A new World Trade Organization dispute settlement panel report said that the U.S. improperly applied Section 301 tariffs on goods from China. “It remains to be seen whether the US decides to appeal the ruling,” former WTO official Peter Ungphakorn said in a tweet. “Since the Appellate Body cannot function, this would be an 'appeal into the void.'” The WTO appeals court is mostly inoperable due to a U.S. hold on adding new members.
Section 301 Tariffs
Section 301 Tariffs are levied under the Trade Act of 1974 which grants the Office of the United States Trade Representative (USTR) authority to investigate and take action to protect U.S. rights from trade agreements and respond to foreign trade practices. Section 301 of the Trade Act of 1974 provides statutory means allowing the United States to impose sanctions on foreign countries violating U.S. trade agreements or engaging in acts that are “unjustifiable” or “unreasonable” and burdensome to U.S. commerce. Prior to 1995, the U.S. frequently used Section 301 to eliminate trade barriers and pressure other countries to open markets to U.S. goods.
The founding of the World Trade Organization in 1995 created an enforceable dispute settlement mechanism, reducing U.S. use of Section 301. The Trump Administration began using Section 301 in 2018 to unilaterally enforce tariffs on countries and industries it deemed unfair to U.S. industries. The Trump Administration adopted the policy shift to close what it deemed a persistent "trade gap" between the U.S. and foreign governments that it said disadvantaged U.S. firms. Additionally, it pointed to alleged weaknesses in the WTO trade dispute settlement process to justify many of its tariff actions—particularly against China. The administration also cited failures in previous trade agreements to enhance foreign market access for U.S. firms and workers.
The Trump Administration launched a Section 301 investigation into Chinese trade policies in August 2017. Following the investigation, President Trump ordered the USTR to take five tariff actions between 2018 and 2019. Almost three quarters of U.S. imports from China were subject to Section 301 tariffs, which ranged from 15% to 25%. The U.S. and China engaged in negotiations resulting in the “U.S.-China Phase One Trade Agreement”, signed in January 2020.
The Biden Administration took steps in 2021 to eliminate foreign policies subject to Section 301 investigations. The administration has extended and reinstated many of the tariffs enacted during the Trump administration but is conducting a review of all Section 301 actions against China.
The following lawsuits were filed at the Court of International Trade during the week of Sept. 7-13:
A vinyl tile supplier challenged the extension of tariffs to cover the third list of goods from China using Section 301 tariff authority, in a lawsuit filed Sept. 10 at the Court of International Trade. Represented by lawyers at Akin Gump, HMTX Industries and subsidiaries Halstead and Metroflor said the Office of the U.S. Trade Representative overstepped the Section 301 statute when it made more goods subject to the tariffs 12 months after the beginning of the investigation. The law doesn't provide authority for the government to “litigate a vast trade war for however long, and by whatever means, they choose,” the company said.
International Trade Today is providing readers with the top stories from Aug. 31-Sept. 4 in case they were missed. All articles can be found by searching on the titles or by clicking on the hyperlinked reference number.
July laptop and tablet unit imports to the U.S. continued their torrid growth from a year earlier, though July growth was flat sequentially from June, according to Census Bureau data accessed Sept. 6 through the International Trade Commission’s DataWeb tool. Shortages of laptop liquid crystal display (LCD) panels and central processing units (CPUs) threaten to impede sales as the supply chain buckles under the weight of sustained consumer demand for notebook PCs as “essential” work-from-home and remote-learning connectivity tools, market leaders Hewlett-Packard and Dell said during earnings calls in August.
The International Trade Commission recently issued two revisions to the 2020 Harmonized Tariff Schedule to implement changes to exclusions on tariffs from China, as well as modifications of Section 301 tariffs on the European Union and Section 232 tariffs on aluminum from Canada. In Revision 20, issued Aug. 31, the ITC implemented recent changes to Section 301 tariffs on the European Union that removed cheeses from Greece and sweet biscuits from the United Kingdom, while adding fruit jams and purees from France and Germany to the list of goods subject to tariffs (see 2008130031). New subheading 9903.89.55 is added to implement some of the changes. The ITC also implemented new and amended exclusions from list three Section 301 tariffs on products from China (see 2008210003).
The Court of International Trade on Sept. 2 declined to order the release of an importer’s entries that were detained by CBP on country of origin concerns, finding the uncertainty around its own contradictory line of cases on substantial transformation was a factor in denying the bid for a preliminary injunction.
The following lawsuits were filed at the Court of International Trade during the week of Aug. 24-30:
More than half of all exclusions from list four Section 301 China tariffs are set to expire Sept. 1, after the Office of the U.S. Trade Representative declined to extend them in the run-up to their expiration. USTR granted extensions to 87 of the more than 200 list four exclusions published to date.
Over half of all exclusions from list four Section 301 China tariffs are now set to expire Sept. 1, after the Office of the U.S. Trade Representative did not include them in a notice of extensions released the day before their slated expiration. In the notice, USTR granted extensions until Dec. 31 to only 87 of the over 200 list four exclusions published to date. That leaves over 100 exclusions to expire on schedule.