THESE DOCUMENTS ARE WRITTEN AND PERIODICALLY UPDATED BY U.S. GOVERNMENT ATTORNEYS, AS TIME AND RESOURCES PERMIT. PLEASE NOTE THE DATE MARKED ON THE DOCUMENT YOU RETRIEVE AND BE ADVISED THAT THE INFORMATION CONTAINED THEREIN IS CURRENT UP TO THAT DATE.
A. Statutory Basis -- Section 301 of the Trade Act of 1974, as amended (19 U.S.C. ¡¦ 2411).
B. Purpose -- Its primary objective is to provide the United States with leverage to enforce U.S. rights under trade agreements, resolve trade disputes and open foreign markets to U.S. goods and services. It is also aimed at producing equitable conditions for U.S. investment abroad and improving foreign protection of intellectual property rights.
C. Role of Private Sector -- Private parties may submit a petition to the U.S. Trade Representative (USTR) requesting that it initiate a section 301 investigation of foreign government acts, policies or practices that violate a trade agreement or are otherwise actionable under section 301.
D. Retaliation
1. Section 301 is the principal statutory authority under which the United States may impose trade sanctions on foreign countries that maintain an act, policy or practice that:
a. violates, or denies U.S. rights or benefits under, trade agreements; or
b. is unjustifiable, unreasonable or discriminatory and burdens or restricts U.S. commerce.
2. By providing a credible threat of retaliation, section 301 enhances the ability of the U.S. Government to negotiate and enforce agreements aimed at eliminating unfair trade practices.
A. Initiation of Section 301 Investigation
1. A section 301 investigation may be commenced in one of two ways:
a. An interested party files a petition with USTR requesting an investigation of a particular practice of a foreign country (and USTR determines within 45 days whether to initiate an investigation); or
b. USTR self-initiates an investigation.
2. In determining whether to initiate an investigation, USTR may consider whether retaliatory action under section 301 would be effective in addressing the act, policy or practice involved.
3. USTR must publish its determination to initiate an investigation (or reasons for not initiating in the case of a petition) in the Federal Register.
B. Public Comments and Public Hearing -- Where USTR initiates an investigation based on a petition, it must provide an opportunity for the public to comment on the issues, and hold a public hearing if requested by the petitioner or an interested person.
C. Consultations with the Foreign Government -- Upon initiation of an investigation, USTR must request consultations with the foreign government.
D. Formal Dispute Settlement -- Where an investigation involves an alleged violation of a trade agreement (such as a World Trade Organization (WTO) agreement or the North American Free Trade Agreement (NAFTA)), USTR must follow the consultation and dispute settlement provisions set out in that agreement.
E. Completion of Investigation
1. USTR must conclude its investigation and make (and publish in the Federal Register) a determination of whether the foreign practice is actionable under section 301 within:
a. 18 months after initiation of an investigation involving a trade agreement that includes a dispute settlement mechanism, or 30 days after the conclusion of dispute settlement procedures, whichever comes first; or
b. 12 months after initiation of an investigation in all other cases.
2. Where an investigation concerns intellectual property rights but does not involve a trade agreement, a determination must be made within six months of initiation of the investigation, unless it is extended up to nine months because:
a. there are complicated issues which require additional time; or
b. the foreign country is making substantial progress in taking appropriate measures to protect intellectual property rights.
A. Mandatory Retaliatory Action
a. a WTO Dispute Settlement Body has adopted a report or a formal dispute settlement body (such as a NAFTA panel) has found that the act, policy or practice does not violate or deny U.S. rights under a trade agreement;
b. USTR finds that the foreign country is taking satisfactory measures to comply with a trade agreement;
c. the foreign country has agreed to:
i. eliminate or phase out the act, policy or practice or to a satisfactory solution; or
ii. provide the United States with compensatory trade benefits;
e. USTR finds "in extraordinary cases" that the adverse effects of retaliation on the U.S. economy would substantially outweigh the benefits of such action; or
f. USTR finds that the action would cause serious harm to the national security of the United States.
B. Discretionary Retaliatory Action
a. denial of fair and equitable opportunities for the establishment of enterprises;
b. denial of adequate and effective protection of intellectual property rights, even if the foreign country is in compliance with the WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPS);
c. denial of fair and equitable market access opportunities for U.S. persons that rely on intellectual property protection;
d. denial of fair and equitable market opportunities, including a foreign government's toleration of systematic anticompetitive activities by or among enterprises in the foreign country that have the effect of restricting access of U.S. goods or services to a foreign market in a manner inconsistent with commercial considerations;
e. export targeting; and
f. denial of worker rights, including the right of association, the right to organize and bargain collectively, or failure to provide standards for minimum wage, hours and safety.
