August 22, 2018
Trade Remedies: Section 201 of the Trade Act of 1974
On January 23, 2018, President Trump proclaimed a four-
relief may be provided in these cases pending the final ITC
year safeguard measure on imports of certain crystalline
decision.
silicon photovoltaic cells (solar cells) and modules, and a
Factors the ITC must consider when determining injury
three-year safeguard on large residential washing machines.
include (1) the significant idling of production facilities; (2)
These safeguards, issued under Section 201 of the Trade
the inability of a significant number of firms to carry out
Act of 1974 (19 U.S.C. §2251), imposed additional tariffs
domestic production at a reasonable level of profit; and (3)
and quotas on U.S. imports of these products. The
significant unemployment or underemployment within the
safeguards were instituted based on findings by the U.S.
U.S. industry. The ITC also considers import trends and
International Trade Commission (ITC) that these goods are
other factors, as well as declines in production, profits,
being imported into the United States in such increased
wages, productivity, and employment. The ITC makes its
quantities that they are a substantial cause of serious injury
injury determination based on a vote of the Commissioners.
to U.S. manufacturers. The ITC also recommended that the
If the Commission is equally divided, the President may
President impose a remedy of this type.
select either option.
What Is Section 201?
Section 201 or “safeguard” actions are designed to provide
Figure 1. Section 201 Timeline
a temporary “safeguard” (for example, additional tariffs or
quotas on imports) in order to facilitate positive adjustment
of a domestic industry to import competition. “Positive
adjustment” in the law means the ability of the industry to
compete successfully with imports after termination of the
safeguard measure, or the industry’s orderly transfer of
resources to other productive pursuits; and the ability of
dislocated workers to transition productively. Section 201
actions are deemed consistent with U.S. international
obligations provided that they conform to the World Trade
Organization (WTO) Agreement on Safeguards.
Section 201 Process
Section 201 investigations are generally initiated by a
written petition filed by a trade association, firm, union, or
group of workers representing a U.S. industry.
Source: Chart by CRS.
Investigations may also be triggered by House Ways and
Note: Timeline may be extended if ITC determines the case is
Means or Senate Finance Committee resolutions, at the
complicated, if critical circumstances are al eged or if merchandise is
request of the U.S. Trade Representative (USTR), or at the
perishable.
ITC’s own initiative. The petitioner must also include a
plan to facilitate the industry’s positive adjustment to
Remedy Phase
import competition. If a plan is not filed at the same time as
If the ITC makes an affirmative injury determination, it
the petition, it must be filed by the petitioner within 120
then considers actions that would address the serious injury
days.
and be most effective in facilitating the industry’s positive
Determining Injury
adjustment to import competition. It may recommend (1) an
The ITC’s investigative process occurs in two phases. In
increase in, or imposition of, a duty on the imports; (2) a
each phase, the ITC must hold hearings, solicit public
tariff-rate quota on the product; (3) a modification, or
comments, and publish all findings in the Federal Register.
imposition of, any quantitative restriction on imports; or (4)
any combination of these actions. In addition to these
In the first phase, the focus is on the affected U.S. industry
remedies, the ITC may also recommend that the President
and whether it is being seriously injured or threatened with
initiate international negotiations or otherwise alleviate the
serious injury; and, if so, whether an increase in imports are
injury or threat, or implement any other action authorized
a “substantial cause” thereof. This phase must be completed
under law to facilitate positive import competition. Only
within 120 days after the filing of the petition, unless the
those Commission members who concurred in the
ITC determines that the investigation is “extraordinarily
affirmative injury determination may vote on the
complicated.” In this case, it may take up to 30 additional
recommended remedy, although other Commissioners may
days to make an injury determination. The timeline may be
submit separate views.
further extended if the petitioner has alleged “critical
circumstances” or the product is perishable; temporary
www.crs.gov | 7-5700
Trade Remedies: Section 201 of the Trade Act of 1974
ITC Report to the President
maximum of eight years. The ITC must monitor Section
Unless an extension is granted, the ITC must report its
201 actions as long as they are in effect, especially with
findings to the President within 180 days of the petition
respect to the efforts and progress of the domestic industry
filing. After submission, the ITC must also release its
and workers to adjust positively to import competition. If
findings (business confidential information redacted) in the
the initial period of the action exceeds three years, the ITC
Federal Register.
is also required to submit a midterm review to the President
Presidential Action
and Congress.
