To read the full report from the Congressional Research Service, please click here. 

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The Trump Administration attributed this shift in policy to its determination to close a large and persistent gap between U.S. and foreign government practices that it said disadvantaged or discriminated against U.S. firms. In addition, it justified many of its tariff actions—particularly those against China—by pointing to alleged weaknesses in WTO dispute settlement procedures and the inadequacy or nonexistence of WTO rules to address certain Chinese trade practices. It also cited the failure of past trade negotiations and agreements to enhance reciprocal market access for U.S. firms and workers.

While the Biden Administration is reportedly reviewing the previous administration’s trade policies, most analysts do not expect any immediate changes to Section 301 actions or to the tariff exclusions on U.S. imports from China.

To view the full report from the Congressional Research Service, please click here.

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The novel Coronavirus Disease 2019 (COVID-19) and its rapid emergence as a pandemic have highlighted issues relating to the production and distribution of personal protective equipment (PPE). PPE refers to worn articles or equipment that help minimize exposure to various hazards, including infectious pathogens. Given the role that PPE plays in mitigating the spread and reducing the impacts of COVID-19, PPE demand has spiked both globally and domestically while supply has been undercut by both rapid consumption as well as supply chain disruptions. According to multiple federal agencies, including the Government Accountability Office, the Food and Drug Administration, and various independent organizations, PPE continues to be in short supply, which has led to broad congressional and public interest in PPE production and distribution issues. The availability of effective PPE is critical to the ongoing pandemic response, but also has broader public health, emergency preparedness, and national security implications.

This report considers aspects of domestic production and distribution of PPE in the context of the COVID-19 pandemic. Specifically, the report considers (1) the availability of PPE supplies, including an assessment of PPE demand related to the COVID-19 pandemic; (2) federal actions and activities undertaken to increase PPE supplies in response to the pandemic, organized by executive agency and program; and (3) other policy options under consideration concerning PPE production and distribution, also organized by executive agency and program.

Overall, this report notes that data limitations and conflicting accounts impede the complete assessment of PPE supply chains, and this may undermine federal (as well as nonfederal) efforts to respond effectively to the COVID-19 pandemic. To the extent that data is available, current PPE production and distribution channels appear to continue to be insufficient compared to reported need. Various mechanisms that may be utilized to increase PPE supply or productive capacity, such as the provisions in the Defense Production Act of 1950 (DPA), appear to be applied selectively, and implemented unevenly, potentially based on narrow experience and limited administrative infrastructure within the federal government to oversee and manage its use in a national emergency context.

To download the full report, please click here.

Michael H. Cecire is the Coordinator of this reports and an Analyst in Intergovernmental Relations and Economic Development Policy for the Congressional Research Service.

Agata Bodie is an Analyst in Health Policy for the Congressional Research Service.

Frank Gottron is a Specialist in Science and Technology Policy for the Congressional Research Service.

Victoria R. Green is an Analyst in Health Policy for the Congressional Research Service.

L. Elaine Halchin is a Specialist in American National Government for the Congressional Research Service.

G. James Herrera is an Analyst in U.S. Defense Readiness and Infrastructure for the Congressional Research Service.

Erica A. Lee is an Analyst in Emergency Management and Disaster Recovery for the Congressional Research Service.

Heidi M. Peters is an Analyst in U.S. Defense Acquisition Policy for the Congressional Research Service.

Andres B. Schwarzenberg is an Analyst in International Trade and Finance  for the Congressional Research Service.

Kavya Sekar is an Analyst in Health Policy for the Congressional Research Service.

Michael D. Sutherland is an Analyst in International Trade and Finance for the Congressional Research Service.

Karen M. Sutter is a Specialist in Asian Trade and Finance for the Congressional Research Service.

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The final language includes several new provisions that appear aimed at creating a Chinese policy counterweight to the U.S. government’s use of export control authorities to restrict the transfer of U.S. dual-use technology to China, including provisions for retaliatory action and extraterritorial jurisdiction. (See CRS In Focus U.S. Export Control Reforms and China: Issues for Congress.) The United States and other governments—such as those in Japan, Taiwan, and Europe—have tightened China’s access to sensitive technology through strengthened export control authorities and licensing practices over the past two years. Relatedly, there has been a marked upswing over the past year in the number of countries that have sought to ban or impose conditions on the participation of China’s telecommunications firm Huawei in their 5G networks, particularly in Europe.

