CRS Reports

Automakers Seek to Align Fuel Economy and Greenhouse Gas Regulations

Automakers are seeking regulatory—and perhaps legislative—changes this year to revise federal fuel economy and environmental standards and reduce potentially large penalties. The technical proposals would be the first major structural change in these standards since 2012, and they come at a time when federal agencies are undertaking a regulatory review that may result in far greater changes. For more than 40 years, the federal government has regulated passenger motor vehicles for their fuel economy. Administered by the National Highway Traffic Safety Administration (NHTSA), the Corporate Average Fuel Economy (CAFE) program requires automakers to meet certain fuel economy targets for their vehicle fleets to limit oil consumption. For roughly 20 years, the legislated target for a given manufacturer’s fleet of light-duty vehicles was 27.5 miles per gallon (mpg); a 2007 law mandated an increase to 35 mpg by 2020. That system received a major makeover in 2012 when the Obama Administration used its regulatory authority to integrate the CAFE program with California state greenhouse gas (GHG) regulations and a new federal GHG standard administered by the Environmental Protection Agency (EPA). California agreed to follow federal GHG standards rather than pursue its own, and automakers signed on to the joint program. The new federal target of 54.5 mpg by 2025 represents the fuel economy needed to meet EPA’s target of 163 grams of carbon dioxide (CO2) emissions per mile. These NHTSA and EPA regulations are influencing the design of automobiles, sport utility vehicles (SUVs), and pickup trucks, and may spur a range of new technologies such as turbocharging, more efficient transmissions, and electrically powered air conditioning. Proposed Changes Could Reduce Penalties Although NHTSA and EPA will reevaluate their respective CAFE and GHG standards through a Midterm Evaluation in 2017, automakers are seeking changes this year. Vehicle manufacturers note that when the Obama Administration developed the program, it referred to it as “One National Program” that would satisfy NHTSA, EPA, and California requirements. They claim that inconsistencies in these agencies’ regulations mean that some of NHTSA’s CAFE rules are more stringent than EPA’s related GHG rules. As a result, the automakers claim, they may be subject to penalties for failing to meet NHTSA’s CAFE standards even if they have complied with EPA’s GHG standards for particular model years. The inconsistencies cited by the automakers are related to the fact that different regulators are seeking specific outcomes in terms of fuel economy, GHG emissions, and state-level air quality under three different statutes. In a June 20, 2016, petition, the Auto Alliance and the Association of Global Automakers asked NHTSA to make several changes in its regulations: NHTSA fuel economy calculations for past model year vehicles (2012-2016) should be based on the same technologies as EPA. The automakers cite certain technologies that are counted by EPA for these model years but will not be applied by NHTSA until model year 2017. This change, affecting vehicles already manufactured, could reduce potential penalties for failure to meet the CAFE standards; NHTSA should adjust its standard retroactively to reflect the actual mix of new vehicle sales that occurred over the past five years, not as forecast in 2012; and NHTSA’s credit system should be aligned with EPA’s. When fuel economy is calculated for each model year, NHTSA compares the test result against its standard. If a vehicle exceeds the CAFE standard, the automaker earns credits, and if not, the automaker has a shortfall. Automakers can use credits from previous years to make up for later shortfalls. The NHTSA and EPA credit systems differ, however. Notably, NHTSA credits can be carried forward only five years, while EPA allows an 11-year carryforward. Making credit aspects of the NHTSA CAFE standards more consistent with EPA’s GHG program would lengthen the period for which automakers can claim NHTSA credits retrospectively for fuel efficiency improvements in future years. It is not clear whether NHTSA has the statutory authority to make the requested changes. No congressional or administrative hearings have been held on these proposals, but it is likely that the same NHTSA and EPA staff who are undertaking the Midterm Evaluation would have to manage the petition, including seeking public input. This might slow progress on the Midterm Evaluation. The industry proposal is not forward-looking—covering future vehicles—but applies to vehicles already produced for model years 2012-2016. Adjustments made to how fuel economy is calculated for vehicles sold in those years could lower the base from which future standards will be calculated. In addition, granting additional credits for vehicles already produced, and allowing longer credit banking, would ease automakers’ compliance with future standards. In this light, adoption of some of these automaker proposals this year could affect the conclusions reached during the Midterm Evaluation in 2017. Automakers have also raised concerns about a separate but related regulatory change required by a 2015 law directing all federal agencies to adjust their penalties for inflation. As a result, NHTSA announced on July 5, 2016, that it has revised its schedule of penalties. Using the formula stipulated in the 2015 statute, civil penalties for CAFE violations would rise from $5.50—the level established in 1975—to $14 for each 0.1 mpg a manufacturer’s annual average fuel efficiency falls below the NHTSA standard, times the number of vehicles sold. These higher penalties affect model year 2015 and later vehicles. The inflation adjustment restores the value of the deterrent built into the 1975 statute. The 2015 law does not provide for a public comment period before higher penalties take effect.

Aug 8, 2016

The 2016 Olympic Games: Health, Security, Environmental, and Doping Issues

The 2016 Olympic Games will be held in Rio de Janeiro, Brazil, August 5-21, 2016, and will be followed by the Paralympic Games, September 7-18, 2016. Notably, these are the first games to be hosted by a South American city. Reportedly, 10,500 athletes from 206 countries will participate in the Olympics, including 555 athletes from the United States. Most Olympic events will take place in and around Rio de Janeiro. In addition to Rio de Janeiro, soccer matches will be held in the cities of Belo Horizonte, Brasília, Manaus, São Paulo, and Salvador. Host countries and cities often have to deal with a variety of questions or issues, which is also true for Brazil and Rio de Janeiro. The list of issues or potential problems that might have implications for athletes, team personnel, and spectators participating in or attending the 2016 Rio Games includes the Zika virus, public safety threats, security concerns, and environmental conditions. It also bears noting that the act of hosting the Olympics may have implications for Brazil. Finally, doping is of particular concern this year because of revelations regarding a state-orchestrated doping scheme perpetrated by Russian authorities and sports organizations. Each candidate city for the 2016 Games was required to address 14 themes in its bid, such as environment and meteorology, finance, security, medical services, and doping control. However, no one in 2009 could have foreseen the outbreak of the mosquito-borne Zika virus in late 2015, when Brazilian health officials noticed an increase in the number of infants born with microcephaly. Although some have called for the Games to be postponed or cancelled, the U.S. Centers for Disease Control and Prevention (CDC) and the World Health Organization (WHO) have indicated the risk of international transmission due to the Olympic and Paralympic Games is low. The CDC has published specific recommendations for pregnant women, and the U.S. Olympic Committee (USOC) has taken steps to safeguard the U.S. Olympic team. In the candidature file it submitted to the International Olympic Committee (IOC), the Rio 2016 Organising Committee for the Olympic Games stated that visitors to the country would be provided free health care. Additionally, Brazil committed to providing medical response teams and units at Olympic facilities. However, shortages of health care workers and supplies might compromise the medical services available. Public safety and security are key concerns for visitors to Brazil, including Olympic competitors and spectators. The Department of State has noted that crime is a significant threat, and, during the 2014 World Cup, thieves targeted visitors near sports venues and other locales frequented by tourists. Although Rio de Janeiro has experienced significant improvement in public safety in recent years, some criminal activity has increased in the first half of 2016. With respect to security concerns and, specifically, terrorist threats, Brazil’s Director of Counterterrorism reportedly has noted that the threat of terrorism has increased in recent months. In July 2016, the Brazilian police arrested 10 Brazilian nationals suspected of planning an attack during the Games. The national government, which is in charge of security for the Olympic Games, plans to muster a force of 85,000 personnel to provide security. U.S. citizens requiring assistance may reach out to the State Department. Organizers of the Rio 2016 Summer Olympics and Paralympics have made many commitments to host Games in which environmental sustainability is integral to design and planning through implementation, review, and post-event activities. These commitments address issues such as impacts of public transportation, construction, and waste management, and needed water quality improvements. For some time, concern has focused on pollution of waters at venues that will host sailing, rowing, triathlon, and similar events, leading to fear that high levels of water pollution could harm the health of tourists and athletes, in addition to impacting the competitions themselves. Organizers of the Games acknowledge that commitments related to sanitation and water quality will not be met before the Games begin. The Brazilian government campaigned hard to win the right to host the 2016 Olympics, viewing the Games as an opportunity to showcase Brazil’s economic and social progress and reinforce the country’s image as a rising power. Brazil’s international stature has generally declined in recent years, however, as the country has struggled to address deepening economic and political crises. While the Olympics could allow Brazil to highlight its potential and regain some of the prestige it may have lost in recent years, any problems that emerge are likely to reinforce negative perceptions some have of the country. The Games are unlikely to have much of an effect on Brazil’s domestic political situation or economy. Nevertheless, a successful Olympics could strengthen the current government’s hold on power and provide a temporary boost to Rio de Janeiro’s economy. Most Brazilians are relatively pessimistic about the Olympics and believe they have brought more costs than benefits to the country. While doping is a perennial concern, it has been, and is, of particular concern in the months leading up to the 2016 Rio Games. The release of two World Anti-Doping Agency (WADA) reports, in November 2015 and July 2016, has shown that Russian authorities and sports organizations engaged in doping schemes involving the Russian track and field team and Russian athletes competing in 2014 at the Winter Games in Sochi, Russia. The latter report also revealed a multi-year operation implicating, among other organizations, the Russian Ministry of Sport. The consequences of these reports include, among other actions and decisions taken by the appropriate international sports organizations, a ban on Russia’s track and field team, which means the team will not be allowed to participate in the 2016 Games. Additionally, the International Olympic Committee (IOC) stated that the presumption of innocence does not apply to Russian athletes and established conditions other Russian athletes must meet to demonstrate they have clean doping records and thus be eligible to compete in Rio de Janeiro.

Aug 8, 2016

Trafficking in Persons and U.S. Foreign Policy Responses in the 114th Congress

Trafficking in persons, or human trafficking, refers to the subjection of men, women, and children to exploitative conditions that may be tantamount to slavery. Reports suggest that human trafficking is a global phenomenon, victimizing millions of people each year and contributing to a multi-billion dollar criminal industry. Common forms of human trafficking include trafficking for commercial sexual exploitation, forced labor, and debt bondage. Other forms of human trafficking include trafficking for domestic servitude and the use of children in armed conflict (e.g., child soldiers). Human trafficking is a centuries-old problem that, despite international and U.S. efforts to eliminate it, continues to occur in virtually every country in the world. The modern manifestation of the human trafficking problem is driven by gaps in the enforcement of anti-trafficking laws and regulations and the willingness of some labor and service providers to violate such laws in order to fulfill international demand. Such demand is particularly concentrated among industries and economic sectors that are low-skill and labor-intensive. Human trafficking is an international and cross-cutting policy problem that affects a range of major national security, human rights, criminal justice, social, economic, migration, gender, public health, and labor issues. The U.S. government and successive Congresses have long played a leading role in international efforts to combat human trafficking. The Trafficking Victims Protection Act (TVPA, Division A of P.L. 106-386, as amended) and its reauthorizations are the cornerstone legislative vehicles for current U.S. policy to combat international human trafficking. Since enactment of the TVPA in 2000, Congress has remained active on international human trafficking issues, particularly with appropriations identified for anti-trafficking assistance purposes, proposed legislation related to the TVPA, and other anti-trafficking initiatives. Periodic oversight hearings have focused in particular on the State Department’s annual Trafficking in Persons (TIP) Report, a detailed country-by-country ranking and analysis of government efforts to achieve congressionally established minimum standards for the elimination of human trafficking. Although there is widespread support among policy makers for U.S. anti-trafficking goals, ongoing reports of continued trafficking worldwide raise questions regarding whether sufficient progress has been made to deter and ultimately eliminate the problem. This report provides an overview of recent global trends and U.S. foreign policy responses to address human trafficking. The report focuses in particular on efforts conducted by the State Department’s Office to Monitor and Combat Trafficking in Persons (J/TIP) and the President’s Interagency Task Force (PITF) on human trafficking, as well as discussion of the 2016 TIP Report. An Appendix includes the status of legislation introduced in the 114th Congress on international dimensions of human trafficking. Drawing on CRS Report R42497, Trafficking in Persons: International Dimensions and Foreign Policy Issues for Congress, this report reflects policy activity in the 114th Congress and will be updated to reflect international trafficking developments through the end of the second session. .

Aug 5, 2016

Overview of Funding Mechanisms in the Federal Budget Process, and Selected Examples

Every year, Congress considers numerous pieces of legislation that would create or modify federal government programs and activities. The variety of approaches used across the federal budget to fund these programs and activities involve different timelines for budgetary decisionmaking, and different processes (and committees) within Congress to make those decisions. How a particular funding mechanism is structured requires tradeoffs between the frequency of congressional review and the predictability of funding for the program. The purpose of this report is to explain these approaches, illustrating them with examples of how they have been applied in practice. When attempting to understand the mechanism through which a program is funded, one of its most basic elements is the type of law that controls that funding. Such laws—and the provisions within them—can be distinguished based on whether their primary purpose is to create or modify federal government programs or activities (“authorizations”), or whether their purpose is to fund those activities (“appropriations”). Discretionary spending programs generally are established through authorization laws, but the annual appropriations process determines the extent to which those programs will actually be funded, if at all. Examples of discretionary spending discussed in this report include the Office of Apprenticeship (Department of Labor; DOL) and the Violence Against Women Family Research and Evaluation program (Department of Justice). Mandatory spending is controlled by authorization laws. For this type of spending, the program usually is created and funded in the same law, often on a multiyear or permanent basis. Examples of this type of funding mechanism that are discussed in this report include the State Children’s Health Insurance Program (Department of Health and Human Services; HHS), Technical Assistance for Tribal Child Welfare Programs (HHS), and Social Security Disability Insurance (Social Security Administration; SSA). Alternatively, a mandatory spending program might be created in an authorization law but funded annually through an appropriations act; this is often referred to as “appropriated mandatory” spending. Examples of appropriated mandatory spending include the Social Services Block Grant (HHS) and Supplemental Security Income (SSA). In some cases, including the federal Health Center Program (HHS) and the Child Care and Development Fund (HHS), federal government programs are funded using a combination of mandatory and discretionary spending. Besides the type of law that controls the spending, another important aspect of any funding mechanism is what the source of that funding will be. This is because there is a distinction between the authority to expend funds and the source of the funds themselves. Revenue and other collections made by the federal government are generally deposited in the General Fund (GF) of the Treasury, which is the default source of spending for many different types of federal government activities. Examples of funding mechanisms that utilize the GF include the Office of Apprenticeship (DOL) and the Maternal, Infant, and Early Childhood Home Visiting program (HHS). Spending also may be funded by dedicated collections that result from the business-like activities that the federal government undertakes. Both the legal authority to make these collections, and the legal authority to expend them, may be provided either through authorization or appropriations acts, and may support either mandatory or discretionary spending. Examples of dedicated collections that are discussed in this report include those associated with the Immigration Examinations Fee Account (Department of Homeland Security), the Manufactured Housing Standard Program (Department of Housing and Urban Development), and the Health Surveillance and Program Support account (HHS). In some cases, including Medicare Part A and B (HHS) and the Prescription Drug User Fee Act activities undertaken by the Food and Drug Administration (HHS), programs are funded using a combination of the GF and dedicated collections.

