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1 1 (July 22, 2019)

handle is hein.crs/govbana0001 and id is 1 raw text is: Cogesoa Researc Seric Updated July 22, 2019 U.S. Trade Policy: Background and Current Issues U.S. Trade Policy in Context Congress plays a major role in U.S. trade policy through constitutional authority over tariffs and foreign commerce (Article 1, §8). Since World War II, U.S. trade policy has generally sought to: * liberalize markets by reducing trade and investment barriers through agreements and negotiations; * foster an open and nondiscriminatory rules-based trading system, including through the World Trade Organization (WTO); * enforce trade commitments and laws; * support economic growth; and * offer relief to U.S. firms and workers from import competition and unfair foreign trade practices. The Trump Administration's trade policy actions continue to present legislative and oversight issues for the 116th Congress, including on: significant unilateral tariff actions, a renegotiated North American Free Trade Agreement (NAFTA), and economic engagement and confrontation with China and other trading partners. Economics of Trade Economic theory holds that international trade is mutually beneficial overall, but potentially with unevenly distributed benefits and concentrated costs. Countries specialize by increasing production and exporting goods and services in which they have a higher relative comparative advantage through skills or resources, and importing those unavailable domestically or less efficiently produced. Benefits of trade can include more efficient resource allocation, competition, economies of scale, jobs, and consumer choice, as well as lower prices. Costs can include job and firm losses through greater competition from imports. The economic impact of trade liberalization is difficult to measure and widely debated, in part because many other factors influence economic activity, often with greater effect. For example, U.S. manufacturing employment is likely more affected by productivity through technological advancements than by expanded trade, which may result from trade liberalization. Figure I. U.S. Goods and Services Trade $3.0 U.S. $in trillion Goods Imports $2.0 $1.0 Goods Exports Services Exports Services impo 1992 1998 2004 2010 2016 2018 Source: Bureau of Economic Analysis and Census Bureau. U.S. Trade Trends The United States is the world's largest economy, trading nation, and foreign direct investment (FDI) source and destination (stock basis). U.S. trade has expanded (Figure 1) and its markets and production have become more integrated especially with emerging economies. The 2018 top U.S. trading partners were China, Canada, Mexico, Japan, and the United Kingdom (UK), and, as a bloc, the European Union (EU-28). The United States has a long- running overall trade deficit (imports exceed exports); the trade deficit for goods outweighs the services trade surplus. The causes and consequences of the trade deficit are debated. Most economists argue it is more closely linked with macroeconomic variables (e.g., savings and investment patterns) than trade policies or agreements. Components of U.S. Trade Policy Congress sets U.S. trade negotiating objectives, enacts trade laws, programs, and agreements, and oversees executive trade functions conducted by a range of federal agencies. By statute, the U.S. Trade Representative (USTR) is the lead U.S. trade negotiator and coordinates trade policy through an interagency process with formal public and private advisory input. Key policy components include: Trade rules-setting, liberalization, and enforcement. Negotiation of trade agreements to open markets and set rules on trade and investment; enforcement of commitments via dispute settlement and U.S. trade laws. Export promotion and controls. U.S. support for export financing, market research, advocacy, and trade missions; licensing and control of strategic exports. Customs, trade remedies, trade adjustment. Regulation of borders; laws to address adverse effects of imports on U.S. industries, national security threats, balance of payments, and unfair barriers to U.S. exports; assistance for dislocated workers and firms. Trade preferences. Duty-free access to U.S. markets for eligible developing countries and products, intended to encourage trade and spur economic growth. Investment. Protection (through investment treaties and trade agreements) and promotion; examination of inbound FDJ for national security implications. U.S. Trade Laws and Policy Tools The Trump Administration has placed increased emphasis on the trade deficit, which it views as an indicator of foreign unfair trade practices with potential implications for U.S. industry and jobs, and is more assertively enforcing U.S. trade laws. The Administration is proposing or imposing tariffs or restrictions based on investigations under previously infrequently used U.S. trade laws such as: * Section 301 (Trade Act of 1974) on barriers to U.S exports caused by China's intellectual property rights (IPR) and industry policy practices (the Administration applied tariffs) and France's recently-passed digital services tax (launched investigation); * Section 232 (1962 Trade Act) on the national security threat posed by imports of aluminum and steel (applied tariffs and quotas), autos and auto parts (possible import restrictions pending the outcome of USTR negotiations with the EU and Japan), uranium (no restrictions placed but formed working group to review domestic nuclear fuel supply chain), and titanium sponges (investigation ongoing); and * Section 201 (1974 Trade Act) to address potential injury from surges in solar panels and washing machine imports (applied tariffs and quotas). The Administration also has conducted antidumping and countervailing duty investigations to address unfairly traded imports. U.S. trading partners have responded to these https://crsreports.congress.g rts

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