[[author name scrubbed], Specialist in International Trade ([phone number scrubbed]) [author name scrubbed], Specialist in National Defense ([phone number scrubbed]) [author name scrubbed], Specialist in Russian and Eurasian Affairs ([phone number scrubbed])] A number of challenging issues in foreign, defense, and trade policy are likely to confront the 110 th Congress, starting with what the Baker/Hamilton-led Iraq Study Group (ISG) calls the "grave and deteriorating" situation in Iraq. In early 2007, the Administration is expected to ask for supplemental appropriations for military operations in Iraq and Afghanistan and to enhance social and political stability, democratization, and reconstruction in those countries. After Iraq, other high priorities will be the continuing fight against terrorism and efforts to dissuade or restrain Iran and North Korea from pursuing nuclear weapons programs. Congress will also consider a number of Free Trade Agreements (FTAs) and whether to extend presidential Trade Promotion Authority (TPA). With both chambers set to pass from Republican to Democratic control, the 110 th Congress is likely to intensify its oversight over these and other Administration policies and activities. As the 110 th Congress convenes, the issue that overshadows all others is what to do in Iraq. Although not all Members agree entirely with the ISG's grim assessment of the situation in Iraq, the predominant issue in Congress no longer seems to be whether to stay the course, but what to do differently. A key corollary question for Congress is what its role should be in redirecting policy. A key recommendation of the ISG calls for a major U.S. diplomatic initiative throughout the region to help stabilize the deteriorating situation in Iraq. The group's report proposes U.S. diplomatic engagement with Iran and Syria, among others, and intensified U.S. efforts to help resolve the Israel-Palestinian conflict and the crisis in Lebanon. The 110 th Congress may want to consider to what extent it supports this recommendation and what, if any, legislative measures might be called for to promote it. Among the central recommendations of the ISG are to make training of Iraqi security forces the primary U.S. military mission and to aim to withdraw all U.S. combat brigades not necessary for force protection by the first quarter of 2008. Congress faces an evaluation of these recommendations and a decision as to what, if any, legislative measures might be helpful to promote these or other policies. Following that, a central issue may be whether Congress should insert any specific, enforceable policy prescriptions into upcoming legislation to provide supplemental funding for the war. In early February, the Defense Department is expected to request supplemental appropriations to cover costs of military operations in Iraq and Afghanistan for the remainder of FY2007. During the war in Vietnam, Congress frequently debated amendments to defense spending bills to reduce troop strength or to cut off funding for U.S. military operations. Congress finally approved a funding cutoff in 1973. Though Congress may not be inclined to go so far in Iraq, there may well be support for linking funding to achievement of political benchmarks, such as those that the ISG laid out. Some may propose a specific timetable for withdrawing forces. Alternatively, there has been some support in Congress for adding troops in Iraq. Congressional action on the FY2007 supplemental appropriations bill may also be the first round of what may be an ongoing debate in the 110 th Congress over the preparedness of U.S. military forces and the sufficiency of planned funding for military personnel, training, and equipment. In recent years, Congress has provided progressively larger amounts of money for war-related costs in annual supplemental appropriations bills as well substantial and growing amounts in regular defense budget requests. In FY2006 Congress provided over $530 billion for the Department of Defense, of which about $120 billion were additional funds for the war. The 109 th Congress also approved a "down payment" of $70 billion for war costs in FY2007, of which almost $25 billion was to repair and replace Army and Marine Corps equipment lost or worn down by the war. Now it appears that the Army, in particular, has toted up a much larger bill than had earlier been expected as the cost of equipping and reorganizing its forces to prepare, not only for operations in Iraq and Afghanistan, but also for possible future operations abroad. Initial reports are that the Army and the other services have requested an additional $125-130 billion in war-related expenses, which would bring the total for FY2007 to almost $200 billion, although it is not yet known how much of that the White House will request from Congress. For Congress, a central issue is how to ensure adequate readiness while also maintaining some degree of fiscal discipline. A key aspect of that issue is how to manage budgetary tradeoffs between pressures to add to the size of the Army and Marine Corps and also preserve sufficient funds to modernize military forces in the longer term. In addition to Iraq and Afghanistan, other central foreign policy issues facing the Administration and 110 th Congress are how best to deal