Congress plays a major role in formulating and implementing U.S. trade policy through its legislative and oversight responsibilities. The United States concluded the Trans-Pacific Partnership (TPP) among the United States and 11 other countries and negotiated the U.S.-European Transatlantic Trade and Investment Partnership (T-TIP). The 12 TPP countries signed the agreement in February 2016, but it required ratification by each country before it could enter into force. In the United States, this requires implementing legislation by Congress. Upon taking office, President Trump withdrew the United States from the TPP and halted further negotiations on the T-TIP, but may reengage in the TPP under different terms. The remaining 11 partners to the TPP concluded, without U.S. participation, a revised TPP, now identified as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The Trump Administration is also attempting to revise the two largest existing U.S. FTAs, through the ongoing renegotiation of the North American Free Trade Agreement (NAFTA), and modification talks regarding the U.S.-South Korea (KORUS) FTA. For Members of Congress and others, international trade and trade agreements offer the prospect of improving national economic welfare, while also raising questions about the potential cost to the economy. Congress plays an important role in shaping and considering legislation to implement U.S. trade agreements. This report focuses on a number of major issues concerning the role of trade and trade agreements in the economy and issues that are particular to FTAs, including
the role of trade in the economy and the macroeconomic forces that drive the trade deficit; the impact of trade on employment and the adjustment costs experienced by firms and workers; estimates of the number of jobs in the economy that are supported by trade and economic models used to estimate the impact of FTAs on employment; the impact of FTAs on foreign investment and employment; and the relationship between trade and the distribution of income. economy." Most economists argue, however, that estimates of employment gains or losses represent a partial accounting of the total economic effects of FTAs and, therefore, are not representative of the overall impact of FTAs on the economy. The various models and approaches have strengths and weaknesses, although not always in equal proportions, and they vary in the degree to which they reflect economic reality and are highly sensitive to the assumptions that are used. International Trade and Income Inequality

Some opponents of trade agreements contend that international trade, trade agreements, and globalization more broadly have been important factors contributing to the growing inequality in wealth and income within countries. Despite intense focus in the academic literature, there is no clear consensus on the direct impact of trade and trade agreements on income inequality. OECD Analyses of Trade Liberalization and Income Inequality

Growing income inequality is not unique to the United States, or even to developed countries, but is found in both developed and developing countries. Such efforts could provide (1) greater insights into the dynamic adjustments that would occur as the result of a given trade agreement; (2) improved estimates of the number of jobs currently related to international trade; (3) improved assessments of the impact of trade agreements on particular sectors in the economy; and (4) a more informed assessment of the potential long-run impact of a trade agreement on the economy as a whole and on particular sectors within the economy. Economists recognize, however, that the adjustment costs associated with trade agreements and other types of market transformations can be highly concentrated on some workers, firms, and communities.
During the Obama Administration, the United States negotiated two comprehensive and high-standard mega-regional free trade agreements: the Trans-Pacific Partnership (TPP) among the United States and 11 other countries, and the U.S.-European Transatlantic Trade and Investment Partnership (T-TIP). The 12 TPP countries signed the agreement in February 2016, but the agreement required ratification by each country before it could enter into force. In the United States this requires implementing legislation by Congress. Upon taking office, President Trump withdrew the United States from the TPP and halted further negotiations on the T-TIP, but may reengage in the TPP under different terms. The remaining 11 partners to the TPP concluded, without U.S. participation, a revised TPP, now identified as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The Trump Administration is also attempting to revise the two largest existing U.S. FTAs, through the ongoing renegotiation of the North American Free Trade Agreement (NAFTA), and modification talks regarding the U.S.-South Korea (KORUS) FTA. For Members of Congress and others, international trade and trade agreements offer the prospect of improving national economic welfare, while also raising questions about the potential cost to the economy. Congress plays an important role in shaping and considering legislation to implement U.S. trade agreements.
Discussions of trade and trade agreements often focus on a number of issues, including the role that trade plays in the U.S. economy, the impact of trade agreements on employment gains and losses, and the size of the U.S. trade deficit. This report focuses on some of the major issues associated with trade and trade agreements and the impact of trade on the U.S. economy. The key findings include the following:
From the perspective of the U.S. economy as a whole, trade is one among a number of forces that drive changes in employment, wages, the distribution of income, and ultimately the standard of living. Most economists argue that broad macroeconomic forces, including technological advances, are generally considered to be more important than trade. Economists generally conclude that trade provides net overall positive benefits to economies. Changes in trading patterns associated with changes in trading partners and composition or with new trade agreements, however, may entail certain adjustment costs, including changes in employment, which can be highly concentrated with some workers, firms, and communities affected disproportionately. In discussions of trade agreements, both proponents and opponents use the results of a variety of trade models and underlying assumptions to estimate the impact on the U.S. economy. Such models have various strengths and weaknesses, although not always in equal proportion. Most economists argue that such estimates represent a partial accounting of the total economic effects and, therefore, are not representative of the overall impact of trade agreements on the U.S. economy. Some argue that trade, trade agreements, and globalization more broadly contributed to growing wealth and income equality within countries. Growing income inequality domestically is not unique to the United States, or even to developed countries, but is found in both developed and developing countries. Despite intense focus in the academic literature, there is no consensus on the direct impact that trade or trade agreements have on income inequality. Congress faces a number of challenging policy issues relative to trade and the impact of trade agreements on the U.S. economy. These challenges include assessing the quality of data on trade and what, if any, additional resources should be devoted to collecting trade data and analyzing the role of trade in the economy. Congress also has legislative and oversight responsibility over various government programs that assist workers and firms adjust to increased competition from trade.