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Con I Re car hServ
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Updated August 9, 2024
U.S. Trade Policy: Future Direction and Key Economic Debates
Congress plays a major role in shaping U.S. trade policy
through the exercise of its constitutional authorities. Article
I, Section 8 of the U.S. Constitution grants Congress the
Power To lay and collect Taxes, Duties, Imposts, and
Excises and to regulate Commerce with foreign Nations.
Congressional interest in trade policy also stems from the
impact of trade on the economy, foreign policy, and
national security of the United States and the economic
success of firms, farmers, and workers. Through periodic
enactments of Trade Promotion Authority (TPA)
legislation, Congress has defined U.S. trade policy priorities
and negotiating objectives for trade agreements, established
consultation and notification requirements for the President
to follow during negotiations, and granted the President
authority to implement limited reciprocal tariff reductions
with trading partners. TPA also has provided for expedited
legislative consideration of broader trade agreements that
meet congressional requirements.
Congress last passed TPA in 2015 (P.L. 114-26), but the
authority expired in 2021, and President Biden has not
asked Congress for its renewal. The President has indicated
that he has no immediate plans to embark on new free trade
agreement (FTA) negotiations, although he has launched
trade initiatives that focus on targeted trade issues and may
not require congressional action, such as the Indo-Pacific
Economic Framework for Prosperity (IPEF) and the
Americas Partnership for Economic Prosperity (APEP).
Members of Congress and the broader trade policy
community have mixed views on the current state of U.S.
trade policy and its future direction. As such, the 118th
Congress is positioned for continued oversight, debate, and
action regarding President Biden's trade policy agenda.
ffects of Trade L bera zat on
Since the 1930s, some economists and U.S. policymakers
across political parties have recognized the importance of
negotiating trade agreements to achieve more open and
rules-based international commerce, while remaining
cognizant of potential costs to specific segments of the
population. Past Administrations have used congressionally
delegated authorities and tools to pursue and achieve trade
liberalization (i.e., the removal of trade barriers). Congress
has played a major role in shaping and approving these
efforts (see textbox). However, concerns over the impact of
greater import competition on some firms and workers have
engendered ongoing debate and led to complementary
legislative action to mitigate the potential negative effects
of trade liberalization (e.g., Trade Adjustment Assistance
[TAA]). The effects of these actions, and the mechanisms
by which trade affects the U.S. economy, are difficult to
quantify, which is partly due to the challenges associated
with disentangling the effects of trade liberalization from
those of other domestic and global economic developments.
U.S. Trade Policy Objectives and Tools
Since World War II, U.S. trade policy has sought to achieve several
interrelated objectives. They have included (I) fostering economic
growth and securing more open, equitable, and reciprocal market
access for U.S. exports and investment; (2) protecting U.S.
producers from unfair foreign trade practices and rapid surges in
fairly traded imports; and (3) strengthening the rules-based
multilateral trading system to help achieve the above objectives and
further U.S. foreign policy. In seeking to fulfill these objectives, U.S.
policymakers have employed an array of policy tools, such as trade
negotiations, FTAs, trade remedies (e.g., safeguards), TAA, export
promotion, trade preference programs, and economic sanctions.
Economists generally agree that, in the aggregate, the
economic benefits of reducing trade barriers outweigh the
costs. Nonetheless, the processes of trade liberalization and
globalization present both opportunities and challenges for
the United States. For example, reducing trade restrictions
tends to lower prices, increase the variety of goods and
services available to U.S. consumers, and increase the
competitiveness of U.S. firms' and farmers' exports in
global markets. Some studies also show that U.S. firms
engaged in trade often achieve greater productivity and pay
higher wages and benefits to their workers.
However, because the gains from trade tend to be more
widely dispersed than the losses, the benefits are often not
readily apparent or well quantified. As a result, some
groups argue that globalization has benefitted some
segments of the population more than others. Affected
stakeholders often point to offshoring, job losses, stagnant
wages, and rising inequality among some groups as
indicators of the negative aspects of globalization. Yet, the
causes of these trends are highly contested. The growth of
global supply chains (GSCs)-combined with changes
related to technology, labor productivity, consumer
preferences, and broader economic factors-has also
transformed or disrupted some U.S. economic sectors.
Trade Polcy Concerns
Some Members contend that although past trade
negotiations and FTAs have lowered or eliminated U.S.
trade barriers, these tools have failed to keep pace with
changes in the global marketplace, effectively address
foreign protectionist practices, and enhance reciprocal
market access for U.S. firms, farmers, and workers. In their
view, some countries (e.g., China) play by different rules
and conduct their economic and trade policies based on
priorities that often undermine those of the United States.
Concerns go beyond tariffs, focusing on issues such as
industrial policy, labor rights, intellectual property, and the
environment. In addition, the COVID-19 pandemic and
Russia's war in Ukraine have exacerbated concerns related
to globalization, import dependencies, and GSC
vulnerabilities. To increase resilience, some Members call](ViewImageLocal?handle=hein.crs/goveqic0001&div=1&collection=&method=preview&ext=.png&size=3)
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