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1 1 (May 17, 2024)

handle is hein.crs/govepsa0001 and id is 1 raw text is: Con re <anal Research Service infon ing I Ieq I lived We ii 1914 Updated May 17, 2024 International Trade and Jobs The 118th Congress is engaged in a range of legislative and oversight activities related to trade. The impact of trade agreements on U.S. jobs has been a key, long-standing policy consideration for Members of Congress. There is broad consensus among economists that, in the aggregate, the economic benefits of trade, such as lower prices and a greater variety of goods and services, outweigh the costs. Because the gains from trade tend to be more widely dispersed than the losses, the benefits are often not readily apparent or well quantified. Affected stakeholders often point to offshoring, job losses, stagnant wages, and rising inequality among some groups as indicators of the costs of trade agreements. There is also broad consensus among economists that factors other than trade, such as the adoption of new technologies, affect jobs and wages, and that the impact of trade agreements can be difficult to disentangle from that of other factors. The economic impact of trade agreements on jobs is widely debated among Members of Congress, academics, and civil society. Multiple government agencies produce estimates of the impact of trade on jobs to inform policymaking. Congress may weigh the relationship between international trade and employment in its trade policy and oversight decisions, particularly with respect to the agencies responsible for economic analysis of trade agreements and the programs that provide trade adjustment assistance for firms, workers, and farmers. Estimating the Impact of Trade on jobs Economists and government agencies use economic models to estimate the impact of trade on the economy (see text box). Estimates from these models inform policymakers' evaluations of trade policy. Despite some limitations, models provide policymakers with estimated impacts on industries, including output, employment, and wages. International Trade Theory and Models Trade models relate firms' supply of goods and services with domestic and foreign consumers' demand based on relationships derived from international trade theory. Models examine how a particular change in trade policy (e.g., the removal of a tariff) affects prices and ultimately supply and demand of goods and services. Trade theory generally assumes that firms adjust their hiring or wages due to these impacts. Estimates of the impact on jobs and wages from trade models are based on assumptions about how firms use labor and other inputs to produce goods and services. Trade Agreements and obs In evaluating potential new trade agreements, Congress has considered estimates of the agreement's potential impacts on U.S. jobs. The U.S. International Trade Commission (ITC) provides advice on trade negotiations and economic analysis of free trade agreements (FTAs). During trade negotiations, the ITC provides a report to the President and Congress mandated under Section 2104(f) of the Trade Act of 2002 (P.L. 107-210) that assesses the likely impact of a proposed FTA on the U.S. economy, including the impact on employment. For example, the ITC's 2019 assessment of the likely impact of the U.S.-Mexico-Canada Agreement (USMCA) estimated that USMCA would raise U.S. employment by 176,000 jobs and increase wages by 0.27% after USMCA is fully implemented and firms and workers have adjusted to the agreement. In a 2021 report required by the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (P.L. 114-26), the ITC estimated that trade agreements added 485,000 jobs to the U.S. economy between 1984 and 2017. The Biden Administration has committed to pursuing a worker-centered trade policy that it states aims to protect workers, drive wage growth, and strive for improved economic outcomes for workers; it has not pursued major measures to open markets or initiated new FTA negotiations. Instead, the Administration has pursued trade initiatives, such as the Indo-Pacific Economic Framework for Prosperity (IPEF), that focus on specific trade-related issues. IPEF, for example, contains pillars dedicated to building resilient supply chains and fostering investments in clean energy. Quantifying the impact of these measures on trade flows, employment, and other economic outcomes may be more difficult than with past FTAs that have focused primarily on lowering tariff and nontariff barriers. Jobs Supported by Exports Broader measures of how many jobs in the U.S. economy are related to international trade may be a useful indicator of how trade agreements that are already implemented continue to support U.S. jobs. The Department of Commerce's International Trade Administration (ITA) estimates the average number of jobs that are supported- not created-by exports in the U.S. economy. The estimate considers the average relationships between the value of goods and services in the economy relative to the average number of jobs that are required to produce that output for each industry, the value of inputs used in their production, and the value of transportation and other marketing services required to bring goods and services to buyers. As shown in the left side of Figure 1, the ITA estimated that in 2021 (latest data available), U.S. exports of goods and services supported 9.05 million jobs-6.1 million in the goods producing sector and 2.9 million in services. Among jobs in services sectors, exports supported the most jobs in professional and technical services, 1.4 million in 2021. These estimates represent an increase from 2020 but still fall below the estimates for 2019. In 2020, the first year of the COVID-19 pandemic, U.S. exports decreased

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