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Rules, Sanctions and Enforcement Under Section 301: At Odds with the WTO?

Published online by Cambridge University Press:  27 February 2017

A. Lynne Puckett  and
William L. Reynolds
A. Lynne Puckett
Affiliation:
Baltimore, Md.
William L. Reynolds
Affiliation:
University of Maryland School of Law
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Extract

Section 301 of the Trade Act of 1974 permits the United States Trade Representative (USTR) to investigate and impose sanctions on countries whose trade practices are found to be unfair to U.S. interests. It reaches beyond the General Agreement on Tariffs and Trade (GATT), to give the United States unilateral power to penalize countries that threaten American interests. Section 301 can be used to enforce United States rights under multilateral and bilateral trade agreements, as well as to remedy unreasonable, unjustifiable or discriminatory foreign trade practices that restrict or burden U.S. trade. It contains both mandatory and discretionary provisions and specific timetables for action by the USTR.

Type
Current Developments
Information
American Journal of International Law , Volume 90 , Issue 4 , October 1996 , pp. 675 - 689
Copyright
Copyright © American Society of International Law 1996

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References

1 19 U.S.C. §§2411–2420 (1994).

2 Section 2411(a)(1) provides for mandatory action:

If the United States Trade Representative determines under section 2414(a) (1) of this tide that—

(A) the rights of the United States under any trade agreement are being denied; or

(B) an act, policy, or practice of a foreign country—

(i) violates, or is inconsistent with, the provisions of, or otherwise denies benefits to the United States under, any trade agreement, or

(ii) is unjustifiable and burdens or restricts United States commerce;

the Trade Representative shall take action authorized in subsection (c) of this section, subject to the specific direction, if any, of the President regarding any such action, and shall take all other appropriate and feasible action within the power of the President that the President may direct the Trade Representative to take under this subsection, to enforce such rights or to obtain the elimination of such act, policy, or practice.

Section 2411(b) provides for “discretionary action”:

If the Trade Representative determines under section 2414(a)(1) of this tide that—

(1) an act, policy, or practice of a foreign country is unreasonable or discriminatory and burdens or restricts United States commerce, and

(2) action by the United States is appropriate, the Trade Representative shall take all appropriate and feasible action authorized under subsection (c) of this section, subject to the specific direction, if any, of the President regarding any such action, and all other appropriate and feasible action within the power of the President that the President may direct the Trade Representative to take under this subsection, to obtain the elimination of that act, policy, or practice.

3 General Agreement on Tariffs and Trade, opened far signature Oct. 30, 1947, TIAS No. 1700, 55 UNTS 187 [hereinafter GATT].

4 See generally S. Rep. No. 1298, 93d Cong., 2d Sess. 164 (1974), reprinted in 1974 U.S.C.C.A.N. 7186.

5 19 U.S.C. §§2411–2420 (1994). Section 2411(d)(4)(A) states:

(4) (A) An act, policy, or practice is unjustifiable if the act, policy, or practice is in violation of, or inconsistent with, the international legal rights of the United States.

(B) Acts, policies, and practices that are unjustifiable include, but are not limited to, any act, policy, or practice described in subparagraph (A) which denies national or most-favored-nation treatment or the right of establishment or protection of intellectual property rights.

Section 2411(d)(5) states: “Acts, policies, and practices that are discriminatory include, when appropriate, any act, policy, and practice which denies national or most-favored-nation treatment to United States goods, services, or investment.”

6 The sanctions provisions of section 301 are contained in §2411 (c), quoted in part in text following note 30 infra.

7 Office of the United States Trade Representative, Section 301 Table of Cases (July 1995) (available from the USTR) [hereinafter Section 301 Case Log]. See also Judith Hippler Bello & Alan F. Holmer, U.S. Trade Law and Policy Series #10: Significant Recent Developments in Section 301 Unfair Trade Cases, 21 Intl Law. 211 (1987).

