The 112 th Congress and the Obama Administration face a range of trade issues. Many of these issues, such as pending free trade agreements and trade negotiations, trade preferences for developing countries, trade enforcement and compliance, and renewal of trade promotion authority, are legacies of previous administrations and congresses. New issues may be on the horizon. Trade policy is an important element of economic policy, and as such, its objective is to enhance national economic welfare. However, what constitutes economic welfare can vary among the interest groups that comprise the stakeholders in U.S. trade policy, such as farmers, manufacturers, service providers, workers, importers, consumers, and environmentalists, and among members of Congress who represent them. The shape and conduct of trade policy are the subject of much debate among policymakers. U.S. policymakers appear to be at a crossroads on these questions at this time. The future shape, direction, and content of U.S. trade policy are uncertain. Some observers have suggested that the role of trade policy should be given lower priority relative to foreign policy and domestic economic issues; others call for an activist policy that faces the challenges head on. Besides these questions, there is the overarching question of what role, if any, should or can trade policy have in promoting U.S. economic and foreign policy interests. On the one hand, it can be argued that the emergence of global production networks, within which manufacturers have internationalized production processes across borders, is making government-to-government trade agreements and trade policy in general less effective, if not obsolete. In addition, the rapid increase in capital flows across borders dwarf the impact of flows of goods and services, reducing the effectiveness of trade policy initiatives. On the other hand, it can be argued that trade policy remains a significant aspect of economic and foreign policy that can hinder or promote national interests and has a high-level of relevance as reflected in the rapid growth of trade (U.S. trade in goods and services totaled $3.5 trillion in 2009), and the increase in bilateral and regional trade agreements throughout the world. This report is designed to assist the 112 th Congress as it grapples with these complex issues of trade policy in a rapidly changing economic landscape. How Congress and the Obama Administration respond could have long-term implications for U.S. trade, economic, and foreign policy interests. The report discusses the issues that the 112 th Congress could face and the political and economic context in which these issues are being debated. It then analyzes the debate that is taking place among policy experts and stakeholders over the future form and role of trade policy and concludes with an examination of some of the options available to Congress and the pros and cons of each. This report will be updated as events warrant. A number of political factors and economic conditions will influence the shape, direction, and content of U.S. trade policy in the next few years. The relative significance of each of these factors could change over time. One factor that will likely affect the direction of U.S. trade policy is American public opinion, including the views of major stakeholders, such as businesses, labor, farmers, and non-government organizations(NGOs), on trade liberalization and trade agreements. Some recent opinion surveys suggest an overall ambivalence, if not growing opposition, among the American public regarding trade liberalization. On the one hand, a plurality of Americans believe that free trade agreements hurt the United States. A Pew Research Center survey released on November 9, 2010, showed that 44% of the American public thought that free trade agreements were a "bad thing," while 35% viewed them as a "good thing.". These percentages were reverse from those that resulted from a December 2009 survey where 43% thought free trade agreements were a "good thing" and 32% thought they were a "bad thing" for the United States. On the other hand, a majority of those surveyed in the same study thought increasing trade with Canada, Japan, the European Union (EU), and other major trading partners was good for the United States. Views vary among the major stakeholders. In general, the U.S. business community has supported trade agreements. The agriculture community largely supports them, although some groups, such as sugar producers, have opposed agreements that would increase access of foreign producers to their markets. U.S. labor in general has been skeptical on trade and has opposed most free trade agreements. Some NGOs, particularly those that serve poor countries, have opposed trade liberalization, while others view trade liberalization as an avenue to economic growth and development. Congress appears to reflect the public's ambivalence on trade policy much of the time. The congressional perspective is particularly critical because the Constitution assigns primary responsibility on trade policy to the legislative branch. Ambivalence on trade appears to be especially evident in the House of Representatives. Over the years, support in Congress for trade liberalization, by some measures, seems to have declined. For example, the House approved the Trade Act of 1974, which established "fast-track trade authority," by a vote of 272-140. On December 6, 2001, however, the House passed the most recent version of "fast-track" (now also called trade promotion authority [TPA]) by the thinner margin of 215-214. Votes on specific trade agreements perhaps indicate a greater congressional ambivalence on trade liberalization. On November 8, 2007, the House passed implementing legislation ( H.R. 3688 , P.L. 110-138 ) for the U.S.