The Office of the U.S. Trade Representative’s initiation of a Section 301 investigation into reportedly unfair Chinese forced technology transfers and intellectual property policies could “severely” undermine the U.S.-China bilateral relationship, Chinese government media reported on Aug. 28. “Until recently, it had been hard to see where the next financial crisis could come from,” says an article published by China’s Global Times. “But imposing trade sanctions could trigger the pricking of China's credit bubble, engendering social and political unrest, exacerbating China's economic woes and thwarting its economic advance.”
U.S. Trade Representative Robert Lighthizer on Aug. 18 initiated an investigation into China under Section 301 of the Trade Act of 1974, to determine whether acts, policies and practices related to technology transfer, intellectual property and innovation are “unreasonable or discriminatory” and “burden or restrict” U.S. commerce, the Office of the U.S. Trade Representative announced. Per statute, the investigation must be completed within one year of initiation. Section 301 gives the president broad authority, including import duties, to retaliate against restrictions found to “burden or restrict” U.S. commerce. President Donald Trump on Aug. 14 issued a memorandum directing Lighthizer to determine whether to launch the investigation (see 1708150027). “After consulting with stakeholders and other government agencies, I have determined that these critical issues merit a thorough investigation,” Lighthizer said in a statement.
President Donald Trump on Aug. 14 issued a memorandum directing U.S. Trade Representative Robert Lighthizer to determine whether to investigate Chinese “laws, policies, practices, or actions” that might be harming U.S. intellectual property rights, innovation or technological development. The memo pointed to language in the Trade Act of 1974 that requires the Office of the U.S. Trade Representative to undertake several requirements in self-initiating an investigation under Section 301 of that law. Section 301 gives the president broad authority, including import duties, to retaliate against restrictions found to “burden or restrict” U.S. commerce.
A mix of “creative cases” is needed to remedy trade violations created by Chinese industrial overcapacity, including Section 301 investigations and self-initiating antidumping and countervailing duty cases, Gilbert Kaplan, President Donald Trump’s nominee to be under secretary of Commerce for international trade, told the Senate Finance Committee Aug. 3. “I think it’s time maybe to dust off … Section 301,” he said. Section 301 of the Trade Act of 1974 allows the president to take all "appropriate and feasible steps" to eliminate “unreasonable restrictions” of countries found to “burden or restrict” U.S. commerce. The statute authorizes the executive branch to retaliate against these restrictions as well as anti-competitive subsidies through duties, other import restrictions and withholding trade agreement benefits.
The U.S. is bound to its own trade laws over the dictates of international bodies like the World Trade Organization, and could choose to disregard instructions of oppositional WTO dispute panel rulings that impinge U.S. sovereignty, the Office of the U.S. Trade Representative indicated in its annual report to Congress (here), sent March 1. The Financial Times obtained and posted the report online. “Ever since the United States won its independence, it has been a basic principle of our country that American citizens are subject only to laws and regulations made by U.S. government -- not rulings made by foreign governments or international bodies," the USTR said. "This principle remains true today. Accordingly, the Trump Administration will aggressively defend American sovereignty over matters of trade policy.” The report states elsewhere that U.S. sovereignty considerations will play a central role in trade policy development.
Although the Transatlantic Trade and Investment Partnership (TTIP) sits dormant, U.S. industry should reignite efforts to convince the public that concluding the deal would pay dividends for both parties, Rock Creek Global Advisors Managing Director Michael Smart said during a Feb. 24 panel. “For all the discussion, one thing has not happened,” Smart said. “The administration certainly had in its ability to say, ‘We are calling off TTIP negotiations, or ending them.’ It hasn’t done that.” Panel participants agreed there is still at least a glimmer of hope for conclusion of the deal, but Smart said that U.S. industry must first find a rhythm in its advocacy for trade and other issues with the new Trump administration. While certain political liabilities come with taking a stance on hot-button issues, trade associations can help shield businesses from unwanted exposure, and industry has somewhat skirted the national trade debate in favor of pushing regulatory and tax reform, Smart said.
The Office of the U.S. Trade Representative has extended from Feb. 22 to March 8 the deadline to submit post-hearing comments on whether it should reinstate tariffs on a number of imports from the EU in response to alleged discrimination against U.S. beef exports, USTR said (here). Members of the U.S. beef industry during a Feb. 15 hearing pleaded with the interagency Section 301 Committee to follow through with the December-proposed retaliatory tariffs in response to the alleged EU discrimination, but representatives of the motorcycle, rayon fiber and confectionery industries cautioned against the move (see 1702150046).
Members of the U.S. beef industry pleaded to the interagency Section 301 Committee on Feb. 15 to assess proposed retaliatory tariffs in response to its allegations of EU discrimination against U.S. beef exports, while representatives of the motorcycle, rayon fiber, and confectionery industries cautioned against the move. The Office of the U.S. Trade Representative in December issued a list of 85 headings and subheadings from the EU that the U.S. is considering for retaliatory tariffs, including food and a smattering of other products (see 1612270025).
Sen. Mike Lee, R-Utah, plans to introduce a bill that would make all executive branch trade actions, including tariff raises, subject to congressional approval, as part of his call for Congress to reclaim constitutional powers to lead U.S. trade policy, he wrote in an opinion column for Forbes (here). The yet-to-be-introduced Global Trade Accountability Act would help ensure that Congress would be involved in any decision that would increase trade barriers, Lee said. One example of a statute giving the executive branch “far too much power” to raise tariffs is Trade Act of 1974 Section 122, which allows the president to impose temporary import “surcharges” of up to 15 percent on any goods to deal with “large and serious” U.S. balance-of-payment deficits, Lee said.
The Office of the U.S. Trade Representative is issuing a list of 85 headings and subheadings that could be subject to retaliatory tariffs being considered against the EU, as industry representatives have claimed that the EU is discriminating against U.S. beef exports, USTR said (here). The Obama administration is considering the tariffs (see 1612220023) after members of the U.S. beef industry filed a petition to USTR for their reinstatement, the agency said.