1) U.S. Trade Policies
A) Managed Trade and Quantitative Restrictions: Issues for Congress
Congress plays a prominent role in shaping U.S. trade policy, due in part to trade policy’s impact on the overall health of the U.S. economy and specific sectors, the success of U.S. businesses and workers, and Americans’ standard of living. Some Members of Congress contend that past trade negotiations and agreements have failed to address effectively foreign protectionist practices and enhance reciprocal market access for U.S. firms, farmers, and workers. They cite as evidence the disruption of some U.S. industries, difficulties of U.S. firms in penetrating some foreign markets, and large U.S. merchandise trade deficits—even with countries with which the United States has a free trade agreement. They argue that the main goals of U.S. trade policy should be to achieve “fair” and “balanced” trade and to place more emphasis on measurable results (e.g., increased exports and market share abroad).
Congress plays a prominent role in shaping U.S. trade policy, due in part to trade policy’s impact on the overall health of the U.S. economy and specific sectors, the success of U.S. businesses and workers, and Americans’ standard of living. Some Members of Congress contend that past trade negotiations and agreements have failed to address effectively foreign protectionist practices and enhance reciprocal market access for U.S. firms, farmers, and workers. They cite as evidence the disruption of some U.S. industries, difficulties of U.S. firms in penetrating some foreign markets, and large U.S. merchandise trade deficits—even with countries with which the United States has a free trade agreement. They argue that the main goals of U.S. trade policy should be to achieve “fair” and “balanced” trade and to place more emphasis on measurable results (e.g., increased exports and market share abroad). . . .
Whether a managed trade approach will dominate future U.S. trade negotiations remains to be seen. Some Members of Congress may encourage the Biden Administration to prod additional U.S. trading partners into negotiating or accepting QRs. Others may see it as an undesirable shift in U.S. trade policy. While increased government intervention on trade flows may not provide long-term net gains to the U.S. economy—as most economists contend, some Members may view the nature of U.S. trade concerns with some partners as so unique that managed trade outcomes, particularly through the use of QRs, can be justified in the short-term to level the playing field. . . .
https://crsreports.congress.gov/product/pdf/IF/IF11035
B) U.S. Trade Debates: Select Disputes and Actions
During the Trump Administration, the United States and some of its major trading partners engaged in a contentious “war” of words over trade—one that tipped over into action in 2018, mostly in the form of increased tariffs. The tariffs imposed by the United States, combined with retaliatory measures adopted by other countries (particularly with respect to China), reportedly continue to have noticeable effects on trade flows and U.S. firms. To date, a number of disputes related to these actions have not been fully resolved. While the scale and scope of these unilateral U.S. tariff increases are unprecedented in modern times, tensions and irritants in trade relations are not uncommon.
During the last 100 years, the United States has been involved in a number of trade disputes. According to the World Trade Organization (WTO), as of December 2022, the United States has been involved in 281 trade disputes (addressed through the WTO dispute settlement system since 1995), either as a complainant or a respondent. . . .
Since the establishment of the WTO, the United States has generally pursued bilateral and multilateral negotiations to address trade concerns, as well as WTO dispute settlement. Some Members of Congress supported the unilateral actions of the Trump Administration, which it justified by pointing to alleged weaknesses in WTO dispute settlement procedures and the inadequacy or nonexistence of WTO rules to address certain foreign trade practices. Others viewed the unilateral approach as an undesirable shift in U.S. trade policy. As the 117th Congress continues to engage with the Biden Administration to chart the next phase of U.S. trade policy, it could require greater congressional consultation before new trade restrictions are imposed. Members may also encourage the Administration to continue working closely with allies to address trade concerns, improve the functioning of the WTO, and address emerging issues that existing multilateral trade rules may not cover adequately.
https://crsreports.congress.gov/product/pdf/IF/IF10958
2) China
A) “Made in China 2025” Industrial Policies: Issues for Congress
The People’s Republic of China (PRC or China) aims to gain a global economic and technology leadership position through a range of state-led industrial and related science and technology (S&T) policies. These policies feature a heavy government role in directing and funding PRC firms to acquire foreign technology and related capabilities— including basic and applied research and talent—in areas where the United States has long been a global leader and has strong comparative advantages. Many Members of Congress have expressed concern that China’s policies, if successful, could undermine U.S. technological leadership, further shift advanced production and research to China, and support a wide range of China’s advancements, including in defense. The scope and scale of China’s efforts are evident in the amount of state direction and support devoted to them; PRC ambitions to lead across the entire value chain, rather than just segments of it, in key advanced and emerging technologies; and the range of tactics China uses use to target and acquire U.S. and allied capabilities. . . .
