What are the costs of trade expansion? While it is debatable how well existing worker assistance policies have worked, funding is also a long-standing issue. (The effect of globalization on U.S. trade flows are discussed in the section on U.S. trade performance.) A trade deficit occurs when a country's imports are greater than its exports. The most significant cause of the U.S. trade deficit is the low rate of U.S. domestic savings relative to its investment needs. This would lower the U.S. trade deficit with the first country and increase it with the other, and the overall U.S. trade deficit would be relatively unchanged. In reducing the U.S. trade deficit, the policy tool kit includes direct measures (trade policy) that are aimed at imports, exports, and the exchange rate, and indirect measures (monetary and fiscal policies) aimed at U.S. interest rates, saving rates, budget deficits, and capital flows. Formulation of U.S. Trade Policy

		Role of Congress

29 . Role of the Executive Branch

34 . Who is in charge of U.S. trade policy ? Congress created the USTR in 1962 (originally as the Office of the Special Representative for Trade Negotiations) to heighten the profile of trade and provide better balance between competing domestic and international interests in the formulation and implementation of U.S. trade policy and negotiations, which were previously managed by the U.S. Department of State. The formal role of the private sector in the formulation of U.S. trade policy is embodied in a three-tiered committee system that Congress has provided in Section 135 of the Trade Act of 1974, as amended. Private sector organizations also lobby Congress and the executive branch to promote their interests in U.S. trade policy actions and agreements. U.S. Trade and Investment Policy Issues

		Trade Negotiations and Agreements

44 . The United States negotiates trade liberalizing agreements for economic and commercial reasons, including to
encourage foreign trade partners to reduce or eliminate tariffs and non-tariff barriers and, in so doing, increase market access for U.S. exporters; gain an advantage for U.S. exporters over foreign competitors in a third-country market; increase access to lower cost imports that help to control inflation and offer domestic and industrial consumers a wider choice of products; and encourage trading partners, especially developing countries, to rationalize their trade regimes, and thereby improve the efficiency of their economies. In general, reciprocal trade agreements can be categorized by the number of countries involved: bilateral agreements , such as free trade agreements (FTAs), are between two countries; regional agreements , such as the North American Free Trade Agreement (NAFTA) and the proposed Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP), involve three or more countries in a geographic region; plurilateral agreements involve a number of countries (not always from the same region) that often negotiate to liberalize trade in a specific sector, such as the proposed Trade in Services Agreement (TISA); and multilateral agreements , such as those negotiated in the World Trade Organization (WTO), cover a significant share of global trade. The United States is currently negotiating a number of FTAs, including the TPP, involving the United States and 11 other countries in the Asia-Pacific region; and the Transatlantic Trade and Investment Partnership (T-TIP) between the United States and the European Union. For the home country, direct investment benefits the individual firms that invest abroad, because they are better able to exploit their existing competitive advantages and to acquire additional skills and advantages. CRS Report RL33743, Trade Promotion Authority (TPA) and the Role of Congress in Trade Policy , by [author name scrubbed]. List of Questions

		Trade Concepts

1. What are the costs of trade expansion? How important is trade to the U.S. economy? What are other benefits of imports? Investment Issues

68. What are some of the benefits of FDI?
Congress plays a major role in U.S. trade policy through its legislative and oversight authority. There are a number of major trade issues that are currently the focus of Congress. For example, bills were introduced in the 113th Congress to reauthorize Trade Promotion Authority (TPA), the U.S. Generalized System of Preferences (GSP), and the U.S. Export-Import Bank, and legislative action on these issues could be forthcoming in the 114th Congress. Additionally, Congress has been involved with proposed free trade agreements (FTAs), including the Trans-Pacific Partnership (TPP) involving the United States and 11 other countries and the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union (EU). Also of interest to Congress are current plurilateral negotiations for a Trade in Services Agreement (TISA) and an updated multilateral Information Technology Agreement (ITA) in the World Trade Organization (WTO). Trade and investment policies of major U.S. trading partners (such as China), especially when they are deemed harmful to U.S. economic interests, are also of continued concern to Congress. Recent improved U.S. relations with Cuba have resulted in the introduction of several bills to boost bilateral commercial ties. The costs and benefits of trade to the U.S. economy, firms, workers, and constituents, and the future direction of U.S. trade policy, are the subject of ongoing debates in Congress.
This report provides information and context for these and many other trade topics. It is intended to assist Members and staff who may be new to trade issues. The 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 some industries, and some unique characteristics of trade between developed countries.
The second section, "U.S. Trade Performance," lists data on U.S. trade flows and focuses on the U.S. trade deficit, including its implications for the U.S. economy. Questions address the causes of trade deficits, the role of foreign trade barriers, and how the trade deficit might be reduced.
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 roles of the private sector and the judiciary are also discussed.
The fourth section, "U.S. Trade and Investment Policy Issues," lists 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 WTO, 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.