Updated December 6, 2019
Section 301 of the Trade Act of 1974
Background
determination appears to be solely at the USTR’s
Section 301 of the Trade Act of 1974 (19 U.S.C. §2411)
discretion. However, the USTR’s decision to bypass WTO
grants the U.S. Trade Representative (USTR) a range of
dispute settlement and impose retaliatory measures (if any),
responsibilities and authorities to investigate and take
may be challenged at the WTO.
action to enforce U.S. rights under trade agreements and
Section 301 Investigations
respond to certain foreign trade practices. Prior to the
While the law does not limit the scope of investigations, it
Trump Administration and since the conclusion of the
cites three types of foreign government conduct subject to
Uruguay Round of multilateral trade negotiations in 1995,
Section 301 action: (1) a violation that denies U.S. rights
which established the World Trade Organization (WTO),
under a trade agreement, (2) an “unjustifiable” action that
the United States has used Section 301 authorities primarily
“burdens or restricts” U.S. commerce, and (3) an
to build cases and pursue dispute settlement at the WTO.
“unreasonable” or “discriminatory” action that “burdens or
However, President Trump has been more willing to act
restricts” U.S. commerce. The statute defines “commerce”
unilaterally under these authorities to promote what the
to include goods, services, and investment.
Administration considers to be “free,” “fair,” and
“reciprocal” trade. The Trump Administration’s use of
Procedures for Section 301 Action
Section 301 has been the subject of congressional and
Sections 302 through 309 describe the procedural
broader international debate.
requirements and limitations for Section 301 actions.
The Administration has attributed this shift in policy to a
Administration. Section 301 investigations are conducted
large and persistent gap between U.S. and foreign
by a “Section 301 Committee”—a subordinate, staff-level
government practices that may disadvantage or discriminate
body of the USTR-led, interagency Trade Policy Staff
against U.S. firms. In addition, the Administration has
Committee (TPSC). The Section 301 Committee reviews
justified many of its recent tariff actions—particularly those
Section 301 petitions, conducts public hearings, and makes
against China—by pointing to alleged weaknesses in WTO
recommendations to the TPSC regarding potential actions
dispute settlement procedures and the inadequacy or
under Section 301. The USTR then bases its final decision
nonexistence of WTO rules to address certain Chinese trade
on the recommendations provided by the TPSC.
practices. It has also cited the failure of past trade
Initiation. The USTR may initiate a Section 301 case as a
negotiations and agreements to enhance reciprocal market
result of a petition or can “self-initiate” a case. Any
access for U.S. firms and workers.
interested person may file a petition with the USTR
Overview of Section 301
requesting that the agency take action under Section 301.
Title III of the Trade Act of 1974 (Sections 301 through
Within 45 days of the receipt, the USTR must review the
310, 19 U.S.C. §§2411-2420), titled “Relief from Unfair
allegations and determine whether to initiate an
Trade Practices,” is often collectively referred to as
investigation. Section 301 also provides two means by
“Section 301.” Section 301 provides a statutory means by
which the USTR may initiate an investigation in the
which the United States imposes trade sanctions on foreign
absence of a petition. It can investigate any matter, but only
countries that violate U.S. trade agreements or engage in
after consulting with appropriate stakeholders. In addition,
acts that are “unjustifiable” or “unreasonable” and burden
the USTR is generally required to initiate a Section 301
U.S. commerce. Prior to 1995, the United States used
investigation of any country—within 30 days—after
Section 301 extensively to pressure other countries to
identifying it as a “Special 301” “Priority Foreign
eliminate trade barriers and open their markets to U.S.
Country.” In its annual Special 301 report, the USTR
exports. The creation of an enforceable dispute settlement
identifies countries that do not provide adequate intellectual
mechanism in the WTO, strongly advocated by the United
property rights (IPR) protection and enforcement. (Rules
States, significantly reduced U.S. use of Section 301.
for IPR cases initiated through Special 301 differ somewhat
from those that govern standard Section 301 investigations.)
The United States retains the flexibility to determine
whether to seek recourse for foreign unfair trade practices
Consultations. Upon initiating an investigation, the
in the WTO and/or act unilaterally. The Statement of
USTR must request consultations with the targeted foreign
Administrative Action (SAA)—which explained how U.S.
government regarding the issues raised. If the investigation
agencies would implement the Uruguay Round Agreements
involves a trade agreement and a mutually acceptable
Act (URAA or “WTO Agreements”)—states that the USTR
resolution is not reached, the USTR must request formal
will invoke the dispute settlement procedures of the WTO
dispute settlement proceedings under the governing trade
Dispute Settlement Understanding (DSU) for investigations
agreement (WTO or potential U.S. free trade agreement). In
that involve an alleged violation of (or the impairment of
the past, with regard to investigations that do not involve an
U.S. benefits under) WTO Agreements. At the same time,
agreement, the USTR has initiated investigations while
the SAA makes clear that “[n]either section 301, nor the
simultaneously requesting consultations with the foreign
DSU will require the” USTR to do so if it “does not
government and seeking information and advice from
consider that a matter involves” WTO Agreements. Such a
appropriate trade advisory committees. If an investigation
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Section 301 of the Trade Act of 1974
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. Following
USTR suspended the tariffs in 2010. Under President
consultations, the USTR begins its investigation to
Trump, the USTR has initiated three new investigations.
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
concludes that there is a trade agreement violation or that an
U.S. action: (1) forced technology transfer requirements, (2) cyber-
enabled theft of U.S. IP and trade secrets, (3) discriminatory licensing
act, policy, or practice of a foreign government is
practices, and (4) state-funded strategic acquisition of U.S. assets.
“unjustifiable” and “burdens or restricts” U.S. commerce. If
Action Taken. Five major tariff actions since May 2018.
an investigation involves an alleged violation of a trade
Approximately two-thirds of U.S. imports from China are subject to
agreement, the USTR must make its final determinations 30
increased Section 301 tariffs, ranging from 15% to 25%.
days after the date on which the dispute settlement
WTO Procedures. Panel established to review China’s technology
licensing requirements (November 2018); proceedings suspended at
procedure concludes. Generally, in cases not involving
the request of the United States (June 2019). (Since April 2018, China
trade agreements, the USTR must make its determinations
has filed three WTO cases chal enging Section 301 tariffs.)
within 12 months after an investigation begins.

