In February 2016, the United States signed the Trans-Pacific Partnership (TPP) with 11 countries: Canada, Mexico, Chile, Peru, Japan, Australia, New Zealand, Singapore, Malaysia, Vietnam, and Brunei. The TPP, now subject to approval and implementation by Congress, is termed by its participants as a comprehensive and high-standard agreement, designed to eliminate and reduce trade barriers and establish and enhance trade rules and disciplines among the parties. If implemented, it would be the largest plurilateral FTA by value of trade, encompassing roughly 40% of world GDP, and could serve further to integrate the United States in the dynamic Asia-Pacific region. As a "living agreement," it has the potential to negotiate new rules and expand its membership. It could also mark a shift to the negotiation of "mega-regional" trade liberalization agreements in lieu of bilateral FTAs and broader multilateral trade liberalization in the World Trade Organization (WTO). In considering TPP and other trade agreements, discussions often focus on potential economic effects, and especially on potential gains or losses in employment. In addition, some observers have tied U.S. trade deficits to existing U.S. free trade agreements (FTAs) by arguing that the agreements have worsened the trade deficit and, thereby, have negatively affected U.S. employment and wages. According to many economists, trade in general provides economy-wide net positive benefits for consumers as a whole and for producers, especially for firms in export-oriented industries. They also note, conversely, that economic adjustment costs stemming from lower trade barriers may be highly concentrated, affecting some workers, firms, and communities disproportionately. The relationship between trade and jobs, however, is complicated and subject to a number of different and, at times, opposing forces. In addition, impediments in local labor markets may raise adjustments costs for some workers, firms, and communities in ways that may not be fully reflected in traditional trade models. This report examines recent studies on the potential economic impact of the TPP. It also provides a limited discussion of the role of trade agreements in the economy and examines selected studies on the impact of TPP. For a broader treatment of some of these issues see CRS Report R44546, The Economic Effects of Trade: Overview and Policy Challenges , by James K. Jackson. In general, economists and others use various economic models and approaches to estimate the magnitude of changes in U.S. economic activity and employment that could arise from a trade agreement. Both proponents and opponents of trade agreements often cite the results of these studies to support their respective positions. These models, however, differ in the estimates they produce, reflecting different assumptions and differences in the structure of the models themselves. While all the various models and approaches have strengths and weaknesses, although not always in equal proportions, they vary in the degree to which they reflect economic reality, and they are highly sensitive to the assumptions they use. The TPP, considered by participants to be a high-standard and comprehensive agreement, is designed to eliminate and reduce trade barriers and establish and enhance trade rules and disciplines of the trading system among the parties to the agreement. The agreement covers goods, services, investment, and a number of other issues including trade facilitation, digital trade, intellectual property rights, and standards, or technical barriers to trade. Due to the limitations of data and other theoretical and practical issues involved with services, investment, and non-tariff barriers, most estimates of the economic and employment effects of trade and trade agreements focus narrowly on the goods sector, where data on trade and tariff rates are available, to estimate how demand for these goods may change as a result of changes in tariffs. Accordingly, such estimates do not represent the total impact of the agreement on the economy. Most economists argue that liberalized trade creates both economic costs and benefits, as indicated in Table 1 , but that the long-run net effect on the economy as a whole is positive. They contend that the economy as a whole operates more efficiently as a result of competition through international trade and that consumers throughout the economy benefit by having available to them a wider variety of goods and services at varying levels of quality and price than would be possible in an economy closed to international trade. They also contend that trade may have a long-term positive dynamic effect on an economy that enhances both production and employment. In addition, trade agreements of the type currently being negotiated by the United States comprise a broad range of issues that could have far-ranging economic effects on trade and commercial relations over the long run between the negotiating parties, particularly for developing and emerging economies. Most economists acknowledge that international trade and trade agreements can entail some negative effects through greater access to markets and increased competition, with the effects falling more heavily on some workers and firms. Generally, the costs and benefits associated with trade agreements do not accrue to the economy at the same speed; costs to the economy are felt in the initial stages of the agreement, while benefits to the economy accrue over time. The expected costs