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handle is hein.crs/govekjz0001 and id is 1 raw text is: Congressional Research Service nforming the legislative debate since 1914 Updated January 30, 2023 U.S. Trade Policy: Background and Current Issues Congress has primary authority over U.S. trade policy through its constitutional power to levy tariffs and regulate foreign commerce (Article 1, §8). It has delegated some trade authorities to the Executive branch, but retains an active role in formulating trade policy and shaping outcomes. Since World War II, U.S. trade policy has generally sought to advance U.S. economic growth and competitiveness by: reducing international trade and investment barriers; fostering an open, transparent, and nondiscriminatory rules-based trading system, including through the World Trade Organization (WTO); enforcing partner countries' trade commitments and U.S. trade laws; and offering relief to U.S. workers and firms adversely affected by unfair foreign trade practices and trade liberalization. Legislative efforts in the 117th Congress aimed to boost U.S. innovation, production and supply chain resiliency in strategic sectors, and restrict certain trade with the People's Republic of China (PRC or China) and Russia (e.g., through sanctions). Congress also deliberated issues such as its role in trade negotiations, tariffs, and trade preference programs. Trade Economs and US. Trade Trends Economic theory generally shows that free trade is beneficial at the national level though the benefits and costs of trade liberalization may be unevenly distributed in a country. Under this theory, countries produce and export goods and services in which they have a higher relative comparative advantage, and import those domestically unavailable or less efficiently produced. This assumes that countries take a market-oriented approach, abide by similar rules, and offer reciprocal market access. Benefits of trade can include higher wages and job growth, a wider variety of products available at lower prices, increased productivity such as in export-focused industries, and more efficient resource allocation from competition and economies of scale. Costs of trade liberalization can include some job and firm losses, and wage declines, through import competition and production relocation. These benefits and costs can vary by industry. The economic impact of trade liberalization is difficult to measure and widely debated, in part because of the many factors that influence economic activity. Most economists agree that trade liberalization benefits the U.S. economy overall, but that it has adjustment costs for certain sectors and regions. Workers and firms may require more assistance and dedicated policies to adjust to trade effects. The United States plays a leading role in global trade and investment. U.S. trade has expanded in recent decades (see Figure 1), and the U.S. economy has become more integrated globally. Since 2020, U.S. and global trade trends have reflected ongoing COVID-19 pandemic and economic recovery effects. The top U.S. trading partners (goods and services, exports plus imports) in 2021 were, as a bloc, the European Union (EU, $1,097 billion), and by country, Canada ($763 bn), Mexico ($726 bn), China ($719 bn), Japan ($279 bn), and Germany ($268 bn). The United States has a long-running overall trade deficit (imports exceed exports); the goods trade deficit outweighs the services trade surplus. Most economists hold that macro- economic variables affect the deficit more than trade policy. Figure I. U.S. Goods and Services Trade $3.0 U.S. $in t llion... Goods Imports $2.0 Goods Exports $1.0 Services Exports services - -o $0.0 I I I I I Imports 1991 1996 2001 2006 2011 2016 2021 Source: Bureau of Economic Analysis and Census Bureau. Key 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 and adjustment. Regulation of borders; laws to address adverse effects of imports, national security threats, balance of payments, tariff and nontariff trade barriers, imports made with forced labor; assistance for dislocated workers and firms. * Trade preferences. Duty-free access to U.S. market 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 investment for national security implications. Selected Issues and Developments In its trade policy, the Biden Administration has sought to strengthen the U.S. economy by aiming to boost U.S. manufacturing, innovation and competitiveness, and advance labor and environmental goals. It also has sought to enforce trade agreements, work with allies and partners to address trade frictions, and counter and constrain actions of concern by China and Russia, among other aims. U.S. Trade Laws. Authorities to adjust tariffs and other restrictions have been active in U.S. trade policy. Examples include laws to address unfairly traded goods (e.g., antidumping and countervailing duty laws); import injury from fairly traded goods, and foreign trade barriers or trade commitment violations (Sec. 201 and Sec. 301 of the Trade Act of 1974, respectively); and trade-related national security concerns (Sec. 232 of the Trade Expansion Act of 1962). The Trump Administration renewed use of some of these authorities, to counter subsidies by applying tariffs on certain steel and aluminum imports from most trading

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