Transcript U.S. Trade Law Case Section 301

U.S. Trade Law Case.
(Section 301)
Andrea Puckett
Fidelia Oyogoa
Maria Paz
Kam Quarles
ITRN 603
November 15, 2004
Overview
Andrea Puckett – Main Question/Critical
Issues
 Fidelia Oyogoa – Background
 Maria Paz – Arguments and Decisions
 Kam Quarles – Implementation/Conclusion
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Main Question
Is Title III, chapter 1(sections 301-310)
of the Trade Act, as amended, and in
particular sections 306 and 305 of the
Act, inconsistent with Articles 3, 21, 22
and 23 of the DSU; Article XVI:4 of the
WTO Agreement; and Articles I, II, III,
VIII and XI of GATT 1994?
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Critical Issues
What is the Section 301 Family of
Legislation?
1.
The Section 301 family of legislation provides a
striking example of unilateral trade legislation which
has been used on numerous occasions against the
EU.
2. Section 301 of the 1974 Trade Act as authorizes the
US Administration to take action to enforce U.S. rights
under any trade agreement and to combat those
practices by foreign governments which the U.S.
government deems to be discriminatory or
unjustifiable and to burden or restrict U.S. commerce.
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Critical Issues
Unilateralism
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The EU regularly complains about unilateralism.
This approach cases doubt on U.S. support for a
multilateral rules-based system of addressing
trade problems and can also lead to bilateral
agreements with elements of discrimination.
Unilateralism in U.S. trade legislation remains a
matter of concern.
The U.S. has used its unilateral trade policy
arsenal more sparingly since the WTO
Agreement entered force on Jan 1 1995.
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Critical Issues
The determination of whether a
nation’s legislations nullify or impair
other members’ WTO rights is a
critical issue for the WTO members,
as well as for the legal body of the
WTO.
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What is Section 301?
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Congress enacted Section 301 as part of the
Trade and Tariff Act of 1974.
 Section 301 is the principal law that authorizes
the U.S. government to address unfair trade
practices.
 Section 301 identifies countries that are
engaging in unfair trade practices.
 The administration can initiate a Section 301
case itself, and it can accept outside petitions.
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Section 301 and USTR
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Section 301 applies to any case where the U.S. Trade
Representative (USTR) determines that :
unfair foreign trade practices.
when U.S. rights have been denied under a trade
agreement with a foreign government.
when action by a foreign government is inconsistent
with or denies benefits to the United States under an
agreement.
Engagement in unjustifiable, unreasonable or
discriminatory acts, policies, or practices that burden
or restrict U.S. commerce.
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Section 301
What action does Section 301 authorize to remedy
unfair trade practices?
Section 301 authorizes U.S. Trade Representative
USTR to:
 suspend benefits under a trade agreement.
 impose duties or other restrictions on imports.
 enter into a binding agreement with the country to end
its unfair trade practices within a specified period of
time.
 take all other “appropriate and feasible” action to
eliminate the unfair trade practices at issue such as
imposing sanctions.
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Background
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The EU filed its complaint against the United States
with the WTO on November 25, 1998 that challenged
Section 301-310 of the U.S. Trade Act of 1974, and
other parts of U.S. trade law, and the Office of the U.S.
Trade Representative (USTR).
On February 2, 1999, the EC requested the
establishment of a panel to challenge the consistency
of Sections 301 -310.
The WTO established a panel to review the complaint
on March 2, 1999.
The panel issued its report on December 22, 1999 and
the WTO Dispute Settlement Body adopted this report
on the 13th of January 2000.
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Background
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The EU complaint against Section 301 was brought in the context of
the on-going dispute between the EU and U.S. over EU’s banana
regime.
On April 24, 1996, the U.S., Ecuador, Guatemala, Honduras and
Mexico jointly requested that a WTO dispute-settlement panel be
convened.
The WTO panel report, issued on May 22, 1997, found that the EU
banana import regime was discriminatory and as such was
inconsistent with the GATT 1994.
The WTO ruled that the EU must cut back the trade benefits enjoyed
by its banana suppliers.
U.S. wanted to seek retaliation against the EU for its failure to comply
with the WTO ruling.