4. In determining whether a foreign practice is unreasonable, reciprocal opportunities in the United States for foreign nationals and firms must be considered.
5. Practices of a foreign country will not be treated as unreasonable if USTR determines that they are not inconsistent with the level of the country's economic development.
6. Discriminatory practices include acts, policies or practices that deny national or MFN treatment to U.S. goods, services or investment.
C. Scope of Authorized Retaliatory Action
1. USTR is authorized to take retaliatory actions, subject to the direction of the President, that are within the President's power with respect to trade
in goods or services or any other area of pertinent relations with the foreign country.
2. Where USTR makes an affirmative determination that a foreign act, policy or practice is actionable under section 301, USTR may:
a. suspend, withdraw or prevent the application of trade agreement concessions;
b. impose duties or other import restrictions on goods (where retaliation is in the form of import restrictions, USTR must give preference to the imposition of duties over other import restrictions);
c. impose fees or restrict the terms and conditions or deny issuance of authorizations to provide services, provided that:
i. action may only be taken if the service sector access authorization has been granted or is pending on or after a 301 petition is filed, or a determination is made to initiate an investigation; and
ii. USTR has consulted with any relevant Federal or State agency;
d. withdraw, limit or suspend duty-free treatment under the General System of Preferences, the Caribbean Basin Economic Recovery Act or the Andean Trade Preference Act, where the act, policy or practice subject to the 301 determination also fails to meet the criteria for receiving such duty- free treatment (even if the value of such action is not equivalent to the burden or restriction on U.S. commerce); or
e. enter binding agreements to:
i. eliminate or phase out the act, policy or practice;
ii. eliminate any burden or restriction on U.S. commerce resulting from the act, policy or practice; or
iii. provide compensatory trade benefits.
3. Retaliatory action may be taken against any economic sector without regard to whether that sector was involved in the act, policy or practice subject to the determination. Moreover, retaliation may be taken on either a non- discriminatory basis or solely against the foreign country involved.
4. The retaliatory action must be equivalent in value to the burden or restriction imposed on U.S. commerce by the foreign country.
D. Development of Retaliatory Action -- Where USTR makes a determination to take retaliatory action, a retaliation list must be prepared.
E. Implementation of Retaliatory Action -- USTR must implement the retaliatory action within 30 days of the determination, except in certain circumstances, including:
F. Section 306 Monitoring of Foreign Compliance
a. consult with the petitioner, if any, involved in the initial investigation and with the concerned domestic industry; and
b. provide an opportunity for the presentation of views by interested persons.
A. Description -- "Special 301" is designed to enhance the U.S. Government's ability to negotiate improvements in foreign intellectual property regimes through bilateral or multilateral initiatives.
B. Annual Review
a. whose acts, policies or practices are "the most onerous or egregious" and have the greatest adverse impact on relevant U.S. products; and
b. that have not entered into, or are not making significant progress in, negotiations.
3. Countries not designated as "priority foreign countries" may be placed on "priority watch" or "watch" lists if their intellectual property laws or enforcement practices are of major concern to the United States.
4. A country may be identified as denying adequate and effective IPR protection, even if it is in compliance with the TRIPS Agreement.
B. Investigations of Priority Countries
C. Affirmative Determination -- An affirmative determination under "Special 301" is treated as a section 301 determination and the section 301 provisions for retaliation apply.
V. "TELECOMMUNICATIONS 301(SECTION 1377 OF 1988 TRADE ACT
A. Description -- Its primary objective is to ensure that countries fulfill their commitments to open their telecommunications markets.
B. Annual Review of Trade Agreements -- By March 31 of each year, USTR must review all trade agreements involving telecommunications products or services to determine whether the foreign country is:
C. 1377 Determination -- An affirmative determination is treated as a violation of a trade agreement under section 301, for which retaliation is mandatory and must be targeted at telecommunications products and services of the foreign country involved, unless actions against other economic sectors would be more effective in achieving compliance with the agreement.
A. Identification of Priority Practices
a. the major barriers and trade distorting practices set out in the NTE Report;
b. the trade agreements to which a foreign country is a party and its compliance with those agreements;
c. the medium-term and long-term implications of foreign government procurement plans; and
d. the international competitive position and export potential of U.S. products and services.
3. USTR may also cite foreign country practices that may warrant identification in the future or that were not identified because they are already being addressed and progress is being made toward their elimination.
B. Section 301 Investigations -- With 21 days after identification of priority foreign practices, USTR must initiate section 301 investigations of any priority practices identified in the report.
Prepared by: Jean Heilman Grier
Tel: 202/482-3215
Fax: 202/482-4076
Email Address: [email protected]
August, 1996