Senate Finance Committee Hearing on Trade Enforcement Bill

S. 1919 contains provisions that would (partial list):

absent extraordinary circumstance, require the President to proclaim the import relief that the International Trade Commission recommends in a Section 421 China safeguard investigation;

(Section 421 implements a transitional (through 2013) product-specific safeguard provision relating to China's accession to the World Trade Organization (WTO). Although the President has had the opportunity to implement Section 421 restrictions against China, he has so far declined to do so.)

require the U.S. Trade Representative (USTR) to provide an annual report to Congress identifying the most significant market access barriers to U.S. companies abroad and take enforcement action to resolve them (referred to by one witness as "Super 301");

clarify that the Commerce Department has the authority to apply countervailing (CV) duties to non-market economies (such as China);

override a Federal Circuit decision by providing that the ITC must make its material injury determination in antidumping (AD) and CV cases without regard to whether other imports will likely replace imports from the country under investigation;

allow the Senate Finance Committee or House Ways and Means Committee (by majority vote) to require the USTR to identify a specific priority foreign country trade practice in its annual report;

establish a commission to review WTO dispute settlement reports and prohibit any change to federal regulation to comply with an adverse report until Congress receives the commission's report on its review;

create a new Senate-confirmed Chief Enforcement Officer, establish an interagency Trade Enforcement Working Group, and authorize $5 million for USTR enforcement activities; and

authorize the ITC to appoint hearing officers (with technical expertise and intellectual property rights law experience), rather than administrative law judges, to take evidence and make initial decisions in Section 337 intellectual property investigations.

(See ITT's Online Archives or 09/18/07 news, 07091805, for more detailed BP summary of S. 1919.)

USTR Does Not Support Bill in Present Form

In his written statement, USTR General Counsel Maruyama notes that the USTR does not support S. 1919 in its present form for the following reasons:

Section 421. The USTR opposes new restrictions on the President's authority to review ITC determinations under Section 421 of the Trade Act of 1974 (the China safeguard provision) because making relief mandatory upon an affirmative ITC determination in Section 421 cases could threaten the public interest and invite retaliation against some U.S. leading exports, including U.S. farm products.

Super 301. The USTR also opposes the proposed Super 301 procedures, stating that the inflexibility of Super 301 could force USTR to bring cases at the wrong time, in the face of industry opposition, or in situations where the risk of failure with the case may be high and counterproductive to the objective of removing a barrier.

Chief Trade Enforcement Officer. The USTR General Counsel also expressed concerns with the provisions creating a new "Chief Trade Enforcement Officer" at USTR and a Trade Enforcement Working Group, as this could become a bureaucratic obstacle and lead to delays in enforcing U.S. trade agreements due to the requirement that the Working Group be consulted before USTR can take any enforcement action.

Commission to review WTO decisions. The USTR General Counsel also asked the Senate Finance Committee to reconsider the establishment of a Commission to review WTO Appellate Body and panel decisions, as the USTR has already demonstrated that it is fully prepared to criticize flawed WTO decisions.

ITIF Urges Tax Credit for Expenditures Related to Bringing WTO Cases

The Information Technology and Innovation Foundation (ITIF) also testified on S. 1919, characterizing it as an "important step forward."

Noting that companies need to play a larger role in bringing WTO cases, ITIF proposes that Congress encourage companies to build WTO cases by allowing them to take a 25% tax credit for expenditures related to bringing WTO cases.

Written statements from all witnesses from the hearing (dated 05/22/08) available at http://finance.senate.gov/sitepages/hearing052208.htm.

Senate Finance Committee press release (dated 08/01/07) available at http://finance.senate.gov/press/Bpress/2007press/prb080107a.pdf.

Senate Finance Committee's section-by-section analysis of S. 1919 available at http://finance.senate.gov/press/Bpress/2007press/prb080107c.pdf.