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handle is hein.crs/goveojv0001 and id is 1 raw text is: Congressional Research Service Informing the IegisIative debate since 1914 Updated February 21, 2024 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. It has delegated some trade authorities to the Executive, 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 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 118t. Congress involve aims to boost U.S. innovation, production and supply chain resiliency in strategic sectors, and restrict certain trade and investment with the People's Republic of China (PRC or China) and Russia (e.g., through sanctions). Congress also could continue to deliberate issues such as its role in U.S. trade negotiations, tariffs, and trade programs. Trade Economics and U.S. 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 within a country. In 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. Trade liberalization's economic impact is difficult to measure and widely debated, in part due to the many factors that influence economic activity. Most economists agree that trade liberalization benefits the U.S. economy overall but imposes adjustment costs for certain sectors and regions. Workers and firms may need more assistance and dedicated policies to adjust to trade effects. Over the past several decades, U.S. trade generally has expanded (see Figure 1), and the U.S. economy has become more integrated globally. Supply chain disruptions from the COVID-19 pandemic, trade frictions with China, and the Russia-Ukraine war revealed some vulnerabilities posed by this interdependence. After rebounding from the economic fallout of the pandemic, U.S. total trade (goods and services, exports plus imports) declined in 2023 by 1.5%. This mirrored trends in global trade, which is estimated to have contracted in 2023, amid geopolitical tensions, continued supply disruptions, high inflation, and rising debt. The top U.S. partners (total trade) in 2022 were, as a bloc, the European Union (EU, $1,322 billion), and by country, Canada ($919 bn), Mexico ($864 bn), China ($761 bn), Japan ($310 bn), and Germany ($304 bn). Figure I. U.S. Goods and Services Trade $3.5 $ in trillions $3.0 Goods Imports $2,5 $2.0 $2.erGics Exports $1.5 $0.5 --- Services Imports $0.0 1990 2000 2010 2020 Source: Bureau of Economic Analysis and Census Bureau. Note: Not adjusted for inflation. The United States has a long-running overall trade deficit (imports exceed exports); and the goods trade deficit outweighs the services trade surplus. Most economists hold that macro-economic variables affect the deficit more than trade policy (see Text Box). Key Components of U.S. Trade Policy Congress sets U.S. trade negotiating objectives, enacts trade laws, programs, and agreements, and oversees trade functions conducted by federal agencies. By statute, the U.S. Trade Representative (USTR) leads U.S. trade negotiations and coordinates trade policy through an interagency process, with formal public and private advisory input. Key trade functions are 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 Border regulations; laws to address adverse effects of imports, national security threats, balance of payments, tariff and non- tariff trade barriers, imports made with forced labor; Trade Adjustment Assistance (TAA) for dislocated workers/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 foreign investment for national security implications. Selected Issues and Deveopments 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. Some Members and stakeholders support renewed focus on key issues like supply chain resiliency and worker rights; others criticize the lack of focus on market access negotiations. U.S. Trade Laws. Authorities to adjust tariffs and other restrictions address: unfairly traded goods (e.g., anti-

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