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1 1 (June 4, 2019)

handle is hein.crs/govzxu0001 and id is 1 raw text is: Congressional Research Service Enforcing Uthe atvedebatse cin3 and China Overview Concerns over China's policies on intellectual property (IP), technology, and innovation led the Trump Administration in August 2017 to launch a Section 301 investigation of those policies. Consequently, the United States has implemented three rounds of tariff increases on a total of $250 billion worth of Chinese products, while China has increased tariffs on $110 billion worth of U.S. products. The Trump Administration has threatened to increase tariffs on nearly all remaining imports from China. What Is Section 301 and How Does It Work? Sections 301 through 310 of the Trade Act of 1974, as amended, are commonly referred to as Section 301. It is one of the principal statutory means by which the United States enforces U.S. rights under trade agreements and addresses unfair foreign barriers to U.S. exports. Section 301 procedures apply to foreign acts, policies, and practices that the USTR determines either (1) violate, or are inconsistent with, a trade agreement; or (2) are unjustifiable and burden or restrict U.S. commerce. The measure sets procedures and timetables for actions based on the type of trade barrier(s) addressed. Section 301 cases can be initiated as a result of a petition filed by an interested party with the USTR or initiated by the USTR. Once the USTR begins a Section 301 investigation, it must seek a negotiated settlement with the foreign country concerned, either through compensation or an elimination of the particular barrier or practice. For cases involving trade agreements, such as those under the Uruguay Round (UR) agreements in the World Trade Organization (WTO), the USTR is required to use the formal dispute proceedings specified by the agreement. For Section 301 cases (except those involving a trade agreement or an IPR issue) the USTR has 12 to 18 months to seek a negotiated resolution. If one is not obtained, the USTR determines whether or not to retaliate (which usually takes the form of increased tariffs on selected imports) at a level equivalent to the estimated economic losses incurred by U.S. firms from the foreign barrier or practice. After the United States implemented the UR agreements and joined the WTO in 1995, the USTR still sometimes began Section 301 investigations but then brought the issues at hand to the WTO for dispute resolution. After 2010, the USTR brought all trade disputes involving WTO members directly to the WTO for adjudication. The Trump Administration's use of Section 301, rather than solely utilizing the WTO dispute settlement process to address the issues of concern, is a departure from past U.S. practices. New U.S. Section 301 Measures Against China On March 22, 2018, President Trump signed a Memorandum on Actions by the United States Related to the Section 301 Investigation. Described by the White House as a targeting of China's economic aggression, the Updated June 4, 2019 memorandum identified four broad policies that justified U.S. action against China under Section 301. It said China * uses joint venture requirements, foreign investment restrictions, and administrative review and licensing processes to force or pressure technology transfers from U.S. companies to a Chinese entity; * maintains unfair licensing practices that prevent U.S. firms from getting market-based returns for their IP; * directs and facilitates investments and acquisitions which generate large-scale technology and IP transfer to support China's industrial policy goals, such as the Made in China 2025 (MIC 2025) initiative; and * conducts and supports cyberintrusions into U.S. computer networks to gain access to valuable business information. Subsequently, the Trump Administration increased tariffs by 25% on three tranches of tariff products with combined value of $250 billion worth of imports from China and has threatened to boost tariffs on nearly all remaining products from China (valued at $300 billion). China has increased tariffs (at rates ranging from 5% to 25%) on $110 billion worth imports from the United States (see table and figure). Table I. U.S.-China Section 301 Tariff Action Ad Country Valorem Stated Imposing Tariff Imports Tariff Actions and Tariff Rates Impacted Dates U.S. 25% $34 billion Implemented Tranche I 7/6/2018 China 25% $34 billion Implemented Tranche I 7/6/2018 U.S. 25% $16 billion Implemented Tranche 2 8/23/2018 China 25% $16 billion Implemented Tranche 2 8/23/2018 U.S. 1000, then 10% hike effective $200 billion 9/24/2018; raised to 25% by 6/1/2019 5% and 10% hikes on 5% and 9/24/2018; increased Tranche 3 10%, then $60 billion to 10%, 20%, and Tranche) 10%, 20%, 25% on selective (4 lists) and 25% products, effective 6/1/2019 U.S. Draft USTR notice Tranche 4 25% $300 billion issued 5/13/19 proposed I I (action pending) Sources: USTR and Chinese Ministry of Finance. https:!crsreports~cong --ssq_

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