Section 301 of the Trade Act of 1974



Updated February 16, 2021
Section 301 of the Trade Act of 1974
Section 301 of the Trade Act of 1974 (19 U.S.C. §2411)
action that “burdens or restricts” U.S. commerce, and (3) an
grants the Office of the United States Trade Representative
“unreasonable” or “discriminatory” action that “burdens or
(USTR) a range of responsibilities and authorities to
restricts” U.S. commerce. The statute defines “commerce”
investigate and take action to enforce U.S. rights under
to include goods, services, and investment.
trade agreements and respond to certain foreign trade
Procedures for Section 301 Action
practices. Prior to the Trump Administration and since the
Sections 302 through 309 describe the procedural
conclusion of the Uruguay Round of multilateral trade
requirements and limitations for Section 301 actions.
negotiations in 1995, which established the World Trade
Organization (WTO), the United States has used Section
Administration. Section 301 investigations are conducted
301 authorities primarily to build cases and pursue dispute
by a “Section 301 Committee”—a subordinate, staff-level
settlement at the WTO. However, former President Trump
body of the USTR-led, interagency Trade Policy Staff
was more willing to act unilaterally under these authorities
Committee (TPSC). The Section 301 Committee reviews
to promote what its Administration considered to be “free,”
Section 301 petitions, conducts public hearings, and makes
“fair,” and “reciprocal” trade. The recent use of Section 301
recommendations to the TPSC regarding potential actions
has been the subject of congressional and broader
under Section 301. The USTR then bases its final decision
international debate.
on the recommendations provided by the TPSC.
The Trump Administration attributed this shift in policy to
Initiation. The USTR may initiate a Section 301 case as a
its determination to close a large and persistent gap between
result of a petition or can “self-initiate” a case. Any
U.S. and foreign government practices that it said
interested person may file a petition with the USTR
disadvantaged or discriminated against U.S. firms. In
requesting that the agency take action under Section 301.
addition, it justified many of its tariff actions—particularly
Within 45 days of the receipt, the USTR must review the
those against China—by pointing to alleged weaknesses in
allegations and determine whether to initiate an
WTO dispute settlement procedures and the inadequacy or
investigation. Section 301 also provides two means by
nonexistence of WTO rules to address certain Chinese trade
which the USTR may initiate an investigation in the
practices. It also cited the failure of past trade negotiations
absence of a petition. It can investigate any matter, but only
and agreements to enhance reciprocal market access for
after consulting with appropriate stakeholders. In addition,
U.S. firms and workers.
the USTR is generally required to initiate a Section 301
investigation of any country—within 30 days—after
While the Biden Administration is reportedly reviewing the
identifying it as a “Special 301” “Priority Foreign
previous administration’s trade policies, most analysts do
Country.” In its annual Special 301 report, the USTR
not expect any immediate changes to Section 301 actions or
identifies countries that do not provide adequate intellectual
to the tariff exclusions on U.S. imports from China.
property rights (IPR) protection and enforcement. (Rules
Overview of Section 301
for IPR cases initiated through Special 301 differ somewhat
Title III of the Trade Act of 1974 (Sections 301 through
from those that govern standard Section 301 investigations.)
310, 19 U.S.C. §§2411-2420), titled “Relief from Unfair
Consultations.
Trade Practices,” is often collectively referred to as
Upon initiating an investigation, the
“Section 301.” Section 301 provides a statutory means by
USTR must request consultations with the targeted foreign
government regarding the issues raised. If the investigation
which the United States imposes trade sanctions on foreign
involves a trade agreement and a mutually acceptable
countries that violate U.S. trade agreements or engage in
acts that are “unjustifiable” or “unreasonable” and burden
resolution is not reached, the USTR must request formal
dispute settlement proceedings under the governing trade
U.S. commerce. Prior to 1995, the United States used
agreement (WTO or potential U.S. free trade agreement). In
Section 301 extensively to pressure other countries to
the past, with regard to investigations that do not involve an
eliminate trade barriers and open their markets to U.S.
agreement, the USTR has initiated investigations while
exports. The creation of an enforceable dispute settlement
simultaneously requesting consultations with the foreign
mechanism in the WTO, strongly supported by the United
government and seeking information and advice from
States, significantly reduced U.S. use of Section 301. While
appropriate trade advisory committees. If an investigation
the United States retains the flexibility to seek recourse for
includes “mixed” issues, some of which are covered by an
foreign unfair trade practices in the WTO or under Section
agreement and some of which are not, the USTR generally
301, a determination to bypass WTO dispute settlement and
pursues consultations within the agreement framework and
impose retaliatory measures (if any) in response to a
through bilateral negotiations.
Section 301 investigation may be challenged at the WTO.
Determinations and Implementation.
Section 301 Investigations
Following
consultations, the USTR begins its investigation to
While the law does not limit the scope of investigations, it
determine if the alleged conduct is unfair or violates U.S.
cites several types of foreign government conduct subject to
rights under trade agreements. If the USTR’s determination
Section 301 action, including: (1) a violation that denies
is affirmative, it then decides what action, if any, to take
U.S. rights under a trade agreement, (2) an “unjustifiable”
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Section 301 of the Trade Act of 1974
(subject to the direction of the President, if any). Section
Recent Section 301 Investigations
301 divides such actions into mandatory and discretionary