Aug 4, 2016

Zika Poses New Challenges for Blood Centers

This report examines recent steps being taken to prevent the spread of Zika virus (ZIKV) in the blood supply.

Aug 4, 2016

Workers’ Compensation: Overview and Issues

Workers’ compensation provides cash and medical benefits to workers who are injured or become ill in the course of their employment and provides benefits to the survivors of workers killed on the job. Benefits are provided without regard to fault and are the exclusive remedy for workplace injuries, illnesses, and deaths. Nearly all workers in the United States are covered by workers’ compensation. With the exception of federal employees and some small groups of private-sector employees covered by federal law, workers compensation is provided by a network of state programs. In general, employers purchase insurance to provide for workers’ compensation benefits. Workers’ compensation has been called a grand bargain between employers and workers that developed at the beginning of the 20th century in response to dissatisfaction with the tort system as a method of compensating workers for occupational injuries, illnesses, and deaths. Under this grant bargain, workers’ receive guaranteed, no-fault benefits for injuries, illnesses, and deaths, but forfeit their rights to sue their employers. Employers receive protection from lawsuits but must provide benefits regardless of fault. Recently, concerns have been raised over what some allege are cuts to state workers’ compensation benefits or policy changes that make it harder for workers to receive the benefits they deserve. These cuts and policy changes may be shifting some of the costs associated with workplace injuries, illnesses, and deaths away from the employer and to the employee or social programs, such as Social Security Disability Insurance (SSDI) and Medicare. There is no federal requirement that states have workers’ compensation systems and no minimum federal standards for state systems. The decentralized nature of workers’ compensation led to unsuccessful calls for minimum state standards in the early 1970s and has caused concerns over benefit equity among the states today. In 2013, Oklahoma joined Texas in making its workers’ compensation system noncompulsory. Unlike in Texas, Oklahoma employers may opt-out of workers’ compensation by offering alternative benefits to employees and keep their protection from lawsuits, whereas Texas employers are exposed to legal liability in the event of employee injury when employers opt-out of worker’s compensation. The constitutionality of the Oklahoma system, as well as to what extent the federal Employee Retirement Income Security Act (ERISA) applies to these alternate benefit plans, are currently being adjudicated in the courts.

Aug 3, 2016

The Department of Defense Acquisition Workforce: Background, Analysis, and Questions for Congress

Congress and the executive branch have long been frustrated with waste, mismanagement, and fraud in defense acquisitions and have spent significant resources seeking to reform and improve the process. Efforts to address wasteful spending, cost overruns, schedule slips, and performance shortfalls have continued unabated, with more than 150 major studies on acquisition reform since the end of World War II. Many of the most influential of these reports have articulated improving the acquisition workforce as the key to acquisition reform. In recent years, Congress and the Department of Defense (DOD) have sought to increase the size and improve the capability of this workforce. The acquisition workforce is generally defined as uniformed and civilian government personnel, who are responsible for identifying, developing, buying, and managing goods and services to support the military. According to DOD, as of December 31, 2015, the defense acquisition workforce consisted of 156,457 personnel, of which approximately 90% (141,089) were civilian and 10% (15,368) were uniformed. Between FY1989 and FY1999, the acquisition workforce decreased nearly 50% to a low of 124,000 employees. This decline is attributable in large part to a series of congressionally mandated reductions between FY1996 and FY1999. These cuts reflected Congress’s then-view that the acquisition workforce size was not properly aligned with the acquisition budget and the size of the uniformed force. A number of analysts believe that these cuts led to shortages in the number of properly trained, sufficiently talented, and experienced personnel, which in turn has had a negative effect on acquisitions. In an effort to rebuild the workforce, between FY2008 and the first quarter of FY2016, the acquisition workforce grew by 24% (30,434 employees). According to DOD, the Department accomplished its strategic objective to rebuild the workforce. Officials stated that certification and education levels have improved significantly: currently, over 96% of the workforce meet position certification requirements and 83% have a bachelor’s degree or higher. In addition, DOD officials stated that they have positioned the workforce for long-term success by strengthening early and mid-career workforce cohorts. The increase in the size of the workforce has not kept pace with increased acquisition spending. According to DOD, from 2001 to 2015, the acquisition workforce increased by some 21%. Over the same period, contract obligations (adjusted for inflation) increased approximately 43%. While this increase in spending does not necessarily argue for increasing the size of the workforce, according to DOD officials, the increased spending has also corresponded to an increase in the workload and complexity of contracting. Four congressional efforts to improve the acquisition workforce are: the Defense Acquisition Workforce Improvement Act (P.L. 101-510), hiring and pay flexibilities enshrined in numerous sections of law, the Defense Acquisition Workforce Development Fund (P.L. 110-181), and strategic planning for the acquisition workforce (P.L. 111-84). These four efforts seek to enhance the training, recruitment, and retention of acquisition personnel by, respectively, establishing (1) professional development requirements, (2) monetary incentives and accelerated hiring, (3) dedicated funding for workforce improvement efforts, and (4) formal strategies to shape and improve the acquisition workforce.

Jul 29, 2016

Federal Benefits and Services for People with Low Income: Overview of Spending Trends, FY2008-FY2015

The Congressional Research Service (CRS) regularly receives requests about the number, size, and programmatic details of federal benefits and services targeted toward low-income populations. This report is the most recent in a series that attempts to identify and discuss such programs, focusing on aggregate spending trends. The report looks at federal low-income spending from FY2008 (at the onset of the 2007-2009 recession) through FY2015 (after implementation of the Patient Protection and Affordable Care Act, or ACA). Programs discussed here provide health care, cash aid, food assistance, education, housing and development, social services, employment and training, and energy assistance to low-income people and communities. Despite the common feature of an explicit low-income focus, these programs are extremely diverse in their purpose, design, and target population. They do not include social insurance (e.g., Social Security, Medicare, Unemployment Compensation), which is meant to be universal, or tax provisions, with the exception of two targeted tax credits. Key findings include the following: In nominal dollars (not adjusted for inflation), federal spending for low-income assistance programs grew from $561 billion in FY2008 to $848 billion in FY2015, a 51% increase over the eight-year period. This increased spending occurred in two distinct episodes. First, after a sharp spike in FY2009 affecting all categories of benefits and services, low-income spending peaked at $763 billion in FY2011, largely in response to the recession. The second episode was driven almost entirely by health care. Spending growth from FY2013 ($744 billion) to FY2015 ($848 billion) was primarily due to the ACA Medicaid expansion. Most low-income spending is for noncash benefits and services; health care is the largest category and Medicaid the largest individual program. In FY2015, noncash benefits and services accounted for 82% of all low-income assistance and cash aid comprised 18%. Health care dominates federal spending for low-income programs, accounting for more than half (52%) of such spending in FY2015. Medicaid alone comprised 45% of all low-income spending that year. This report identifies a large number of programs intended to assist low-income people, but spending is concentrated among a few. The four largest programs—Medicaid, the Supplemental Nutrition Assistance Program, Supplemental Security Income, and the Earned Income Tax Credit—together accounted for 68% of all low-income spending in FY2015, and the top 10 programs comprised 83%. After the top four, these programs include (in descending size) Federal Pell Grants, the Medicare Part D Low-Income Drug Subsidy, the Additional Child Tax Credit, Section 8 Housing Choice Vouchers, Temporary Assistance for Needy Families, and Title I-A Education for the Disadvantaged grants. Spending patterns described here do not reflect congressional decisions about the aggregate size of low-income spending that should occur each year. The size of each program is a function of its design and budgetary classification (mandatory versus discretionary), congressional budget and appropriations processes, external influences affecting the cost of goods and services, and other factors. This report tells a story—that low-income spending has grown sharply in recent years and is dominated by health care—but given the diversity among programs that serve low-income people, further generalizations should be made with care.

Jul 29, 2016

FY2017 National Defense Authorization Act: Selected Military Personnel Issues

Military personnel issues typically generate significant interest from many Members of Congress and their staffs. The Congressional Research Service (CRS) has selected a number of the military personnel issues considered in deliberations on H.R. 4909 as passed by the House on May 26, 2016, and S. 2943 as passed by the Senate on July 21, 2016. Updates to this report will follow the final enacted bill. This report provides a brief synopsis of sections in each bill that pertain to selected personnel policies. These include issues such as military end-strengths, pay and benefits, military healthcare (TRICARE), military retirement, and other major policy issues. This report focuses exclusively on the annual national defense authorization act (NDAA) legislative process. It does not include language concerning appropriations, or tax implications of policy choices, topics that are addressed in other CRS products. Issues that have been discussed in the previous year’s defense personnel reports are designated with an asterisk in the relevant section titles of this report.

Jul 29, 2016

Human Trafficking and Forced Labor: Trends in Import Restrictions

This report discusses issues regarding a provision against forced labor in the Tariff Act of 1930 (19 U.S.C. 1307), which prohibited from import into the United States "all goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in any foreign country by convict labor or/and forced labor or/and indentured labor under penal sanctions" (Section 307 of the Act).

Jul 29, 2016

The Food and Drug Administration (FDA) Budget: Fact Sheet

The Food and Drug Administration (FDA) regulates the safety of foods (including dietary supplements), cosmetics, and radiation-emitting products; the safety and effectiveness of drugs, biologics (e.g., vaccines), and medical devices; and public health aspects of tobacco products. Seven centers within FDA represent the broad program areas for which the agency has responsibility: the Center for Biologics Evaluation and Research (CBER), the Center for Devices and Radiological Health (CDRH), the Center for Drug Evaluation and Research (CDER), the Center for Food Safety and Applied Nutrition (CFSAN), the Center for Veterinary Medicine (CVM), the National Center for Toxicological Research (NCTR), and the Center for Tobacco Products (CTP). Several other offices have agency-wide responsibilities. FDA’s budget has two funding streams: annual appropriations (i.e., discretionary budget authority, or BA) and industry user fees. In FDA’s annual appropriation, Congress sets both the total amount of appropriated funds and the amount of user fees that the agency is authorized to collect and obligate for that fiscal year. Between FY2012 and FY2016, FDA’s total program level increased from $3.832 billion to $4.745 billion. Although congressionally appropriated funding increased by 9% over that time period, user fee revenue increased more than 50%. The President’s FY2017 budget request was for a total program level of $4.826 billion, an increase of $81 million (+2%) over the FY2016 enacted appropriation of $4.745 billion. Both the House and Senate Appropriations Committees have reported their FY2017 Agriculture appropriations bills (H.R. 5054, S. 2956). This report will be updated with information on FDA funding for FY2017 once legislative action on appropriations for the new fiscal year is completed.

Jul 28, 2016

Overview of the Prudential Regulatory Framework for U.S. Banks: Basel III and the Dodd-Frank Act

The Basel III international regulatory framework, which was produced in 2010 by the Basel Committee on Banking Supervision (BCBS) at the Bank for International Settlements, is the latest in a series of evolving agreements among central banks and bank supervisory authorities to promote standardized bank prudential regulation (e.g., capital and liquidity requirements, transparency, risk management) to improve resiliency during episodes of financial distress. Because prudential regulators are concerned that banks might domicile in countries with the most relaxed safety and soundness requirements, capital reserve requirements are internationally harmonized, which also reduces competitive disadvantages for some banks with competitors in other countries. Capital serves as a cushion against unanticipated financial shocks (such as a sudden, unusually high occurrence of loan defaults), which can otherwise lead to insolvency. Holding sufficient amounts of liquid assets serves as a buffer against sudden reversals of cash flow. Hence, the Basel III regulatory reform package revises the definition of regulatory capital, increases capital requirements, and introduces new liquidity requirements for banking organizations. The quantitative requirements and phase-in schedules for Basel III were approved by the 27 member jurisdictions and 44 central banks and supervisory authorities on September 12, 2010, and endorsed by the G20 leaders on November 12, 2010. Basel III recommends that banks fully satisfy these enhanced requirements by 2019. The Basel agreements are not treaties; individual countries can make modifications to suit their specific needs and priorities when implementing national bank capital requirements. In the United States, Congress mandated higher bank capital requirements as part of financial-sector reform in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act; P.L. 111-203, 124 Stat.1376). Specifically, the Collins Amendment to the Dodd-Frank Act amends the definition of capital and establishes minimum capital and leverage requirements for banking subsidiaries, bank holding companies, and systemically important non-bank financial companies. In addition, the Dodd-Frank Act requires greater prudential requirements on larger banking institutions. This report summarizes the higher capital and liquidity requirements for U.S. banks regulated for safety and soundness. Federal banking regulators announced the final rules for implementation of Basel II.5 on June 7, 2012, and for the implementation of Basel III on July 9, 2013. On April 8, 2014, federal regulators adopted the enhanced supplementary leverage ratio for bank holding companies with more than $700 billion of consolidated assets or $10 trillion in assets under custody as a covered bank holding company. On October 10, 2014, the federal banking agencies (i.e., Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation) announced a final rule to strengthen liquidity regulations for banks with $50 billion or more in assets. Additional requirements that have since been proposed or finalized particularly for the larger and more complex financial institutions are described in various appendices of this report. In addition, the 114th Congress is considering bills that would affect the banking system’s prudential regulation, including S. 1484, the Financial Regulatory Improvement Act of 2015, which would affect bank capital regulation. Greater prudential requirements for most U.S. banking firms may reduce the insolvency risk of the deposit insurance fund, which is maintained by the Federal Deposit Insurance Corporation (FDIC), because more bank equity shareholders would absorb financial losses. A systemic-risk event, however, refers to multiple institutions simultaneously experiencing financial distress. For example, higher bank capital reserves may absorb greater losses associated with the financial distress of an individual institution, but a systemic-risk event exhausts the capital reserves of the industry, thus threatening the level of financial intermediation conducted by the banking system as a whole. Higher capital reserves in the banking industry are also incapable of buffering losses associated with financial activity that occurs outside of the banking system.

