Codes of Conduct for Multinational Corporations: An Overview

James K. Jackson
Specialist in International Trade and Finance

The U.S. economy has grown increasingly interconnected with other economies around the world, a phenomenon often referred to as globalization. As U.S. businesses expand globally, however, various groups across the social and economic spectrum have expressed their concerns over the economic, social, and political impact of this activity. Over the past 20 years, multinational corporations and nations have adopted voluntary, legally enforceable, and industryspecific codes of conduct, often referred to broadly as corporate social responsibility (CSR), to address many of these concerns. Recent events, primarily the 2008-2009 financial crisis and related work by major international organizations, spurred Congress and governments in Europe to increase their regulation of financial firms. Indeed, the growing presence and influence of multinational corporations in the production of goods and services and in international trade through value chains has prodded governments to adopt measures that enhance the benefits of such activities through codes of conduct. Congress will continue playing a pivotal role in addressing the various issues regarding internationally applied corporate codes of conduct.


Date of Report: April 16, 2013
Number of Pages: 11
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U.S.-Japan Economic Relations: Significance, Prospects, and Policy Options

William H. Cooper
Specialist in International Trade and Finance

Japan and the United States are two major economic powers. Together they account for over 30% of world domestic product, for a significant portion of international trade in goods and services, and for a major portion of international investment. This economic clout makes the United States and Japan potentially powerful actors in the world economy. Economic conditions in the United States and Japan have a significant impact on the rest of the world. Furthermore, the U.S.-Japan bilateral economic relationship can influence economic conditions in other countries.

The U.S.-Japan economic relationship is strong and mutually advantageous. The two economies are highly integrated via trade in goods and services—they are large markets for each other’s exports and important sources of imports. More importantly, Japan and the United States are closely connected via capital flows. Japan is a major foreign source of financing of the U.S. national debt and will likely remain so for the foreseeable future, as the mounting U.S. public debt needs to be financed and the stock of U.S. domestic savings remains insufficient to meet the investment needs. Japan is also a significant source of foreign private portfolio and direct investment in the United States, and the United States is the origin of much of the foreign investment in Japan.

The relative significance of Japan and the United States as each other’s economic partner has diminished. This trend is due in part to the rise of China and other emerging economic powers. For example, China has overtaken Japan as the largest source of foreign financing of the U.S. national debt. Nevertheless, analyses of trade and other economic data suggest that the bilateral relationship remains important, and policy leaders from both countries face the challenge of how to manage it. The trend is also due to the mediocre performance of the Japanese economy over the last two decades, which was exacerbated by the global economic slowdown beginning in 2008, and other setbacks, including the tsunami, earthquake, and nuclear accidents that occurred in March 2011. Japan is still struggling to achieve sustained economic recovery.

However, during the last decade, U.S. and Japanese policy leaders seem to have made a deliberate effort to drastically reduce the friction that prevailed in the economic relationship during the 1970s, 1980s, and the first half of the 1990s. On the one hand, this calmer environment has stabilized the bilateral relationship and permitted the two countries to focus their attention on other issues of mutual interest, such as national security. On the other hand, as some have argued, the friendlier environment masks serious problems that require more attention, such as Japan’s continuing failure to resolve long-standing market access barriers to U.S. exports. Failure to resolve any of these outstanding issues could heighten friction between the two countries.

More generally, other issues regarding U.S.-Japan economic relations may emerge on the agenda of the 113th Congress. U.S. and Japanese leaders have several options on how to manage their relationship, including stronger reliance on the World Trade Organization; special bilateral discussion frameworks and agreements; or a free trade agreement such as the potential Trans- Pacific Partnership (TPP) agreement in which Japan has decided to participate. The possible participation of Japan in the TPP has renewed concerns of some Members of Congress over a number of Japanese trade practices.


Date of Report: April 16, 2013
Number of Pages: 23
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Argentina’s Post-Crisis Economic Reform: Challenges for U.S. Policy

J. F. Hornbeck
Specialist in International Trade and Finance

U.S.-Argentine economic relations have long history of mutually beneficial engagement. In recent years, however, they have been strained at times, in part because of Argentina’s struggle to maintain macroeconomic stability, and also because of specific policy choices that have made the business environment difficult to navigate since the country’s 2001 financial crisis. Following a steep currency devaluation and the largest sovereign default in history, Argentina entered a deep recession with high unemployment and social upheaval. It brought to power a new government, and with it a shift in economic policy away from market-oriented policies toward greater government control of the economy in pursuit of “social equity.” The initial policy responses intended to restore order and address the most pressing social problems evolved into permanent social programs. Government policies introduced many distortions into the economy, including high inflation, which have required regular adjustments in the international accounts to maintain economic stability. These include managed trade, capital controls, and limited currency conversion, among other policies that have earned the ire of international stakeholders.

