October 30, 2019
Section 301 of the Trade Act of 1974
Background
consider that a matter involves” WTO Agreements. Such a
Section 301 of the Trade Act of 1974 (19 U.S.C. § 2411)
determination appears to be solely at the USTR’s
grants the U.S. Trade Representative (USTR) a range of
discretion. However, the USTR’s decision to bypass WTO
responsibilities and authorities to investigate and take
dispute settlement and impose retaliatory measures (if any),
action to enforce U.S. rights under trade agreements and
may be challenged at the WTO.
respond to certain foreign trade practices. Prior to the
Section 301 Investigations
Trump Administration and since the conclusion of the
While the law does not limit the scope of investigations, it
Uruguay Round of multilateral trade negotiations in 1995,
cites three types of foreign government conduct subject to
which established the World Trade Organization (WTO),
Section 301 action: (1) a violation that denies U.S. rights
the United States has used Section 301 authorities primarily
under a trade agreement, (2) an “unjustifiable” action that
to build cases and pursue dispute settlement at the WTO.
“burdens or restricts” U.S. commerce, and (3) an
However, President Trump has been more willing to act
“unreasonable” or “discriminatory” action that “burdens or
unilaterally under these authorities to promote what the
restricts” U.S. commerce. The statute defines “commerce”
Administration considers to be “free,” “fair,” and
“reciprocal” trade. The Trump Administration’s use of
to include goods, services, and investment.
Section 301 has been the subject of congressional and
Procedures for Section 301 Action
broader international debate.
Sections 302 through 309 describe the procedural
The Administration has attributed this shift in policy to a
requirements and limitations for Section 301 actions.
large and persistent gap between U.S. and foreign
Administration. Section 301 investigations are conducted
government practices that may disadvantage or discriminate
by a “Section 301 Committee”—a subordinate, staff-level
against U.S. firms. In addition, the Administration has
body of the USTR-led, interagency Trade Policy Staff
justified many of its recent tariff actions—particularly those
Committee (TPSC). The Section 301 Committee reviews
against China—by pointing to alleged weaknesses in WTO
Section 301 petitions, conducts public hearings, and makes
dispute settlement procedures and the inadequacy or
recommendations to the TPSC regarding potential actions
nonexistence of WTO rules to address certain Chinese trade
under Section 301. The USTR then bases its final decision
practices. It has also cited the failure of past trade
on the recommendations provided by the TPSC.
negotiations and agreements to enhance reciprocal market
Initiation. The USTR may initiate a Section 301 case as a
access for U.S. firms and workers.
result of a petition or can “self-initiate” a case. Any
Overview of Section 301
interested person may file a petition with the USTR
Title III of the Trade Act of 1974 (Sections 301 through
requesting that the agency take action under Section 301.
310, 19 U.S.C. §§ 2411-2420), titled “Relief from Unfair
Within 45 days of the receipt, the USTR must review the
Trade Practices,” is often collectively referred to as
allegations and determine whether to initiate an
“Section 301.” Section 301 provides a statutory means by
investigation. Section 301 also provides two means by
which the United States imposes trade sanctions on foreign
which the USTR may initiate an investigation in the
countries that violate U.S. trade agreements or engage in
absence of a petition. It can investigate any matter, but only
acts that are “unjustifiable” or “unreasonable” and burden
after consulting with appropriate stakeholders. In addition,
U.S. commerce. Prior to 1995, the United States used
the USTR is generally required to initiate a Section 301
Section 301 extensively to pressure other countries to
investigation of any country—within 30 days—after
eliminate trade barriers and open their markets to U.S.
identifying it as a “Special 301” “Priority Foreign
exports. The creation of an enforceable dispute settlement
Country.” In its annual Special 301 report, the USTR
mechanism in the WTO, strongly advocated by the United
identifies countries that do not provide adequate intellectual
States, significantly reduced U.S. use of Section 301.
property rights (IPR) protection and enforcement. (Rules
The United States retains the flexibility to determine
for IPR cases initiated through Special 301 differ somewhat
whether to seek recourse for foreign unfair trade practices
from those that govern standard Section 301 investigations.)
in the WTO and/or act unilaterally. The Statement of
Consultations. Upon initiating an investigation, the
Administrative Action (SAA)—which explained how U.S.
USTR must request consultations with the targeted foreign
agencies would implement the Uruguay Round Agreements
government regarding the issues raised. If the investigation
Act (URAA or “WTO Agreements”)—states that the USTR
involves a trade agreement and a mutually acceptable
will invoke the dispute settlement procedures of the WTO
resolution is not reached, the USTR must request formal
Dispute Settlement Understanding (DSU) for investigations
dispute settlement proceedings under the governing trade
that involve an alleged violation of (or the impairment of
agreement (WTO or potential U.S. free trade agreement). In
U.S. benefits under) WTO Agreements. At the same time,
the past, with regard to investigations that do not involve an
the SAA makes clear that “[n]either section 301, nor the
agreement, the USTR has initiated investigations while
DSU will require the” USTR to do so if it “does not
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Section 301 of the Trade Act of 1974
simultaneously requesting consultations with the foreign
Ukraine’s practices regarding IPR. However, in light of the
government and seeking information and advice from
political situation in Ukraine, the USTR determined that no
appropriate trade advisory committees. If an investigation
action was appropriate at the time. The last investigation
includes “mixed” issues, some of which are covered by an
prior to the Trump Administration that resulted in
agreement and some of which are not, the URAA SAA
retaliation (i.e., tariffs) took place in 2009 and involved
states that the USTR will pursue consultations within the
Canada’s compliance with the 2006 U.S.-Canada Softwood
agreement framework and through bilateral negotiations.
Lumber Agreement. Per a U.S-Canadian understanding, the
Determinations and Implementation.
USTR suspended the tariffs in 2010. Under President
Following
Trump, the USTR has initiated three new investigations.
consultations, the USTR begins its investigation to
determine if the alleged conduct is unfair or violates U.S.
Recent Section 301 Investigations
rights under trade agreements. If the USTR’s determination