The Export Control Law gives the Chinese government new policy tools and justifications to deny and impose terms on foreign commercial transactions—both inside and outside of China—on the grounds of China’s national security and national interest. The Chinese government traditionally has sought to restrict foreign investment and imports to advance national industrial goals, although there have been prominent examples of China controlling the export of strategic commodities, such as coke, fluorspar, and rare earth elements. China for some time also has used ad hoc import restrictions to create commercial and political pressures on its major trading partners, a tactic that Beijing has used most recently with Australia and Canada in restricting agriculture and commodity trade. The law gives China’s government new rationales and processes to impose terms on transactions among firms and within joint ventures and other partnerships within China, as well as on exports and offshore transactions. Key licensing factors include not only the particular technology, end use, and end user, but also an entity’s “social credit” rating, highlighting how the government may seek to leverage and enhance the emerging role of China’s social credit system as a policy tool to influence corporate activity. 

The law authorizes the government to exercise export controls in retaliation against other countries’ actions, to impose temporary (up to two years) export controls on items not on a control list, and to broadly justify actions with several open-ended clauses. The law also includes provisions for China’s participation in international discussions and regimes and global rulemaking on export controls according to the principles of equality and reciprocity, a sign that China could become more active in trying to set rules and norms that advantage China.

To download the full report, please click here.

Karen M. Sutter is a Specialist in Asian Trade and Finance at the Congressional Research Service.

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The TAAF program targets those firms impacted specifically by import competition and not by other forms of trade or market disruption. Other federal programs provide assistance for other forms of economic disruption. A 2019 GAO analysis identifies multiple potential causes of disruption, including trade agreements, defense or energy policy changes, emerging technologies, and shifting business models. The report provides an inventory of economic adjustment assistance programs that respond to economic disruptions, including TAAF. While TAAF is solely focused on assisting businesses, other programs target a mix of individuals, businesses, communities, and other beneficiaries (e.g., coal communities, health tax credits).

TAAF is not intended to address all potential disruptions that confront firms involved in international trade. Such disruptions can include an economic downturn that leads to suppressed demand by foreign customers; increased costs or lowered demand due to tariffs and trade disputes; or supply chains affected by protectionism or other policy shifts. In the 116th Congress, some Members have introduced bills to expand the scope of TAAF to address additional trade related elements of economic disruption. For example, one bill introduced (H.R. 6124) would extend TAAF to cover firms whose exports declined because of foreign retaliatory measures adopted in repose to tariffs imposed under the Trump Administration. Other proposals focus on the TAA for Workers program to assist workers whose jobs are eliminated through automation (see S. 3034) or those adversely affected by disruptions in global supply chains from the Coronavirus Disease (COVID–19) (see H.R. 6205).

Trade adjustment assistance can play a role in helping companies adapt to a changing environment. Enabling firms to adopt greater digitization or automation, target new markets, or develop business continuity plans to increase resilience may lead the firm to need a different workforce with different skills. Upskilling the workforce of a single TAAF company or helping that firm recruit and possibly relocate new trained workers could be part of a business recovery plan under TAAF. However, broader government or private sector programs are likely needed to address broader educational and training needs of entire industries or sectors.

Issues for Congress

As Congress considers trade liberalization agreements and ongoing trade negotiations, it may wish to further examine the TAAF in light of the current debate of its effectiveness and the impact of international trade on the U.S. economy and recent trends. An implementing bill for a new trade agreement and upcoming expiration of TPA may provide Congress an opportunity to reexamine and potentially revise the TAA programs. In addition to adjusting appropriations levels, Congress could examine changing the current program or EDA’s administration of it.

Potential options for Congress to consider on TAAF may include:

• determining if the program should be limited to assisting firms who face competition from imports or if it should be expanded to assist firms who face increased costs or decreased demand due to changes in domestic or foreign tariffs or other trade-related policies;
• determining if current funding levels are appropriate;  further refining the performance metrics to measure the employment or economic impact of TAAF programs;
• placing a stronger emphasis on assisting SMEs to utilize technology to improve operational efficiency, expand into new markets, including through e-commerce, and take fuller advantage of an increasingly digitally driven economy;
• facilitating partnerships with large multinational companies to support SME integration into GVCs;
• facilitating partnerships with educational institutions or programs to train workers for digital or other skills needed by the TAAF firm or other employers;
• aligning Federal programs by linking qualified workers of a TAAF firm with the TAA for Workers program under the Department of Labor; or
• consolidating or streamlining TAAF with other federal programs that assist troubled SMEs such as those operated by the Small Business Administration (SBA).

