In the process of abusing regulations, President Trump has provided a road map for Congress to reform 301 , giving us the opportunity to ensure that future presidents will not follow his lead.
Section 301 of the Trade Act of 1974 gives the U.S. Trade Representative (USTR) broad authority to investigate "unfair" foreign trade policies that allegedly harm U.S. companies and initiate the imposition of tariffs or other trade restrictions to eliminate those policies. . The statute was a common tool of U.S. trade policy from the 1980s and 1990s, authorizing the U.S. Trade Representative to conduct nearly 100 different investigations during that period. However, since the establishment of the World Trade Organization (WTO) in 1995, the USTR has rarely used Section 301, and almost exclusively to initiate or implement WTO dispute settlement actions. That is, under WTO rules, these actions were supposed to replace the various unilateral trade actions that were once applicable under the Act. The Trump administration has deviated from this long-standing U.S. practice, exploiting flaws in Section 301 to bypass the WTO and impose unilateral tariffs on multiple U.S. trading partners, inflicting huge economic and geopolitical costs in the process. .
Against this historical backdrop, this article examines the Trump administration's actions, assesses how the law went beyond its intended purpose and directly violates the United States' WTO obligations, and proposes practical reforms to prevent future abuse.
Introduction
The widespread abuse of unilateral trade tools has been a hallmark of Donald Trump's presidency. His actions prompted lawmakers in the House and Senate to consider bipartisan legislation that would limit the president's authority to impose import tariffs without significant congressional input or oversight. One law in particular, Section 301 of the Trade Act of 1974, gives the U.S. Trade Representative (USTR) broad authority to respond to unfair trade practices at the direction of the President. Such unfair trade practices include violations of U.S. trade agreements or "foreign acts, policies, or practices that are unreasonable or discriminatory and burden U.S. commerce."
After the establishment of the World Trade Organization (WTO) in 1995, Article 301 was rarely invoked. Because WTO rules generally prohibit members from unilaterally ruling on trade disputes. However, in 2017, President Trump reinstated this little-used regulation to achieve some of his economic and geopolitical goals, most notably to combat the alleged abuse of Chinese intellectual property rights by and . Trump imposed tariffs on billions of dollars of U.S. imports from China and then imposed more tariffs in retaliation for the first round of tariffs by the Chinese government.
The Trump Administration has exploited the broad procedural and substantive discretion Congress has given the President under the law, as well as the ambiguity of the legal text, to implement these and other Section 301 tariffs. In the process, the President has not only caused significant damage to U.S. economic and trade relationships, but has also ignored decades of precedent and the U.S. government's commitments to its foreign counterparts to restrict the use of Section 301 after the WTO agreement takes effect. terms.
In his abuse of the statute, however, President Trump has also provided Congress with a roadmap for reforming Section 301 to ensure that future presidents cannot follow his lead. Restricting the president's power on Section 301 not only helps Congress take back its power to regulate international commerce, thus providing a sufficient check and balance on the excessive behavior of the executive branch, but also demonstrates the United States' commitment to maintaining rules-based international commerce. trade system and the seriousness with which it restores fragile economic and geopolitical relations with U.S. allies.
Background
In light of the slew of tariffs imposed by executive branch actions under the Trump administration, one might forget that Congress has exclusive and comprehensive constitutional authority to regulate trade with other countries and, at one time, was responsible for changing U.S. tariffs The only tool. That approach began to shift when Congress gave the president some trade policy authority under the Reciprocal Trade Agreements Act of 1934, and the trend has only accelerated since then.
One of the most important legislative changes is Section 301. After World War II, bipartisan belief in the geopolitical benefits of trade grew, leading to the negotiations of the 1947 General Agreement on Tariffs and Trade (GATT), under which participating countries liberalized most tariffs on each other's goods. , and agree to various other regulations. However, GATT lacks rules on many non-tariff barriers and has only a weak, non-binding enforcement mechanism and no means of appealing adverse rulings. There are also concerns that U.S. trading partners will not provide reciprocal trade. These problems, coupled with the U.S. economic downturn and weak export performance in the early 1970s, led Congress to pass the Trade Act of 1974, whose primary purpose was to expand the president's authority to negotiate "the coordination, reduction, and elimination of non-tariff barriers and and other agreements that distort international trade and establish constitutional procedures for Congress to review and enforce those agreements."
