The USA in the World Trading System

This paper begins with a review of the domestic sources of US trade policy and the external influences on that policy. It then examines changes in the external orientation of US manufacturing, focusing in particular on the rapidly spreading phenomenon of offshore production of parts and and components. Although the latter has been criticized as inimical to the interest of American workers, it is, on the contrary capable of improving the lot of workers and strengthening the competitive position of US manufacturers. It generates positive overall welfare effects by making resource utilization more efficient. The paper moves next to consideration of competition policies and their role in affecting trade patterns and the distribution of the gains from trade. Next on the agenda is a discussion of the political economy of globalization and its implications for the future of economic policy.