While TAAF has traditionally focused on firms who can demonstrate they have been harmed by import competition, Congress could also explore the feasibility and possible steps that could or should be taken before firms are harmed. Congress might consider requiring EDA to conduct outreach and education on pending trade liberalization agreements. The analysis of each proposed trade agreement by the USITC may help identify industries or regions as potentially vulnerable or likely to experience a negative impact as a result of proposed trade liberalizing measures. For example, the USITC economic impact assessment report for the Trans-Pacific Partnership (TPP), before the United States withdrew from the negotiations, contended that U.S. demand for business services would outstrip supply, presenting opportunities for growth, while employment could decline in certain manufacturing and transport sectors. Congress could, for example, consider requiring EDA to prepare a capacity building plan to assist those industries or regions that the USITC identifies as potentially vulnerable or likely to experience a negative impact from implementation of a proposed trade agreement.

To download the full report, please click here. 

Rachel F. Fefer is an Analyst in International Trade and Finance at the Congressional Research Service. 

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The WTO and global trading system face significant challenges. The WTO’s credibility hinges on the conclusion of outstanding negotiations, set back by the postponement of the 2020 Ministerial Conference, due to the Coronavirus Disease 2019 (COVID-19) pandemic. Meanwhile, a dispute settlement crisis continues and broader WTO reforms remain under discussion, complicated by wide differences, growing trade disputes, and trade protectionism. In the near-term, WTO members face additional challenges in responding to the global trade and economic slowdown and spread of trade restrictions in response to COVID-19. In the words of the outgoing DG: “The challenges facing the work of this Organization will always be formidable — commensurate with its relevance and role as an anchor of predictability and certainty in a fast-changing global economy.”

Debate over the WTO’s future direction is of interest to Congress. Some Members have expressed support for ongoing WTO reform efforts (H.Res. 746) and advocated for an active U.S. leadership role (S.Res. 651). In May, Senator Hawley and Representatives DeFazio and Pallone introduced joint resolutions (S.J.Res. 71, H.J.Res. 89) proposing to withdraw congressional approval of WTO agreements; rule changes are likely to prevent votes from occurring on the measures.

Cathleen D. Cimino-Isaacs is an analyst in International Trade and Finance at the Congressional Research Service. 

To read the full report, click here. 

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An area of particular concern to Congress is U.S. shortages in medical supplies— including personal protective equipment (PPE) and pharmaceuticals—as the United States steps up efforts to contain COVID-19 with limited domestic stockpiles and insufficient U.S. industrial capacity. Because of China’s role as a global supplier of PPE, medical devices, antibiotics, and active pharmaceutical ingredients, reduced exports from China have led to shortages of critical medical supplies in the United States. Exacerbating the situation, in early February 2020, the Chinese government nationalized control of the production and distribution of medical supplies in China—directing all production for domestic use—and directed the bureaucracy and Chinese industry to secure supplies from the global market. Once past the initial peak of its COVID-19 outbreak, the Chinese government appears to have prioritized certain countries and selectively released some medical supplies for overseas delivery.

Congress has enacted legislation to better understand and address U.S. medical supply chain dependencies, including P.L. 116-136, The Coronavirus Aid, Relief, and Economic Security (CARES) Act, that includes several provisions to:

• expand drug shortage reporting requirements; 
• require certain drug manufacturers to draw up risk management plans; 
• require the U.S. Food and Drug Administration (FDA) to maintain a public list of medical devices that are determined to be in shortage; and 
• direct the National Academies of Science, Engineering, and Medicine to conduct a study of pharmaceutical supply chain security.

Other potential considerations for Congress include whether and how to further incentivize additional production of health supplies, diversify production, address other supply chain dependencies (e.g., microelectronics), fill information and data gaps, and promote U.S. leadership on global health and trade issues.