The bill also expands the executive branch’s powers to address unfair trade practices. Title III is intended to "ensure prompt and affirmative response to foreign import restrictions, export subsidies, price discrimination, and other unfair foreign trade practices." Section 301 of the bill authorizes the President to impose Retaliation against foreign trading partners who maintain "unreasonable or unjustifiable" restrictions on U.S. trade. If The Office of the U.S. Trade Representative determines that:
(1) a foreign country’s actions, policies, or practices are unreasonable or discriminatory and burden or restrict U.S. commerce, and (2) the U.S. action is appropriate , the Trade Representative shall take all appropriate and practicable actions... within the President's authority, which the President may direct the Trade Representative to take under this subsection to obtain the elimination of the effects of such act, policy, or practice. It is within the powers of the President to take action with respect to trade in any goods or services, or with respect to any other field relating to such foreign country.
Types of actions or foreign conduct subject to Section 301 include:
Violations of trade agreements;
Unreasonable conduct (actions, policies, or practices that violate or are inconsistent with U.S. international legal rights, such as the denial of national treatment or normal trade relations treatment); and
unreasonable conduct (conduct, policy or practice that does not necessarily violate or be inconsistent with U.S. international rights, but is otherwise unfair and unjust).
In other words, the president can take an action under Section 301, such as imposing tariffs on imported products, in retaliation for unfair trade practices, including market access restrictions or other barriers to U.S. exports.
Under the regulation, the USTR can initiate Section 301 investigations on its own initiative upon application by any interested party or in consultation with the Private Sector Advisory Committee. Petitions for Section 301 investigations are the traditional method by which private interests can prompt USTR to take legal action against a foreign country. However, since 1995, 74% of all Section 301 investigations by USTR have been self-initiated cases, indicating that Congress and the private sector are no longer involved in these cases. This shift may be due to the establishment of the WTO and its binding dispute settlement system in 1995. Section 301 cases have since been used almost exclusively to establish a case that could be turned into a formal WTO dispute. The investigation of
301 is conducted by a committee that includes an official from the Office of the United States Trade Representative as committee chair, as well as individuals from other agencies related to the issues under investigation. The committee reviews complaints, holds public hearings and makes recommendations to a staff committee on trade policy made up of senior civil servants. The U.S. Trade Representative's office decides whether to take action on Section 301 cases based on the committee's recommendations.
The U.S. Trade Representative is authorized to take two different types of actions under Section 301, as the statute provides for mandatory and discretionary actions. Section 301(a) involves "enforcement action," meaning that if the U.S. Trade Representative finds that unfair trade practices are occurring, it must take certain actions.However, there are five situations in which the USTR is not required to take action, as follows:
1 A WTO panel report, or a dispute settlement award under a trade agreement, found that U.S. trade agreement rights were not abridged or violated;
2 USTR found that the The foreign country is taking satisfactory steps to grant the United States trade agreement rights or has agreed to eliminate or phase out unfair trade practices;
3 There is an urgent solution to burdens or restrictions on U.S. commerce;
The country has provided an order Compensatory trade benefits that are satisfactory to the public;
In special circumstances, the U.S. Trade Representative’s office believes that taking action will have a seriously disproportionate adverse impact on the U.S. economy, or the U.S. Trade Representative’s Office believes that taking the action will cause serious harm to national security .
Section 301(b) involves "discretion," whereby the USTR can take action if he or she finds that a foreign country's actions, policies, or practices are unreasonable or discriminatory and burden U.S. commerce. The U.S. Trade Representative has the discretion to take all appropriate and practicable actions, at the specific direction of the President, to obtain the elimination of such act, policy, or practice. The types of actions the U.S. Trade Representative can take include imposing tariffs or import restrictions, withdrawing from or suspending trade agreement benefits, or entering into binding agreements requiring the target foreign country to eliminate controversial burdensome acts, or practices, or to provide compensation to the United States. Sex trade benefits (e.g. liberalization in another industry or sector). If the U.S. Trade Representative determines that import restrictions are an appropriate form of action, he or she must prioritize tariffs over other forms of import restrictions and consider replacing any other forms of import restrictions with equivalent tariffs on an incremental basis.
Section 301 actions taken against a foreign country are subject to certain restrictions. First, its value must be commensurate with the burden or restriction the country imposes on U.S. commerce. Second, the United States must participate in international dispute settlement efforts, especially at the WTO, in parallel with the Section 301 process. In fact, USTR must request consultations with foreign countries accused of engaging in unfair trade practices on the same day it establishes an investigation into those practices. If the measures taken may violate a trade agreement and the matter cannot be resolved through negotiation, USTR must promptly request formal dispute resolution under the agreement. Finally, in preparing for consultation and dispute resolution proceedings, the USTR must seek information and advice from petitioners and appropriate private sector advisory committees. It should be emphasized that U.S. law restricts the USTR from taking action under Section 301 on any claim covered by a WTO agreement without challenging the WTO and obtaining authorization to implement corresponding countermeasures. However, USTR can use Section 301 for practices not covered by the WTO agreement.