Jul 27, 2016

Introduction to U.S. Economy: Unemployment

Jul 27, 2016

U.S. Electronic Attack Aircraft

Electronic warfare (EW) has been an important component of military air operations since the earliest days of radar. The advent of the airplane enabled the United States to project power faster than land and naval forces had ever done. It also spurred the development of technologies, such as radar, that could detect and track enemy aircraft, thereby protecting military forces, infrastructure, and populations from aerial threats. Department of Defense EW Activities The Department of Defense (DOD) is engaged in numerous developmental EW activities. These activities include research and development (R&D) programs, procurement programs, training, and experimentation. Such activities are designed to improve various electronic attack (EA), electronic countermeasures (ECM), and suppression of enemy air defenses (SEAD) capabilities both in the near and long term. DOD EW activities often cut across service and intra-service community boundaries and defy easy categorization and oversight, making it difficult to determine and assess DOD-wide EW priorities. Although DOD does not have an overall EW procurement strategy, it is focusing more on this aspect of military operations in response to emerging threats. The DOD budget request for FY2017 showed an increase in Research, Development, Testing and Evaluation (RDT&E) funds for EW. Congressional appropriations and authorization conferees often matched or exceeded DOD’s request for EW programs to help ensure the survivability of numerous aircraft and to increase the military’s ability to suppress or destroy enemy air defenses. Congressional Decisions Regarding EW Congress has the authority to approve, reject, or modify Air Force and Navy funding requests for EW aircraft sustainment and modernization. Congress also has the authority to provide oversight of the nation’s EW requirements and capabilities. Congress’s decisions on appropriations for the airborne EW aircraft fleet may affect the United States’ EW capabilities, as well as the U.S. defense industry. As part of its FY2017 budget authorization, appropriations, and oversight responsibilities, Congress may influence DOD’s EW force structure, aircraft survivability, and air campaign effectiveness. Potential congressional oversight, authorization, and appropriations concerns for the sustainment and modernization of DOD’s airborne EW force include the following: a potential shortfall in EW capabilities if funds are not available for sustainment and upgrades that would keep the weapon systems viable until they are replaced; ascertaining DOD, Air Force, and Navy priorities for sustainment and modernization; and potential implications that changing the number of EW aircraft may have on future rounds of base realignment and closure efforts. Report Focus This report focuses on the definition of EW and the four primary aircraft that are the main assets for this mission area: the Navy’s EA-18G, the Marine Corps’ EA-6B Prowler, the Air Force’s EC-130H Compass Call, and the F-16CM Block 50 “Wild Weasel.” The report also addresses potential congressional oversight and appropriations concerns for the sustainment and modernization of the DOD’s EW aircraft. It does not address options for recapitalization currently being offered by industry.

Jul 26, 2016

TPP: Intellectual Property Rights (IPR)

Jul 26, 2016

U.S. Restrictions on Relations with Burma

Major changes in Burma’s political situation have precipitated a broad discussion in Congress, the Obama Administration, and elsewhere about the appropriate role for U.S. restrictions on relations with Burma (Myanmar). These discussions are examining U.S. policy toward Burma in general, the appropriate framework for analyzing the current situation in Burma, and what adjustments to make on U.S. restrictions on relations with Burma. On May 17, 2016, President Obama continued the national emergency with respect to Burma to extend some of the restrictions, as well as renew past presidential waivers of other restrictions. In addition, on that same day, the State Department and Treasury Department announced some changes in the implementation of the existing restrictions. Between 1989 and 2008, Congress passed several laws placing political and economic sanctions on Burma’s military junta as part of a policy to foster the reestablishment of democratically-elected civilian government, promote the protection of human rights, and identify individuals responsible for repression in Burma and hold them accountable for their actions. In 2011, Burma’s military junta, known as the State Peace and Development Council (SPDC) transferred power to a mixed civilian/military government led by the SPDC’s ex-Prime Minister General Thein Sein. Over the next five years, Congress and the Obama Administration waived or ended some of the sanctions on Burma in part in response to political and economic reforms undertaken by the Thein Sein government. In November 2015, Burma held nationwide parliamentary elections, from which Aung San Suu Kyi’s political party, the National League for Democracy (NLD), emerged with an absolute majority in both chambers of Burma’s Union Parliament. The NLD-led Union Parliament chose Htin Kyaw, a long-standing NLD member and close friend of Aung San Suu Kyi, as President. Aung San Suu Kyi was subsequently appointed to the newly-created position of State Counselor, as well as Foreign Minister. While the NLD controls the Union Parliament and the executive branch, the Burmese military, or Tatmadaw, continue to exercise significant power under the provisions of Burma’s 2008 constitution. For example, 25% of the seats in both chambers of the Union Parliament are military officers appointed by the Tatmadaw’s Commander in Chief Senior General Min Aung Hlaing, creating a voting bloc that can prevent any changes in the constitution. In addition, the Tatmadaw engages in active fighting with several ethnic armed organizations (EAOs) in a continuation of a nearly six decade-old low grade civil war. As such, it is uncertain if the NLD-led government will have the ability to address its top priorities—national reconciliation and peace; further democratic reforms; respect for human rights; and greater prosperity for the Burmese people.

Jul 22, 2016

Energy Legislation: Comparable Provisions in S. 2012 as Passed by the House and Senate

Congress most recently enacted major energy legislation in the Energy Independence and Security Act of 2007 (P.L. 110-140). The 114th Congress is currently considering new legislation to address broad energy issues. On April 20, 2016, the Senate passed an amended version of S. 2012, the Energy Policy and Modernization Act. On December 3, 2015, the House passed an amended version of H.R. 8, the North American Energy Security and Infrastructure Act of 2015. On May 25, 2016, the House passed an amended version of S. 2012 which contains the text of H.R. 8, as well as the text of several other energy and natural resources-related bills. The following day, the House moved to insist upon its amendment, and to appoint conferees to resolve the differences in S. 2012. On July 12, the Senate agreed to the request for a conference, and appointed conferees. Both versions of S. 2012 would address a variety of energy topics, including Energy efficiency in federal buildings, data centers, manufacturing, and schools; Water conservation/efficiency; Electric grid cybersecurity; Nuclear energy and carbon sequestration research and development; Amendments to hydropower licensing provisions; Liquefied natural gas exports; and Energy workforce development. The House version also contains provisions on Electric grid physical security; A North American energy security plan; and A study of wholesale electricity markets. The Senate version also includes provisions on Review of the Strategic Petroleum Reserve; Geothermal energy development on federal lands; Vehicle research and development; Electric grid energy storage; Renewable energy supply and incentives; and Loan programs. Both versions of S. 2012 also contain major non-energy provisions including fish and wildlife recreation and federal land conveyances. Differences include permanent authorization of the Land and Water Conservation Fund (LWCF) (Senate); reauthorization of the EPA Brownfields Program (Senate); National Forest management (House); and drought relief (House). This report provides a side-by-side table identifying comparable and non-comparable provisions in the House and Senate-passed versions of S. 2012.

Jul 22, 2016

Geographical Indications (GIs) in U.S. Agricultural Trade

Jul 21, 2016

Overview of ESEA Title I-A and the School Meals’ Community Eligibility Provision

The primary source of federal funding for elementary and secondary schools is the Title I-A program. Under Title I-A, the allocation of funds to schools, eligibility to operate certain programs, and accountability requirements are based in part in identifying students from low-income families. Historically, this has been achieved by using National School Lunch Program (NSLP) eligibility data. However, a new school meals eligibility option—the Community Eligibility Provision (CEP)—has been implemented that changes the eligibility determinations for NSLP as well as the School Breakfast Program (SBP). The Title I-A program is authorized under the Elementary and Secondary Education Act (ESEA) and was last reauthorized by the Every Student Succeeds Act (ESSA; P.L. 114-95) in 2015. Title I-A grants provide supplementary educational and related services to low-achieving and other students attending pre-kindergarten through grade 12 schools with relatively high concentrations of students from low-income families. There are also a number of accountability requirements that states, local educational agencies (LEAs), and schools must meet to receive Title I-A funds. The number and percentage of a school’s enrolled students from low-income families are used when LEAs allocate Title I-A grants to schools and to determine whether a school is eligible to use its Title I-A funds to operate specific programs. Additionally, schools need to identify which of their students are from low-income families to comply with certain accountability policies. Eligibility for free or reduced-price school lunch is commonly used as an indicator of low- income status for all of these purposes. The child nutrition programs, including NSLP and SBP, were last reauthorized by the Healthy Hunger-Free Kids Act (HHFKA; P.L. 111-296) in 2010. HHFKA also authorized the school meals eligibility option or CEP. CEP allows eligible schools and LEAs in high-poverty areas to offer free meals to all enrolled students without collecting household income information via applications. By no longer collecting household income information for free and reduced-price lunch, CEP can affect Title I-A grant allocations to schools, school eligibility to operate specific programs, and accountability policies. Thus, the U.S. Department of Education (ED) has published policy guidance that provides LEAs and schools implementing CEP with alternatives for identifying students from low-income families for Title I-A purposes. This report begins with a description of the school meals programs and CEP. It then describes Title I-A grant allocations and eligibility for specific Title I-A school programs and discusses the low-income data that can be used for these purposes and the data alternatives for CEP schools. Last, the report describes Title I-A accountability provisions and discusses the low-income data that can be used for these purposes and data alternatives for CEP schools. NOTE: The 114th Congress has been working on the next reauthorization of the school meals and other child nutrition programs. This report does not discuss any proposed changes to CEP or other school meals policies. For information on the ongoing reauthorization of the child nutrition programs, including proposals to change CEP, see CRS Report R44373, Tracking the Next Child Nutrition Reauthorization: An Overview, by Randy Alison Aussenberg.

Jul 20, 2016

U.S. Crude Oil Exports to International Destinations

On December 18, 2015, Congress passed H.R. 2029—the Consolidated Appropriations Act, 2016—which was enacted and became P.L. 114-113. A provision contained in P.L. 114-113 repealed a 40-year prohibition, with exceptions, on the export of crude oil produced in the United States. Removing this prohibition and its associated restrictions provides producers, shippers, and traders with options to market and sell crude oil to international markets when market conditions support such transactions. Prior to the removal of the export restrictions, exceptions resulted in approximately 500,000 barrels per day of crude oil exports—nearly all to Canada—during 2015. Since the export prohibition was repealed, industry trade data indicate that crude oil has been exported to destinations that were previously not allowed and monthly export volumes to these international markets increased steadily at first but have declined since peaking in May 2016. U.S. Crude Oil Export Volumes Energy Information Administration (EIA) monthly data report that for the month of December 2015, 392,000 barrels per day (bpd) of crude oil was exported from the United States. After initially declining in January and February, crude oil export volumes in April 2016 were 591,000 bpd. One possible reason for the initial export volume decline is the narrowing price differential between domestic and international crude oils that reduced the financial attractiveness of exporting U.S. crude. According to industry data consultancy ClipperData, waterborne exports—not including modes such as pipeline, rail, or truck—of U.S. crude oil and condensate from December 19, 2015, through June 30, 2016, totaled approximately 74.9 million barrels, approximately 413,500 bpd. The majority of those barrels (approximately 60%) was eligible for export prior to enactment of P.L. 114-113 and would likely have been exported had the restrictions remained in effect. For example, exports to Canada and exports of processed condensate and Alaska North Slope (ANS) crude were allowed within the previous crude oil export regulatory framework. Other crude oil exports outside of these categories represent non-condensate crude oil exports that have been enabled by the prohibition repeal (Figure 1). Figure 1. U.S. Waterborne Crude Oil Exports December 19, 2015 – June 30, 2016 / Source: CRS, with data from ClipperData. According to ClipperData, approximately 29 million barrels of non-condensate crude oil, approximately 161,000 bpd, have been exported to destinations that were prohibited prior to enactment of P.L. 114-113. This export volume is within the 0 to 2 million bpd range estimated by EIA in a September 2015 study that projected the effects of removing export restrictions. Export volumes to date have been on the lower end of the range, which can generally be explained by two factors. First, the financial attractiveness of exporting U.S. crude oil has been limited by the relatively narrow price differential between domestic and international benchmark prices. However, benchmark price differentials are not the only condition that might motivate exports. Regional price discounts and low-cost shipping opportunities could result in conditions that support crude oil exports. Second, global refiners may still be getting comfortable with acquiring and processing U.S. crude oil and it may take some time for global refiners to integrate U.S. crude oil into their feedstock mix. Monthly export data appear to support this conclusion: monthly non-condensate, non-Canada, non-ANS crude oil export volumes increased from 1.2 million barrels in January to 7.2 million barrels in May, then fell to 4.7 million barrels in June (Figure 2). Figure 2. Non-condensate U.S. Crude Oil Exports (Excluding Canada and ANS) January–June 2016 / Source: CRS, with data from ClipperData, Export Destinations Through June 30, 2016, approximately 29 million barrels of non-condensate crude oil—including approximately 10 crude oil grades such as Eagle Ford, West Texas Intermediate, and Gulf Coast sour blend—have been exported and either have been delivered or were in transit to 15 destinations that were previously prohibited. Regional destinations for U.S. crude oil include Europe, Asia, the Mediterranean, and the Caribbean. Approximately 82% of these exports have been delivered and 18% were in transit. Figure 3 indicates export volumes to each destination. Figure 3. Non-condensate U.S. Crude Oil Destinations (Excluding Canada and ANS) January–June 2016 / Source: CRS, with data from ClipperData, Notes: Projected destinations are subject to change due to transactions that can occur during transit. Policy Considerations During the congressional debate about removing crude oil export restrictions, several policy issues were considered, such as price impacts and production volumes. Regarding price impacts, there was concern that gasoline prices for U.S. consumers could potentially rise if crude oil exports were allowed. However, assessing such a relationship is difficult due to the limited amount of time that exports have been unrestricted in addition to the multiple variables (e.g., inventories) that influence gasoline prices. EIA price data indicate that during the week prior to enactment of P.L. 114-113, retail gasoline was priced at $2.14 per gallon. Prices declined to $1.83 per gallon in mid-February, and have since risen to $2.43 per gallon for the week ending June 27, 2016. Additionally, there was concern expressed about increasing production volumes and the potential for associated environmental impacts that might result from allowing crude oil exports. However, EIA data indicate that U.S. crude oil production has declined since December 2015. This dynamic could potentially change in the future should crude oil prices and production profitability increase, production levels rise, and/or regional oversupply of certain crude oil types start to occur. Oversupply conditions generally result in price differentials, which could create economic incentives to export and thus motivate additional production activity. P.L. 114-113 includes a provision that allows the President to impose export restrictions should it be determined that crude oil exports result in domestic oil prices above global prices and adverse employment effects. While current data do not suggest any negative economic, gasoline price, or employment effects resulting from the export prohibition repeal, unrestricted U.S. crude oil exports have only been allowed for a short period. It may take some time for such relationships, if any, to be evident.