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

France
benefits. The USTR must give preference to duties (i.e.,
Date of Initiation. July 2019.
tariffs) if action is taken in the form of import restrictions.
Issue. France’s new digital services tax (DST).
The level of mandatory action under Section 301 should
Finding. DST discriminates against major U.S. digital companies and
“affect goods or services of the foreign country in an
is inconsistent with prevailing tax policy principles.
amount equivalent in value to the burden or restriction
Action Taken. None (as of December 2019). In December 2019,
being imposed by that country on” U.S. commerce.
USTR issued a preliminary list of products from France, with an
estimated 2018 import value of $2.4 bil ion, on which to impose
Subsequent Actions. Sections 306 and 307 specify the
additional tariffs of up to 100%. The agency is seeking comments on
requirements for monitoring, modifying, and terminating
the proposed action and is to convene a hearing in January 2020, after
any action taken under Section 301. Notably, foreign
which it is to make a final determination. (USTR is also considering
whether to impose fees or restrictions on services from France.)
noncompliance with a measure or agreement undertaken as
WTO Procedures. None (as of December 2019).
a result of a Section 301 investigation is considered a
violation of an agreement under Section 301 and subject to
Issues for Congress
mandatory retaliatory action. Section 301 actions terminate
Since 1995, the United States has addressed most trade
automatically after four years unless the USTR receives a
disputes bilaterally and multilaterally, including through the
request for continuation and conducts a review of the case.
WTO. While some Members applaud the Administration’s
In addition, in some cases the USTR may reinstate a
Section 301 actions or call for more active use of trade
previously terminated Section 301 action.
authorities, others have decried such unilateral actions as an
Section 301 Cases
undesirable shift in U.S. trade policy. Congress could
There have been 127 cases under Section 301 since the
consider amending Section 301 to require greater
law’s enactment in 1974, of which 32 have been initiated
consultation or approval before a president takes new trade
since the WTO’s establishment in 1995. These cases have
actions, establish a formal product exclusion process, or
primarily targeted the European Union (EU), which
request an economic impact study of how such actions may
accounts for about 22% of all cases—concerning mostly
affect the U.S. economy, global supply chains, and the
agricultural trade. The EU is followed by Canada (11%),
multilateral trade system.
Japan (11%), and South Korea (8%). Prior to 2017, the last
Section 301 investigation took place in 2013 and involved
Andres B. Schwarzenberg, Analyst in International Trade
Ukraine’s practices regarding IPR. However, in light of the
and Finance
political situation in Ukraine, the USTR determined that no
IF11346
action was appropriate at the time. The last investigation
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Section 301 of the Trade Act of 1974


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https://crsreports.congress.gov | IF11346 · VERSION 3 · UPDATED

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