After receiving the ITC’s report, the President has 60 days
After the President receives the ITC review and consults
to decide which, if any, of the ITC’s recommendations to
with the Secretaries of Commerce and Labor, he may
implement. The deadline may be extended another 15 days
modify, reduce, or terminate the action if he determines that
if the President requests additional information from the
the industry has not made adequate efforts toward positive
ITC. The President may opt to implement the ITC’s
adjustment or the action is no longer effective due to
recommendations, modify them, or do nothing. When
economic circumstances. He may also terminate or change
making a determination under Section 201, the President
the remedy if the industry petitions the President to do so
must consider
on the basis of positive adjustment to import competition.
the recommendations and report of the ITC;
Section 201 Actions
the degree to which workers and firms are already
Prior to the Trump Administration, the ITC conducted 73
benefiting from adjustment assistance and worker
Section 201 investigations from 1975 to 2001. The ITC
retraining programs;
determined in the negative in 32 cases (including 3 tie votes
the industry’s efforts (including proposals outlined in
for which the President accepted the ITC negative
the adjustment plan) to make a positive adjustment to
determination). The President decided to grant no relief in
import competition;
14 cases. The President granted relief 26 times in the form
the probable effectiveness of the ITC’s proposed actions
of tariff increases (9), adjustment assistance (6), tariff-rate
to facilitate the industry’s positive adjustment;
quotas or import quotas (3), marketing agreement (1), and
the short- and long-term economic and social costs of
combinations of these actions (4). In 3 cases, he granted
the actions as opposed to the potential benefits; and
more open-ended types of relief (voluntary restraint
the position of the domestic industry in the U.S.
agreement, income supports, retraining/relocation of
economy.
workers).
The President must also weigh U.S. national economic and
Figure 2. Outcomes of Section 201 Investigations
security interests, including the proposed remedy’s possible
impact on U.S. consumers and on other U.S. industries. If
the President decides to impose a remedy, he has several
options. He may
proclaim a tariff, tariff increase, tariff-rate quota, or
quota on imports;
implement adjustment measures for U.S. firms and
workers;
negotiate and implement agreements limiting exports
with other countries;
proclaim procedures for the auction of import licenses;
Source: CRS Chart based on GAO data and Federal Register
initiate international negotiations;
documents.
submit legislative proposals to Congress;
take any other actions under the President’s legal
In 2002, based on a Section 201 case, President George W.
authority; or
Bush implemented a combination of quotas and tariff
use any combination of these actions.
increases on various types of steel imports. The action was
subsequently challenged in the WTO. In 2003, WTO panels
Congressional Role
determined that the safeguard action was inconsistent with
On the day the President takes action (or decides to take no
the United States’ WTO obligations, and on December 8,
action) under Section 201, he is required to report to
2003, President Bush terminated the action.
Congress in writing, describing the action and the reasons
for it. If the President’s action differs from the ITC’s
On May 14, 2018, South Korea requested WTO
recommendation, or if the President opts to take no action,
consultations with the United States regarding both recent
Congress may enact a joint resolution of disapproval within
U.S.-implemented safeguards on washing machines and
90 days of receiving the President’s report. If a resolution is
solar products and, on August 16, formally requested that
enacted, the ITC’s recommendation becomes the remedy,
WTO dispute settlement panels be established. On August
and the President must proclaim it within 30 days.
14, 2018, China requested consultations with the United
States on the safeguard on solar products.
Duration and Review
The President may grant import relief for an initial period
Vivian C. Jones, vcjones@crs.loc.gov, 7-7823
of up to four years and extend it one or more times, up to a
IF10786
www.crs.gov | 7-5700