Jul 20, 2016

FY2017 Appropriations for the Census Bureau and Bureau of Economic Analysis

This report discusses FY2017 appropriations (discretionary budget authority) for the Bureau of Economic Analysis (BEA) and Bureau of the Census (Census Bureau), which make up the Economics and Statistics Administration (ESA) in the U.S. Department of Commerce. The report will be updated as necessary to reflect congressional actions. The Administration’s FY2017 budget request for ESA (except the Census Bureau, whose budget justification is published separately from ESA’s) is $114.6 million, $5.6 million (5.2%) above the $109.0 million FY2016-enacted funding level. Of the $114.6 million, the $110.7 million requested for BEA exceeds the $105.1 million FY2016-enacted amount by $5.6 million (5.3%); the $4.0 million requested to fund ESA’s policy support and management oversight is $83,000 (2.1%) more than the $3.9 million approved for FY2016. The FY2017 request for the Census Bureau is $1,633.6 million, $263.6 million (19.2%) above the $1,370.0 million FY2016-enacted amount. The FY2017 request is divided between the bureau’s two major accounts: Current Surveys and Programs would receive $285.3 million, a $15.3 million (5.7%) increase over the $270.0 million enacted for FY2016; Periodic Censuses and Programs—which include the decennial census, American Community Survey, economic census, and census of governments—would receive $1,348.3 million, $248.3 million (22.6%) more than the $1,100.0 million approved for FY2016. On April 21, 2016, the Senate Committee on Appropriations reported S. 2837, the Departments of Commerce and Justice, Science, and Related Agencies Appropriations Bill, 2017 (CJS), with recommended funding of $109.0 million for ESA (showing no separate breakout for BEA). The recommendation is identical to ESA’s FY2016 funding level and $5.6 million (4.9%) below the FY2017 request. S. 2837, as reported, recommends $1,518.3 million for the Census Bureau in FY2017, $148.3 million (10.8%) above the FY2016 appropriation and $115.3 million (7.1%) below the FY2017 request. Current Surveys and Programs would receive $270.0 million, the same as the FY2016-enacted amount and $15.3 million (5.4%) less than requested for FY2017. Periodic Censuses and Programs would be funded at $1,248.3 million, $148.3 million (13.5%) more than enacted for FY2016 and $100.0 million (7.4%) less than the FY2017 request. The committee’s recommendation provides for $2.6 million to be transferred from this account to the Commerce Department’s Office of Inspector General (OIG) for continued “oversight and audits of periodic censuses” and “independent recommendations” to improve 2020 census operations. The House Committee on Appropriations approved the House FY2017 CJS appropriations bill, H.R. 5393, on June 7, 2016. The bill recommends $107.0 million in funding for ESA (with no separate breakout for BEA), $2.0 million (1.8%) less than enacted for FY2016 and approved by the Senate committee, and $7.6 million (6.7%) below the FY2017 request. The Census Bureau would receive $1,470.0 million, $100.0 million (7.3%) above the FY2016 funding level, $163.6 million (10.0%) less than requested for FY2017, and $48.3 million (3.2%) below the Senate committee’s recommendation. The $270.0 million approved for Current Surveys and Programs equals the FY2016-enacted and FY2017 Senate committee-recommended amounts, and is $15.3 million (5.4%) under the FY2017 request. Funding for Periodic Censuses and Programs would be $1,200.0 million, $100.0 million (9.1%) above the FY2016-enacted level, $148.3 million (11.0%) less than requested for FY2017, and $48.3 million (3.9%) below what the Senate committee approved. The House committee, like its Senate counterpart, would have $2.6 million of the amount for Periodic Censuses and Programs transferred to the Commerce Department’s OIG for Census Bureau oversight.

Jul 19, 2016

Turkey: Failed Coup and Implications for U.S. Policy

On July 15-16, 2016, elements within the Turkish military tried, but failed, to seize political power from President Recep Tayyip Erdogan and Prime Minister Binali Yildirim. The perpetrators detained the military’s top commanders, and declared (via Turkey’s government broadcaster) that they had taken power, but failed in their efforts to seize Erdogan or other key leaders. Government officials used various traditional and social media platforms and alerts from mosque loudspeakers to rally Turkey’s citizens in opposition to the plot. Figure 1. President Erdogan on CNN Turk – July 16, 2016 / Figure 2. Key Events Surrounding Failed Coup / Source: Washington Post Resistance by security forces loyal to the government and civilians in key areas of Istanbul and Ankara succeeded in foiling the coup, though at least 104 rebels and 161 others were killed, and Turkey’s parliament building in Ankara sustained damage from rebel airstrikes. The leaders of Turkey’s opposition parties and key military commanders helped counter the coup attempt by publicly denouncing it. As events were unfolding, Secretary of State John Kerry expressed his hope for “stability and peace and continuity.” Later, the White House released a statement of U.S. support for Turkey’s democratically elected government. A majority of voters elected Erdogan to a five-year term as president in August 2014, and the Justice and Development Party (AKP, which Erdogan co-founded) won its fourth parliamentary majority since 2002 in a November 2015 election. U.S. civilian and military installations and personnel in Turkey were unharmed during the attempted putsch, but operations at Incirlik air base (currently being used for U.S.-led coalition airstrikes in Syria and Iraq against the Islamic State, or IS/ISIS/ISIL) were temporarily disrupted in connection with the events. Elements of the Turkish air force reportedly used Incirlik to support the coup plot. Turkey hosts various other U.S. and NATO military assets, including a missile defense radar in eastern Turkey, and aircraft-deliverable tactical nuclear weapons reportedly at Incirlik. The Pentagon said that the coup attempt came as a surprise to U.S. officials. The failed coup and Turkey’s trajectory in its aftermath could significantly impact U.S.-Turkey relations given Turkey’s regional importance and membership in NATO. Secretary Kerry has dismissed allegations from some in Turkey about possible U.S. links to the coup attempt. Such allegations may partly stem from popular sensitivities about historical U.S. closeness to Turkey’s military and recent U.S.-Turkey differences on domestic and foreign policy issues. U.S. officials had also faced questions earlier in 2016 about alleged U.S. involvement in plots against Erdogan. Additionally, Turkish officials have sought to link Fethullah Gulen—a formerly state-employed imam in Turkey who is now a permanent U.S. resident—to the coup plot. Gulen, whom Erdogan and the government have openly and vigorously opposed since late 2013, is the inspiration behind a multifaceted civil society movement with roots in Turkey. Prime Minister Yildirim stated on July 19 that Turkey has officially requested Gulen’s extradition, and the White House press secretary has said that the United States would evaluate the legal applicability and evidentiary merit of any formal request. In a July 19 phone call with Erdogan, President Obama said that the United States is “willing to provide appropriate assistance to Turkish authorities investigating the attempted coup” while urging that authorities conduct their investigation “in ways that reinforce public confidence in democratic institutions and the rule of law.” Gulen strenuously denies involvement in the plot, but has acknowledged that he “could not rule out” involvement by some of his followers. He and some others claim that the government may have staged the putsch to justify consolidating power and weakening opponents. Aftermath and Context Since the failed coup, Turkey’s government has detained or dismissed tens of thousands of personnel within its military, judiciary, civil service, and educational system. The coup attempt may have sought to thwart a reportedly imminent purge of some involved in the plot, and took place in a context in which Erdogan is seeking to consolidate his presidential power via constitutional amendment. Amid post-plot turmoil and an atmosphere of distrust, observers are speculating about a possible intensification of Turkish governmental measures that have reduced civil liberties and the independence of key institutional and media organs. Secretary Kerry warned on July 16 that a wide-ranging purge “would be a great challenge to [Erdogan’s] relationship to Europe, to NATO and to all of us.” Media reports assert that during Erdogan’s initial decade as head of government (he was prime minister from 2003 to 2014), adherents or sympathizers of the Gulen movement worked with the government to diminish the military’s political power. Many observers had concluded in recent years that the military was unlikely to challenge civilian authority as it routinely had in previous eras. Figure 3. Past Turkish Domestic Military Interventions / Source: Washington Post However, a proliferation of internal and external challenges has made Turkey more dependent on military force in confronting threats and maintaining stability. Consequently, some speculation had surfaced about the potential for renewed military intervention in politics, while the military leadership issued a March 2016 statement insisting that it would not tolerate illegal action by those under its command. Implications for U.S. Policy Going forward, Turkey may face an even more complicated array of challenges than before the failed coup. Internal Stability and Rule of Law. Turkey is dealing with fundamental questions regarding security, prosperity, and civil liberties, including: conflict in its southeast and at its borders; terrorist cells linked to the Kurdistan Workers’ Party (PKK) or the Islamic State; nearly three million refugees and migrants from Syria and elsewhere; government repression; and safety and rule of law concerns that affect Turkey’s tourist sector and external investment. Turkey may now have less capability within its security forces or justice sector to address or subdue such stresses and uncertainties, given that the post-plot crackdown has targeted many government personnel and exposed apparent divisions within the military command structure. Foreign Policy and U.S./NATO Relations. Issues of concern include: Turkey’s future role in NATO, U.S./NATO basing and operations in Turkey, and NATO assistance (including air defense batteries and AWACS aircraft) to address Turkey’s external threats; Turkey-U.S. dynamics involving anti-IS coalition operations and PKK-affiliated groups; Turkey’s ability and willingness, in concert with other international actors, to control cross-border flows of refugees, migrants, and possible foreign fighters and terrorists; and diplomatic efforts to improve Turkey’s regional profile and relations with Israel, Russia, Syria, Egypt, Cyprus, and the European Union. For background information on Turkey and U.S.-Turkey relations, see CRS Report R44000, Turkey: Background and U.S. Relations In Brief, by Jim Zanotti; and CRS Report R41368, Turkey: Background and U.S. Relations, by Jim Zanotti.

Jul 19, 2016

Labeling Genetically Engineered Foods: Current Legislation

Jul 18, 2016

Dispute Settlement in the World Trade Organization: Key Legal Concepts

Jul 18, 2016

The Coast Guard’s Role in Safeguarding Maritime Transportation: Selected Issues

Congress has made the U.S. Coast Guard responsible for safeguarding vessel traffic on the nation’s coastal and inland waterways. Congress typically passes Coast Guard authorization bills every one to two years and appropriates funds to the agency annually under the Department of Homeland Security appropriations bill. The fleet of vessels the Coast Guard inspects for safety reasons recently doubled because the agency is now responsible for inspecting tugs and towboats that push or pull barges (towing vessels), in addition to ships. In June 2016 the Coast Guard issued a final rule on this matter. The Coast Guard is now considering an hours-of-service limit for crews working on towing vessels in an effort to reduce accidents caused by fatigue and is reevaluating the crewing requirements for certain seagoing barges. These potential changes are controversial and could raise the cost of transporting petroleum and chemical products by barge. Other current controversies related to the Coast Guard’s vessel safety responsibilities include the following: Whether the agency should place greater reliance on nonprofit vessel classification societies to perform vessel inspections in place of Coast Guard personnel, as recommended by an independent review panel requested by Congress. Enforcement of new international rules requiring shippers of containerized cargo to more accurately verify the weight of their shipments; U.S. agricultural exporters contend this will significantly complicate and add costs to their shipments. The Coast Guard’s ability to operate in the Arctic, where a decline in sea ice during the late summer has led to increased maritime activity. The potential for replacing physical aids to navigation, such as channel marking buoys and beacons, with virtual aids utilizing GPS and electronic charts, at significant cost saving. The potential use of unmanned aerial vehicles (drones) to increase the efficiency and reduce the cost of Coast Guard sea patrols. Guidelines for the safe refueling of ships using liquefied natural gas (LNG). Enforcement of cleaner fuels for ships; cleaner fuels are reportedly causing some ships to have engine problems and are believed by some to be part of the reason for a ship collision in Houston in March 2015.

Jul 15, 2016

Digital Trade and U.S. Trade Policy

As the rules of global Internet develop and evolve, digital trade has risen in prominence on the global trade and economic agenda, but multilateral trade agreements have not kept pace with the complexities of the digital economy. The economic impact of the Internet is estimated to be $4.2 trillion in 2016, making it the equivalent of the fifth-largest national economy. According to one source, the volume of global data flows grew 45-fold from 2005 to 2014, faster than international trade or financial flows. Congress has an important role to play in shaping global digital trade policy, from oversight of agencies charged with regulating cross-border data flows to shaping and considering legislation to implement new trade rules and disciplines through ongoing trade negotiations, and also working with the executive branch to identify the right balance between digital trade and other policy objectives, including privacy and national security. Digital trade includes end-products like movies and video games and services such as email. Digital trade also enhances the productivity and overall competitiveness of an economy. According to the U.S. International Trade Commission, U.S. domestic and international digital trade added 3.4 - 4.8% ($517.1-$710.7 billion) to the U.S. gross domestic product (GDP) in 2011. The Department of Commerce found that in 2014, digitally delivered services accounted for more than half of U.S. services trade. The increase in digital trade also raises new challenges in U.S. trade policy, including how to best address new and emerging trade barriers. As with traditional trade barriers, digital trade constraints can be classified as tariff or nontariff barriers. In addition to high tariffs, barriers to digital trade may include localization requirements, cross border data flow limitations, intellectual property rights (IPR) infringement, unique standards or burdensome testing, filtering or blocking, and cybercrime exposure or state-directed theft of trade secrets. Digital trade issues often overlap and cut across policy areas, including IPR and national security; this raises questions for Congress as it weighs different policy objectives. The Organization for Economic Cooperation and Development (OECD) points out three potentially conflicting policy goals in the Internet economy: (1) enabling the Internet; (2) boosting or preserving competition within and outside the Internet; and (3) protecting privacy and consumers more generally. While no comprehensive agreement on digital trade exists in the World Trade Organization (WTO), other WTO agreements do cover some aspects of digital trade. Recent bilateral and plurilateral agreements have begun to address digital trade rules and barriers more explicitly. For example, the potential Trans-Pacific Partnership (TPP), Transatlantic Trade and Investment Partnership (T-TIP), and plurilateral Trade in Services Agreement (TiSA) are expected to address digital trade to varying degrees. Digital trade norms are also being discussed in forums such as the Group of 20 (G-20), the OECD, and the Asia-Pacific Economic Cooperation (APEC), providing the United States with multiple opportunities to engage in and shape global developments. Congress has an interest in ensuring the global rules and norms of the Internet economy are in line with U.S. laws and norms, and in establishing a U.S. trade policy on digital trade that advances U.S. interests.

Jul 15, 2016

Agriculture and the Transatlantic Trade and Investment Partnership (T-TIP) Negotiations

The Transatlantic Trade and Investment Partnership (T-TIP) is a potential reciprocal free trade agreement being negotiated between the United States and the European Union (EU). Formal negotiations began in July 2013. Through the negotiations, both sides are seeking to liberalize transatlantic trade and investment, set globally relevant rules and disciplines that could boost economic growth, support multilateral trade liberalization through the World Trade Organization (WTO), and address third-country trade policy challenges. Agricultural issues have been an active topic of debate in the negotiations, given the potential market access gains for both sides and the potential to address a series of regulatory and intellectual property rights issues. The United States is among the world’s largest net exporters of agricultural products. The EU is an important export market for U.S. agricultural exports and ranks as the fifth largest market for U.S. food and farm exports. However, in recent years, growth in U.S. agricultural exports to the EU has not kept pace with growth in trade to other U.S. markets, and imports from Europe currently exceed U.S. exports to the EU. In 2015, U.S. exports of agricultural products to the EU totaled $12 billion, while EU exports of agricultural products to the United States totaled $20 billion, resulting in a trade deficit of nearly $8 billion for the United States and reversing the net trade surplus in U.S. agricultural exports to the EU during the 1990s. (These statistics include data for all current 28 EU member states, including the United Kingdom, which voted in June 2016 to leave the EU, a process that could take many years.) Addressing market access for U.S. agricultural exports to the EU is among the major goals of the T-TIP negotiation. The U.S. Department of Agriculture (USDA) reports that the EU’s average agricultural tariff is 30%, well above the average U.S. agricultural tariff of 12%. Restrictive tariff rate quotas (TRQs) on agricultural products are also a concern for U.S. exporters. A USDA study reports that removing tariffs and TRQs could increase U.S. agricultural exports to the EU by an estimated $5.5 billion (compared to a 2011 base year). EU exports to the United States are estimated to rise by $0.8 billion. These totals cover all current 28 EU member states. High tariff barriers are further exacerbated by additional non-tariff barriers that may limit U.S. agricultural exports. Addressing non-tariff barriers is another major goal of the U.S. agricultural sectors in the negotiation, covering certain sanitary and phytosanitary (SPS) concerns. These include delays in reviews of biotech products (limiting U.S. exports of grain and oilseed products), prohibitions on growth hormones in beef production and certain antimicrobial and pathogen reduction treatments (limiting U.S. meat and poultry exports), and burdensome and complex certification requirements (limiting U.S. exports of processed foods, animal products, and dairy products). As such, T-TIP negotiations on agricultural products are conditioned by a number of these long-standing, high-profile transatlantic trade disputes between the United States and EU. Other EU regulations of concern to U.S. exporters include lack of a science-based focus in establishing SPS measures, difficulty meeting food safety standards and obtaining product certification, lack of cohesive labeling requirements, and stringent testing requirements that are often applied inconsistently across EU member nations. USDA reports that removing select non-tariff barriers affecting meats, field crops, and fruits and vegetables could raise U.S. exports to the EU by an additional $4.1 billion over gains estimated from removing tariffs and TRQs (compared to a 2011 base year) across all current 28 EU member states. Other U.S. concerns involve the EU’s use of geographical indications (GIs)—certain protected product names that many U.S. food producers consider to be generic names. Further complicating negotiations regarding GIs are underlying regulatory and administrative differences between the United States and the EU in how each addresses GIs within their respective borders.

