Section 301 Investigations

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As part of the Trump administration’s continuing efforts under Section 301 to pressure the People’s Republic of China (PRC) to change its intellectual property and forced technology transfer practices, the Office of the U.S. Trade Representative announced in the Federal Register today (1) which PRC products will be subject to a Section 301 25 percent…

Last Friday, the Trump administration released the list of imported products from the People’s Republic of China (PRC) that will be subject to an additional 25 percent tariff. The retaliatory tariffs are the result of (1) the U.S. government’s Section 301 investigation and report that assessed the PRC government’s intellectual property and technology transfer practices…

On June 7, 2018, the U.S. Department of Commerce announced that Zhongxing Telecommunications Equipment Corporation of Shenzhen, China (ZTE Corporation) and ZTE Kangxun Telecommunications Ltd. of Hi-New Shenzhen, China (ZTE Kangxun) (collectively, ZTE) had agreed to additional penalties and compliance measures to replace Commerce’s Bureau of Industry and Security (BIS) denial order imposed as a result of ZTE’s violations of its March 2017 settlement agreement. On April 15, 2018, BIS activated the suspended denial order against ZTE after learning that ZTE had not disciplined numerous employees responsible for the violations that led to the settlement agreement. Instead, ZTE rewarded those employees with bonuses. With the imposition of the denial order by BIS, ZTE announced in early May 2018 that all major operating activities of the company had ceased as a result of the denial order. On May 13, 2018, President Trump, against the advice of U.S. law enforcement and intelligence officials, announced that “President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!”

President Trump has released a statement setting forth the steps that his administration will undertake in an effort to protect domestic technology and intellectual property from China’s unfair and discriminatory trade practices. These actions are the result of the findings of the U.S. Trade Representative investigation pursuant to Section 301 of the Trade Act of…

Over the weekend, China and the United States continued bilateral trade consultations and announced they had reached a consensus on “taking effective measures to substantially reduce the United States trade deficit in goods with China.” In a Joint Statement, both countries agreed (1) to increases in U.S. agriculture and energy exports, (2) on the…

In its self-initiated investigation, the Department of Commerce has preliminarily determined that countervailing duties (CVD) should be assessed for imports of aluminum sheet from China to counteract Chinese government subsidies. Commerce calculated a 31.20 percent CVD rate for Chinese respondent Yong Jie New Material Co., Ltd.; a 34.99 percent CVD rate for respondents Henan Mingtai Industrial Co., Ltd. and Zhengzhou Mingtai Industry Co., Ltd.; and a 33.10 percent CVD rate for all other Chinese producers and exporters. Due to their failure to cooperate in the investigation, Commerce assigned a 113.30 percent CVD rate to respondents Chalco Ruimin Co., Ltd. and Chalco-SWA Cold Rolling Co., Ltd.

On April 12, 2018, the House of Representatives’ Committee on Ways and Means held a hearing to explore the effects on the U.S. economy and jobs of the tariff increases related to Section 232 and Section 301 investigations. Before the hearing, Chairman Kevin Brady stated, “In enforcing our trade laws, we should always take a targeted approach to address unfair practices while avoiding harm to U.S. workers and job creators. Our private sector witnesses will discuss the impact of recently announced U.S. tariff increases on their businesses, including product and country coverage of the tariffs, the process to comment on and apply for exclusions from the tariffs, and the effects of possible retaliation on U.S. exporters.” In his opening comments, Brady highlighted China’s questionable trade policies and practices, but also asked, “How do you avoid punishing Americans for China’s misbehavior?”

On April 11, 2018, the Senate Committee on Finance held a hearing regarding the challenges that U.S. businesses, manufacturers and service providers face when trying to access the Chinese market. Links to the witnesses’ written testimony are provided below. Before the committee, these industry witnesses consistently indicated that a long-term strategy – with clear objectives and a timeline – was needed to address China’s trade practices. Perhaps, most poignantly, Dean Garfield, president and CEO of the Information Technology Industry Council, stated, “The U.S.-China relationship is as complex as it is important. The relationship has always been – and likely will continue to be – one of both competition and cooperation. We need to approach managing difficulties in the bilateral trade relationship with the nuance and deliberation they deserve, recognizing that both action and inaction will have consequences for years to come, in positive and negative respects.” He later added that the United States, regardless of China’s practices, must rebalance its approach to strengthening the U.S. economy because, “Regardless of whether China plays by the rules or not, it will continue to develop significant capacity for technological development, innovation, and growth. The United States must be prepared to compete.”

The Office of the U.S. Trade Representative (USTR) has released its annual report on significant foreign trade barriers, providing an inventory of the most important foreign barriers affecting U.S. exports of goods and services, foreign direct investment by U.S. persons and protection of intellectual property rights. The term “trade barriers” does not have a fixed definition but is broadly defined by the USTR as government laws, regulations, policies or practices that either protect domestic goods and services from foreign competition, artificially stimulate exports of particular domestic goods and services, or fail to provide adequate and effective protection of intellectual property rights. The report classifies foreign trade barriers into 10 different categories, including import policies, government procurement, export subsidies, lack of intellectual property protections and service/investment barriers.

Announcing that China’s unfair trade practices in the areas of technology transfers and intellectual property result in harm to the U.S. economy of at least $50 billion per year, President Trump issued a Presidential Memorandum announcing the findings of his administration’s Section 301 investigation into these practices by the People’s Republic of China. This trade…