to the economy in the form of job losses and downward pressure on wages in some sectors and some segments of the labor force are experienced in the initial stages of the agreement, while the anticipated benefits to the economy in terms of enhanced consumer welfare and improvements in resource utilization accrue over time. In addition, while research is ongoing, most economists have concluded that trade liberalization, or international trade more broadly, has not been a major factor affecting the distribution of income, whether in the United States, or in other economies, developed or developing. Some economists also estimate that international trade and trade liberalization have a different impact on workers in various occupations in the economy, termed by some as the occupational exposure to international trade. This means that trade liberalization can have a disproportionate impact on workers and firms not only in different sectors of the economy, but even within the same industry. Such types of microeconomic analysis at the firm level generally are not within the scope of trade models. The lack of data in areas other than direct trade in goods and services means that data on traded goods and some services can drive policy debates. Economists and others face numerous challenges in their efforts to estimate precisely the economic and employment effects that are associated with agreements that reduce or eliminate barriers to trade and investment flows, including non-tariff barriers to trade in services and other sectors. Trade in services, in particular, is characterized by a broad array of formal and informal barriers that complicate efforts to translate the barriers into tariff-equivalent values. Also, little analysis has been done to date on the potential economic effects of removing or reducing technical barriers to trade. Reduced barriers to trade in services potentially could have a large and positive impact on the U.S. economy, since informal barriers to trade in services are numerous, the United States is highly competitive in a number of services sectors, and U.S. direct investment abroad often spurs exports. The economic environment within which trade occurs is also being constantly shaped by domestic and international activities in ways that may be difficult to model and may not be fully reflected in the time series data that are the fundamental building blocks of trade models. For instance, the sharp decline in energy and raw material prices in 2015-2016 and the slowdown in global trade since 2011 are altering the global economy in ways that arguably exceed any potential trade agreement. It is unlikely that the complete effects of these changes have been fully reflected in global economic and trade data. Trade models also do not explicitly incorporate exchange rates, in part due to the difficulty involved in estimating future movements in exchange rates. Such models, therefore, rely on existing trade patterns that may limit their ability to estimate the impact of new trade patterns that could arise from a multi-country agreement. Trade models also generally treat exports and imports as strictly domestic or foreign goods. However, the rapid growth of global value chains (GVCs) and intra-industry trade (importing and exporting goods in the same industry) have significantly increased the amount of trade in intermediate goods in ways that challenge traditional concepts of domestic versus foreign firms and blur the distinction between exports and imports. For instance, foreign value added accounts for about 28% of the content on average of global exports. As a result of the growth in GVCs, traditional methods of counting trade may obscure the actual sources of goods and services and the allocation of resources that are used in producing those goods and services. Trade in intermediate goods also means that imports may be essential for exports and that countries that impose trade measures restricting imports may negatively affect their own exports. This complex process of cross-border production and trade in intermediate goods also utilizes a broad range of services in ways that have expanded and redefined the role that services play in international trade. Increased trade in intermediate goods has also meant that the number of jobs in the economy tied directly and indirectly to international trade has increased in ways that are not captured fully by trade models. Efforts to estimate the economic impact of the proposed TPP are further complicated by the existence of overlapping trade agreements among the TPP countries: the United States already has FTAs with six TPP partners: Australia, Canada, Chile, Mexico, Peru, and Singapore. In addition, Singapore, Malaysia, Vietnam, and Brunei are members of the ASEAN (Association of Southeast Asian Nations) FTA. Such agreements have both trade creating and trade diverting dimensions that can interact in tandem or in opposite ways that may complicate the trade environment. While it may not be possible for any trade model to incorporate all the economic effects that potentially could arise from overlapping trade agreements, such agreements may be reshaping trade patterns that ostensibly could be enhanced further by the TPP. In addition to the direct economic effects expected to result from cuts in tariffs, the TPP may offer additional long-term indirect benefits to bilateral and regional trade through changes in domestic non-tariff trade barriers that form the structure under which trade is conducted.