The crisis that merged for the U.S. economy is defined, in large part, by a collapse of critical supply, as well as a sharp downturn in demand, first in China and now in the United States and globally. As China’s manufacturing sector recovers, while the United States and other major global markets are grappling with COVID-19, some fear China could overwhelm overseas markets, as it ramps up export-led growth to compensate for the sharp downturn of exports in the first quarter of 2020, secure hard currency, and boost economic growth. China may also seek to make gains in strategic sectors—such as telecommunications, microelectronics, and semiconductors—in which the government undertook extraordinary measures to sustain research and development and manufacturing during the COVID-19 outbreak in China.

Karen M. Sutter is the Coordinator Specialist in Asian Trade and Finance at the Congressional Research Service.

Michael D. Sutherland is an analyst in International Trade and Finance at the Congressional Research Service.

Andres B. Schwarzenberg is an analyst in International Trade and Financeat the Congressional Research Service.

To read the full report, click here.

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TikTok launched in the United States in August 2018. The app is available in over 155 countries in 39 languages and has approximately 800 million monthly active users. In the United States, the app has approximately 49 million monthly active users. TikTok’s appeal lies heavily on what has been called its “addictive” video feed, For You. The app builds this feed through a “recommendation engine” algorithm built on artificial intelligence (AI) technologies and data mining practices. According to the company, the recommendation engine relies on a complex set of weighted factors to recommend content, including hashtags and videos watched previously, as well as the kind of device a person is using. TikTok critics cite problems with how much data TikTok collects from and about its users and with how that data is stored—and could be shared.

On August 6, 2020, President Trump signed an Executive Order aimed at stopping TikTok from doing business in the United States. Once in effect on September 27, 2020 (an extension from the original date of September 20), the order will prohibit any U.S. company or person from “transacting” with ByteDance. On August 14, 2020, the President issued a second Executive Order stating that ByteDance, its subsidiaries, and partners must divest from all assets that support TikTok’s operations in the United States and destroy all previously collected U.S. user data. Divestiture may be accomplished by finding a U.S. buyer for TikTok. The requirements are designed to limit the Chinese government’s access to current and future data from U.S. TikTok users. ByteDance does not want to divest from TikTok and has sued the Trump Administration.

On September 14, 2020, Oracle announced that it had reached an agreement with ByteDance to “serve as [the company’s] trusted technology provider” in the United States. Treasury Secretary Steven Mnuchin announced that he had received the proposal. From the terminology used, it appears that the deal may involve a partnership between the two companies rather than a sale. This arrangement would keep the source code of the For You recommendation engine in the hands of ByteDance. It is unclear if this deal satisfies the conditions in President Trump’s Executive Orders. Secretary Mnuchin said that the Committee on Foreign Investment in the United States will review the proposal and present President Trump with its opinion. On September 19, 2020, Oracle announced that Walmart would be joining the TikTok acquisition.

On September 27, 2020, Judge Carl J. Nichols of the United States District Court for the District of Columbia granted a preliminary injunction against the Trump administration order. He stated that while President Trump has broad authority to prohibit business transactions with foreign entities that are deemed to pose a national security risk, TikTok appears to be exempt from such a prohibition because it is a personal communication service, which is protected by the International Emergency Economic Powers Act. The ruling does not affect the November 12, 2020, deadline that ByteDance divest from TikTok in the United States.

Some believe TikTok and other Chinese-owned apps pose a serious security risk to the United States because Chinese companies are subject to China’s laws that require compliance with government requests for data. Others believe that TikTok has fallen into “the crosshairs of a global technology battle” based on technology trade protectionism (this concept, also called “techno-nationalism,” refers to a country’s refusal or reluctance to import other countries’ advanced technology, as well as to export, or to allow other nations to benefit from, its own advanced technology).

Similar situations may arise in the future with other apps created by foreign companies. Options that Congress may consider include (1) developing an overarching legal and regulatory framework to protect the security and privacy of U.S. citizens’ data and communications, and (2) developing a uniform, transparent process to assess and mediate risks posed by foreign apps.

Patricia Moloney Figliola is a Specialist in Internet and Telecommunications Policy at the Congressional Research Service.

To download the full report, please click here.

