President-elect Donald Trump's hard-line trade stance expressed throughout his campaign is seen by some as more of a negotiating tactic than a clear indicator of likely policy changes. While scholars still wonder how Trump would react if such talks don’t meet his goals, there's much debate as to what authority the president has to enact many of the Trump campaign promises. Among other things, Trump has said the U.S. should renegotiate NAFTA (see 1611100040), collect up to 45 percent tariffs to counter alleged Chinese currency manipulation (see 1601150029), and raise tariffs on companies that move operations overseas, withdrawing from the World Trade Organization if it disapproves of that policy (see 1607260043). Withdrawing from the WTO seems the least likely of those proposals, but a greater effort to engage China from a Trump administration is especially likely, observers said.
Section 301 Tariffs
Section 301 Tariffs are levied under the Trade Act of 1974 which grants the Office of the United States Trade Representative (USTR) authority to investigate and take action to protect U.S. rights from trade agreements and respond to foreign trade practices. Section 301 of the Trade Act of 1974 provides statutory means allowing the United States to impose sanctions on foreign countries violating U.S. trade agreements or engaging in acts that are “unjustifiable” or “unreasonable” and burdensome to U.S. commerce. Prior to 1995, the U.S. frequently used Section 301 to eliminate trade barriers and pressure other countries to open markets to U.S. goods.
The founding of the World Trade Organization in 1995 created an enforceable dispute settlement mechanism, reducing U.S. use of Section 301. The Trump Administration began using Section 301 in 2018 to unilaterally enforce tariffs on countries and industries it deemed unfair to U.S. industries. The Trump Administration adopted the policy shift to close what it deemed a persistent "trade gap" between the U.S. and foreign governments that it said disadvantaged U.S. firms. Additionally, it pointed to alleged weaknesses in the WTO trade dispute settlement process to justify many of its tariff actions—particularly against China. The administration also cited failures in previous trade agreements to enhance foreign market access for U.S. firms and workers.
The Trump Administration launched a Section 301 investigation into Chinese trade policies in August 2017. Following the investigation, President Trump ordered the USTR to take five tariff actions between 2018 and 2019. Almost three quarters of U.S. imports from China were subject to Section 301 tariffs, which ranged from 15% to 25%. The U.S. and China engaged in negotiations resulting in the “U.S.-China Phase One Trade Agreement”, signed in January 2020.
The Biden Administration took steps in 2021 to eliminate foreign policies subject to Section 301 investigations. The administration has extended and reinstated many of the tariffs enacted during the Trump administration but is conducting a review of all Section 301 actions against China.
The office of U.S. Trade Representative released its annual 2012 Special 301 review process based on compliance with intellectual property rights, and IPR enforcement in 77 trading partners. The Special 301 Report provides a means for the United States to promote the protection and enforcement of IPR. For companies on the list, the U.S. Government could initiate dispute settlement proceedings at the World Trade Organisation (WTO) or other trade bodies, or eliminate tariff preferences.
The International Trade Commission has issued a general exclusion order and a cease and desist (CD) order in its section 337 patent-based investigation of certain inkjet ink supplies and components thereof (Inv. No. 337-TA-691). The ITC has also terminated the investigation.
Note that Daily Update on Capitol Hill Trade Actions does not appear in today's issue of International Trade Today. Publication of this feature will resume as new information becomes available.
The Office of the U.S. Trade Representative has published in the Federal Register its notice of initiation of a Section 301 investigation and determinations therein, which imposes an additional 10% duty on imports of certain softwood lumber products of Canada, whose Region of Origin is Ontario, Quebec, Manitoba, or Saskatchewan, in response to Canada's failure to cure its breach of the 2006 Softwood Lumber Agreement between the U.S. and Canada (SLA 2006) or provide the monetary compensation determined by a SLA arbitral tribunal. The additional duty is effective for products that are entered for consumption or withdrawn from warehouse for consumption on or after April 15, 2009. (See ITT's Online Archives or 04/08/09 news, 09040805, for previous BP summary.) (D/N USTR-2009-0011, FR Pub 04/10/09, available at http://edocket.access.gpo.gov/2009/pdf/E9-8232.pdf)
On July 17, 2008, House Ways and Means Committee Chairman Rangel and Trade Subcommittee Chairman Levin introduced H.R. 6530, the Trade Enforcement Act of 2008, to amend U.S. trade laws to eliminate foreign barriers to exports of U.S. goods and services, restore rights under trade remedy laws, strengthen enforcement of U.S. intellectual property rights (IPR) and health and safety laws at U.S. borders, and for other purposes.
The Washington File reports that the U.S. and South Korea will open negotiations on a comprehensive bilateral free trade agreement (FTA) to remove tariff and nontariff barriers and expand trade between the countries. The talks are expected to begin in or around May 2006 after a consultation period. (Washington File Pub 02/03/06, available at http://usinfo.state.gov/usinfo/Archive/2006/Feb/02-508129.html)
The Journal of Commerce reports that the Federal Motor Carrier Safety Administration (FMCSA) has asked for permission to keep the hours-of-service (HOS) final rule for truck drivers in effect for at least six more months while it tries to revise it after it was vacated by a court decision in July. (See ITT's Online Archives or 09/08/04 news, 04090810, for the FMCSA's filing to stay the court decision.) (JoC, dated 09/06/04, www.joc.com)