Argentina’s economic policies reflect priority for financial independence, social equity, and what may be considered a commitment to “populist” macroeconomic solutions. Even in recognizing that countries can govern themselves well under alternative policy frameworks, what stands out for many is the sense that Argentina’s policy choices, with attendant economic distortions, increase the risk of a new financial crisis. The resulting spillovers into international economic policy are unavoidable. Trade protection, managed exchange rates, and capital controls, for example, are policy adjustments required to address problems that materialize in a constrained economic system (e.g., subsidy-driven fiscal expansion, price controls, inability to borrow internationally) that cannot easily accommodate current account deficits, a market exchange rate, or standard macroeconomic responses to high inflation.

Congress and private U.S. stakeholders have opposed many of Argentina’s policies that include a sovereign default on debt owed to both private investors and countries, including the United States; refusal to pay awards ordered by the International Centre for the Settlement of Investment Disputes (ICSID); nationalization of foreign assets; trade protectionism; capital and currency controls; and refusal to abide by International Monetary Fund (IMF) reporting requirements. Some U.S. investors are suing the government of Argentina in U.S. federal courts; the Obama Administration has invoked financial restrictions, revoked trade preferences, voted against loans for Argentina in the development banks, and filed cases before the World Trade Organization (WTO). Some Members of Congress have expressed dissatisfaction in hearings, resolutions, and proposed legislation.

International stakeholders, both public and private, find themselves challenged by this system, along with some Argentines. One indication of the breadth of international dissatisfaction over Argentina’s policies is the call for effectively removing Argentina from the G-20, despite the lack of precedent and formal procedure for doing so. Irrespective of these initiatives, Argentina has not been moved to change course, and the 113th Congress may decide to consider once again U.S. options for addressing bilateral concerns with Argentina.

For details on the sovereign debt issue, see CRS Report R41029, Argentina’s Defaulted Sovereign Debt: Dealing with the “Holdouts,” by J. F. Hornbeck.


Date of Report: April 15, 2013
Number of Pages: 22
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International Trade and Finance: Key Policy Issues for the 113th Congress

Mary A. Irace, Coordinator
Section Research Manager

J. F. Hornbeck, Coordinator
Specialist in International Trade and Finance

The U.S. Constitution grants authority over the regulation of foreign commerce to Congress, which it exercises in a variety of ways. These include the oversight of trade policy generally, and more particularly, the consideration of legislation to approve trade agreements and authorize trade programs. Policy issues cover such areas as: U.S. trade negotiations; tariffs; nontariff barriers; worker dislocation from trade liberalization, trade remedy laws; import and export policies; international investment, economic sanctions; and the trade policy functions of the federal government. Congress also has an important role in international finance. It has the authority over U.S. financial commitments to international financial institutions and oversight responsibilities for trade- and finance-related agencies of the U.S. Government.

The 112th Congress approved U.S. bilateral free trade agreements with Colombia, Panama, and South Korea, extended the Trade Adjustment Assistance (TAA) programs through December 31, 2013, and reauthorized the Generalized System of Preferences (GSP) through July 31, 2013. In addition, Congress authorized permanent normal trade relations (PNTR) status for Russia and Moldova, reauthorized the U.S. Export-Import Bank, and approved full U.S. participation in general capital increases for the World Bank and four regional development banks.

The 113th Congress may revisit many of these issues and address new ones. Among the more potentially prominent issues are:

1. Negotiations for comprehensive reciprocal trade agreements with major trading partners, including the Trans-Pacific Partnership (TPP) with 11 countries from the Western Hemisphere and Asia, and new negotiations with the European Union for the Transatlantic Trade and Investment Partnership (TTIP) Agreement; 
2. Possible renewal of Trade Promotion Authority (TPA), allowing the President to enter into reciprocal trade agreements, and providing trade negotiating objectives and expedited legislative procedures to consider trade agreement implementing bills; and the possible related issue of TAA program reauthorization; 
3. U.S.-China trade relations including investment, intellectual property rights protection, currency reform, and market access liberalization; 
4. International finance issues including implications of the ongoing Eurozone debt crisis for the U.S. economy, oversight of international financial institutions, and negotiations to conclude new bilateral investment treaties (BITs); 
5. Oversight of the stalemated World Trade Organization (WTO) Doha Round negotiations and separate new trade negotiations (e.g. services) that some members of the WTO have undertaken; 
6. Review of the President’s export control reform initiative and possible renewal of the Export Control Act (EAA), and review of trade sanctions; 
7. Oversight of the President’s request for new authority to reorganize and consolidate the business- and trade-related functions of six federal entities; the Export-Import Bank, and the Administration’s National Export Initiative; 
8. Reauthorization of U.S. Customs and Border Protection (CBP) and expiring trade preference programs (e.g., the GSP and the Andean Trade Preference Act).