-Peru Free Trade Agreement—the most recent FTA to be approved—by a vote of 285-132, but passed the U.S.-Dominican Republic-Central American (DR-CAFTA) ( H.R. 3045 , P.L. 109-53 ) by a much narrower margin of 217-215. Senate votes on fast-track and trade agreements tended to be not as close. The President's role and his stance on trade is a third political factor shaping trade policy. While influenced by the other two factors, presidents have favored trade liberalization for economic and foreign policy reasons, while acknowledging, through rhetoric and actions, the adverse affects trade liberalization may have on some segments of the economy. This has been the case with both Republican and Democratic Administrations. The United States completed and enacted the Tokyo Round Agreements under President Carter, the negotiations for which were launched under President Nixon. NAFTA and the Uruguay Round Agreements were enacted under President Clinton, but the negotiations for both were launched under President Reagan and continued under President George H.W. Bush. This pattern may be continuing. President Obama has expressed qualified support for the pending free trade agreements (FTAs) with Colombia, Panama, and South Korea and for the completion of the Doha Development Agenda (DDA) round of WTO negotiations, all of which were launched under President George W. Bush. The U.S. Constitution assigns express authority over foreign trade to Congress. Article I, section 8, gives Congress the power to "regulate commerce with foreign nations ..." and to "... lay and collect taxes, duties, imposts, and excises...." For more than a century and half, Congress exercised its foreign trade policy responsibility primarily through setting tariff rates. Tariffs were also a major source of federal government revenue at that time. Early congressional trade debates pitted members from northern manufacturing regions, who benefitted from protectionist tariffs, against those from largely southern raw material exporting regions, who lobbied for low tariffs. However, for political and pragmatic reasons, Congress has increasingly delegated certain trade authority to the President—without relinquishing overall congressional authority over trade policy. One important example is in the area of trade agreement negotiations. In 1934, Congress enacted the Reciprocal Trade Agreements Act (RTAA; P.L. 73-316). The RTAA authorized the President to negotiate reciprocal agreements that reduced tariffs within pre-approved levels. The tariffs were applied on an MFN basis. Under the RTAA, Congress authorized the president to implement the new tariffs by proclamation without additional legislation. The RTAA was the first time Congress expressly delegated to the President major trade authority. In so doing, it is argued, Congress aimed to lessen pressure to protect specific firms and industries from import competition and also to assure trading partner-countries that agreements would not be changed by Congress before enactment. In addition, the RTAA was also a practical way for Congress to exercise its constitutional responsibility for trade while recognizing the President's constitutional role (Article II) as the sole authority to negotiate foreign agreements for the United States. Over the years, Congress expanded presidential trade authority as trade negotiations and agreements became more complex. Beginning with the Trade Act of 1974, as amended, Congress authorized fast-track authority, which allowed for implementing legislation for certain trade agreements that the President negotiated be subject to expedited legislative procedures (e.g., limited debate, no amendments, and guaranteed congressional consideration), if the Administration adhered to statutorily mandated procedures, including consultation with Congress. Congress has delegated additional trade policy authority to the executive branch by granting it the authority to implement a number of trade remedies and other trade programs. For example, the U.S. Department of Commerce (along with the independent U.S. International Trade Commission) is responsible for implementing the anti-dumping (AD) and countervailing duty (CVD) trade remedy programs. AD and CVD remedies are designed to offset the price advantages accrued to imports as a result of dumping (selling at below fair market value) and foreign government subsidies, respectively. Congress has also given the authority to the President and the U.S. International Trade Commission (USITC) to implement the escape clause (section 201) trade remedy, to dampen the injurious effects on domestic industries of surges in fairly traded imports. While selectively delegating trade policy authority to the President, Congress has maintained tight reins on its implementation.