8 Section 301 Case Log, supra note 7.

9 Id.

10 See generally Julia Christine Bliss, The Amendments to Section 301: An Overview and Suggested Strategies for Foreign Response, 20 Law & Pol’y Int’l Bus. 501 (1989). But cf. Alan O. Sykes, Constructive Unilateral Threats in International Commercial Relations: The Limited Case for Section 301, 23 Law & Pol’y Int’l Bus. 263 (1992) (arguing that sec. 301 can prove a beneficial tool in international commerce).

11 See, e.g., the criticism of Sir Leon Brittan, Commissioner for Trade of the European Union, in Tom Buerkle, EU Blasts U.S. Tariffs on Japanese Automobiles, Int’l Herald Trib., May 18, 1995, at 1. Criticism by Asian leaders can be found in David E. Sanger, United States Finds Itself Virtually Alone in Japan Trade, N.Y. Times, May 29, 1995, at A1.

12 The recent attempt by the United States to open up the Japanese home market for automobiles was soundly criticized both here and abroad for ignoring the WTO. That criticism was all the more telling, given the timing of the American strong-arm tactics (immediately after the effective date of the WTO Agreement), and the fact that the United States had pushed very hard for the creation of the WTO. See note 106 infra.

13 Bliss, supra note 10, at 504.

14 Id.

15 Id. at 504–05.

16 Trade Act of 1974, §301(a), Pub. L. No. 93-618, 88 Stat. 1978.

17 Trade Agreements Act of 1979, §901, Pub. L. No. 9639, 93 Stat. 144, 295.

18 Trade and Tariff Act, §304(c), (d)(1), (f), Pub. L. No. 98–573, 98 Stat. 2948, 3003–06 (1984).

19 Id. §303, 98 Stat. at 3001.

20 Id. §304(c), (d)(1), (f), 98 Stat, at 3003–06.

21 Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100–418, 102 Stat. 1107 [hereinafter Trade Act of 1988]. Section 1301(a) transferred the authority to the USTR, “subject to the direction, if any, from the President.”

22 H.R. Rep. No. 40, 100th Cong., 1st Sess. 59 (1987).

23 19 U.S.C. §§2411–2420 (1994).

24 19 U.S.C §2242(a)(1)(A).

25 19 U.S.C. §2420(a)(1)(A) & (B) (as amended).

26 19 U.S.C. §2411(a) & (b).

27 19 U.S.C. §2411(a)(1).

28 19 U.S.C. §2411 (a)(2).

29 19 U.S.C. §2411(b).

30 19 U.S.C. §2411 (c).

31 Bliss, supra note 10, at 501–02.

32 19 U.S.C. §2412(a).

33 19 U.S.C. §2412(a)(4).

34 19 U.S.C. §2411 (d)(9) defines an “interested person” as “domestic firms and workers, representatives of consumer interests, United States product exporters, and any industrial user of any goods or services that may be affected by actions taken under subsection (a) or (b) of this section.”

35 19 U.S.C. §2412.

36 19 U.S.C. §2413.

37 19 U.S.C. §2414.

38 Id.

39 19 U.S.C. §24l4(a)(4).

40 19 U.S.C. §2415(a).

41 Id.

42 19 U.S.C. §2417.

43 Id.

44 Trade Act of 1988, supra note 21. 19 U.S.C. §2242(a)(1)(A) contains the “special 301” provisions. 19 U.S.C. §2420(a)(1)(A) & (B) (as amended) contains the “super 301” provisions.

45 19 U.S.C. §2242(a)(1)(A).

46 Id.

47 19 U.S.C. §2242(b)(1)(A). See also Bliss, supra note 10, at 523.

48 Section 301 Case Log, supra note 7.

49 Brazilian Pharmaceuticals, 53 Fed. Reg. 41,551 (1988).

50 Section 301 Case Log, supra note 7. Brazil Informatics, 50 Fed. Reg. 37,608 (1985); India Intellectual Property Protection, 56 Fed. Reg. 24,877 (1991), 57 Fed. Reg. 3457 (1992); Thailand Copyright Enforcement, 56 Fed. Reg. 67,114 (1991); Thailand Pharmaceutical, 57 Fed. Reg. 9762 (1992).