China
categories. Mandatory action is required if the USTR
Date of Initiation. August 2017.
concludes that there is a trade agreement violation or that an
Issue. China’s technology transfer, IP, and innovation policies/practices.
act, policy, or practice of a foreign government is
Finding. Four Chinese IPR-related practices are unreasonable (or
“unjustifiable” and “burdens or restricts” U.S. commerce.
discriminatory) and burden (or restrict) U.S. commerce and justified U.S.
If
action: (1) forced technology transfer requirements, (2) cyber-enabled
an investigation involves an alleged violation of a trade
theft of U.S. IP and trade secrets, (3) discriminatory licensing practices, and
agreement, the USTR must make its final determinations 30
(4) state-funded strategic acquisition of U.S. assets.
days after the date on which the dispute settlement
Action Taken. Additional tariffs, ranging from 7.5% to 25%, on
approximately $370 bil ion worth of U.S. imports from China.
procedure concludes. Generally, in cases not involving
WTO Procedures. WTO case DS542. (See also DS543 / DS565 / DS587.)
trade agreements, the USTR must make its determinations

European Union
within 12 months after an investigation begins.
Date of Initiation. April 2019.
Issue. EU subsidies on large civil aircraft; violation of U.S. rights under the
Upon making an affirmative determination to take
WTO Agreement; and EU’s failure to implement WTO Dispute
retaliatory action, the USTR must implement that action
Settlement (DS) panel recommendations concerning certain subsidies to
within 30 days. Waivers are allowed for mandatory actions
the EU large civil aircraft industry.
and implementing timelines.
Finding. EU and certain member states have denied U.S. rights under the
WTO Agreement and have failed to bring WTO-inconsistent subsidies
Retaliatory Action. To remedy a foreign trade practice,
into compliance with WTO rules.
Section 301 authorizes the USTR to (1) impose duties or
Action Taken. Additional tariffs of 15% or 25% on $7.5 bil ion worth of
U.S. imports from the EU. Action modified three times in 2020.
other import restrictions, (2) withdraw or suspend trade
WTO Procedures. WTO case DS316. (See also DS353.)
agreement concessions, or (3) enter into a binding

France
agreement with the foreign government to either eliminate
Date of Initiation. July 2019.
the conduct in question (or the burden to U.S. commerce) or
Issue. France’s digital services tax (DST).
compensate the United States with satisfactory trade
Finding. The DST discriminates against major U.S. digital companies and is
inconsistent with prevailing international tax policy principles.
benefits. The USTR must give preference to duties (i.e.,
Action Taken. Suspended (indefinitely, as of January 6, 2021). Additional
tariffs), if action is taken in the form of import restrictions.
tariffs of 25% on $1.3 bil ion worth of U.S. imports from France.