Jul 14, 2016

Economic Implications of a United Kingdom Exit from the European Union

This report provides an analysis of the possible economic implications for the United States and the global economy of an exit from the European Union (EU) by the United Kingdom (UK), commonly referred to as Brexit. It offers background information on possible implications of the vote to leave the EU, an overview of U.S.-UK trade and investment relations, and various estimates of Brexit’s financial implications for the U.S. and global economies. For Members of Congress, economic fallout from Brexit could increase the risks of a slower rate of economic growth and potentially complicate economic policymaking. Brexit also could have implications for congressional oversight of U.S. trade policy, including ongoing U.S.-EU negotiations on a Transatlantic Trade and Investment Partnership (T-TIP) free trade agreement (FTA). Since the Brexit vote, resolutions have been introduced in the House and Senate supporting the negotiation of a U.S.-UK FTA. (See S. 3123 (Lee), S.Res. 520 (Rubio), H.Res. 817 (Dent), and concurrent resolutions H.Con.Res. 146 (Brady) and S.Con.Res. 47 (Hatch).) Factors that could shape the possible impact of a UK exit from the EU include the following. There is no precedent for a country withdrawing from the EU, so there is a high degree of uncertainty about how a separation might work. The vote does not force the UK out of the EU immediately. Negotiating the UK’s withdrawal and future relationship with the EU could take years to complete. NATO remains the preeminent transatlantic security institution, and the UK will remain a leading member of NATO, but Brexit may affect Euro-Atlantic cooperation and unity on a range of security issues. Various studies project that Brexit would lower UK GDP between -1.3% and -5.5% per year in the short run (2020) and between -1.2% and -7.5% per year over the long run (2030). Estimates of the yearly income loss per UK household are at between -£600 (about $900) and -£5,200 (about $7,500). Immediately following the Brexit vote, global financial markets reacted sharply: the pound depreciated by more than 10% at one point, reaching its lowest level in more than 30 years; the dollar appreciated against major currencies; and the yen and Swiss franc appreciated. Other currencies were mixed as some emerging market currencies depreciated; most major stock indexes and government bond yields were lower. Global financial markets recovered substantially by the end of June, although the pound and stocks of British firms remained lower. According to some analysts, uncertainties created by Brexit may have a long-term negative impact on global markets, given the tepid pace of the current global economic recovery. A protracted political leadership struggle in the UK also could add to uncertainties over the UK’s ability to implement the economic measures that may be necessary to restore stability. To date, various central banks have taken steps to calm financial markets. The depreciation in the pound and simultaneous appreciation in the value of the dollar and other currencies considered to be safe havens could add to the challenges facing some central banks in formulating monetary policy over the near term. Capital flight from emerging economies to safe-haven assets could further add to the economic challenges facing developed and emerging economies and potentially harm global growth prospects.

Jul 14, 2016

Terrorism and Violent Extremism in Africa

The pace of high-profile terrorist attacks in Sub-Saharan Africa has intensified in recent years, and the death toll now rivals that of other regions where violent Islamist extremist groups are active. This report provides context for these trends, including a summary of sub-regional dynamics, factors affecting radicalization, and U.S. responses. It focuses primarily on Sunni Islamist terrorism, given the ideological underpinnings of the African groups currently designated by the U.S. State Department as Foreign Terrorist Organizations. Select issues for Congress are also explored. Information on the major Africa-based groups is provided in an Appendix. Over the past two decades, Congress has appropriated increasing funding to counter terrorism in Africa and has demonstrated interest in the nature of terrorist threats and efforts to counter them. Members have raised questions regarding the threat violent extremist groups in Africa may pose to U.S. citizens and U.S. interests; the counterterrorism capacities of African countries and the impact of U.S. efforts to bolster them; the role of the U.S. military in countering violent extremist groups in Africa; the level of U.S. funding and personnel dedicated to these efforts; and the extent to which U.S. programs are successful in seeking to prevent or mitigate radicalization, recruitment, and support for violent extremist groups. Some Africa-based groups have affiliated with Al Qaeda or the self-proclaimed Islamic State, but many seem to operate autonomously. While many extremists on the continent appear to be driven primarily by local political and socioeconomic dynamics, some African groups have sought to attack Western interests in Africa, and some, like Somalia’s Al Shabaab, apparently seek to inspire or carry out attacks in the United States and elsewhere. The spillover effects from areas where terrorist groups operate—most notably Libya, Mali, northeast Nigeria, and Somalia—are of increasing concern to neighboring states and the broader region. Several emerging trends in violent Islamist extremist activity on the continent are impacting how governments in the region, local communities, and international actors respond: Proliferation of African-Led Groups. Al Qaeda’s first avowed African affiliate, Algerian-led Al Qaeda in the Islamic Maghreb (AQIM), was long assumed to have limited appeal among West African Muslims, and its interest in criminal activities often seemed to eclipse its ideological commitment. However, the rise of relatively potent, locally led violent Islamist groups in Somalia, Nigeria, and Mali over the past decade challenges past assumptions about the limited prospects for Islamist terrorism on the continent. Africa also appears to have become an arena for competition between Al Qaeda affiliates and the Islamic State over recruits, affiliates, and perceived legitimacy. The Push and Pull of North Africa. State collapse in Libya and political transitions in Tunisia and Egypt have provided new opportunities for armed groups to establish safe havens for training, expand their geographic reach, recruit followers, and equip themselves. Protecting and sustaining Tunisia’s nascent democratic government has become a focus for U.S. policymakers in light of these trends. Contrary to some hopes, however, increased political openness has not inoculated Tunisia against domestic radicalization and recruitment. Conflict in Libya has spilled over its borders, generating new flows of arms and combatants into Tunisia and West Africa’s Sahel region. Instability in North Africa has also drawn African recruits seeking to join groups based in Libya, or seeking to transit through North Africa en route to other global hotspots. Mutual distrust among North and Sub-Saharan African governments has inhibited counterterrorism cooperation, as have bureaucratic divisions within some donor governments. From Holding Territory to Asymmetric Attacks. Years before the “Islamic State” announced its caliphate in Iraq and Syria in 2014, Islamist extremist groups in Africa sought to hold, and in some cases govern, territory. Al Shabaab began to assert territorial control in Somalia in the mid-2000s, as did AQIM and two local affiliates in Mali in 2012, followed by Boko Haram in Nigeria and Islamic State-linked groups in Libya in 2014. Military offensives by regional forces (in Somalia, Nigeria, and Libya) and French forces (in Mali) have reversed this trend, but gains are fragile. In response, extremists have reverted to asymmetric tactics and expanded the scope of their targets. Attacks on Urban “Soft Targets” by a Resurgent AQIM. For much of the past decade, AQIM focused primarily on lucrative kidnap-for-ransom operations, attacks on local military and police posts, and insurgent operations in remote areas. As of 2013, the group appeared to have been weakened by internal divisions and by French military operations in Mali that killed or captured several key figures. However, three recent AQIM-linked attacks on hotels and restaurants popular with Western expatriates—in Mali (November 2015), Burkina Faso (January 2016), and Côte d’Ivoire (March 2016)—were among the group’s deadliest ever, killing dozens of Western civilians and placing AQIM back at the center of regional terrorism dynamics. AQIM and its former rival splinter movement Al Murabitoun jointly claimed responsibility, signaling their apparent renewed merger. These attacks also appeared to signal a shift in tactics, piquing concerns about the vulnerability of cosmopolitan cities with large expatriate communities, such as Dakar, Accra, and Abidjan. As a result, local governments and donors, including the United States, are considering new programs to bolster West African urban crisis response capabilities, in addition to ongoing military train-and-equip counterterrorism programs. Challenges. African-led responses to terrorist threats have been constrained by limited resources and capacity, institutional weaknesses, conflicting political agendas, corruption, sensitivities over domestic sovereignty, regional rivalries, and uneven engagement among affected states. These challenges have also undermined the effectiveness of efforts by concerned international actors and donors—including the United States—to respond. U.S. policymakers face a number of dilemmas, including how to prioritize U.S. counterterrorism activities in Africa (both within the continent and compared to other regions); how to define a threshold for the use of U.S. military force against terrorist groups on the continent; whether and how to balance a large infusion of military aid to affected African countries with investments in law enforcement, development, and governance; and how to measure and assess the impact of U.S. efforts. The question of how and when to partner with authoritarian states for counterterrorism purposes—and what consequences this may have on long-term regional stability and the pursuit of other U.S. policy objectives—is particularly thorny. Further CRS Reading: CRS In Focus IF10172, Al Qaeda in the Islamic Maghreb (AQIM) and Al Murabitoun; CRS In Focus IF10170, Al Shabaab; CRS Report R43558, Nigeria’s Boko Haram: Frequently Asked Questions; CRS Report RL33142, Libya: Transition and U.S. Policy; CRS In Focus IF10116, Mali: Transition from Conflict?; CRS In Focus IF10155, Somalia; CRS Report RL33964, Nigeria: Current Issues and U.S. Policy; CRS Report R42967, U.S.-Kenya Relations: Current Political and Security Issues; CRS Report R43612, The Islamic State and U.S. Policy; and CRS Report R44313, What Is “Building Partner Capacity?” Issues for Congress.

Jul 14, 2016

Supplemental Appropriations for Zika Response: The FY2016 Conference Agreement in Brief

This report presents funding proposals for response to the Zika outbreak, including proposals in Division B of the conference report, and, where applicable, associated proposed rescissions, including those in Division D of the conference report.

Jul 14, 2016

The Veterans Choice Program (VCP): Program Implementation

Authorized under Section 101 of the Veterans Access, Choice, and Accountability Act of 2014 (VACAA), the Veterans Choice Program (VCP) is a new, temporary program (the VCP is set to expire in August 2017 or whenever funds in the Veterans Choice Fund are exhausted) that enables eligible veterans to receive medical care in the community. It supplements several existing statutory authorities that allow the Veterans Health Administration (VHA) to provide health care services to veterans outside of the Department of Veterans Affairs (VA) facilities. Generally, all medical care and services (including inpatient, outpatient, pharmacy, and ancillary services) are provided through the VCP—institutional long-term care and emergency care in non-VA facilities are excluded from the VCP and are provided under different authorities. The VCP is not a health insurance plan for veterans, nor does it guarantee health care coverage to all veterans. Eligibility and Choice of Care Veterans must be enrolled in the VA health care system to request health services under the VCP. A veteran may request a VA community care consult/referral, or his or her VA provider may submit a VA community care consult/referral to the VA Care Coordination staff within the VA. Veterans may become eligible for the VCP in four ways. First, a veteran is informed by a local VA medical facility that an appointment cannot be scheduled within 30 days of the clinically determined date requested by his or her VA doctor or within 30 days of the date requested by the veteran. Second, the veteran lives 40 miles or more from a VA medical facility that has a full-time primary care physician. Third, the veteran lives 40 miles or less (not residing in Guam, America Samoa, or the Republic of the Philippines) and either travels by air, boat, or ferry to seek care from his or her local facility or incurs a traveling burden of a medical condition, geographic challenge, or an environmental factor. Fourth, the veteran resides 20 miles or more from a VA medical facility located in Alaska, Hawaii, New Hampshire (excluding those who live 20 miles from the White River Junction VAMC), or a U.S. territory, with the exception of Puerto Rico. Once found eligible for care through the VCP, veterans may choose to receive care from a VA provider or from an eligible VA community care provider (VCP provider). VCP providers are federally-qualified health centers, Department of Defense (DOD) facilities, or Indian Health Service facilities, and hospitals, physicians, and non-physician practitioners or entities participating in the Medicare or Medicaid program, among others. A veteran has the choice to switch between a VA provider and VCP provider at any time. Program Administration and Provider Participation The Veterans Choice Program is administered by two third-party administrators (TPAs): Health Net and TriWest. Generally, Health Net and TriWest manage veterans’ appointments, counseling services, card distributions, and a call center. The TPAs contract directly with the VA. Then, Health Net or TriWest will contract with eligible non-VA community care providers interested on participating in the VCP. Payments Generally, a veteran’s out-of-pocket costs under the VCP are equal to VHA out-of-pocket costs. Veterans do not pay any copayments at the time of their medical appointments. Copayment rates are determined by the VA after services are furnished. Usually, the VHA becomes the secondary payer when certain veterans with other health insurance (OHI) receive care for nonservice-connected conditions under VCP. Participating community providers are reimbursed by their respective TPA, and VA pays the TPAs.

Jul 13, 2016

Acquisition Reform in the House and Senate Versions of the FY2017 National Defense Authorization Act

For purposes of this analysis, CRS selected 31 sections of the House-passed version of FY2017 National Defense Authorization Act (H.R. 4909), and 68 sections of the Senate-passed version of FY2017 NDAA (S. 2943) that appear closely linked to the respective committee’s stated efforts to reform the acquisition system. Acquisition reform. Each section is identified as fitting into one (or more) of the following six overarching categories: Gathering information for future action, Streamlining the current process (focusing on schedule and minimizing bureaucratic effort), Improving the effectiveness of the current process (focusing on cost, performance, and public policy), Improving the performance of the workforce (through recruitment/retention, professional development, or empowering decisionmaking), Improving the use of data in decisionmaking, or Reorganizing the acquisition management structure within the Department of Defense.