Figure 1 shows the total number of Section 301 investigations from 1975 to 2020. Note that in 1984, Congress amended the Trade Act of 1974 and gave the Office of the United States Trade Representative additional authority to conduct investigations on its own. The number of investigations dropped markedly shortly after the establishment of the WTO in 1995, and increased immediately thereafter, mainly resulting from new WTO dispute actions. From 1975 to 2020, there were 130 Section 301 investigations, 35 of which, or only 27% of all cases, were initiated after the establishment of the WTO. Consistency of the
301 clause with the WTO Whether the
301 clause allowing unilateral adjudication of trade disputes is consistent with the WTO agreement, which usually requires disputes to be conducted only through multilateral channels, has been a subject of debate. To address this potential conflict, the Statement of Binding Administrative Action under the Uruguay Round Agreements Act (SAA), which incorporates WTO agreements into U.S. law, states that the Office of the United States Trade Representative "will" (rather than "may" or " The WTO's dispute settlement procedures can be invoked against anyone "alleged to have violated the Uruguay Round agreement or harmed U.S. interests under that agreement."However, the SAA added that "neither Section 301 nor the WTO Dispute Settlement Understanding (DSU) will require the Trade Representative to invoke the DSU dispute settlement procedures if the Trade Representative considers that a matter does not involve the Uruguay Round Agreement." Due to this understanding , several cases started under Section 301 procedures after 1995 have been submitted to WTO dispute settlement. The Office of the U.S. Trade Representative has also submitted cases directly to the WTO without initiating an investigation through Section 301.
’s actions regarding Section 301 must follow the requirements of the SAA to remain consistent with the United States’ WTO obligations. This was confirmed in the WTO dispute brought by the European Union (then known as the European Community in the WTO) against the United States in January 1999 over Article 301. The European Community believes that the following aspects of Article 301 are inconsistent with WTO rules: the United States can take unilateral actions under Article 301 before the WTO's ruling on the issue is adopted; the United States can unilaterally determine whether the WTO's ruling on the issue is be enforced by the defendants in the case and take action to remedy the underlying issues before seeking additional dispute resolution proceedings at the WTO; Section 301 provides a shorter time frame allowing the U.S. Trade Representative to determine a suspension before the WTO makes a ruling the extent of concessions and enforcing those concessions.
However, the WTO panel held that the United States' commitments in the binding SAA eliminated any prima facie inconsistency with WTO law. The panel noted that the SAA contains the government's views, is submitted to Congress by the President and endorsed by Congress, relates to interpretation and application, and contains commitments that future administrations will follow and that both domestic and international actors can rely on. . The
Panel believes that the United States' commitment to follow WTO procedures and laws in applying Section 301 set forth in the SAA is sufficient to overcome any apparent inconsistency between Section 301 and WTO rules. However, the panel also noted that U.S. practices may be inconsistent with this legal consistency and thus violate U.S. WTO obligations. The
Panel explains that this finding of conformity will no longer exist if the United States Government or another agency of the United States Government denies or in any other way cancels the commitments set forth in the SAA and confirmed and expanded by the United States to this Panel. There is a reason. In addition, as WTO trade law expert Simon Lester said, even if it turns out that the United States' actions are not consistent with the correct interpretation of the DSU, the expert group expressed confidence that the United States will follow and wait for the completion of the DSU process from then on, and then Make a decision again.
As we detail in the next section, the Trump administration broke with past U.S. practices and violated its commitments under the Special Assistance Agreement. Therefore, the actions taken by the Trump administration, some of which continue under the Biden administration, violate WTO rules and, perhaps just as importantly, the United States' long-standing commitment to its trading partners to When organizational rules are in effect, Section 301 will never be used to implement unilateral retaliation.
Source: The American think tank Cato Institute published "Policy Analysis Report No. 930" written by Scott Lincicome, Inu Manak and Alfredo CarrilloObregon on June 14, 2022. Unfair Trade or Unfair Protection? The Evolution and Abuse of Section 301. The article is very long, so I will share with you the parts I think will be useful.