51 China Intellectual Property Rights, Section 301 Case Log, supra note 7, at (301-92). See Sanctions Put U.S., China on Course to Trade War, Wall St. J., Feb. 6, 1995, at A3 (sanctions scheduled to go into effect Feb. 26, 1995). See also John Ridding, Survey—China 1996: Knocks before entry to the world club, Fin. Times (London), June 27, 1996, at 2 (discussing settlement of latest bilateral trade dispute between U.S. and China).

52 Section 301 Case Log, supra note 7. See People’s Republic of China Intellectual Property Protection, 57 Fed. Reg. 3084 (1992); Taiwan Intellectual Property, id. at 25,091; Brazilian Intellectual Property Rights, 59 Fed. Reg. 4135 (1994); Korea Intellectual Property Rights, 51 Fed. Reg. 29,445 (1986); Argentina Pharmaceutical, 54 Fed. Reg. 33,809 (1989).

53 19 U.S.C. §2420(a)(1)(A) & (B) (as amended).

54 Exec. Order No. 12,901, 59 Fed. Reg. 10,727 (1994).

55 19 U.S.C. §2420(a)(2)(A) & (B) (as amended).

56 19 U.S.C. §2420(a)(1) (as amended).

57 Id.

58 Id.

59 Section 301 Case Log, supra note 7. See Brazil Import Licensing, 55 Fed. Reg. 22,876 (1990); Japan Satellites, id. at 25,761; Japan Supercomputers, id. at 25,764; Japan Forest Products, id. at 25,763.

60 Section 301 Case Log, supra note 7. See India Investment, 55 Fed. Reg. 25,765 (1990); India Insurance, id. at 25,766.

61 Ralph H. Folsom, Michael Wallace Gordon & John A. Spanogle, Jr., International Business Transactions 588 (2d ed. 1991).

62 Bliss, supra note 10, at 523.

63 Bob Benenson, With Health Care Receding, GATT Pad Gains Urgency, 52 Cong. Q. 2661, 2662 (1994).

64 Kantor Identifies No Super 301 Targets, Wash. Tariff & Trade Letter, Oct. 10, 1994, at 2 (Kantor noted eight foreign practices that, while not “super 301” targets, were “significant trade negotiating objectives for the United States”; these included the EU’s utilities directive, Canada’s dairy and poultry measures, India’s restrictions on textiles and apparel, Korea’s barriers to foreign cars, China’s dismal protection of intellectual property rights, global restrictions on financial services and telecommunications, and accession requirements for countries seeking to join the WTO).

65 Section 301 Case Log, supra note 7.

66 Id.

67 Id.

68 Id.

69 Id.

70 Id.

71 Id. Sanctions were imposed on Argentina in Argentina Hides, 47 Fed. Reg. 49,625 (1982), and on Brazil in Brazilian Pharmaceuticals, 53 Fed. Reg. 41,551 (1988).

72 EC Citrus Tariff Preferences for Certain Mediterranean Countries, 41 Fed. Reg. 52,567 (1976) (initiating investigation), 50 Fed. Reg. 26,143 (1985) (imposing additional duties), 51 Fed. Reg. 30,146 (1986) (U.S. and EU terminated retaliatory duties).

73 The European Community is now called the European Union or EU following the entry into force on November 1, 1993, of the Maastricht Treaty on European Union. This paper will refer to the EU rather than the EC.

74 50 Fed. Reg. 26,143 (1985).

75 Section 301 Case Log, supra note 7.

76 Id. at (301–11).

77 Id.

78 EC Pasta Export Subsidies, 46 Fed. Reg. 59,675 (1981) (initiating), 51 Fed. Reg. 30,146 (1986) (terminating).

79 51 Fed. Reg. 30,146 (1986).

80 EC Enlargement, 51 Fed. Reg. 18,294 (1986) (imposing quotas in response to EU quantitative restrictions), 52 Fed. Reg. 2663 (1987) (additional tariff increases announced), id. at 3523 (USTR suspended additional duties), 56 Fed. Reg. 30,945 (1991) (USTR terminated quantitative restrictions).

