Section 201 (Trade Act) – Definition

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Section 201 Definition

Section 201 is a provision under the Trade Act of 1974 that permits the President of the United States to grant temporary relief in cases of domestic industries that are injured or threatened. Under this provision, temporary reliefs are granted through an increase in import duties or imposing non-tariff barriers on imports in the U.S that serve as a threat to domestic industries producing similar goods.

Domestic industries facing threats often petition the United States International Trade Commission (USITC) for temporary relief. The USITC investigates the petition to know whether the imported product is competing with or threatening the domestic industry that produces same products if this is so, the Presidents then decides on import relief for the industry.

A Little More on What is Section 201

The criteria for import relief under section 201 of the Trade Act of 1974 are based on those of XIX, GATT and WTO Agreement on safeguards. Before an import relief can be granted to a domestic industry that is injured and threatened by by increased imports, the provision of 201 stipulates that the injury must really be ‘serious.’ Aside from incurring a ‘serious’ injury, the increased imports must also be important, that is it must be a substantial cause.  This is why the injury requirement under section 201 is more difficult than requirements found on other sections of the law.

A section 201 case only commences after a petition has been filed by the domestic industry that is seriously injured or threatened. The petition is submitted to USITC who then initiates an investigation or inquiry into the case.

Upon receipt and investigation into the petition, if USITC finds that the petitioner has indeed suffered a serious injury, a request is then made from the office of the United States Trade Representative (USTR) of from the President. The request is however preceded by a resolution of the Senate Committee on Finance or other designated authority.

The investigation carried out by the United States International Trade Commission (USITC) lasts between a period of 120 days and 150 days depending on the complexity of the case. This period include when the petition was received, the request, resolution and institution of motion regarding the petition. However, the transmission of the petition to the President, the decision whether to provide relief and the amount of relief and other resolutions takes a period of 180 days after the petition has been received.

After investigation. If USTIC makes an affirmative determination on the serious injury to a domestic industry as a result of increased imports, this finding must be transmitted to the President. If is then that the President would determine what relief should be granted to the affected industry. The president may grant relief such as quantitative restrictions, increase in import duties or imposing non-tariff barriers on imports as the case may be.

Once the President decides on the relief to be granted to a domestic industry that suffered serious injury, follow up is necessary and this follow-up is usually from USITC. The United States International Trade Commission (USITC) monitors the industry and gives periodic reports to the President during the period of relief. If need be, USITC gives regular advices to the President regarding the effect of reliefs on the industry. Also, once the period of relief elapses, USITC is also meant to give a holistic report on the effectiveness of the relief, its setbacks among others.

The primary duty of the North American Free Trade Agreement (NAFTA) is to get rid of trade barriers and investment blockages between United States, Canada and Mexico. After NAFTA was implemented, there was immediate removal of export tariffs. Under the section 302 of the NAFTA Implementation Act, USITC determines whether a U.S industry suffers serious injury and threats due to the reduction or elimination duty of NAFTA. If the injury incurred is found affirmative by USITC, the President makes a remedy decision in terms of temporary import reliefs for the affected industry. However, the procedures of the NAFTA section 302 investigations are similar to those of section 201 of the Trade Act of 1974.

References for Section 201 of the Trade Act

Academic Research on Section 201

Causing problems? The WTO review of causation and injury attribution in US Section 201 cases, Irwin, D. A. (2003). World Trade Review, 2(3), 297-325.

Import Competition and the Trade Act of 1974: A Case Study of Section 201 and its Interpretation by the International Trade Commission, Adams, W., & Dirlam, J. B. (1976). Ind. LJ, 52, 535.

Promissory Estoppel and Section 2-201 of the Uniform Commercial Code, Metzger, M. B., & Phillips, M. J. (1981). Vill. L. Rev., 26, 63.

Implications of Section 201 of the Sarbanes–Oxley Act: the role of the audit committee in managing the informational costs of the restriction on auditors engaging in …, Alles, M. G., Kogan, A., & Vasarhelyi, M. A. (2005). International Journal of Disclosure and Governance, 2(1), 9-26.

The US International Trade Commission’s 30-Day Inquiry Under the Antidumping Act: Section 201 (c)(2), McDermid, J. F., & Foster, F. D. (1975). Mercer L. Rev., 27, 657.

The 1988 Amendments to Section 201: It Isn’t Just for Import Relief Anymore, Rosenthal, P. C., & Gilbert, R. H. (1988). Law & Pol’y Int’l Bus., 20, 403.

Can US Safeguard Actions Survive WTO Review: Section 201 Investigations in International Trade Law, Pickard, D. B., & Kimble, T. P. (2007). Loy. LA Int’l & Comp. L. Rev., 29, 43.

Section 201 of the Trade Act of 1974: The Reagan Record, Holmer, A. F., & Bello, J. H. (1988). NCJ Int’l L. & Com. Reg., 13, 185.

The Response of Escape Clause of GATT and Section 201 of the Tariff and Trade Act of 1974 to the Needs of Developing Countries, Fandel, R. A. (1987). Cal. W. Int’l LJ, 17, 208.

The Effects of Section 201 Safeguards on US Industries, Ryan, D. (2012). Geo. J. Int’l L., 44, 249.

 

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