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1 1 (September 15, 2020)

handle is hein.crs/govdbum0001 and id is 1 raw text is: FF. ' iE S .,, i , Updated September 15, 2020 U.S. Trade Policy: Background and Current Issues Congress plays a major role in U.S. trade policy through its constitutional authority over tariffs and foreign commerce (Article 1, §8). Since World War II, U.S. trade policy has generally sought to promote U.S. economic growth and competitiveness by: (1) reducing global trade and investment barriers; (2) fostering an open, transparent, and nondiscriminatory rules-based trading system, including through the World Trade Organization (WTO); (3) enforcing partner countries' trade commitments and U.S. trade laws; and (4) offering relief to U.S. firms and workers adversely affected by unfair foreign trade practices and trade liberalization. Congress has deliberated and legislated in response to aspects of the Trump Administration's trade policy, including the President's use of unilateral tariffs, the priorities and scope of U.S. trade agreement negotiations, and the U.S. approach to China and other trading partners. Economic theory holds that international trade can be beneficial at the national level, but benefits and costs can be unevenly distributed or concentrated. Countries increase production and export goods and services in which they have a higher relative comparative advantage through skills or resources, and import those unavailable domestically or less efficiently produced. Benefits of trade can include more efficient resource allocation and greater productivity through competition, economies of scale, higher wages and job growth in exporting industries, as well as greater choice and lower prices for consumers and firms using imports as inputs into final products. Costs can include job, wage, and firm losses through competition from imports and relocation of production. The economic impact of trade liberalization is difficult to measure and widely debated, in part because other factors influence economic activity, potentially with greater effect, and because expanded trade may lead to shifts in the composition of economic activity with growth in some sectors and declines in others. Some economists assess that U.S. manufacturing employment has been more affected by productivity gains through technological advancements and automation than by expanded trade. Since 1990, U.S. production in the manufacturing sector increased by roughly 60%, while employment fell by one-third. Most economists argue that expanded trade has been a net benefit to the U.S. economy (through the channels described above), but has contributed to job losses in some sectors and regions, including through offshoring, and that workers may require costly retraining or relocation to adjust to the resulting shifts in employment opportunities. U ,S. )rad T,-e-Jt The United States is the world's largest economy, trader, and source and destination of foreign direct investment (FDI, stock basis). U.S. trade has expanded (Figure 1) and U.S. markets and production have become more integrated, especially with emerging economies. The 2019 top U.S. trading partners were Canada, Mexico, China, 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. Most economists argue macroeconomic variables (e.g., aggregate savings and investment; valuation of the dollar and its role in global markets) play a larger role in determining the U.S. trade deficit than trade policies or agreements. Figure I. U.S. Goods and Services Trade $3.0JS Goods Imports Goods Exports Services Exports ..... ....... ~ ~~. .... . 2 2; 2 2 . . . . ... e vie .. .....Servkes $ 0 . ... . I I I I Imports 1989 ,94 q99 2M04 ?nog 2014 2019 Source: Bureau of Economic Analysis and Census Bureau. C., ,,p o P,',A ;, , T r d i o,, i' y 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 their economic growth. * Investment. Protection and promotion (through investment treaties and trade agreements); examination of inbound FDI for national security implications. kJ. r,. Laws ,\ ar,,d F>o, (,y TNA The Administration highlights the U.S. trade deficit as an indicator of foreign unfair trade practices with potential implications for U.S. industry and jobs, and has assertively enforced U.S. trade laws. In particular, the Administration has applied unilateral tariff increases through use of authorities delegated by Congress in the Trade Expansion Act of 1962 (Section 232 tariffs on steel and aluminum) and the Trade Act of 1974 (Section 201 tariffs on washing machines and solar panels, and Section 301 tariffs on Chinese imports). Congress created these authorities to p\w -- , gnom goo mppm qq\ a , q 'S I 11LULANJILiN,

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