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Thursday, January 24, 2013

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


Article I, Section 8, of the U.S. Constitution grants authority over the regulation of foreign commerce to Congress. Congress exercises this authority in a variety of ways, including through the consideration of legislation to approve trade agreements and authorize trade programs and through oversight of trade policy more generally. 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. For example, it has the authority over the level of U.S. financial commitments to international financial institutions and oversight responsibilities over trade- and finance-related agencies of the U.S. Government.

The 112
th Congress approved U.S. bilateral free trade agreements (FTAs) 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. It also conducted oversight of the Eurozone sovereign debt crisis.

The 113
th Congress may revisit many of these issues and address new ones. This report provides an overview of key international trade and finance policy issues, including the ones listed below.

• The ongoing Trans-Pacific Partnership (TPP) free trade agreement negotiations.


  • Trade Promotion Authority (TPA) and its possible renewal. 
  • The stalemated WTO Doha Round negotiations and separate new trade liberalizing proposals that some members of the WTO may undertake. 
  • Oversight of the emerging potential for U.S.-European Union FTA negotiations. 
  • U.S.-China trade relations including intellectual property rights protection, currency reform, and market access liberalization. 
  • Renewal of expiring trade programs including GSP and TAA. 
  • The President’s request for new authority to reorganize and consolidate the business- and trade-related functions of six federal entities, oversight of the recently reauthorized Export-Import Bank, and the Administration’s National Export Initiative. 
  • Ongoing review of the President’s export control reform initiative and possible renewal of the Export Control Act (EAA), and review of trade sanctions on Iran, Cuba, North Korea, and Syria. 
  • Reauthorization of U.S. Customs and Border Protection (CBP). 
  • 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). 

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


Date of Report: January 4, 2013
Number of Pages: 36
Order Number: R42882
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Tuesday, January 22, 2013

Miscellaneous Tariff Bills: Overview and Issues for Congress



Vivian C. Jones
Specialist in International Trade and Finance

U.S. importers often request that Members of Congress introduce bills seeking to temporarily suspend or reduce tariffs on certain imports. The vast majority of these bills address chemicals, raw materials, or other components used as inputs in the manufacturing process. The rationale for these requests, in general, is that they help domestic producers of the downstream goods reduce costs, thus making their products more competitive. In turn, these cost reductions may be passed on to the consumer.

In recent congressional practice, the House Ways and Means and Senate Finance Committees, the committees of jurisdiction over tariffs, have combined individual duty suspension bills and other technical trade provisions into larger pieces of legislation known as miscellaneous trade (or tariff) bills (MTBs). Before inclusion in an MTB, the individual legislative proposals introduced by Members are reviewed by the trade subcommittee staff in each committee, the U.S. International Trade Commission (USITC), and executive branch agencies to ensure that they are noncontroversial (generally, that no domestic producer, Member, or government agency objects), relatively revenue-neutral (revenue loss due to the duty suspension of no more than $500,000 per item), and are able to be administered by U.S. Customs and Border Protection (CBP).

In the 111
th Congress, the United States Manufacturing Enhancement Act of 2010 (P.L. 111-227) was signed by the President on August 11, 2010. As enacted, the law temporarily suspended or reduced for three years (through December 31, 2012) duties on over 600 products, many of which renewed duty suspensions or reductions that were already in place. On December 15, 2010, H.R. 6517, a bill that, in part, proposed duty suspensions on approximately 290 additional products, passed in the House. Due to changes in the Senate version of the bill subsequently approved in the House, the duty suspensions were dropped (became P.L. 111-344).

On January 1, 2012, Chairman Camp and Ranking Member Levin of the House Ways and Means Committee, and Chairman Brady and Ranking Member McDermott of the Trade Subcommittee introduced H.R. 6727, the “U.S. Job Creation and Manufacturing Competitiveness Act of 2013.” The package was based on over 2,000 bills that were introduced in the House and Senate during the MTB process that was conducted from March 30 to April 30, 2012. Since the bill was not taken up in either the House or the Senate, MTB legislation could continue to be a legislative issue in the 113
th Congress.

On June 12, 2012, S. 3292, the Temporary Duty Suspension Process Act of 2012, a bill seeking to require the USITC to recommend temporary duty suspensions to Congress, was introduced. This bill is similar, but not identical, to S. 1162 (the Removing Hurdles for American Manufacturers Act of 2011), introduced on June 9, 2011.

This report discusses: first, the review process of duty suspension bills by House Ways and Means and Senate Finance committee staff, the U.S. International Trade Commission (USITC), and other relevant agencies; second, MTB legislation debated in the past few Congresses; and third, some details of the debate for MTB passage. Finally, MTB legislation considered in Congress from 1983 to the present is summarized in Table A-1.



Date of Report: January 10, 2013
Number of Pages: 19
Order Number: RL33867
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Generalized System of Preferences: Background and Renewal Debate



Vivian C. Jones
Specialist in International Trade and Finance

The U.S. Generalized System of Preferences (GSP) program provides non-reciprocal, duty-free tariff treatment to certain products imported from designated beneficiary developing countries. The United States, the European Union, and other developed countries have implemented similar programs since the 1970s in order to promote economic growth in developing countries by stimulating their exports. The U.S. program was first authorized in Title V of the Trade Act of 1974, and is subject to periodic renewal by Congress. The GSP program was most recently extended until July 31, 2013, in Section 1 of P.L. 112-40. GSP trade benefits became effective 15 days after the date of enactment (October 21, 2011), on November 5, 2011. P.L. 112-40 also retroactively extended the GSP program to eligible merchandise that entered the United States between the expiration date, December 31, 2010, and the date that the GSP renewal entered into force.