A list of CRS reports covering these issues is provided at the end of the report.


Date of Report: April 15, 2013
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The Trans-Pacific Partnership Negotiations and Issues for Congress

Ian F. Fergusson, Coordinator
Specialist in International Trade and Finance

William H. Cooper
Specialist in International Trade and Finance

Remy Jurenas
Specialist in Agricultural Policy

Brock R. Williams
Analyst in International Trade and Finance

The Trans-Pacific Partnership (TPP) is a proposed regional free trade agreement (FTA) being negotiated among the United States, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. On March 15, 2013, Japanese Prime Minister Shinzo Abe announced that Japan would seek to participate in the TPP negotiations. On April 12, 2013, the Obama Administration announced that bilateral talks had concluded and that the United States was prepared to support Japan’s participation in the TPP negotiations, subject to the consensus of the other TPP partners. U.S. negotiators and others describe and envision the TPP as a “comprehensive and high-standard” FTA that aims to liberalize trade in nearly all goods and services and include commitments beyond those currently established in the World Trade Organization (WTO). The broad outline of an agreement was announced on the sidelines of the Asia-Pacific Economic Cooperation (APEC) ministerial in November 2011, in Honolulu, HI. If concluded as envisioned, the TPP potentially could eliminate tariff and non-tariff barriers to trade and investment among the parties and could serve as a template for a future trade pact among APEC members and potentially other countries. Congress has a direct interest in the negotiations, both through influencing U.S. negotiating positions with the executive branch, and by passing legislation to implement any resulting agreement.

The 16th round of negotiations concluded in Singapore on March 14, 2013, and the 17th round is scheduled to be held in Lima, Peru in May 2013. The current goal is to reach an agreement in time for the October 2013 APEC summit in Indonesia. For this deadline to be achieved, outstanding negotiating positions may need to be tabled soon in order for political decisions to be made. The negotiating dynamic itself is complex: decisions on key market access issues such as dairy, sugar, and textiles and apparel may be dependent on the outcome of controversial rules negotiations such as intellectual property rights or state-owned enterprises.

Twenty-nine chapters in the agreement are under discussion. The United States is negotiating market access for goods, services, and agriculture with countries with which it does not currently have FTAs: Brunei, Malaysia, New Zealand, and Vietnam. Negotiations are also being conducted on disciplines to intellectual property rights, trade in services, government procurement, investment, rules of origin, competition, labor, and environmental standards and other issues. In many cases, the rules being negotiated are intended to be more rigorous than comparable rules found in the WTO. Some topics, such as state-owned enterprises, regulatory coherence, and supply chain competitiveness, break new ground in FTA negotiations. As the countries that make up the TPP negotiating partners include advanced industrialized, middle income, and developing economies, the TPP, if implemented, may involve substantial restructuring of the economies of some participants.

The TPP serves several strategic goals in U.S. trade policy. First, it is the leading trade policy initiative of the Obama Administration, and is a manifestation of the Administration’s “pivot” to Asia. If concluded, it may serve to shape the economic architecture of the Asia-Pacific region by harmonizing existing agreements with U.S. FTA partners, attracting new participants, and establishing regional rules on new policy issues facing the global economy—possibly providing impetus to future multilateral liberalization under the WTO.

As the negotiations proceed, a number of issues important to Congress are emerging. One is whether the United States can balance its vision of creating a “comprehensive and high standard” agreement with a large and expanding group of countries, while not insisting on terms that other countries will reject. Another issue is how Congress will consider the TPP, if concluded. The present negotiations are not being conducted under the auspices of formal trade promotion authority (TPA)—the latest TPA expired on July 1, 2007—although the Administration informally is following the procedures of the former TPA. If TPP implementing legislation is brought to Congress, TPA may need to be considered if the legislation is not to be subject to potentially debilitating amendments or rejection. Finally, Congress may seek to weigh in on the addition of new members to the negotiations, before or after the negotiations conclude.


Date of Report: April 15, 2013
Number of Pages: 62
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