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1 [1] (January 4, 2018)

handle is hein.crs/crsmthzzafw0001 and id is 1 raw text is: Enfor Congressional Research Service ~~~Info rigthe egislative debatecsancel1914 Enforcing U.S. Trade Laws: Section 301 and China Overview The U.S. Trade Representative's (USTR) 2017 Trade Policy Agenda and 2016 Annual Report stated that strictly enforcing U.S. trade laws (including the use of Section 301) was one of the Administration's top four priorities. It said that properly used, Section 301 can be a powerful lever to encourage foreign countries to adopt more market- friendly policies. On August 14, 2017, President Trump issued a Presidential Memorandum directing the USTR to determine whether it should launch a Section 301 investigation into China's protection of U.S. intellectual property rights (IPR) and forced technology transfer polices. On August 18, 2017, the USTR announced it had launched a Section 301 case against 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. Since 1974, the USTR has initiated 122 Section 301 cases, retaliating in 16 instances. The last 301 case was in 2010 against China's green technology policies. Section 301 procedures apply to foreign acts, policies, and practices that the USTR determines either (1) violates, or is inconsistent with, a trade agreement; or (2) is unjustifiable and burdens or restricts 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 self-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 utilize the formal dispute proceedings specified by the agreement. For Section 301 cases (except those involving a trade agreement or 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 loss in commerce by U.S. firms from the foreign burden or restriction that is being challenged. After the United States implemented the UR agreements in 1995, the USTR sometimes chose to file Section 301 cases on WTO-related issues and then initiated a WTO case, but since 2010, disputes have been taken directly to the WTO. January 4, 2018 Special 301 U.S. innovation and the intellectual property that it generates have been cited by various economists as a critical source of U.S. economic growth and global competitiveness. China has been a particular concern to U.S. IPR stakeholders for many years. Section 182 of the 1974 Trade Act (as amended), commonly referred to as Special 301, is the primary U.S. trade statute used to protect U.S. IPR in foreign markets. The provision directs the USTR to report to Congress those countries that deny adequate protection or market access for U.S. IPR and to designate as priority those countries with the most onerous acts, policies, or practices and have the most significant impact on U.S. IPR stakeholders. If a country is designated by the USTR as a priority foreign country, it will launch a Section 301 case. If an agreement is not reached within six months (extendable to nine months), the USTR must determine if the foreign practice violated U.S. rights under a trade agreement or was unreasonable or discriminatory. If an affirmative determination is made, the USTR may decide to impose trade sanctions. The Special 301 statute was amended in the UR implementing legislation to exempt IPR issues covered under the WTO from the timetables required under Special 301. This allows the USTR to proceed under the WTO dispute resolution process and timetables. In 2001, the United States designated Ukraine as a priority foreign country under Special 301, and subsequently suspended its tariff preferences under the Generalized System of Preferences (GSP), which were valued at $75 million (Ukraine was not a WTO member at the time). Section 301 and WTO Dispute Settlement A central goal of the United States during the UR negotiations was strengthening the trade dispute mechanism that existed under the General Agreement on Tariffs and Trade (GATT), the WTO's predecessor. Under the GATT, any member could delay or block the dispute settlement panels and reports and the GATT had no real authority to enforce its decisions. At the time, the United States claimed that it was often forced to rely on unilateral Section 301 action because of the lack of an effective multilateral dispute settlement process. However, many U.S. trading partners often criticized Section 301 as unfair. The WTO dispute mechanism established in the UR agreements prevents members from blocking panel decisions and can authorize retaliation if a member fails to implement a WTO dispute settlement body's ruling. The Clinton Administration's 1994 Statement of Administration Action (SAA) accompanying the implementation legislation of the UR agreements specified that Section 301 cases involving the UR agreements (or impairment of U.S. benefits under the UR) would, as required by U.S. law, go through the WTO dispute www.crs.gov 1 7-5701

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