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      - page 6 / 47





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incidence of policies. For example, is the goal of a policy to support business to promote the overall efficiency and profitability of U.S. parented supply chains even if significant segments of those chains are located abroad, or is the goal to induce companies to move production or other business activity to the United States even if such action reduces supply chain efficiency and the ability of the U.S.-parented supply chain to compete in the global marketplace? In international trade and investment policies, does the incidence of the policy fall on overseas segments of American parented supply chains? If the policy is to reduce imports into the United States, what effect will that have on global supply chain operations? Is there a balance between trade policies designed to increase U.S. exports (e.g., by reducing tariffs abroad) and those that may induce U.S. companies to move production overseas (e.g., easing foreign country limits on direct investments). As global supply chains attempt to maximize their efficiency and profitability, they face trade-offs between border transaction costs (including tariffs), factor costs (including labor and capital), logistical costs (including shipping), external business costs (ease of doing business, regulations, etc.), and various risks (including security, financial, and political risk). How does government economic policy influence these factors and trade-offs in ways that are in accord with, rather than counter to U.S. national goals?

Some of the legislation related to global supply chains in the 111th Congress include a bill condemning the People’s Republic of China for its socially unacceptable business practices, including the manufacturing and exportation of unsafe products, casual disregard for the environment, and exploitative employment practices (H.Res. 44 [Poe]); Retooling America's Workers for a Green Economy Act (S. 269[Murray]); Achievement Through Technology and Innovation Act of 2009 (H.R. 558 [Roybal-Allard]); Trade Enforcement Act of 2009 (H.R. 496 [Rangel]); 10,000 Trained by 2010 Act (H.R. 461 [Wu]); or Strengthening Our Economy Through Small Business Innovation Act of 2009 (S. 177 [Feingold]).

The 110th Congressed passed the Consumer Product Safety Improvement Act of 2008 that reformed the Consumer Product Safety Commission and strengthened enforcement of consumer product safety standards (H.R. 4040 [Rush, P.L. 110-314])2 and the America Competes Act that promotes investment in science and engineering research and in science, technology, engineering, and mathematics education (H.Res. 602/H.R. 2272 [Sutton, P.L. 110-69]).

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The globalized American economy poses challenges for U.S. trade and regulatory policy. The traditional paradigm for policy was that the American economy consisted of U.S. businesses that operated primarily in the domestic market, hired U.S. workers, and sold to U.S. consumers but with some production either imported or exported. International trade took place between countries according to each nation’s competitive and comparative advantage. A trade policy aimed at a particular country had impact on businesses and consumers in that country. Only indirectly would adverse effects rebound to harm U.S. business interests such as when foreign governments retaliated in kind.


CRS Report RL34684, Consumer Product Safety Improvement Act of 2008: P.L. 110-314, by Margaret Mikyung Lee.

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