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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

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Congressional Research Service (CRS)

 

Trade Primer: Qs and As on Trade Concepts, Performance, and Policy

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

April 16, 2012

http://www.fas.org/sgp/crs/misc/RL33944.pdf

[full-text, 35 pages]

 

 

Summary

The 112th Congress has a full legislative and oversight agenda on international trade. The agenda

so far has included approval of legislation to implement free trade agreements with Colombia,

Panama, and South Korea, and may take up enhanced enforcement of U.S. trade agreements, as

well as Russia’s accession to the World Trade Organization (WTO) and Permanent Normal Trade

Relations (PNTR) status, oversight of the World Trade Organization’s Doha Round, and trade

relations with China. This report provides information and context for many of these topics. It is

intended to assist members and staff who may be new to trade issues.

 

This report is divided into four sections in a question-and-answer format: trade concepts; U.S.

trade performance; formulation of U.S. trade policy; and trade and investment issues. Additional

suggested readings are provided in an appendix.

 

The first section, “Trade Concepts,” deals with why countries trade, the consequences of trade

expansion, and the relationship between globalization and trade. Key questions address the

benefits of specialization in production and trade, efforts by governments to influence a country’s

comparative advantage, how trade expansion can be costly and disruptive to workers in particular

industries and skill categories, and some unique characteristics of trade between developed

countries.

 

The second section, “U.S. Trade Performance,” focuses on the U.S. trade deficit and its impact on

industries. Several questions address the causes of trade deficits, the role of foreign trade barriers,

and how the trade deficit can be reduced. In terms of business impacts, the questions focus on

which U.S. industries appear to be the most and least competitive, and on the relative size of the

manufacturing sector.

 

The third section, “Formulation of U.S. Trade Policy,” deals with the roles played by the

executive branch, Congress, the private sector, and the judiciary in the formulation of U.S. trade

policy. Information on how trade policy functions are organized in Congress and the executive

branch, as well as the respective roles of individual members and the President, is provided. The

formal and informal roles of the private sector and the involvement of the judiciary are also

covered.

 

The fourth section, “U.S. Trade and Investment Policy Issues,” asks questions related to trade

negotiations and agreements and to imports, exports, and investments. The justification, types,

and consequences of trade liberalization agreements, along with the role of the World Trade

Organization, are treated in this section. The costs and benefits of imports, exports, and

investments are also discussed, including how the government deals with disruption and injury to

workers and companies caused by imports and its efforts to both restrict and promote exports.

 

Contents

Trade Concepts ................................................................................................................................ 1

Trade Expansion and Globalization........................................................................................... 1

U.S. Trade Performance................................................................................................................... 5

U.S. Trade Deficit...................................................................................................................... 5

Formulation of U.S. Trade Policy.................................................................................................. 14

Role of Congress ..................................................................................................................... 14

Role of the Executive Branch.................................................................................................. 15

Role of the Private Sector........................................................................................................ 16

Role of the Judiciary................................................................................................................ 17

U.S. Trade and Investment Policy Issues....................................................................................... 18

Trade Negotiations and Agreements........................................................................................ 18

Import Issues ........................................................................................................................... 21

Export Issues ........................................................................................................................... 23

Investment Issues..................................................................................................................... 24

Additional Readings ...................................................................................................................... 26

CRS Reports ............................................................................................................................ 26

Other Readings ........................................................................................................................ 27

List of Questions............................................................................................................................ 28

Trade Concepts ........................................................................................................................ 28

U.S. Trade Performance .......................................................................................................... 29

Formulation of U.S. Trade Policy............................................................................................ 29

U.S. Trade and Investment Policy Issues ................................................................................ 30

 

Figures

Figure 1. Employees on Nonagricultural Payrolls by Major Industry........................................... 13

 

Tables

Table 1. U.S. Exports, Imports, and Merchandise Trade Balances 2002-2011................................ 6

Table 2. Top U.S. Trading Partners Ranked by Total Merchandise Trade in 2011 ........................ 10

Table 3. U.S. Industries with the Largest Trade Surpluses and Deficits in 2011........................... 11

Table 4. Recent Peaks and Current Employment for Industries With Heavy Import Competition ............. 14

 

Contacts

Author Contact Information........................................................................................................... 32

 

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