Jul 13, 2016

The Brexit Vote: Political Fallout in the United Kingdom

Referendum Result Shakes Up British Politics The result of the June 23 referendum on whether the United Kingdom (UK) should leave the European Union (EU) sent convulsions through the country’s political establishment. The regional dimensions of the voting have also fueled questions about the future of the UK’s political union. For additional information about the referendum result, see CRS Insight IN10513, United Kingdom Votes to Leave the European Union, by Derek E. Mix. Theresa May Takes Over As Prime Minister After 51.9% of referendum voters backed leaving the EU, Prime Minister David Cameron announced his resignation, originally expected to take effect by October 2016. Having led the unsuccessful campaign to remain in the EU, Cameron concluded that a new prime minister should steer the process of leaving. His departure comes after having been reelected in May 2015 with an absolute majority for the Conservatives. Theresa May took over as the UK’s new prime minister on July 13, 2016. As the longest-serving home secretary in modern times, May oversaw the UK’s counterterrorism, policing, crime, and immigration policies for the past six years. A Member of Parliament (MP) since 1997, she now becomes the UK’s second-ever female prime minister. The contest to become the new leader of the Conservative Party and prime minister came to a surprisingly early conclusion. The initial favorite, former London mayor Boris Johnson, unexpectedly withdrew from the contest at the end of June amid reports of plotting by other senior party figures to undermine his candidacy. Voting by Conservative MPs narrowed the remaining field to two finalists, May and Energy Secretary Andrea Leadsom, with the approximately 150,000 members of the Conservative Party then expected to decide the winner in early September. Leadsom’s subsequent withdrawal left May unopposed, however, allowing for a substantially accelerated transition. May’s leadership gets under way as the Conservative Party seeks to heal the internal rift that split its ranks during the bitter and intense referendum campaign, in which she aligned herself with the Remain camp but did not take an outspoken role. The party remains divided about what Brexit should look like and what comes next. Among the new prime minister’s first tasks will be deciding how and when to enact the result of the referendum by invoking Article 50 of the EU treaty, which would begin negotiations on the UK’s withdrawal from the EU. During the leadership contest, May appeared to favor a “soft Brexit,” with an unhurried timetable for negotiations and the possibility of retaining significant aspects of the relationship with the EU. Advocates of a “hard Brexit,” by contrast, support a quick withdrawal negotiation and fewer residual ties with the EU. In either case, dissenting Conservative MPs could insist on a rigorous debate in the House of Commons prior to starting the withdrawal process, which could further deepen splits in the party. Although May has rejected any suggestion of calling an early election (the next general election is not required until 2020), pressure for a snap election could resurface during the next four years. Labour Party Disarray Following the Labour Party’s defeat in the 2015 election, Jeremy Corbyn became the new party leader and leader of the parliamentary opposition. Although party membership subsequently increased, Corbyn’s tenure has been marked by perceptions that the Labour Party has suffered from relative ineffectiveness and disarray under his leadership. This impression has been fueled by tensions between the two ideological branches of the party: Corbyn, an MP since 1983, retains the Labour Party’s traditional roots in left-wing, democratic socialism, whereas many Labour MPs identify more with the centrist “New Labour” that came to dominate the party’s outlook under former prime minister Tony Blair. Tensions boiled over in the aftermath of the EU referendum. Many areas in the north of England traditionally considered Labour heartlands voted Leave, leading to accusations that Corbyn had failed to mount a vigorous campaign for remaining in the EU (Labour is generally considered a “pro-EU” party). Corbyn subsequently endured the resignation of most of his shadow cabinet and a lopsided vote of no confidence in his leadership by Labour MPs. Facing widespread calls to resign, Corbyn has vowed to stay on and challenged his critics to launch a formal leadership contest if they wish to unseat him. Former shadow cabinet members Angela Eagle and Owen Smith are the leading early challengers. Exposed Fault Lines Factors such as economic dissatisfaction, unease with globalization and immigration, and anti-elite or anti-establishment sentiments played a key role in the referendum outcome. For the most part, the result was a victory for the English countryside, with especially strong majorities for leaving the EU in the north and east of England, Yorkshire, and the Midlands. Most of the large cities, including London (nearly 60%), voted to remain. Outside of England, support for remaining in the EU was 62% in Scotland and nearly 56% in Northern Ireland, whereas 52.5% of voters in Wales supported leaving the EU. Commentators have also highlighted the breakdown of voting by age group. Voters aged 24 and under overwhelmingly wanted to remain in the EU (75%), and a majority (56%) of voters aged 25 to 49 also wished to remain. A majority (56%) of voters aged 50 to 64 supported leaving the EU, and 61% of voters over the age of 65 supported leaving. Voter turnout was considerably higher among older age groups. Return of the Scottish Question The referendum result has reignited calls by some Scottish political leaders for Scotland to separate from the UK and join the EU as a newly independent country. The issue had been seemingly put to rest when 55% of Scottish voters chose to remain part of the UK in a September 2014 referendum, but advocates of independence now argue that Scotland should not be forced out of the EU against its democratically expressed will. The 2014 referendum was officially binding because it had the assent of Prime Minister Cameron and the British government. Future British governments may be more reluctant to agree to another Scottish referendum.

Jul 13, 2016

Nicaragua: In Brief

This report discusses Nicaragua’s current politics, economic development, and relations with the United States. The report also provides context for Nicaragua’s controversial upcoming elections. After its civil war ended, Nicaragua began to establish a democratic government in the early 1990s. Its institutions remained weak, however, and they have become increasingly politicized since the late 1990s. Current President Daniel Ortega was a Sandinista (Frente Sandinista de Liberacion Nacional, FSLN) leader when the Sandinistas overthrew the dictatorship of Anastasio Somoza in 1979. Ortega was elected president in 1984. An electorate weary of war between the government and U.S.-backed contras denied him reelection in 1990. After three failed attempts, he won reelection in 2006, and again in 2011. He is expected to win a third term in November 2016 presidential elections. As in local, municipal, and national elections in recent years, the legitimacy of this election process is in question, especially after Ortega declared that no international election observers would be allowed and an opposition coalition was effectively barred from running in the 2016 elections. As a leader of the opposition in the legislature from 1990 to 2006, and as president since then, Ortega slowly consolidated Sandinista—and personal—control over Nicaraguan institutions. As Ortega has gained power, he reputedly has become one of the country’s wealthiest men. His family’s wealth and influence have grown as well, inviting comparisons to the Somoza family dictatorship. As president, Ortega has also implemented social welfare programs that have benefited Nicaragua’s poor—reducing poverty, raising incomes, and providing subsidies and services—and thereby buoyed his popularity. The United States and other countries have responded in critical but measured terms to Ortega becoming more authoritarian. For many in the international community, Ortega’s cooperation on issues of importance to them, such as counternarcotics efforts and free trade, and the relative stability in Nicaragua seem to outweigh Ortega’s perceived provocations and authoritarian proclivities. Similarly, in the minds of many Nicaraguans, Ortega’s authoritarian tendencies appear to be outweighed by populist measures that have improved their standard of living. Although President Ortega’s stated goal has been to implement socialism in Nicaragua, which he defines as a mixed economy, he has maintained many elements of a market-based economy. Nicaragua has maintained growth levels above the average for Latin America and the Caribbean in recent years. Over the past decade, poverty has declined significantly. Nevertheless, Nicaragua remains the poorest country in Central America and the second-poorest country in the Western Hemisphere, ahead of Haiti. The Ortega administration is taking steps to prepare for a probable sharp contraction in funds from Venezuela, a major source of government revenues in recent years. Controversy and conflict have been growing over Ortega’s decision to grant a 100-year concession for an inter-oceanic canal through Nicaragua to a Chinese company. The government maintains the project would stimulate the economy and provide jobs. Critics argue it would displace rural communities and harm the environment. The United States and Nicaragua cooperate on issues such as free trade and counternarcotics. U.S. aid has sometimes been reduced over concern for the narrowing democratic space in Nicaragua. Currently, Nicaragua is part of the U.S. Strategy for Engagement in Central America. Tensions rose recently when Nicaragua expelled three U.S. officials. Other U.S. concerns include violations of human rights, including restriction on citizens’ rights to vote, government harassment of civil society groups, arbitrary arrests and killings by security forces and corruption. The Administration and some Members of Congress have expressed concern about Nicaragua’s relationship with Russia, especially recent military purchases.

Jul 9, 2016

Geographical Indications in the Transatlantic Trade and Investment Partnership (T-TIP) Negotiations

Geographical indications (GIs) are place names used to identify products that come from these places and to protect the quality and reputation of a distinctive product originating in a certain region. The term is most often applied to wines, spirits, and agricultural products. Some food producers benefit from the use of GIs by giving certain foods recognition for their distinctiveness, differentiating them from other foods in the marketplace. In this manner, GIs can be commercially valuable. GIs may be eligible for relief from acts of infringement or unfair competition. GIs may also protect consumers from deceptive or misleading labels. Examples of GIs include Parmesan cheese and Parma ham from the Parma region of Italy, Tuscan olive oil, Roquefort cheese, Champagne from the region of the same name in France, Irish whiskey, Darjeeling tea, Ceylon tea, Florida Oranges, Idaho Potatoes, Vidalia Onions, Washington State Apples, and Napa Valley Wines. The use of GIs has become a contentious international trade issue, particularly for U.S. wine, cheese, and sausage makers involved in trade between the United States and the European Union (EU). Accordingly, GIs are among the agricultural issues that have been raised in the ongoing Transatlantic Trade and Investment Partnership (T-TIP) negotiations, a potential reciprocal free trade agreement that the United States and the EU are negotiating. Many U.S. food manufacturers view the use of common or traditional names as generic terms and the EU’s protection of its registered GIs as a way to monopolize the use of certain wine and food terms and as a form of trade protectionism. Specifically, several industry groups have expressed concern that the EU is using GIs to impose restrictions on the use of common names for some foods—such as parmesan, feta, and provolone cheeses and certain wines—and limit U.S. food companies from marketing these foods using these common names. Complicating this issue further are GI protections afforded to registered products in third country markets. This has become a concern for U.S. agricultural exporters following a series of recently concluded trade agreements between the EU and countries such as Canada, South Korea, South Africa, and other countries that are, in many cases, also major trading partners with the United States. Laws and regulations governing GIs differ between the United States and EU, which further complicates this issue. In the United States, GIs are generally treated as brands and trademarks, whereas the EU protects GIs through a series of established quality schemes. These approaches differ with respect to the conditions for protection or the scope of protection, but both establish rights for collective use by those who comply with defined standards. In the United States, the U.S. Patent and Trademark Office (PTO) administers GI protections, along with labeling requirements for wine, malt beverages, beer, and distilled spirits under the jurisdiction of the Alcohol and Tobacco Tax and Trade Bureau. In the EU, a series of regulations governing GIs was initiated in the early 1990s covering agricultural and food products, wine, and spirits. Legislation adopted in 1992 covered agricultural products (not including wines and spirits), but it was changed in 2006 following a World Trade Organization (WTO) panel ruling that found some aspects of the EU’s scheme inconsistent with WTO rules. The new rules came into force in January 2013. GIs are also protected by agreements of the WTO as part of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Some Members of Congress have long expressed their concerns about EU protections for GIs, which they claim are being misused to create market and trade barriers. However, they are also concerned about the implementation of GI protections in other trade agreements that have been or are being negotiated by the EU with other countries.

Jul 7, 2016

The Essential Health Benefits (EHB)

Jul 6, 2016

The Fair Housing Act: HUD Oversight, Programs, and Activities

The federal Fair Housing Act, enacted in 1968 as Title VIII of the Civil Rights Act (P.L. 90-284), prohibits discrimination in the sale, rental, or financing of housing based on race, color, religion, national origin, sex, familial status, and handicap. The Department of Housing and Urban Development (HUD), through its Office of Fair Housing and Equal Opportunity (FHEO), receives and investigates complaints under the Fair Housing Act and determines if there is reasonable cause to believe that discrimination has occurred or is about to occur. State and local fair housing agencies and private fair housing organizations also investigate complaints based on federal, state, and local fair housing laws. In fact, if alleged discrimination takes place in a state or locality with its own similar fair housing enforcement agency, HUD must refer the complaint to that agency. Two programs administered by FHEO provide federal funding to assist state, local, and private fair housing organizations: The Fair Housing Assistance Program (FHAP) funds state and local agencies that HUD certifies as having their own laws, procedures, and remedies that are substantially equivalent to the federal Fair Housing Act. Funding is used for such activities as capacity building, processing complaints, administrative costs, and training. In FY2016, Congress appropriated $24.3 million for FHAP. The Fair Housing Initiatives Program (FHIP) funds eligible entities, most of which are private nonprofit organizations. Funds are used for investigating complaints, including testing (comparing outcomes when members of a protected class attempt to obtain housing with outcomes for those not in a protected class), education, outreach, and capacity building. In FY2016, Congress appropriated $39.2 million for FHIP. Another provision of the Fair Housing Act requires that HUD affirmatively further fair housing (AFFH). As part of this requirement, recipients of certain HUD funding—jurisdictions that receive Community Planning and Development grants and Public Housing Authorities—go through a process to certify that they are affirmatively furthering fair housing. In July 2015, HUD issued a new rule governing the process, called the Assessment of Fair Housing (AFH). Under the AFH, funding recipients will assess their jurisdictions and regions for fair housing issues (including areas of segregation, racially and ethnically concentrated areas of poverty, disparities in access to opportunity, and disproportionate housing needs), identify factors that contribute to these fair housing issues, and set priorities and goals for overcoming them. HUD will provide data for program participants to use in preparing their AFHs, and will include a tool that helps program participants through the AFH process. Among other activities undertaken by HUD’s FHEO are efforts to prevent discrimination not explicitly directed against protected classes under the Fair Housing Act. This includes a regulation to prohibit discrimination in HUD programs based on sexual orientation and gender identity, and guidance about the use of criminal background checks in screening applicants for housing. FHEO also oversees efforts to ensure that clients with Limited English Proficiency (LEP) have access to HUD programs. Guidance from FHEO helps housing providers determine how best to provide translation services, and HUD also receives a small appropriation through the Fair Housing and Equal Opportunity account for the agency to translate documents and provide translation on the phone or at events. Another requirement overseen by FHEO is Section 3, which provides employment and training opportunities for low- and very low-income persons. Section 3 requirements apply to hiring associated with certain housing projects funded by HUD.

