2011).
As shown in Table ES-1, inbound companies would increase their direct employment of
U.S. workers by 400,000 in response to TTIP and TPP. An additional 1,030,000 workers
would be employed at suppliers to inbound companies and businesses that expand in
response to the increased spending of workers at both the inbound companies and their
suppliers.
As shown in Figure ES-1, the direct employment impacts are concentrated in the manufacturing industry, which would experience an increase of 147,500 jobs at inbound companies. The manufacturing industry alone accounts for 37 percent of total direct employment
impacts in the United States. The next three sectors with the largest direct impacts are the
professional and business services industry (44,500 jobs), the retail trade industry (42,000
jobs), and the leisure and hospitality industry (36,500 jobs). These three industries account for approximately 31 percent of the direct employment impacts.
Figure ES-1. Distribution of estimated long-run direct employment impacts, by industry
Number of full- and part-time employees (thousands); percentage of total direct employment
Manufacturing, 147.5 (37%)
Professional and Business Services, 44.5 (11%)
Retail Trade, 42.0 (10%)
Leisure and Hospitality, 36.5 (9%)
Information, 31.5 (8%)
Transportation and Warehousing, 31.5 (8%)
Wholesale Trade, 24.0 (6%)
Finance and insurance, 18.0 (4%)
Other Industries, 16.5 (4%)
Education and health services, 10.0 (2%)
Note: Scaled to the 2012 US economy. Figures may not sum due to rounding. A detailed industry breakdown of direct employment impacts
is included in Appendix B.
Source: EY analysis using the 2012 IMPLAN model of the US economy; Centre for Economic Policy Research, “Reducing Transatlantic
Barriers to Trade and Investment: An Economic Assessment,” (2013); Peter A. Petri, Michael G. Plummer and Fan Zhai, “The Trans-Pacific
Partnership and Asia-Pacific Integration: A Quantitative Assessment,” (2011).
the Report
This report, based on the analysis of the Quantitative Economics & Statistics
(QUEST) group within Ernst & Young LLP, estimates the economic contributions to
the U.S. economy regarding increased investment in the United States by inbound
employers due to the TTIP and TPP agreements. These estimates are scaled to
the 2012 U.S. economy and reflect the long-run contributions of fully phased-in
agreements.
The Organization for International Investment
Created more than two decades ago, the Organization for International Investment
(OFII) is a non-profit business association in Washington, D.C. representing the
U.S. operations of many of the world’s leading global companies, which insource
millions of American jobs. OFII works to ensure the United States remains the top
location for global investment. As such, OFII advocates for fair, non-discriminatory
treatment of foreign-based companies and promotes policies that will encourage
them to establish U.S. operations, increase American employment, and boost U.S.
economic growth.
Published April 2015
see more, Including comprehensive state-by-state analysis, at
ofii.org/trade
1225 Nineteenth Street, NW
Suite 501
Washington, DC 20036
(202) 659-1903