The level of mandatory action under Section 301 should
Foreign Digital Services Taxes
“affect goods or services of the foreign country in an
Date of Initiation. July 2020.
amount equivalent in value to the burden or restriction
Issue. The DSTs adopted or under consideration by Austria, Brazil, the
Czech Republic, the EU, India, Indonesia, Italy, Spain, Turkey, and the UK.
being imposed by that country on” U.S. commerce.
Findings. The DSTs of Austria, India, Italy, Spain, Turkey, and the UK
Subsequent Actions. Sections 306 and 307 specify the
discriminate against major U.S. digital companies and are inconsistent with
prevailing international tax policy principles. Additional DST investigations
requirements for monitoring, modifying, and terminating
are ongoing.
any action taken under Section 301. Notably, foreign
Action Taken. None (as of February 2021).


noncompliance with a measure or agreement undertaken as
Vietnam
a result of a Section 301 investigation is considered a
Date of Initiation. October 2020.
violation of an agreement under Section 301 and subject to
Issue. Vietnam’s policies/practices related to the valuation of its currency.
Finding. Vietnam’s acts, policies, and practices related to currency
mandatory retaliatory action. Section 301 actions terminate
valuation, including excessive foreign exchange market interventions and
automatically after four years, unless the USTR receives a
other related actions, taken in their totality, are unreasonable and burden
request for continuation and conducts a review of the case.
or restrict U.S. commerce.
In addition, in some cases the USTR may reinstate a
Action Taken. None (as of February 2021).
Vietnam
previously terminated Section 301 action.
Date of Initiation. October 2020.
Section 301 Cases
Issue. Vietnam’s policies/practices related to the import and use of timber
There have been 130 cases under Section 301 since the
that is il egally harvested or traded.
law’s
Investigation. Ongoing. Virtual public hearing held in December 2020.
enactment in 1974, of which 35 have been initiated
since the WTO’s establishment in 1995. These cases have
Issues for Congress
primarily targeted the European Union (EU), concerning
Since 1995, the United States has addressed most trade
mostly agricultural trade. The EU is followed by Canada,
disputes bilaterally and multilaterally, including through the
Japan, and South Korea. Prior to 2017, the last Section 301
WTO. While some Members support recent Section 301
investigation took place in 2013 and involved Ukraine’s
actions or call for more active use of trade authorities,
practices regarding IPR. Given the political situation in
others have decried such unilateral actions as an undesirable
Ukraine, the USTR determined that no action was
shift in U.S. trade policy. Congress could consider
appropriate at the time. The last investigation prior to the
amending Section 301 to require greater consultation or
Trump Administration resulting in retaliation (i.e., tariffs)
approval before a President takes new trade actions, or to
took place in 2009 and involved Canada’s compliance with
establish a formal product exclusion process. Congress
the 2006 U.S.-Canada Softwood Lumber Agreement. Per a
could also request an economic impact study of how such
U.S.-Canadian understanding, the USTR suspended the
actions may affect the U.S. economy, global supply chains,
tariffs in 2010.
and the multilateral trade system.
During the Trump Administration, the USTR initiated six
new investigations (see textbox). Two investigations have
Andres B. Schwarzenberg, Analyst in International Trade
resulted in the imposition of tariffs to date, on U.S. imports
and Finance
from China and the EU. The U.S. action against the EU—
unlike that against China—was based on a WTO dispute in
IF11346
which the USTR anticipated being allowed to retaliate.
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Section 301 of the Trade Act of 1974


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https://crsreports.congress.gov | IF11346 · VERSION 10 · UPDATED