Taking into account macroeconomic forces, we interpret sympathetically the argument of opponents of free trade that U.S. adherence to a trade agreement will allow the new partner to bear a larger share of the U.S. trade deficit, since the growth of its partner`s exports to the United States, as assumed by opponents, will outpace the growth of its imports from the United States. Although macroeconomic forces largely determine the size of the global trade deficit, its division among trading partners is, according to this argument, affected by the existence or absence of a free trade agreement with the United States. For example, a nation could allow free trade with another nation, with exceptions that prohibit the importation of certain drugs not authorized by its regulators, animals that have not been vaccinated, or processed foods that do not meet their standards. Globalization and free trade are driving economic growth and, ideally, will drive down prices for many commodities, according to U.S. economist Robert Reich. Not everyone agrees with Professor Reich`s assertion, but most people agree that free trade agreements (FTAs) and their close cousin, preferential trade agreements (EPZs), are the basis of globalization and free trade. DFAT says free trade agreements currently account for 28 per cent of Australia`s trade. In addition, free trade is now an integral part of the financial and investment systems. U.S. investors now have access to most foreign financial markets and a wider range of securities, currencies and other financial products.
The proposed Trans-Pacific Partnership, currently being negotiated between 12 countries, including Australia, would become the world`s largest free trade agreement if signed, which would open up an estimated $28 trillion in trade $US. But do the partners in the free trade agreement account for an increasing share of U.S. trade deficits? No no. The blue line in Figure 1 shows the share of trade deficits that represent all 20 U.S. free trade partners. According to the OPPOSITION of the ESTV, this proportion is expected to continue to increase, as other countries have signed free trade agreements with the United States. The blue line fluctuates, but it does not increase permanently. While in 2015, the free trade agreement partners accounted for 34% of U.S. merchandise imports, they accounted for only 8% of U.S.