The U.S. stated that the EU argument against Section 301 was an
attempt to divert attention from the fact that the EU had failed to
comply with the WTO ruling against its banana import regime.
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Arguments made by the EU:
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EU challenged the U.S. “Section 301” law,
Sections 301-310, stating it was inconsistent
under WTO.
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The EU maintains that Section 301 violates
Articles 3, 21, 22 and 23 of the WTO Dispute
Settlement Understanding (DSU).
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The EU also argued that Section 301 violated
international trade laws with respect to unilateral
measures.
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Arguments made by the EU (cont.):
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EU argues as well that Section 301
violates Article XVI:4 of the Marrakech
Agreement.
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Lastly, the EU maintains that Section 301
violated Articles I, II, III, VIII, and XI of
the GATT.
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Arguments made by the U.S.:
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The U.S. argued that only legislation
which mandates WTO inconsistent
action, or which precludes WTO
consistent action, could violate WTO
provisions.
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U.S. countered that the EU argument
against Section 301 was “inaccurate”.
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DISCRETION
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Key question facing the panel was: Does
the legislation that gives national
authorities the possibility to act, either
consistently or inconsistently with their
WTO obligations, violate those
obligations?
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Decisions
The decision was made on Nov. 8th, 1999.
 The Dispute Settlement Body found Section
301 of the U.S. trade Act of 1974 consistent
with U.S. obligations under the WTO.
 Panel concluded that the relevant part of the
legislation as such was inconsistent with the
WTO.
 It also came to the final conclusion that it could
be considered in conformity with the WTO.
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IMPLEMENTATION
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Section 301, through the dispute
settlement process, was determined not
to be inherently in violation of W.T.O. and
GATT agreements.
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Therefore, no remedial action is required
by the U.S.
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IMPLEMENTATION
At the end of 2003, there were two active
investigations underway utilizing Section
301:
 Beef Hormone Case with the EU
 Intellectual Property Protection in the
Ukraine
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IMPLEMENTATION
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Beef Hormone Case with the EU
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U.S. brought a W.T.O. case against the EU for
its actions in banning beef imports that had
been treated with certain hormones.
 The U.S. used Section 301 concurrently with
the W.T.O. dispute settlement process to
successfully challenge the ban on the grounds
that the EU had failed to provide a scientific
justification for the restriction.
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IMPLEMENTATION
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Ukraine IPR dispute
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U.S. determined that the Ukraine failed to
actively address continuing piracy in optical
media (DVDs, CDs, etc).
 This piracy was damaging U.S. firms doing
business throughout that region.
 USTR suspended Ukraine’s GSP eligibility and
also issued a preliminary retaliation list under
Section 301 on $75 million in imports.
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CONCLUSION
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Section 301 does not generally conflict with W.T.O.
responsibilities.
Many trade disputes brought by the U.S. before the
W.T.O. began as a Section 301 matter. Some have
been successfully defended (banana dispute, beef
hormones) and some have failed (steel tariffs).
Therefore, specific actions that are implemented using
Section 301 can violate those responsibilities.
The key is the discretion that exists for the executive
authority in implementing a case brought under
Section 301.
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References
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http://www.isdb.org/english_docs/coop_home/info1.htm#establishment
http://www.useu.be/ISSUES/wto1229.html
http://www.heritage.org/Research/TradeandForeignAid/BG1543.cfm
http://www.asil.org/insights/insigh69.htm
http://www.useu.be/issues/bananadossier.html
The United States Mission to the European Union:
http://www.useu.be/ISSUES/wto1229.html
Tech Law Journal: http://www.techlawjournal.com/trade/19991223eu.htm
Tech Law Journal: http://www.techlawjournal.com/trade/20000129.htm
http://www.agriculturelaw.com/Headlines/jan00/jan31b.htm
“2000 Report on United States Barriers to Trade and Investment.” 2000
http://europa.eu.int/comm/trade/issues/bilateral/countries/usa/docs/usrbt2000.pdf
“EU Complaint Against the U.S. Over Section 301 of the Trade Act.”
www.techlawjournal.com/trade/20000113.htm
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