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Thursday, April 1, 2010

The Future of U.S. Trade Policy: An Analysis of Issues and Options for the 111th Congress

William H. Cooper
Specialist in International Trade and Finance

U.S. trade policy is at a cross-roads as the Obama Administration and the 111th Congress face a range of policy issues and challenges. The future direction of trade policy and how the issues will be addressed are unclear at this time and the subject of sharp debate within Congress, the Administration, and the trade policy community at large. While a number of issues are related to trade policy, the fundamental question that is the subject of this debate is which trade policy, if any, will maximize the benefits of trade and boost U.S. living standards. 

Among the trade issues facing Congress and the Administration are pending free trade agreements (FTAs) and negotiations on new FTAs; the stalled Doha Development Agenda (DDA) multilateral trade negotiations; the possible renewal of trade promotion authority (TPA); the review and reauthorization of trade preference programs for developing countries; the enforcement of U.S. trade laws and rights under existing trade agreements; the role of export promotion in the U.S. economic recovery; and the growing link between foreign direct investment and trade and, with it, the increasing use of bilateral investment treaties (BITs) and investment provisions in trade agreements. 

The current trade policy environment is affected by a number of political and economic forces. The political forces involve the opinions of the American public, including major stakeholders— business, labor, agriculture, and non-government organizations—on trade; congressional perspectives; presidential perspectives; and tension in the congressional/executive relationship as the two branches play their respective trade policy roles. The economic forces include the global economic downturn; the rise of developing countries, including the emerging markets of Brazil, China, and India as major trading powers; the growth of global production networks; the proliferation of free trade agreements and other preferential trade arrangements; the inherent limitations of trade policy as a tool in economic policy; the growth of "behind the border" trade barriers; and the long-standing U.S. trade deficits. 

The debate on trade is framed by three groups of views. One group, who might be called "trade liberalizers," assert that on a net basis the benefits to the United States of trade liberalization are greater than the costs and, therefore, should be encouraged through trade barrier reductions. A second group—"fair traders"—acknowledge the benefits of trade liberalization but assert that U.S. firms and workers are often forced to compete under unfair conditions. They support trade agreements, but only if the agreements provide for a "level playing field." A third group—"trade skeptics"—tends to argue that the costs of trade liberalization outweigh the benefits for the United States, and therefore, reject unrestricted trade liberalization. Where policymakers fit on this continuum of views could help to determine how they decide to address the outstanding and emerging trade issues before Congress 

In many cases, the trade policy positions of policymakers and other experts cannot be readily categorized as belonging to one group or another, but the categories provide a mechanism to analyze the major concepts in trade policy and their potential implications.

Date of Report: March 24, 2010
Number of Pages: 24
Order Number:R41145
Price: $29.95

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