Jul 6, 2016

TPP: Estimates of Economic Effects

Jul 6, 2016

The Economic Effects of Trade: Overview and Policy Challenges

The United States is considering two comprehensive and high-standard mega-regional free trade agreements: the recently concluded Trans-Pacific Partnership (TPP) among the United States and 11 other countries, and the U.S.-European Transatlantic Trade and Investment Partnership (T-TIP), still under negotiation. The 12 TPP countries signed the agreement in February 2016, but the agreement must be ratified by each country before it can enter into force. In the United States this requires implementing legislation by Congress. For Members of Congress and others, international trade and trade agreements offer the prospect of improving national economic welfare, while also raising questions about the potential cost to the economy. Congress plays an important role in shaping and considering legislation to implement U.S. trade agreements. Discussions of trade and trade agreements often focus on a number of issues, including the role that trade plays in the U.S. economy, the impact of trade agreements on employment gains and losses, and the size of the U.S. trade deficit. This report focusses on some of the major issues associated with trade and trade agreements and the impact of trade on the U.S. economy. The key findings include the following: From the perspective of the U.S. economy as a whole, trade is one among a number of forces that drive changes in employment, wages, the distribution of income, and ultimately the standard of living. Most economists argue that broad macroeconomic forces, including technological advances, are generally considered to be more important than trade. Economists generally conclude that trade provides net overall positive benefits to economies. Changes in trading patterns associated with changes in trading partners and composition or with new trade agreements, however, may entail certain adjustment costs, including changes in employment, which can be highly concentrated with some workers, firms, and communities affected disproportionately. In discussions of trade agreements, both proponents and opponents use the results of a variety of trade models and underlying assumptions to estimate the impact on the U.S. economy. Such models have various strengths and weaknesses, although not always in equal proportion. Most economists argue that such estimates represent a partial accounting of the total economic effects and, therefore, are not representative of the overall impact of trade agreements on the U.S. economy. Some argue that trade, trade agreements, and globalization more broadly contributed to growing wealth and income equality within countries. Growing income inequality domestically is not unique to the United States, or even to developed countries, but is found in both developed and developing countries. Despite intense focus in the academic literature, there is no consensus on the direct impact that trade or trade agreements have on income inequality. Congress faces a number of challenging policy issues relative to trade and the impact of trade agreements on the U.S. economy. These challenges include assessing the quality of data on trade and what, if any, additional resources should be devoted to collecting trade data and analyzing the role of trade in the economy. Congress also has legislative and oversight responsibility over various government programs that assist workers and firms adjust to increased competition from trade.

Jul 5, 2016

SBA and CDBG-DR Duplication of Benefits in the Administration of Disaster Assistance: Background, Policy Issues, and Options for Congress

Numerous nonprofit, private, and governmental organizations provide a wide range of assistance after a disaster strikes. Section 312 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (P.L. 93-288) requires federal agencies providing disaster assistance to ensure that individuals and businesses do not receive disaster assistance for losses for which they have already been compensated. Duplication of benefits occurs when compensation from multiple sources exceeds the need for a particular recovery purpose. Recipients are liable to the United States when the assistance duplicates benefits provided for the same purpose. The combination of any type of disaster assistance can cause duplication. This report focuses on duplication of benefits between the Community Development Block Grant Disaster Recovery (CDBG-DR) grant program and the Small Business Administration (SBA) Disaster Loan Program. Key areas of congressional concern over the past decade with respect to the two programs include: despite quality checks and audits, agencies continue to provide duplicative disaster assistance to individuals and businesses; duplication assessment and collection process costs often exceed the money recouped; the execution of the required delivery sequence can be complex and confusing because a multitude of assistance sources can be difficult to coordinate and monitor; the execution can also be complex and confusing because CDBG-DR is not listed in the Federal Emergency Management Agency’s regulatory sequence procedures; benefits stem from multiple authorities subject to different interpretations; federal guidelines regarding the process that states may follow in an effort to minimize potential duplication of benefits in the awarding of CDBG-DR are advisory and are not mandated requirements. To some this gives states too much flexibility to determine who is eligible for CDBG-DR; disaster victims are sometimes unaware that they received an improper payment and, in some cases, receive collection notices well after they had spent the money on recovery needs. Equity concerns also stem from the duplication of benefits. These include: that CDBG-DR is not provided for all disasters. Consequently, some major disasters may benefit from CDBG-DR while others may not—even if they have similar losses; in most cases, SBA disaster loans can be provided more quickly than financial assistance from a CDBG-DR grant. As a consequence, it is possible for some homeowners to receive an SBA disaster loan and later be deemed ineligible when applying for financial assistance from a CDBG-DR grant due to duplication of benefits requirements. To some, it may appear that homeowners who took initiative to repair and rebuild were unfairly penalized. This report provides a brief description of the SBA Disaster Loan Program and CDBG-DR. It lists relevant authorities, and highlights policy considerations. The report also explores a number of policy options Congress might consider when addressing duplication of benefits issues related to SBA disaster loans and CDBG-DR. These policy options include requiring FEMA to clarify the regulatory delivery sequence to help eliminate potential confusion; prohibiting SBA disaster loan recipients from receiving CDBG-DR assistance or developing other policy options so that CDBG-DR assistance is awarded uniformly; establishing CDBG-DR assistance as a permanent disaster assistance program; replacing suggested guidelines for the disbursal of CDBG-DR with requirements; investigating the use of a centralized database to identify duplication of benefits more effectively. This report will be updated as events warrant.

Jul 1, 2016

The Trans-Pacific Partnership (TPP): Analysis of Economic Studies

Congress plays a major role in formulating and implementing U.S. trade policy through its legislative and oversight responsibilities. Under the U.S. Constitution, Congress has the authority to regulate foreign commerce, while the President has the authority to conduct foreign relations. In 2015, Congress reauthorized Trade Promotion Authority (TPA) that (1) sets trade policy objectives for the President to negotiate in trade agreements; (2) requires the President to engage with and keep Congress informed of negotiations; and (3) provides for Congressional consideration of legislation to implement trade agreements on an expedited basis, based on certain criteria. The United States is considering the recently concluded Trans-Pacific Partnership (TPP) among the United States and 11 other countries. The 12 TPP countries signed the agreement in February 2016, but the agreement must be ratified by each country before it can enter into force. In the United States this requires implementing legislation by Congress. The agreement is viewed by the participants as a “comprehensive and high standard” mega-regional free trade agreement that may hold the promise of greater economic opportunities and closer economic and strategic ties among the negotiating parties. For Members of Congress and others, international trade and trade agreements may offer the prospect of improved national economic welfare. Such agreements, however, have mixed effects on U.S. domestic and foreign interests, both economic and political. In considering the TPP, Congress likely will examine various economic studies to assess the impact of the agreement on the economy. The results of these studies vary depending on the model and the assumptions that are used to generate the results. The U.S. International Trade Commission is tasked with providing the official U.S. government estimate of the economic effects of the agreement. This report provides an analysis of various studies and information on the types of economic models that are used to assess the impact of trade agreements and the importance of the assumptions that are used in generating these estimates. Estimating the employment effects from a trade agreement is imprecise because (1) estimates can vary widely as a result of the model and assumptions that are used; (2) limitations arise from the types of data available, particularly concerning non-tariff barriers; and (3) it is difficult to disentangle the effects of trade and trade agreements from other factors that affect the U.S. economy, among other things. This report analyses some studies of the economic impact of TPP that are playing an important role in affecting the public policy debate, including the following: U.S. International Trade Commission (USITC): estimated the TPP would increase annual U.S. GDP by 0.15%, and trade by 1.0% by 2032; U.S. annual employment would be higher by 128,000. Peter A. Petri and Michael G. Plummer (Peterson Institute for International Economics) estimated that the TPP would increase annual GDP by 0.5% and increase U.S. exports by 9.0% by 2030. World Bank: estimated the TPP would increase U.S. GDP by 0.5% by 2030. Tufts University, Global Development and Environment Institute study by Jeronim Capaldo and Alex Izurieta: estimated that all TPP participants would lose 770,000 jobs and non-TPP developing economies would lose 4.5 million jobs. Other studies that use such proxy indicators as trade balances and jobs associated with exports to assess the impact of the TPP.

Jun 30, 2016

NATO’s Warsaw Summit: In Brief

The North Atlantic Treaty Organization’s (NATO’s) 2016 summit is to be held in Warsaw, Poland, on July 8-9, 2016. This summit will be the second meeting of the alliance’s 28 heads of state and government since 2014, when Russia annexed Crimea and began providing large-scale military support to separatist forces fighting in Ukraine. Russia’s actions in Ukraine and Eastern Europe more broadly have upended NATO’s post-Cold War transformation from a military alliance focused solely on deterring Russia to a globally oriented security organization. Over the last two years, NATO has taken major steps to strengthen once again its territorial defense capabilities and to deter Russia. NATO’s renewed focus on collective defense and deterrence has created tensions within the alliance, particularly between those member states more sensitive to the Russian threat—especially in Eastern Europe—and those, such as Germany, with a long history of close ties to Russia. In addition, heightened fears about instability in the Middle East and North Africa have caused strain between those allies more concerned about security threats from NATO’s south and those that continue to prioritize deterring and managing Russia. At the Warsaw summit, NATO leaders are expected to seek to balance these concerns by addressing both the threat to NATO’s east and the threat to its south. As such, the summit is expected to focus primarily on two broad themes: Enhancing deterrence, primarily through forward deployment to Eastern Europe, and Projecting stability beyond NATO, in particular to the Middle East and North Africa (MENA). The Warsaw Summit will take place just two weeks after the United Kingdom (UK) voted to leave the European Union (EU). Prior to the referendum, many allied leaders echoed the sentiments of NATO Secretary-General Jens Stoltenberg that a British exit from the EU, referred to as Brexit, would have negative repercussions for regional security. Since the referendum, these leaders have stressed the importance of using NATO as a platform for both transatlantic and European defense cooperation. UK officials have stressed that the country’s commitment to NATO remains steadfast. Along with France, the UK is widely acknowledged to be the most militarily capable European ally. U.S. officials have said that the key Administration priorities for the summit will be to sustain and enhance NATO collective defense and deterrence initiatives, with an emphasis on securing commitments from a broad group of allies. The United States has also called on its NATO allies to play a greater role in addressing security threats emanating from MENA, including by contributing more to the fight against the Islamic State (IS) terrorist organization. In addition, President Obama is expected to stress the importance of European allies taking on a greater share of the defense burden in the alliance by meeting defense spending and capabilities development commitments made in Wales in 2014. Afghanistan, Ukraine, Operation Atlantic Resolve, OAR, European Reassurance Initiative, ERI, Istanbul, Paris, Brussels, S.Res. 506, H.Res. 739, H.Res. 56, H.Res. 469, H.Res. 235.

Jun 30, 2016

Zika Virus in Latin America and the Caribbean: U.S. Policy Considerations

This report provides background information on the Zika virus, discusses challenges faced by governments and implementing partners in the Latin America and Caribbean region that are attempting to control the ongoing outbreak, and analyzes these issues in the context of the U.S. Zika response.

Jun 29, 2016

The Fair Labor Standards Act (FLSA) Child Labor Provisions

The Fair Labor Standards Act (FLSA) of 1938 prohibits the employment of “oppressive child labor” in the United States, which the act defines—with some exceptions—as the employment of youth under the age of 16 in any occupation or the employment of youth under 18 years old in hazardous occupations. The act includes several exemptions, however, that create a complex set of thresholds that depend on the child’s age, local school hours, the nature of the work (e.g., occupation, industry, and work environment), parental involvement in the child’s employment, and other factors. Notably, exemptions to the act’s child labor provisions create separate rules governing children’s employment in agriculture and in non-agricultural work. For non-exempt children, the minimum age for employment in non-agricultural occupations is 18 years for hazardous occupations; 16 years for employment in non-hazardous occupations; and 14 years for a limited set of occupations, with restrictions on hours and work conditions. With some exceptions, the minimum age for employment in agricultural occupations is 16 years for employment in any agricultural job, including hazardous agricultural occupations, with no restrictions on hours of work; 14 years for employment in non-hazardous agricultural jobs outside of school hours; and any age, for employment in non-hazardous agricultural jobs, outside of school hours, with parental consent, when certain conditions are met concerning farm size, the nature and duration of work, and other requirements. The FLSA provisions prohibit (1) the employment of oppressive child labor for children covered by the act, and (2) the interstate shipment of goods produced in an establishment in or about which oppressive child labor is employed. But not all work performed by underage children is unlawful under the act. The FLSA authorizes the Secretary of Labor to conduct workplace inspections and investigations to determine if oppressive child labor is present and enforce the child labor provisions. The Secretary may assess civil money penalties to employers who violate the provisions or pursue action in federal courts. Employers who violate the FLSA child labor provisions may be assessed a civil penalty of up to $11,000 for each employee who was the subject of a child labor violation, or up to $50,000 for each violation that causes the death or serious injury of a minor employee; a penalty may be doubled if the violation is a repeated or willful violation. Since FY2007, the Department of Labor (DOL) has concluded more than 9,700 cases in which employers violated FLSA child labor provisions. U.S. district courts have jurisdiction to enjoin violations of the FLSA’s child labor provisions. Criminal penalties are also prescribed for willful violations of the FLSA’s child labor provisions. Any person who willfully violates these provisions will, upon conviction, be subject to a fine of not more than $10,000, imprisonment for not more than six months, or both. Since the enactment of the FLSA, various courts have resolved cases involving the meaning and operation of the law’s child labor provisions. Early cases focused on the movement of goods produced by minors and whether an employer’s activities were restricted by the provisions. More recent cases have examined the direct employment of minors in oppressive child labor. Although there do not appear to be a substantial number of recent reported cases, DOL continues to pursue enforcement of the child labor provisions through litigation, as evidenced by court filings in 2015. This report describes the FLSA child labor provisions, accompanying DOL regulations, and their administration. Taken together, these constitute what is commonly known as “federal child labor law.” In addition, all states have child labor laws, compulsory schooling requirements, and other laws that govern children’s employment and activities. No state law may weaken the worker protections provided by the FLSA. However, state laws that impose greater worker protections will supersede those provided by the FLSA. Such state protections are not discussed in this report.

Jun 29, 2016

The Dodd-Frank Act: An Overview of the 2016 Incentive-Based Compensation Proposal

Incentive compensation or incentive-based compensation refers to the portion of an employee’s pay that is not fixed in contrast to an annual or monthly salary. Incentive compensation takes the form of variable contingent compensation, particularly cash bonuses, that are based on the attainment of certain firm or employee performance metrics. Such pay has been a significant component of compensation for executives and other key personnel at many firms in the financial sector. Many argue that such compensation contributed to the 2007-2009 financial crisis by incentivizing pivotal financial firm personnel to take excessive, and in retrospect dangerous risks that were financially problematic for their firms. In July 2010, in response to the financial crisis of 2007 to 2009, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act, P.L. 111-203). Section 956 of the law directed financial regulators to adopt new rules that jointly prescribe regulations or guidelines aimed at prohibiting incentive compensation arrangements that might encourage inappropriate risks at financial institutions. These regulators, the Agencies, are the National Credit Union Association, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission. In April 2016, after releasing an ultimately unimplemented proposal in 2011, the Agencies proposed new rules to implement Section 956. The centerpiece of the proposal is a three-tiered protocol in which the stringency of incentive compensation limits grow as an entity’s consolidated asset total increases: Level 1, $250 billion and up; Level 2, $50 billion to $250 billion; and Level 3, $1 billion to $50 billion. Thousands of finance professionals and senior executives at various financial entities overseen by the Agencies would be potentially affected by the proposal, including those employed by commercial and investment banks, brokerage firms, hedge funds, and private equity funds. The Agencies will receive public comments on the proposal through July 22, 2016. The proposal will then require the approval of each agency in order to be finalized and adopted. Level 1 and Level 2 institutions must comply with enhanced requirements as to the structure of their incentive compensation for senior executive officers (i.e., various top corporate leaders, including the president, the chief executive officer, and the chief operating officer) and significant risk-takers (i.e., top paid non-senior employees). For example, a Level 1 institution would be required to defer at least 60% of a senior executive officer’s qualifying incentive-based compensation and 50% of a significant risk-takers qualifying incentive-based compensation for up to four years. Senior executive officers and significant risk-takers incentive-based compensation awarded under the long-term incentive plan would be deferred by 60% and 50%, respectively, for at least two years. A Level 2 institution would be required to defer at least 50% of a senior executive officer’s qualifying incentive-based compensation and 40% of a significant risk-taker’s qualifying incentive-based compensation for at least three years. Senior executives and significant risk-takers at Level 1 and 2 institutions would also be subject to reductions in previously earned incentive compensation (i.e., forfeiture and downward adjustment) in the event of certain behaviors, including when (1) deviation from risk parameters causes a firm’s poor financial performance, or (2) inappropriate risk-taking occurs regardless of the impact on the firm’s financial performance. Those employees could also have their vested incentive compensation clawed back by their employer under conditions determined by the employer, including (1) the existence of significant financial or reputational harm caused by the employee’s actions; (2) fraudulent conduct by the employee; or (3) intentional misrepresentations on the part of the employee.

