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1 1 (December 19, 2018)

handle is hein.crs/govyvg0001 and id is 1 raw text is: Updated December 19, 2018 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, Section 8), legislative activity, and oversight responsibility. 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 affected by import competition and unfair foreign trade practices. In its first two years, the Trump Administration's trade policy actions created new dynamics that will continue to influence trade issues in the 116th Congress, including: significant unilateral tariff actions, a renegotiated North American Free Trade Agreement (NAFTA), and economic engagement and confrontation with China. 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. Trade benefits can include more efficient resource allocation, increased competition, economies of scale, job growth, lower prices, and more consumer choice. 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 boosting technological advancements than by expanded trade, which may result from trade liberalization. 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 2017 top U.S. trading partners were China, Canada, Mexico, Japan, Germany, and the European Union (EU). 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. https://crsrepc Figure I. U.S. Goods and Services Trade TRILLIONS OF U.S. DOLLARS $2.5 Goods Imports $2.0 Goods $1.5 Exports $1.0Sevc Exports - - - - -- -- -Imports Source: Bureau of Economic Analysis and Census Bureau. 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 FDI 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. It has also taken a more assertive approach to enforcing U.S. trade laws, 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) practices, Section 232 (1962 Trade Act) on the national security implications of aluminum and steel imports and potentially auto and uranium imports (reviews pending), and Section 201 (1974 Trade Act) on potential injury from surges in imports of solar panels and washing machines. Antidumping and countervailing duty investigations have orts.congress.gov

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