The GSP is one of several U.S. trade preference programs through which the United States seeks to help developing countries expand their economies. Other U.S. trade preference programs include the African Growth and Opportunity Act (AGOA), the Andean Trade Preference Act (ATPA), and the Caribbean Basin Initiative (CBI). The GSP program provides duty-free entry for over 3,500 products (based on 8-digit U.S. Harmonized Tariff Schedule tariff lines) from 127 designated countries and territories, and duty-free status to an additional 1,500 products from 44 GSP beneficiaries that are additionally designated as least-developed beneficiary developing countries.

U.S. implementation of the GSP program requires that eligible countries and products conform to certain criteria. First, to be designated a beneficiary developing country (BDC), developing countries must be taking steps to grant internationally recognized worker rights and to reduce trade-distorting investment policies and practices, among other things. Second, at least 35% of the appraised value of the product must be the “growth, product, or manufacture” of the BDC. Third, the GSP program also includes certain curbs on product eligibility intended to shield U.S. manufacturers and workers from harm due to the duty-free treatment. These include specifically excluding certain “import sensitive” products (e.g., textiles and apparel) from GSP, and placing limits on the quantity or value of any one product imported under the program. Fourth, GSP country and product eligibility are subject to an annual review.

The expiration of the GSP in July 2013 means that renewal of the program is likely to be a legislative issue in the first session of the 113
th Congress. In recent years, renewal of trade preference programs in general, and of the GSP program in particular, has been somewhat controversial. For example, some Members have reportedly asserted that more “advanced” BDCs, such as Brazil and India, should not receive benefits under U.S. preference programs, and propose ending or limiting their benefits in favor of providing a greater share of benefits to eligible leastdeveloped countries (LDCs). Other Members have proposed expanding preferences to grant dutyfree, quota-free access (DFQF) to all least-developed countries.

This report presents, first, a brief history, economic rationale, and legal background leading to the establishment of the GSP. Second, the report presents a discussion of U.S. implementation of the GSP, along with the present debate surrounding its renewal and legislative developments to date. Third, the report presents an analysis of the U.S. program’s effectiveness and the positions of various stakeholders. Fourth, implications of the expiration of the U.S. program and possible options for Congress are discussed.



Date of Report: January 9, 2013
Number of Pages: 42
Order Number: RL33663
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Trade Adjustment Assistance (TAA) and Its Role in U.S. Trade Policy



J. F. Hornbeck
Specialist in International Trade and Finance

Congress created Trade Adjustment Assistance (TAA) in the Trade Expansion Act of 1962 to help workers and firms adjust to dislocation that may be caused by increased trade liberalization. It is justified now, as it was then, on grounds that the government has an obligation to help the “losers” of policy-driven trade opening. In addition, TAA is presented as an alternative to policies that would restrict imports, and so provides assistance while bolstering freer trade and diminishing prospects for potentially costly tension (retaliation) among trade partners. As in the past, critics strongly debate the merits of TAA on equity, efficiency, and budgetary grounds. Nonetheless, finding agreement on TAA remains important for forging a compromise on national trade policy. This report discusses the role of TAA in U.S. trade policy from its inception as a legislative option in the early 1950s to its core role as a cornerstone of modern trade policy that many argue has served to promote the long-term U.S. trade liberalization agenda.

TAA was reauthorized through December 31, 2013, in the 112
th Congress. Democratic leaders and the Obama Administration considered TAA a quid pro quo for passage of three implementing bills for free trade agreements (FTAs) with Colombia, Panama, and South Korea. There was, however, considerable partisan debate over the direction TAA should take. Congress had expanded TAA significantly in the American Recovery and Reinvestment Act (ARRA) of 2009 from an earlier version in the Trade Act of 2002. The issue before the 112th Congress was how to craft a compromise TAA bill that would receive bipartisan support in the both Houses, and assure its passage along with the three implementing bills. Such an understanding was developed and became part of H.R. 2832, a bill to reauthorize the Generalized System of Preferences (GSP). In an elaborate legislative procedure, both chambers passed the four trade bills on October 12, 2011.

TAA reauthorization reflected a compromise that allowed for passage as part of a larger trade deal. Because it was understood that TAA was essential to move the three FTA implementing bills, both parties and Houses of Congress eventually embraced this solution, albeit not unanimously. The bill reauthorized the workers, firms, and farmers programs through December 31, 2013, but discontinued TAA for communities because it was considered duplicative of other federal programs. Many, but not all, of the enhanced programs and funding levels in the ARRA were reauthorized, including restoring eligibility to services workers and firms, increasing income support for workers undergoing job training, raising the Health Coverage Tax Credit, expanding funding for training benefits, and reinstituting more detailed program evaluation and reporting requirements. Funding was reduced from ARRA levels for job search, relocation assistance, and wage insurance for older workers. Public sector workers are no longer eligible for benefits. TAA eligibility is retroactive to the expiration date of the ARRA enhancements. The firms and farmers TAA programs were reauthorized at annualized levels $16 million and $90 million, respectively, much less than in ARRA, but comparable to current (and historical) appropriated levels.

Although many opponents of expanding TAA programs spoke out against the reauthorizing legislation, its ultimate passage once again suggests that TAA remains an integral part of the debate over trade liberalization. Without providing assistance to those hurt by trade liberalization, moving ahead with the trade policy agenda remains a difficult proposition, an outcome consistent with TAA legislative history since 1962.



Date of Report: January 9, 2013
Number of Pages: 19
Order Number: R41922
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