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1 [1] (March 13, 2025)

handle is hein.crs/scnadcna0001 and id is 1 raw text is: Congressional Research Service Inforrnin g the legislative debate since 1914 S Updated March 13, 2025 Section 301 and China: Shipping and Shipbuilding Issues Title III of the Trade Act of 1974 (Sections 301-310, codified at 19 U.S.C. §§2411-2420) is 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. It grants the U.S. Trade Representative (USTR) a range of authorities to investigate foreign trade actions, policies, and practices and impose trade sanctions on foreign countries found to violate U.S. trade agreements or engage in acts that are unjustifiable, unreasonable, or discriminatory, and burden or restrict U.S. commerce. In April 2024, USTR initiated an investigation into efforts by the People's Republic of China (PRC or China) to dominate in the maritime, logistics, and shipbuilding sectors. It determined in January 2025 that such efforts were unreasonable, burden or restrict U.S. commerce, and were therefore actionable under Section 301. With this finding, Section 301 requires USTR to negotiate with PRC officials to try to resolve U.S. concerns, and permits USTR to initiate U.S. countermeasures. In February 2025, the USTR proposed remedies for public comment (see USTR's Proposed Remedies). Relatedly, media reports indicated the White House may be preparing to take actions to bolster the U.S. shipbuilding sector. This is the second Section 301 case involving China since 2018. In late 2024, the USTR initiated a third investigation on PRC semiconductor policies and practices. Congress has considered ways to counter China's role in global shipping, including whether to revitalize the U.S.- flag shipping and shipbuilding industries and related sectors (e.g., steel). Some Members say capacity shortfalls in these sectors affect the U.S. defense posture. Other Members have sought to restrict the use of PRC port cranes, counter China's development of integrated maritime supply chains, and thwart PRC efforts to project maritime power globally through its One Belt, One Road (or Belt and Road Initiative). Congress enacted provisions in the FY2024 National Defense Authorization Act (P.L. 118-31) to prohibit the U.S. military from using any global port that uses the National Transportation and Logistics Public Information Platform (LOGINK), a PRC state-owned and controlled logistics data management platform. The act also bans federal funding for any port that uses LOGINK. USTR's Section 301 I Investigation While U.S. industry only represents 2.9% of world fleet ownership by capacity and 0.1% of global shipbuilding tonnage, USTR can use Section 301 to address the effects of PRC policies and practices on U.S. industry because of Congress' actions in 1979. Congress amended Title III of the Trade Act of 1974 (P.L. 96-39) to address its concerns about the decline of the U.S. shipbuilding industry. The amendment allows USTR to invoke Section 301 because of the effects of PRC policies and practices on U.S. maritime trade. It made actionable, per Section 301, the use of subsidies by foreign governments to construct commercial oceangoing vessels that transport goods between the United States and other countries. The amendment is codified at 19 U.S.C. §2411(d)(2). In 2022, ships moved 44.6% of U.S. global goods trade by value ($2.3 trillion) and 78.6% of U.S global goods trade by weight (1.6 billion tons). Section 301 Process Investigations: Section 301 generally requires that investigations be concluded within 12 months. USTR may determine, after carrying out an investigation, whether action under Section 301 would address issues raised in the petition. Consultations: During an investigation and prior to making a determination on whether to take action, USTR must consult with the petitioner and seek advice from private sector advisory representatives. The agency can-but is not required to-request the views of the U.S. International Trade Commission concerning how a proposed retaliatory action could impact the U.S. economy. Negotiations: Section 301 requires the USTR to seek a negotiated settlement with the country concerned. USTR has 12 to 18 months to seek a negotiated resolution, except for cases that involve a trade agreement or intellectual property (IP) rights issue. For cases involving trade agreements, the USTR is required to use such agreements' dispute process. Retaliation: If a settlement is not obtained, the USTR may determine whether to retaliate at a level it deems equivalent to the estimated U.S. economic losses incurred from the foreign barrier/practice. Section 301 authorizes the USTR to impose duties or other import restrictions; withdraw or suspend trade agreement concessions; enter into a binding agreement with the foreign government to either eliminate the conduct (or burden to U.S. commerce) in question or compensate the United States with satisfactory trade benefits; or restrict terms and conditions or deny licenses and permits that allow access to the U.S. market. While Congress may amend Section 301, the use of Section 301 authorities does not require congressional approval. The President is authorized to take any action with respect to trade in any goods or services, or with respect to any other area of pertinent relations with the foreign country to obtain the elimination of the policy or practice under investigation. See CRS In Focus IFI 1346, Section 30) of the Trade Act of /974. In March 2024, five major U.S. labor unions filed a Section 301 petition requesting that USTR investigate PRC acts, policies, and practices that sought dominance in the global maritime, logistics, and shipbuilding sectors. In April and May, 2024, USTR initiated a Section 301 investigation, accepted public comments, and held a public hearing. USTR also requested consultations with PRC counterparts. The USTR determined in its investigation that PRC policies and practices displaced foreign firms; undercut business opportunities and investments in the U.S. maritime, logistics, and shipbuilding sectors; restricted competition; and created risks from dependencies in sectors critical to .congressgy

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