Trade and the Americas

CRS ReportCRSTradeAmericas12Sept03.pdf: 220 downloads, before Oct. 1, 2020

Globalization, Worker Insecurity, and Policy Approaches

[Excerpt] Today’s global economy, or what many call globalization, has a growing impact on the economic futures of American companies, workers, and families. Increasing integration with the world economy makes the U.S. and other economies more productive. For most Americans, this has translated into absolute increases in living standards and real disposable incomes. However, while the U.S. economy as a whole benefits from globalization, it is not always a win-win situation for all Americans. Rising trade with low-wage developing countries not only increases concerns of job loss, but it also leads U.S. workers to fear that employers will lower their wages and benefits in order to compete. Globalization facilitated by the information technology revolution expands international trade in a wider range of services, but also subjects an increasing number of U.S. white collar jobs to outsourcing and international competition. Also, globalization may benefit some groups more than others, leading some to wonder whether the global economy is structured to help the few or the many. The current wave of globalization is supported by three broad trends. The first is technology, which has sharply reduced the cost of communication and transportation that previously divided markets. The second is a dramatic increase in the world supply of labor engaged in international trade. The third is government policies that have reduced barriers to trade and investment. Whether these trends are creating new vulnerabilities for workers is the subject of increasing research and debate

Globalization, Worker Insecurity, and Policy Approaches

[Excerpt] Today\u27s global economy, or what many call globalization, has a growing impact on the economic futures of American companies, workers, and families. Increasing integration with the world economy makes the U.S. and other economies more productive. For most Americans, this has translated into absolute increases in living standards and real disposable incomes. However, while the U.S. economy as a whole benefits from globalization, it is not always a win-win situation for all Americans. Rising trade with low-wage developing countries not only increases concerns of job loss, but it also leads U.S. workers to fear that employers will lower their wages and benefits in order to compete. Globalization facilitated by the information technology revolution expands international trade in a wider range of services, but also subjects an increasing number of U.S. white collar jobs to international competition. Also, globalization may benefit some groups more than others, leading some to wonder whether the global economy is structured to help the few or the many. The current wave of globalization is supported by three broad trends. The first is technology, which has sharply reduced the cost of communication and transportation that previously divided markets. The second is a dramatic increase in the world supply of labor engaged in international trade. The third is government policies that have reduced barriers to trade and investment. Some recent research examines whether these trends are creating new vulnerabilities for workers. Some of the vulnerabilities for workers are underlined by changing employment patterns caused by increased foreign competition, a declining wage share of national income, and rising earnings inequality. These trends, in turn, have become a source of economic insecurity for many Americans and may be weakening public support for U.S. engagement with the world economy. To bolster public support for an open world economy, the conventional wisdom is that the legitimate concerns of those who are losing in the contemporary economic environment need to be addressed. To what extent the losers should be compensated and how is a matter of considerable congressional and public debate. Because the relationship between globalization and worker insecurity is complicated and uncertain, a number of different approaches may be considered if the goal is to bolster public support for U.S. trade policies, globalization, and an open world economy. Policies involving adjustment assistance, education, tax, and trade are most commonly proposed. There appears to be a range of views on the merits of each of these policy approaches and the extent to which they can be designed and implemented in a way that would reduce worker insecurity without undermining the benefits of globalization. In the view of many economists, policies that inhibit the dynamism of labor and capital markets or erect barriers to international trade and investment would not be helpful because technology and trade are critical sources of overall economic growth and increases in the U.S. living standard. This report will be updated should events warrant

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

[Excerpt] The 112th Congress has a full legislative and oversight agenda on international trade. The agenda may include considering legislation to implement pending free trade agreements with Panama, South Korea, and Colombia, enhanced enforcement of U.S. trade agreements, as well as oversight of the World Trade Organization\u27s Doha Round and trade relations with China. This report provides information and context for many of these topics. It is intended to be read primarily by 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 on 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\u27s 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, on 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 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, on U.S. trade and investment policy, 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. The motivations and consequences of foreign direct investment flows are also discussed

World Trade Organization (WTO): Issues in the Debate on Continued U.S. Participation

[Excerpt] Following World War II, the United States led efforts to establish an open and nondiscriminatory trading system with the expressed goal of raising the economic well-being of all countries and bolstering world peace. These efforts culminated in the creation of the General Agreement on Tariffs and Trade (GATT) in 1948, a provisional agreement on tariffs and trade rules that governed world trade for 47 years. The World Trade Organization (WTO) succeeded the GATT in 1995 and today serves as a permanent body that administers the rules and agreements negotiated and signed by 153 participating parties, as well as a forum for dispute settlement and negotiations. Section 125 of the Uruguay Round Agreements (P.L. 103-465), which is the law that approved and implemented the agreements reached during the Uruguay Round of multilateral trade negotiations, provided that the U.S. Trade Representative (USTR) must submit to Congress every five years a report that analyzes the costs and benefits of continued U.S. participation in the WTO. The USTR submitted its report to Congress on March 1, 2010, triggering a 90 legislative day timetable in which any Member of Congress may introduce a privileged joint resolution withdrawing congressional approval of the WTO Agreement (to date no withdrawal resolution has been introduced in the 111th Congress). Most observers maintain that U.S. withdrawal from the WTO is at best highly unlikely for both substantive and procedural reasons. Substantively, the withdrawal of U.S. participation could undermine a multilateral system of trade rules and practices, formulated and implemented under U.S. leadership, that on balance has contributed to increased economic prosperity and security at home and abroad. Procedurally, a withdrawal resolution would have to pass both the House and Senate and then surmount a likely Presidential veto via an override with a two-thirds majority vote. Nevertheless, such a resolution provides an opportunity for Members of Congress periodically to debate “whether the WTO is an effective organization” and ways it could better serve U.S. interests. The purpose of this report is to analyze some of the main issues in any debate on U.S. participation in the WTO and to address some of the criticisms leveled at the organization. Academic studies indicate that the United States benefits from broad reductions in trade barriers worldwide, but some workers and industries might not share in those gains. Decisions in the WTO are made by member governments, which determine their negotiating positions, file dispute challenges, and implement their decisions. However, some argue that smaller countries are left out of decision-making and that governments tend to represent the interests of large corporations disproportionately. The United States has been a frequent participant in WTO dispute proceedings, both as a complainant and as a respondent. There have been complaints that countries do not adhere to decisions and that U.S. trade remedy laws have not been judged properly. It is also argued that this multilateral dispute settlement process is unique and that the United States has successfully used the process to advance its economic interests. Certain advocates for the environment, food safety, labor, development, and financial regulation have criticized the WTO. Much of the criticism is based on interpretations of various WTO agreements or rulings that have been controversial. An appendix sets out the legislative procedures for the WTO withdrawal resolution. This report will be updated as events warrant

112th Congress

Report concerning a variety of issues faced by the 112th Congress. Topics include trade negotiations with South Korea, Panama, Colombia, and China, export controls and sanctions, and international financial institutions