81 See Section 301 Case Log, supra note 7, at (301–54).

82 Id.

83 EC Hormones, 52 Fed. Reg. 49,131 (1987) (proclaiming, but immediately suspending, increased duties on certain EU products). See also Section 301 Case Log, supra note 7, at (301–62).

84 Section 301 Case Log, supra note 7, at (301–62).

85 Id.

86 Canadian Import Restrictions on Beer, 55 Fed. Reg. 27,731 (1990) (initiating investigation), 57 Fed. Reg. 33,747 (1992) (imposing 50% ad valorem tax). See also Section 301 Case Log, supra note 7, at (301–80).

87 Section 301 Case Log, supra note 7, at (301-80).

88 Id.

89 Japan Leather, 42 Fed. Reg. 42,413 (1977) (initiating), 45 Fed. Reg. 51,171 (1980) (monitoring agreement to expand quota), 51 Fed. Reg. 9435 (1986) (raising tariffs on imports). See also Section 301 Case Log, supra note 7.

90 Section 301 Case Log, supra note 7, at (301-13).

91 Id.

92 Section 301 Case Log, supra note 7.

93 Brazil, Korea, and PRC Thrown Silk Agreements with Japan, 42 Fed. Reg. 11,935 (1977) (initiating), 43 Fed. Reg. 8876 (1978) (terminating). See also Section 301 Case Log, supra note 7.

94 Section 301 Case Log, supra note 7.

95 Japan Cigars, 44 Fed. Reg. 19,083 (1979) (initiating), 46 Fed. Reg. 1389 (1981) (terminating). See also Section 301 Case Log, supra note 7, at (301-17).

96 Japan Pipe Tobacco, 44 Fed. Reg. 64,938 (1979) (initiating), 46 Fed. Reg. 1388 (1981) (terminating). See also Section 301 Case Log, supra note 7, at (301–19).

97 Section 301 Case Log, supra note 7.

98 Id.

99 Martha M. Hamilton, U.S. to Hit China With Stiff Tariffs, Wash. Post, Feb. 5, 1995, at A1.

100 Bliss, supra note 10, at 502.

101 Letter and Executive Summary Results of the GATT Uruguay Round of Multilateral Trade Negotiations, from William J. Clinton, President of the United States, to Thomas Foley, Speaker of the U.S. House of Representatives 24 (Dec. 15, 1993) (on file with authors).

102 See generally G. Richard Shell, Trade Legalism and International Relations: An Analysis of the World Trade Organization, 1995 Duke L.J. 829.

103 Although, of course, one never knows these days whether the Supreme Court will examine legislative history.

104 The language is curiously lacking in clarity. Section 102(a) (1) of the implementing legislation states that “ [n]o provision of any of the Uruguay Round Agreements … that is inconsistent with any law of the United States shall have effect.” Uruguay Round Agreements Act, Pub. L. No. 103–465, 108 Stat. 4809, 4815 (1994). That language strongly suggests that section 301 survives the Uruguay Round. The linguistic trouble comes with the definition provision of the implementing legislation, §101, which does not expressly define the key term “Uruguay Round Agreements.” Only by circular reasoning can the reader determine with reasonable confidence that the WTO is part of those Agreements.

105 H.R. Rep. No. 826, 103d Cong., 2d Sess. 137 (1994), reprinted in 1994 U.S.C.C.A.N. 3773, 3909 (emphasis added).

106 The American record so far is mixed. In a much-publicized dispute with Japan over automobiles, the United States essentially bypassed the WTO and imposed sanctions unilaterally. Although the dispute was resolved fairly quickly, the American position was sharply criticized at home and abroad. See, e.g., Nathaniel E. Nash, The Lonely Americans: Isolated in a Trade War, N.Y. Times, May 26, 1995, at D2.

Other than that dispute, however, which also included a complaint filed with the WTO, the United States has indicated that it will work within the WTO framework—as either claimant or respondent. See Coquilles and Muscles, Economist, Sept. 30, 1995, at 91.

107 Section 301 Case Log, supra note 7.

108 Id.