Section 301, Special 301, and Super 301 refer to trade remedies available to the United States under the Trade Act of 1974 and subsequent revisions of that act. Initially Section 301 of the act applied when U.S. rights or benefits under international trade agreements were at risk or when foreign nations engaged in unjustifiable, unreasonable, or discriminatory conduct. Section 301 focused primarily on the activities of foreign governments, not foreign businesses. It has been used primarily to open up foreign markets to U.S. exports and investments and to protect intellectual property rights.
Most Section 301 disputes have been resolved through negotiations leading to changes in foreign country practices. If the U.S. president or the U.S. trade representative (USTR) is not satisfied with the negotiated results in connection with a Section 301 complaint, the United States may undertake unilateral retaliatory trade actions. Created as a result of U.S. frustration with multilateral trade resolution methods and procedures, Section 301 was a U.S. legislative decision, not sanctioned by the General Agreement on Tariffs and Trade (GATT) or the World Trade Organization (WTO), and is thought to be inconsistent with multilateral trade relations.
Section 301 was amended in 1988 (through the Omnibus Trade and Competitiveness Act), creating Super 301 and Special 301 procedures. The 1988 act introduced the concept of mandatory rather than discretionary retaliation against Section 301 offenses. Offenses requiring retaliation include unjustifiable trade practices and the breach of international trade agreements to which the United States is a party.
Membership in the WTO since 1995 has committed the United States to multilateral dispute settlement of issues covered by WTO agreements. Section 301 petitions that are within the scope of WTO agreements are routinely sent to the WTO Dispute Settlement Body. The United States has been involved in more WTO disputes (as a complaining and responding party) than any other member country. When a petition concerns issues not covered by a WTO agreement or a country that is not a WTO member, Section 301 remedies are often pursued.
Super 301 procedures refer to a requirement that the USTR identify “trade liberalization priorities.” These priorities focused on major trade barriers and other tradedistorting practices of foreign countries, which, if eliminated, would likely have the most potential to increase U.S. exporting. The revised act of 1988 also required the USTR to investigate harmful practices under Section 301. This resulted in a practice of creating “watch lists,” by which the USTR would identify countries whose practices were of most concern without initiating a Section 301 investigation. Shortly after the law was passed, many countries and practices were placed on the Super 301 watch list, including
• Japanese procurement restraints on purchases of U.S. super computers and space satellites, and Japanese technical barriers to trade in wood products
• Brazilian import bans and licensing controls
• Indian barriers to foreign investment and foreign insurance
Intergovernmental negotiations resolved the Japanese and Brazilian disputes, opening these markets to U.S. exporters, but India refused to discuss super 301 listing.
Sometimes Super 301 procedures and designations were used as “bargaining chip” in advance to GATT/WTO negotiations, and sometimes they used as an alternative to efforts for calls for stricter measures against other trading nations. In September 1995, President Bill Clinton extended Super 301 for two years. No countries were prioritized that year, but China and Japan were identified for special scrutiny. Korea negotiated a last-minute arrangement to avoid citation under Super 301. In 1996 Brazil, Argentina, Australia, and Indonesia were all subject to Super 301 investigations, but Super 301 watch lists were suspended in 1997.
Unlike Super 301 procedures, which were allowed to expire, the Special 301 procedures established in the 1988 Omnibus Trade and Competitiveness Act are permanent parts of U.S. trade legislation. Under these procedures, the USTR is required to identify foreign countries that deny adequate and effective protection of intellectual-property rights or deny fair and equitable access for U.S. citizens who rely on intellectual-property protection. Countries identified under Special 301 as “priority countries” are subject to a mandatory Section 301 investigation within six months unless there is a determination that this would be detrimental to U.S. economic interests or the dispute is settled through negotiation.
In identifying priority foreign countries for intellectualproperty rights violations, the USTR is directed to focus on only those countries that have the most “onerous or egregious” practices—that is, whose practices have the greatest adverse impact on U.S. products. Like the Super 301 legislation, Special 301 rules have resulted in “priority watch lists” and “secondary watch lists.” This has created pressure for offending nations to enter into intellectualproperty rights negotiations with the United States. During the early 1990s, many countries were placed on Special 301 lists, but now most intellectual-property disputes go to the WTO as alleged breaches of the Trade-Related Intellectual Property Agreement.
Further reading
Folsom, Ralph H., and Michael Gordon. International Business Transactions, 5th ed. Eagan, Minn.: West Group, 2002.