Section 301 (Trade Act) – Definition

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Section 301 Definition

Business owners as well as private parties can incur losses or injury when they are involved in unfair trade agreements with external parties. In order to cater for the injury or losses sustained by private parties due to illegal trade action, Section 301 of the Trade Act of 1974 was added.

Section 301 of the United States Trade Act of 1974 empowers the United States to mediate in disputes resulting from trade agreements. The provisions of this section allows private companies or individuals to seek redress in trade disagreements including a reimbursement of the money they have lost as a result of illegal actions of foreign government.

A Little More on What is Section 301

Section 301 of the Trade Act of 1974 authorizes the President to take all appropriate action in resolving internal trade disputes. This entails that the president has the power to enforce acceptable trade agreements, resolve trade disputes and also mete out appropriate punishments for traders found guilty of illegal trade activities.

Hence, this section allows a firm or a group to file a petition against any party that violates trade agreements. Section 301 cases are often initiated by the United States Trade Representative trade petitions. Section 301 cases involves investigation into trade disputes by the President and also agreement on settlement terms between parties.

Usually, Section 301 cases only commence after a dispute petition has been filed either by the United States Trade Representative or by the affected firm of group. Once the USTR or a firm initiates a Section 301 case, negotiations and settlement of disputes must be through the U.S. government.

However, the amended section 1302 of the Omnibus Foreign Trade and Competitiveness Act (Super 301) contained some actions needed to be carried out before USTR can go ahead initiate a section 301 case. Also, one a firm or USTR opts for the initiation of a section 301 case, it must agree to the trade agreements, negotiations and dispute settlements made through the United States.

There are many consequences or downsides of a country being listed in a section 301 case, this is because for a country to be on section 302 report watchlist, it must have violated certain trade agreements or involved in illicit trade actions.

Despite that the law does not necessitates that the United states gets approval from the World Trade Organization WTO, before enforcing trade actions, the dispute settlement proceedings at WTO can be used against a country that violates trade agreements. Unilateral trade sanctions and prohibitive tariffs from WTO, NAFTA, GSP FTA can be imposed on an erring country.

Upon the enactment of the Trade Act of 1974, Super 301 also came to force between 1989 and 1990. Super 301 required the USTR to issue a report on its trade priorities and to identify priority foreign countries that practiced unfair trade before seeking redress under the provisions of Section 301. However, super 301 only lasted till 1991. After its provisions expired the President of the United States at that time, President Clinton reactivated it between 1994 and 1995.

It was further extended through 1997 by the September 1995 EO 12973 but was not in function in 1998 before it was reinstated in 1999 by EO 13116. Since its reinstatement, the USTR report illegal foreign trade activities to Super 301 before filing a case under Section 301.

References for Section 301

Academic Research on Section 301

Section 301 and the Primary Jurisdiction of the NLRB, Sovern, M. I. (1962). Harv. L. Rev., 76, 529.

Enforceability of Arbitration Agreements Under Taft-Hartley Section 301, Mendelsohn, A. I. (1956). Yale LJ, 66, 167.

Constructive Unilateral Threats in International Commercial Relations: The Limited Case for Section 301, Sykes, A. O. (1992). Law & Pol’y Int’l Bus., 23, 263.

The heart of the 1988 Trade Act: A legislative history of the amendments to Section 301, Bello, J. H., & Holmer, A. F. (1988). Stan. J. Int’l L., 25, 1.

Retaliation Against Unreasonable Foreign Trade Practices: The New Section 301 and GATT Nullification and Impairment, Hudec, R. E. (1974). Minn. L. Rev., 59, 461.

Mandatory Retaliation for Breach of Trade Agreements: Some Thoughts on the Strategic Design of Section 301, Sykes, A. O. (1990). BU Int’l LJ, 8, 301.

The limits of economic power: Section 301 and the World Trade Organization dispute settlement system, Taylor, C. N. (1997). Vand. J. Transnat’l L., 30, 209.

TRIPS and the future of section 301: A comparative study in trade dispute resolution, Getlan, M. (1996). Colum. J. Transnat’l L., 34, 173.

Rules, Sanctions and Enforcement Under Section 301: At Odds with the WTO?, Puckett, A. L., & Reynolds, W. L. (1996). American Journal of International Law, 90(4), 675-689.

‘Aggressive unilateralism’and Section 301: Market opening or market closing?, Thomas, O., & Elliott, K. A. (1992). World Economy, 15(6), 685-706.

Section 301 of the Trade Act of 1974: Protection for US Exporters of Goods, Services, and Capital, Fisher, B. S., & Steinhardt III, R. G. (1982). Law & Pol’y Int’l Bus., 14, 569.

 

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