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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

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U.S. Trade Law Case. ( Section 301)

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  1. U.S. Trade Law Case. (Section 301) Andrea Puckett Fidelia Oyogoa Maria Paz Kam Quarles ITRN 603 November 15, 2004

  2. Overview • Andrea Puckett – Main Question/Critical Issues • Fidelia Oyogoa – Background • Maria Paz – Arguments and Decisions • Kam Quarles – Implementation/Conclusion

  3. 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?

  4. Critical Issues What is the Section 301 Family of Legislation? • 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.

  5. Critical Issues Unilateralism • 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.

  6. 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.

  7. What is Section 301? • 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.

  8. Section 301 and USTR • 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.

  9. Section 301 What action does Section 301 authorize to remedy unfair trade practices? Section 301 authorizes U.S. Trade RepresentativeUSTR 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.

  10. Background • 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.

  11. Background • 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.

  12. Arguments made by the EU: EU challenged the U.S. “Section 301” law, Sections 301-310, stating it was inconsistent under WTO. The EU maintains that Section 301 violates Articles 3, 21, 22 and 23 of the WTO Dispute Settlement Understanding (DSU). The EU also argued that Section 301 violated international trade laws with respect to unilateral measures.

  13. Arguments made by the EU (cont.): • EU argues as well that Section 301 violates Article XVI:4 of the Marrakech Agreement. • Lastly, the EU maintains that Section 301 violated Articles I, II, III, VIII, and XI of the GATT.

  14. Arguments made by the U.S.: • The U.S. argued that only legislation which mandates WTO inconsistent action, or which precludes WTO consistent action, could violate WTO provisions. • U.S. countered that the EU argument against Section 301 was “inaccurate”.

  15. DISCRETION • 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?

  16. 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.

  17. IMPLEMENTATION • Section 301, through the dispute settlement process, was determined not to be inherently in violation of W.T.O. and GATT agreements. • Therefore, no remedial action is required by the U.S.

  18. 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

  19. IMPLEMENTATION • Beef Hormone Case with the EU • 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.

  20. IMPLEMENTATION • Ukraine IPR dispute • 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.

  21. CONCLUSION • 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.

  22. References • 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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