China
is affirmative, it then decides what action, if any, to take
Date of Initiation. August 2017.
(subject to the direction of the President, if any). Section
Issue. Technology transfer, IP, and innovation policies/practices.
301 divides such actions into mandatory and discretionary
Finding. Four Chinese IPR-related practices are unreasonable (or
categories. Mandatory action is required if the USTR
discriminatory) and burden (or restrict) U.S. commerce and
justified U.S. action: (1) forced technology transfer requirements,
concludes that there is a trade agreement violation or that an
(2) cyber-enabled theft of U.S. IP and trade secrets, (3)
act, policy, or practice of a foreign government is
discriminatory licensing practices, and (4) state-funded strategic
“unjustifiable” and “burdens or restricts” U.S. commerce. If
acquisition of U.S. assets (March 2018).
an investigation involves an alleged violation of a trade
Action Taken. Five major tariff actions. Approximately two-thirds
agreement, the USTR must make its final determinations 30
of U.S. imports from China (worth roughly $336 bil ion) are subject
days after the date on which the dispute settlement
to increased Section 301 tariffs, ranging from 15% to 25%.
WTO Procedures. Panel established to review China’s technology
procedure concludes. Generally, in cases not involving
licensing requirements (November 2018); proceedings suspended at
trade agreements, the USTR must make its determinations
the request of the United States (June 2019). (Since April 2018,
within 12 months after an investigation begins.
China has filed three WTO cases chal enging Section 301 tariffs.)

Upon making an affirmative determination to take
European Union
Date of Initiation. April 2019.
retaliatory action, the USTR must implement that action
Issue. EU subsidies on large civil aircraft; violation of U.S. rights
within 30 days. Waivers are allowed for mandatory actions
under the WTO Agreement; EU’s failure to implement WTO
and implementing timelines.
Dispute Settlement Body recommendations.
Retaliatory Action.
Finding. EU and certain member states have denied U.S. rights
In order to remedy a foreign trade
under the WTO Agreement and have failed to implement WTO
practice, Section 301 authorizes the USTR to (1) impose
Dispute Settlement Body recommendations concerning certain
duties or other import restrictions, (2) withdraw or suspend
subsidies to the EU large civil aircraft industry.
trade agreement concessions, or (3) enter into a binding
Action Taken. Additional tariffs of 10% or 25% on $7.5 bil ion
agreement with the foreign government to either eliminate
worth of EU imports—consistent with the WTO arbitrator’s
finding on the appropriate level of countermeasures (October
the conduct in question (or the burden to U.S. commerce) or
2019). (Possible similar action by EU on future WTO ruling.)
compensate the United States with satisfactory trade
WTO Procedures. For an overview of the WTO DSU procedures
benefits. The USTR must give preference to duties (i.e.,
since 2004, see WTO Case “DS316.”
tariffs) if action is taken in the form of import restrictions.

France
The level of mandatory action under Section 301 should
Date of Initiation. July 2019.
“affect goods or services of the foreign country in an
Issue. France’s new digital services tax (DST).
amount equivalent in value to the burden or restriction
Investigation. Ongoing. Requested consultations with the French
being imposed by that country on” U.S. commerce.
government (July 2019); held public hearing (August 2019).
WTO Procedures. None (as of October 2019).
Subsequent Actions. Sections 306 and 307 specify the
requirements for monitoring, modifying, and terminating
Issues for Congress
any action taken under Section 301. Notably, foreign non-
Since the establishment of the WTO, the United States has
compliance with a measure or agreement undertaken as a
addressed trade disputes bilaterally and multilaterally,
result of a Section 301 investigation is considered a
including through the WTO dispute settlement process.
violation of an agreement under Section 301 and subject to
While some Members of Congress have applauded the
mandatory retaliatory action. Section 301 actions terminate
Section 301 actions by the Trump Administration or called
automatically after four years unless the USTR receives a
for more active use of trade authorities, others have decried
request for continuation and conducts a review of the case.
unilateral trade sanctions under Section 301 as an
In addition, in some cases the USTR may reinstate a
undesirable shift in U.S. trade policy that could undermine
previously-terminated Section 301 action.
the multilateral trade system. Congress could consider
Section 301 Cases
amending Section 301 and other U.S. trade laws to require
greater consultation or approval before a president takes
There have been 127 cases under Section 301 since the
law’s
new trade actions. In addition, Congress could request an
enactment in 1974, of which 32 have been initiated
economic impact study of how such actions may affect the
since the WTO’s establishment in 1995. These cases have
U.S. economy, global supply chains, and global trade rules.
primarily targeted the European Union (EU), which
accounts for about 22% of all cases—concerning mostly
agricultural trade. The EU is followed by Canada (11%),
Andres B. Schwarzenberg, Analyst in International Trade
Japan (11%), and South Korea (8%). Prior to 2017, the last
and Finance
Section 301 investigation took place in 2013 and involved
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Section 301 of the Trade Act of 1974


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