with the challenges posed by the nuclear activities of North Korea and Iran. In 2007, there is likely to be a good deal of political and diplomatic activity regarding both countries' nuclear programs. The 110 th Congress may exercise oversight of Administration conduct in this area and may address aspects of the issue more directly through legislative action. European issues that the 110 th Congress may address include NATO's role in Afghanistan, the status of Kosovo, and relations with Russia. NATO's expanding engagement in Afghanistan is the alliance's largest and most problematic military operation to date. There is controversy over restrictions some allies have placed on the role of their forces there. The disputed status of Kosovo is set to be resolved in early 2007, possibly in some form of independence. Russia presents a complex set of challenges and opportunities for the United States, particularly with regard to its policies toward neighboring states and the implications of its growing influence as an energy supplier for Europe. Security issues in Asia that may draw the attention of the 110 th Congress include flashpoints along the Taiwan Strait, on the Korean Peninsula, between India and Pakistan, and along the Pakistani border with Afghanistan, as well as terrorist activity in Indonesia, the Philippines, India, and Pakistan. Two other long-term trends in Asia that may warrant Congressional attention are the rise of China and its increasing influence in the region and globally and increasingly negative attitudes toward the United States, particularly among Southeast Asian nations with large Muslim populations and in South Korea. Legislative and oversight attention to Latin America and the Caribbean in the 110 th Congress will likely focus on continued counternarcotics efforts, especially in the Andean region; potential immigration reform efforts as well as efforts to increase cooperation on border security, which have been key issues in relations with Mexico; efforts to deal with threats to democracy in such nations as Venezuela as well as the rise of leftist populism in several Latin American countries, and debate over the best means to foster political change in Cuba. Key U.S. policy issues pertaining to Africa are likely to center on efforts to promote peace and security in the region; counter-terrorism initiatives; bilateral military cooperation and training in support of international peacekeeping; the programmatic focus, funding levels, and objectives of diverse U.S. assistance efforts, with a particular emphasis on fighting the HIV/AIDS pandemic; and promoting democracy, human rights, trade, and market-driven economic growth. In January 2006, Secretary of State Rice announced a major foreign policy initiative that she called Transformational Diplomacy, "...a bold diplomacy to match the President's bold mission of supporting democracy around the world with the ultimate goal of ending tyranny in our world." Pursuant to this goal, State Department personnel are to be shifted largely from Europe and Washington, D.C. to designated critical locations in Africa, South Asia, East Asia, and the Middle East. They are to be trained in public diplomacy skills and encouraged not merely to report on the country in which they are posted, but to promote democratic principles there. This initiative will likely require increased funding for the foreign operations budget. The 110 th Congress may seek to exercise oversight on how the money is spent, whether transformational diplomacy is effective, and how foreign governments respond to this U.S. promotion of democracy in their countries. Trade issues have become increasingly controversial in Congress during the last few years. This is likely to continue to be the case during the 110 th Congress as many Members grapple with the real and perceived effects of globalization and how to balance the benefits and costs of trade liberalization. Many Members of Congress have raised concerns over lost jobs and lower wages, over the growing income gap in the United States, over the burgeoning U.S. trade deficits with trading partners, especially China, and the undervaluing of China's currency. While mainstream economists generally assert that trade policy has a very limited role in these areas, for many Members the trends serve as backdrop to a debate on the shape and conduct of U.S. trade policy. That debate could be launched early in the 110 th Congress with the scheduled expiration on July 1, 2007, of the Trade Promotion Authority (TPA). TPA is the authority that the Congress has delegated to the President to negotiate reciprocal trade agreements that receive expedited Congressional consideration (limited debate and no amendments). Under this authority, the Bush Administration completed and the Congress approved free trade agreements with Chile, Singapore, Australia, Morocco, the Dominican Republic, Central American countries, Bahrain and Oman. Also, the Administration signed agreements with Colombia and Peru and announced it would send implementing legislation for these agreements for Congressional approval under the TPA procedures. If the President requests renewal of TPA, Congress would face a decision of whether to accede to his request and, if so, what form the new authority should take.