1. Unfair Trade Practices in Import Trade
The ITC is authorized, upon the filing of a complaint or on its own initiative, to investigate alleged violations of section 337 and to determine whether such violations exist. Section 337 of the Tariff Act of 1930 prohibits (1) the importation of articles that violate a valid and enforceable U.S. patent, trademark, copyright, and so on, for which an industry exists or is in the process of being established in the United States, and (2) unfair methods of competition by the importer or consignee that could adversely affect a U.S. industry (19 U.S. Code S.1337). The ITC’s investigations also include gray-market imports (i.e., products manufactured abroad by the owner or under license that are imported by unauthorized sources into the United States). The strict meaning of gray-market goods is products that are authorized by the owner of production rights to be made and sold in one market are diverted and sold in another, often unauthorized market. The problem with such goods in import trade is that they are often purchased at discounted prices abroad and imported into the United States, taking away the market from authorized dealers.
A large percentage of Section 337 cases involve patent infringement; others pertain to violation of other forms of intellectual property. Such actions can also be raised with the U.S. Patent and Trademark Office. The remedies for such violations include the following:
- A general or limited exclusion order that directs customs to deny entry of certain goods
- A cease and desist order that enjoins a person from further violation of Section 337.
These remedies may be ordered by the ITC in the case of imports that infringe upon U.S. intellectual property rights without finding injury. ITC determinations may be appealed to the U.S. Court of Appeal for the Federal Circuit (International Perspective 19.2).
2. Unjustified Foreign Trade Practices
Section 301 of the Trade Act of 1974 was introduced as part of an effort to seek open access to U.S. exports in foreign markets. It is directed at foreign government practices that restrict U.S. exports or artificially direct goods or services to the United States. It is applicable to the export of goods and services, investment practices, and intellectual property rights.
Special 301 is another version of Super 301 that is applicable to intellectual property rights. Priority countries (countries that do not provide adequate protection for intellectual property rights) are identified for bilateral negotiations. A Special 301 investigation is similar to an investigation initiated in response to an industry Section 301 petition. Trade sanctions for noncompliance could be imposed in the event that the country declines bilateral consultations or fails to implement an agreement to open its market or provide adequate protection for U.S. intellectual property rights.
3. Import Interference with Agricultural Programs
The ITC conducts investigations at the direction of the president to determine whether imports interfere with or render ineffective any program of the Department of Agriculture. The ITC makes its findings and recommendations to the president, who may take appropriate remedial action, including the imposition of a fee or quota on the imports in question. However, fees or quotas may not be imposed on imports from nations that are members of the WTO (USITC, 2006).
4. Trade Adjustment Assistance
For companies and workers adversely affected by fairly traded imports, trade adjustment assistance is provided in the form of retraining or relocation assistance for workers or certain forms of technical and financial assistance to companies. The Department of Labor (adjustment assistance for workers) or Commerce (adjustment assistance for firms) makes an affirmative determination that imports constitute an important contributing factor to declines in production and sales as well as loss of jobs in the affected industries. The available assistance can be pursued before or in tandem with escape-clause proceedings.
5. The Escape Clause
Under Section 201 of the U.S. Trade Act (1974), the ITC assesses whether U.S. industries are being seriously injured by fairly traded imports and can recommend to the president that relief be provided to those industries to facilitate their adjustment to import competition. Relief could take the form of increased tariffs or quotas on imports and/or adjustment assistance for the domestic industry. Such relief is temporary and may be provided for up to five years, with one possible extension of not more than three years. Such actions can be appealed to the U.S. Court of International Trade and then to the Court of Appeals for the Federal Circuit and from there to the U.S. Supreme Court.
From 1975 through 2008, the ITC conducted seventy-three escape-clause (safeguard) investigations accounting for $60 billion of U.S. imports. About 47 percent of such investigations were decided in the affirmative, and the ITC recommended remedial action.
6. Import Relief Based on National Security
The Tariff Act (19 U.S. Code S.1862) gives the president discretion to restrict imports that threaten national security. The Department of Commerce makes findings and recommendations to the president, who may order the imposition of a quota, fee, tariff, or other remedies. Although such remedies are rarely invoked, they could conceivably be used by companies in some strategic sectors. Such remedies are available only if it is established that a strategically important industry is adversely affected by imports and that supplies may not be available during a crisis from either domestic or foreign sources.
Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd edition.