International Trade Blog

Many international traders were surprised by the Buy American rules proposed by President Biden soon after inauguration—they were expecting the incoming president to have a gentler approach to international trade than his predecessor. (See my previous article Buy American Legislation Importers and Exporters Should Watch.) The January 2021 proclamation offered broad guidelines and few specifics but signaled the direction the administration would take on trade: goods purchased by federal agencies would need to contain less foreign-made content and waivers would be harder to come by.

Six months later, the White House released more specifics in this fact sheet. The proposal requires that goods purchased with taxpayer dollars contain more U.S.-made content—60% as soon as the rules go into effect and 75% by 2029, up from 55%.

What does this mean in a practical sense to the trade community?

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In my last article, I discussed President Biden’s January 2021 Executive Order on Ensuring the Future Is Made in All of America by All of America's Workers. Since then, his Buy American vision has grown to be a major part of his administration’s economic program.

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Those expecting a dramatic reversal in some of former President Trump’s protectionist trade policies were surprised to see that one of the first trade-related proclamations in the first days of the Biden administration was “Buy American.” The executive order—Executive Order on Ensuring the Future Is Made in All of America by All of America's Workers—was issued without Congressional approval on Jan. 25, 2021, just 10 days after inauguration.

The executive order promotes enforcement of the existing Buy American Act of 1933 by tightening the test for measuring domestic content (the amount of a product that must be made in the U.S. for a purchase to qualify under Buy American law) and more tightly controlling when waivers are granted. The decree would make changes to Federal Acquisition Regulations (FAR), which deal with sales to the U.S. government, including some military and NASA contracts—a large sector of the economy.

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Now that Brexit is finalized, many are wondering what this means for trade between the United States and the United Kingdom. Both countries were restricted from formerly negotiating a trade pact while the U.K. was part of the European Union (EU). However, unbeknownst to many, the U.S. and the U.K. held informal talks for some time prior to Brexit so that a structure would be ready when the time came.

Former President Trump was very much in favor of a deal with the U.K., even though conceptually he did not like bilateral trade agreements. Part of this was his affinity for U.K. Prime Minister Boris Johnson and some antipathy for EU leaders. President Biden is also expected to pursue a trade deal with the U.K.

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The first and second parts of this series, Section 301 of the Trade Act of 1974: Yesterday, Today and Tomorrow, illustrated how, for many years,  Section 301 was used to eliminate trade barriers and open markets to U.S. exports. However, the average business may not have become familiar with this law until President Trump began to invoke it and impose tariffs against China in 2018. The Office of the United States Trade Representative (USTR)—after a notice in the Federal Register and a period for public comment—determined that China violated Section 301 by denying market access to United States companies and infringing on their intellectual property rights. Based on this finding, President Trump imposed the first round of 15% tariffs on $34 billion of Chinese goods covered in what is referred to as List 1.

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In the first article of this series—How Section 301 Investigations and Tariffs Have Impacted Trade—I gave an introduction to Section 301 of the Trade Act of 1974, a trade law with a long history and one which has been used more frequently during the Trump administration. I traced the use of the law through the founding of the World Trade Organization (WTO) and the historic Japanese semiconductor investigations in the mid 1980s.

Today I'll look at Special 301, which emerged in the late 1980s and 1990s to address trade barriers to U.S. companies due to the ineffective protection and enforcement of intellectual property rights.   

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The past two years, importers and exporters have become increasingly familiar with Section 301 of the Trade Act of 1974: the Trump administration has used it extensively to impose tariffs on approximately $370 billion in Chinese-origin goods. But you may be less familiar with how this versatile statute was used over the past 45 years to eliminate trade barriers with other countries and open markets to U.S. exports. 

This article looks at how the use of Section 301 has evolved since its inception and examines one of the more significant earlier investigations under the law. Look for future articles about how the law is being used in regards to China and on strategies companies should be using to monitor its use.    

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