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Worker rights are a prominent issue in U.S. FTA negotiations. Some stakeholders believe worker rights provisions are necessary to protect U.S. workers from perceived unfair competition and to raise labor standards abroad. Others believe these rights are more appropriately addressed at the International Labor Organization (ILO) or through cooperative efforts and capacity building. Since 1988, Congress has included worker rights as a principal negotiating objective in Trade Promotion Authority (TPA) legislation. The United States has been in the forefront of using FTAs to promote core internationally recognized worker rights. Labor provisions have evolved significantly since the North American Free Trade Agreement (NAFTA), moving from side agreements to integral chapters within FTA texts, with more provisions subject to enforcement. The conclusion of NAFTA renegotiations resulted in the U.S.-Mexico-Canada Agreement (USMCA), which replaces NAFTA and has a new labor chapter and enforcement mechanism. USMCA entered into force in July 2020.

Issues for Congress

In considering future TPA legislation (the current reauthorization expires in July 2021) or trade negotiations, Congress may wish to examine the application of worker rights provisions in FTAs. This debate could include

• The effectiveness of FTAs as a vehicle for improving worker rights and labor standards in other countries;
• The extent to which FTA partners are complying with labor obligations and whether dispute settlement provisions have been applied effectively;
• Whether USMCA labor provisions serve as a new template for future U.S. FTAs;
• The effectiveness of FTAs in providing technical assistance and trade capacity building; and
• The role of businesses in promoting U.S. labor practices abroad and conducting supply chain due diligence.

Cathleen Cimino-Isaacs is an Analyst in International Trade and Finance at Congressional Research Service

M. Angeles Villarreal is a Specialist in International Trade and Finance at Congressional Research Service.

To download the full report, please click here

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U.S. customs law has contained prohibitions against importing goods produced by certain categories of labor since the end of the nineteenth century. Beginning in 1890, the United States prohibited imports of goods manufactured with convict labor. In 1930, Congress expanded this prohibition in Section 307 of the Tariff Act to include any (not just manufactured) products of forced labor. Although a few Members of Congress brought up humanitarian concerns during debate, the central legislative concern was with protecting domestic producers from competing with products made with forced labor. As such, Section 307 allowed the admission of products of forced labor if it could be shown that no comparable product was made in the United States or the level of domestic production did not meet domestic demand (“consumptive demand” clause).

Over the decades, lawmakers and civil society became increasingly concerned about forced labor in the context of human trafficking. The Victims of Trafficking and Violence Prevention Act of 2000 (P.L. 106-386), for example, included forced labor in its definition of human trafficking. In 2015, Congress removed the “consumptive demand” clause, as part of the Trade Facilitation and Trade Enforcement Act (reflecting this interest in addressing human rights abuses in the context of forced labor).

Issues for Congress

Trade Policy and Forced Labor Provisions

The treatment of forced labor in U.S. trade policy and free trade agreements (FTAs) has been of long-standing congressional interest and has evolved in recent years. Consistent with negotiating objectives set by Congress in Trade Promotion Authority, recent U.S. FTAs commit countries to maintain laws on core labor rights/principles of the International Labor Organization (ILO). This includes the elimination of forced or compulsory labor.

For the first time in a U.S. FTA, the U.S.-Mexico-Canada Agreement (USMCA) also commits parties to prohibit imports of goods produced by forced labor through “measures it considers appropriate,” and to establish cooperation for identifying such goods. The 116th Congress passed USMCA implementing legislation in early 2020. It created a Forced Labor Enforcement Task Force, chaired by the Secretary of Homeland Security, to monitor enforcement of Section 307, and reporting requirements.

In addition, eligibility criteria for U.S. trade preference programs, such as the Generalized System of Preferences (GSP), includes taking steps to maintain internationally recognized worker rights. Some eligibility reviews by the U.S. Trade Representative have involved concerns over labor practices. Recently, the Administration withdrew GSP benefits for Thailand over forced labor in the fishing sector.

Trade agreements and programs have expanded coverage of trade and labor issues in part because the World Trade Organization (WTO) does not cover such rules. However, Article XX(e) of General Agreement on Tariffs and Trade (GATT), provides exceptions to a country’s obligations for measures related to imports of products of prison labor.

Christopher A. Casey is an Analyst in International Trade and Finance for the Congressional Research Service.

Cathleen D. Cimino-Isaacs is an Analyst in International Trade and Finance  for the Congressional Research Service.

Katarina C. O’Regan is an Analyst in Foreign Policy for the Congressional Research Service.

To download the full report, please click here.

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