Jun 29, 2016

The IMF’s Special Drawing Right and China’s Renminbi

Jun 28, 2016

Possible Economic Impact of Brexit

In a June 23, 2016 referendum, a majority of British voters supported the United Kingdom (UK) leaving the European Union (EU), stunning global financial markets that expected the vote to fail (see CRS Insight IN10513, United Kingdom Votes to Leave the European Union). In the immediate aftermath: Some equity markets fell by as much as 7% in value (the Dow Jones industrial average fell by 600 points, or 3.5%), erasing nearly $3 trillion in equity value. The British pound depreciated against other major currencies by its largest amount in one day; the U.S. dollar, the yen, and other currencies appreciated sharply. Some London-based American, European, and other foreign banks began reconsidering their UK presence due to concerns that Brexit will jeopardize their EU “passport” status that allows them to operate throughout the EU. Standard & Poor’s and Fitch downgraded UK sovereign debt, Fitch downgraded Bank of England debt, and Moody’s downgraded the UK’s credit outlook status, raising borrowing costs and risks of potential domino effects onto other credit ratings. Questions arose about London’s continued status as the largest global financial center and the prospects of increased global economic risks. These events reflect growing concerns including: 1) the evolving political leadership crisis; 2) uncertainties about the process for UK disengagement from the EU; and 3) the short- and long-term economic effects. Financial markets likely will be volatile over the near term as the UK and the EU sort through these issues. Much uncertainty also looms over the UK’s trade and economic arrangements and the corresponding legal and regulatory frameworks. Trade is equivalent to about 60% of the UK economy, largely due to reduced trade barriers with the EU through the EU’s Single Market. The UK is the second largest EU economy after Germany. Impact on Financial Markets The Brexit vote immediately affected international financial markets through changes in exchange rates and shifts in capital flows, which affected the value of the British pound and UK business investment. Brexit concerns reportedly have steered investment funds toward the United States, amplifying upward pressure on the yields of U.S. Treasury securities and the value of the dollar. A higher-valued dollar and capital inflows make U.S. exports more expensive, lower import prices, interest rates, and consumer prices, and increase imports. Emerging economies are wary of a stronger dollar, fearing its potential negative contagion effect on their economies by drawing away much-needed capital. Uncertainties about Brexit’s impact on international capital markets reportedly factored into the Federal Reserve’s announcement on June 18, 2016 to postpone raising U.S. prime interest rates. Fed Chairman Janet Yellen indicated that, “[I]t [Brexit] is a decision that could have consequences for economic and financial conditions in global financial markets. If it does so, it could have consequences in turn for the U.S. economic outlook that would be a factor in deciding on the appropriate path of policy.” Moody’s asserted that “[I]n the absence of a trade agreement that preserves core elements of the UK’s current access to the Single Market, the UK’s real GDP growth would be materially lower. Barriers to trade will not only result in lower trade but also negatively impact competition, innovation and productivity.” Economic impact assessments of Brexit by various international organizations mostly indicate a small negative impact, e.g., the International Monetary Fund (IMF) projected that the UK’s economic growth rate will slow to 1.6% in 2016, or about 0.5% below earlier estimates. Impact on Trade A Brexit vote does not immediately affect the UK’s trade with other countries, but could in the future. Brexit would return authority to the UK to set its own external tariffs and broader trade policy, an authority currently with the EU. While the UK’s trade policy trajectory is unknown, the economic implications of returning trade policy to the UK may be mixed. It could benefit the UK to the extent that it lowers tariffs below current EU rates, but detrimental if the UK loses access to the benefits of the EU Single Market and existing EU preferential trade arrangements. It also raises issues regarding the status of the U.S.-EU free trade negotiations to conclude a Trans-Atlantic Trade and Investment Partnership (see CRS In Focus IF10120, Transatlantic Trade and Investment Partnership (T-TIP)). Under Brexit, the UK’s trade with EU members would potentially be on less favorable terms if the UK lost preferential access to the Single Market. EU tariffs on the UK would most likely be re-imposed to World Trade Organization (WTO) most-favored-nation (MFN) levels, depending on the terms of the negotiated withdrawal and subsequent UK-EU negotiations. Brexit also would require the UK to re-establish its trade terms with other countries. Multilaterally, the UK is an individual member of the WTO, but is represented through the European Commission and has terms of trade through commitments as an EU member (e.g., MFN tariff levels) in the WTO. Under Brexit, the UK would presumably remain a WTO member, but likely have to renegotiate its terms of trade within the WTO. There apparently is no precedent for doing so, the process is unclear, and the negotiating period may be lengthy. In addition, Brexit could affect the UK’s trade relations with countries with which the EU has preferential trade arrangements. The UK could lose access to the benefits of existing EU trade agreements with key partners such as South Korea unless it negotiated otherwise. Brexit likewise could affect the UK’s potential access to EU trade agreements that have been concluded but not yet entered into force—such as the Comprehensive Economic and Trade Agreement (CETA) with Canada—and those under negotiation—such as the plurilateral Trade in Services Agreement (TiSA) and the T-TIP with the United States (see CRS In Focus IF10311, Trade in Services Agreement (TiSA) Negotiations and CRS In Focus IF10120, Transatlantic Trade and Investment Partnership (T-TIP)). Many potential scenarios exist for renegotiating those agreements and future negotiations, but the UK would likely have less negotiating power without the EU’s full economic heft. Brexit also could affect the EU’s positions in trade negotiations with other countries. For instance, there is speculation that Brexit could impede the T-TIP negotiations, given the UK’s role as a liberalizing force in the EU. Other possibilities include the United States and UK pursuing their own a bilateral free trade agreement or investment treaty or the UK joining T-TIP as a third party.

Jun 28, 2016

Slow Growth in the Current U.S. Economic Expansion

Between 2008 and 2015, economic growth has been, depending on the indicator, one-quarter to one-half the long-term average since World War II. Economic performance has been variable throughout the post-war period, but recent growth is markedly weaker than previous low growth periods, such as 1974 to 1995. Initially, slow growth was attributed to the financial crisis and its aftermath. But even after the recession ended and financial conditions normalized, growth has remained below average in the current economic expansion. The current expansion has already lasted longer than average, but growth has not picked up at any point during the expansion. By some indicators, growth began to slow during the 2001 to 2007 period, while other indicators suggest that the slowdown is more recent and abrupt. Although this report focuses on the U.S. economy, the same pattern has occurred across other advanced economies. Economists have offered a number of explanations at various points for the relatively slow recovery. These explanations are not necessarily mutually exclusive, and some economists combine elements from more than one in their diagnoses. Slow growth in the immediate aftermath of the crisis could be attributed to deleveraging (debt reduction) by firms and households and financial disruptions caused by the crisis, but those problems were of a temporary nature. There is historical evidence that recoveries are slower after financial crises. Permanent damage from the crisis, called hysteresis, would affect the subsequent recovery. For example, if long-term unemployment resulting from the crisis eroded workers’ skills, it could be more difficult for them to find a job when the labor market has recovered. This factor was of greater importance early in the recovery and of waning importance as the recovery continues because it would be expected to leave the level of GDP permanently lower, but should not affect the long-term growth rate. Subsequent shocks to the economy during the expansion, called headwinds, could also be temporarily holding back growth. Headwinds identified at various points in the expansion include high energy prices, the European economic crisis, the emerging market slowdown, fiscal contraction, and fiscal policy uncertainty. Headwinds can be easy to identify after the fact, but there has been little systematic attempt to determine whether there have also been offsetting tailwinds or whether recent headwinds have been relatively larger than in the past. Secular stagnation is an explanation for the slowdown of a more long-lasting nature that posits, atypically, this expansion cannot generate a healthy pace of economic activity on its own, even with the help of aggressive monetary stimulus. This explanation has focused on persistently low interest rates and low inflation as keys to understanding what has held back growth. This explanation struggles to explain the recent return to nearly full employment, however. An explanation based on structural factors would suggest a more permanent slowdown. This explanation looks at long-term shifts in the sources of long-term growth—growth in labor supply and quality, investment, and productivity. For example, the aging of the population has reduced the growth rate of the labor supply. While it is unlikely that slow growth is being driven solely by structural factors—that would imply the timing of the financial crisis and onset of the growth slowdown was purely coincidental—the longer that slow growth persists, the more it can be attributed to structural factors. As the duration of the slowdown persists, explanations based on temporary factors become less compelling and permanent factors become more compelling—particularly as the labor market approaches full employment.

Jun 24, 2016

President Obama’s June 2016 Meeting with Tibet’s Dalai Lama

Jun 24, 2016

Financing U.S. Agricultural Exports to Cuba

In December 2014, President Obama announced a new policy approach toward Cuba that in part seeks to reduce the role of long-standing U.S. sanctions on commercial relations with Cuba while also promoting greater engagement and normal relations with the island nation. For U.S. agriculture, the most significant change to emerge from the altered U.S. policy stance toward Cuba has been a revised interpretation of the definition of “payment of cash in advance” that conditions sales of agricultural commodities to Cuba under the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA, Title IX of P.L. 106-387). In January 2015, the U.S. Department of the Treasury revised its interpretation of “cash in advance” from one that limits such transactions to cash payment before the shipment to the current interpretation that cash payment is required before transfer of title. For additional information on U.S. policy toward Cuba and bilateral relations, see CRS Report R43926, Cuba: Issues for the 114th Congress, by Mark P. Sullivan. U.S. Farm Exports to Cuba Have Slumped in Recent Years Although Section 980(b) of TSRA permits the export of U.S. agriculture products to Cuba, subject to the cash in advance rule, or with third-country financing, it specifically prohibits any role for U.S. government assistance and also bars the provision of private financing to facilitate such sales. Following the enactment of TSRA, U.S. farm exports to Cuba climbed from zero in 2000 to $685 million in 2008, but thereafter declined sharply, with 2015 marking a low point at $149 million (Table 1). Cuba’s total agricultural imports declined from a peak of about $2.4 billion in 2008 to $2 billion in 2013 and 2014. In a report issued in 2015, USDA compared the potential for U.S. agricultural exports to Cuba to those of the Dominican Republic, noting that the Dominican Republic market bears similarities to Cuba in terms of population and per-capita income. But whereas the Dominican Republic imported an annual average of $1.3 billion of U.S. farm products between 2013 and 2015, Cuba’s average annual imports were far lower at $262 million over that same period. For more on U.S. agricultural trade with Cuba, see CRS Report R44119, U.S. Agricultural Trade with Cuba: Current Limitations and Future Prospects, by Mark A. McMinimy. Table 1. Major U.S. Agricultural Product Exports to Cuba 2013-2015 Average Product Value in Millions of U.S. Dollars Percentage of Total Total Agricultural Exports 261.8 100% - Poultry Meat & Products (ex. eggs) 123.9 47.3% - Soybean Meal 63.9 24.4% - Corns 30.0 11.5% - Soybeans 26.1 10% - Feeds and Fodder NESOI 6.8 2.6% - Distillers Grains 4.9 1.9% - Pork and Pork Products 3.4 1.3% Source: U.S. Department of Agriculture, Foreign Agricultural Service. Notes: Totals do not add up because list is limited to major products; NESOI = not elsewhere specified or indicated. Numerous farm groups and agribusiness interests also have identified Cuba as a market that could become a significantly larger importer of U.S. farm products. This reflects Cuba’s heavy dependence on agricultural imports (amounting to about 70% to 80% of its domestic requirements according to a March 2016 report of the U.S. International Trade Commission (ITC)) to feed its population of 11 million, the considerable transportation cost and delivery time advantages that U.S. exporters have over competitors (such as Brazil and Vietnam), and the broad range of U.S. agricultural products available for export. Some of these same stakeholders have pointed to TSRA’s ban on the use of private financing by U.S. entities to facilitate exports of agricultural products and its prohibition on the use of U.S. government export promotion programs for Cuba as policies that impair the competitiveness of U.S. agricultural products relative to foreign suppliers and that curb U.S. agricultural exports to Cuba. In its March 2016 report on the effect of U.S. restrictions on Cuban imports of goods and services, the ITC concluded that U.S. agricultural exports to Cuba could post significant gains if U.S. restrictions on trade were removed. In particular, it noted that U.S. agricultural suppliers view the inability to offer credit and U.S. restrictions on travel to Cuba as key obstacles to increasing farm exports. Exceptions to Private Financing Ban Exclude Agricultural Products In 2015, and in early 2016, the Obama Administration issued a policy of general approval for the export to Cuba of certain additional categories of goods and followed this up in January 2016 by permitting U.S. private export financing of these goods. But agricultural products continued to be excluded from private U.S. financing due to the prohibition imposed by TSRA. Critics of the Obama Administration’s policy initiative to move toward normal bilateral relations with Cuba point out that Cuba remains a one-party communist regime with a poor record on human rights, and they contend that reforms that demonstrate a commitment to democracy and human rights should precede a relaxation in the U.S. sanctions regime. In response to concerns about the ability of U.S. farmers and exporters to compete for agricultural sales to Cuba, some Members of Congress have proposed legislation that would ease or repeal various elements of the U.S. economic embargo on Cuba (see CRS Report R43926, Cuba: Issues for the 114th Congress, by Mark P. Sullivan .). Several of these would specifically address agricultural elements of economic sanctions on Cuba, including: H.R. 635 (Rangel); S. 491 (Klobuchar); S. 1049 (Heitkamp) S. 1543 (Moran); H.R. 3238 (Emmer); and H.R. 3687 (Crawford). Most recently, on June 16, 2016, the Senate Appropriations Committee reported S. 3067, the FY2017 Financial Services and General Government Appropriations bill. Section 634 of the bill would amend TSRA by removing the prohibition on private financing of agricultural commodity sales to Cuba. In addition, a proposed amendment (Crawford) to the House version of the Financial Services appropriations bill, H.R. 5485 (see amendment 24 in H.Rept. 114-639) would prohibit funding in the Act to implement, administer, or enforce Section 908(b) of TSRA that prohibits private financing of agricultural exports to Cuba.

Jun 24, 2016