The Executive Branch to date has not sought to enforce China’s commitments on IP and technology transfer even as the PRC government expands its statist practices. The USTR to date has kept tariffs, saying it is difficult to justify lifting them when the PRC government has not changed its practices of concern. Some Members have sought to restrict investment, trade, technology, and research ties that support MIC2025, diversify critical supply chains away from China, and prohibit China from participating in U.S. infrastructure and federal procurement. Congress might examine:
The efficacy of U.S. tools and policies in practice (e.g., export control, foreign investment, and antitrust) in countering China’s industrial policies;
Implementation of recent agreements and negotiation of new rules; Whether the PRC state’s growing role in business calls for treating PRC firms differently;
The future trajectory of U.S.-PRC technology ties and how current trade, investment, and technology transfer might affect U.S. competitiveness; and
How China’s reliance on certain U.S. capabilities strengthen U.S. leverage and create U.S. options to counter PRC industrial policies.
https://crsreports.congress.gov/product/pdf/IF/IF10964
B) U.S.-China Trade Relations
The PRC is the second-largest global economy and an important global market for the United States. At the same time, U.S. firms face significant trade barriers, unfair practices, and a lack of reciprocity in key areas. China’s state-driven economic, trade, investment, and technology practices and the challenges they pose to U.S. economic and technology leadership are of concern to many in Congress. China continues to require the transfer of critical U.S. capabilities to China to operate in strategic areas. Many in Congress have expressed concern that China’s practices distort markets and undermine fair competition in China and globally as PRC firms expand in areas that China restricts domestically. China’s system blurs state and corporate interests, enabling the government to deploy trade tools (e.g., antidumping, antitrust, standards, and procurement), economic coercion, and espionage to advantage its firms and advance China’s industrial and other policies. The state’s expanding role in commercial activity—including an intensification of industrial policies and enactment of a set of interrelated national economic security policies and data restrictions since 2020—appear to have increased the risks of U.S. commercial ties with China even as some U.S. firms increase their exposure in China. . . .
Beijing’s continued pursuit of statist practices and relative inaction on long-standing U.S. concerns have arguably caused issues to intensify for many in Congress. Some in Congress have expressed concern about asymmetries in economic ties, U.S. participation in China’s industrial policies, U.S. ties to PRC firms violating human rights, and China’s practices that may force or unfairly incentivize the transfer of U.S. technology and data to China. These issues appear to be evolving into broader concerns about how the terms China sets for commercial ties may challenge U.S. competitiveness, national security, and leadership. Congress might consider whether and how to strengthen U.S. and global trade rules; require reciprocity with China with consequences for gaps; work with allies on China trade concerns; and deepen commercial, technology, and research ties with like-minded countries. Congress also might address core systemic issues, such as the role of the state in China’s corporate activity; consider new terms for China trade, investment, technology, and research ties; and determine whether and what actions are needed to address China’s trade coercion and efforts to sidestep U.S. policies.
https://crsreports.congress.gov/product/pdf/IF/IF11284
C) China’s “One Belt, One Road” Initiative: Economic Issues
The PRC in 2013 launched an ambitious and multifaceted foreign economic policy initiative—One Belt, One Road—to expand China’s global economic reach and influence. In 2015, China’s leaders changed the English name to the Belt and Road Initiative (BRI), possibly to deflect from the initiative’s focus on developing China-centered and controlled global ties in a hub and spoke format. The Communist Party of China (CPC) incorporated the initiative into the Party’s Charter in 2017 and reaffirmed its significance in the November 2022 Work Report of the CPC’s 20th Party Congress and in a January 2021 State Council White Paper. Some in Congress assess that One Belt, One Road projects advance China’s geopolitical and economic goals while undercutting U.S. influence and challenging U.S. interests. . . .
Congress enacted the Better Utilization of Investments Leading to Development Act of 2018 (BUILD Act, P.L. 115-254) to create the U.S. International Development Finance Corporation (DFC) and increase support for quality market-oriented and financially-sustainable infrastructure projects that have environmental and social safeguards. . . . The U.S. government has promoted alternatives to China through a G-7 Partnership for Global Infrastructure and a Blue Dot Network prototype for quality infrastructure financing in development with Australia, Japan, and the Organization for Economic Co-operation and Development. The U.S. government has sanctioned some PRC state firms that build One Belt, One Road military infrastructure in the South China Sea. Congress might also examine:
PRC entities’ presence in U.S. production, energy, transportation, and communications networks and investments in the Western Hemisphere and Caribbean;
whether new trade rules or organizations are needed to influence the networks PRC entities are developing; and
whether new standards, investment, or procurement rules ought to discipline certain investment behavior.
https://crsreports.congress.gov/product/pdf/IF/IF11735