the assembly operation in the United States or third country as well as on whether the parts and components from the country subject to the order are a "significant portion" of the total value of the merchandise assembled in the United States or third country. Best information available In order to promote transparency, the Uruguay Round signatories agreed to detailed guidelines concerning the use of "best information available" (BIA). In seeking to implement those guidelines, the Uruguay Round Agreements Act preserves the ability of the agencies to rely on adverse inferences upon a finding that the party has failed to cooperate by not acting to the best of its ability to comply with a request. At the same time, however, the new law also contains limitations on the use of BIA, many of which are designed to assist small companies in providing information. For example, the agency is to consider the ability of an interested party to provide the information in the requested form and manner, and may modify the requirements upon a reasoned and timely explanation by that party. In addition, if the agency determines that a response does not comply with the request, the agency must, to the extent practicable, provide an opportunity to remedy the deficiency. The Agreements provide that the authorities are not justified in disregarding less than ideal information if the party acted to the best of its ability. Section 231 of the Uruguay Round Agreements Act provides that the agencies are not to decline to consider information that is timely submitted, verifiable, and not so incomplete that it cannot serve as a reliable basis for the determination, if the submitting party acted to the best of its ability to meet the requirements, and if the information can be used without undue difficulties. The Act further provides that if an agency relies on secondary information rather than on information submitted by a respondent, it must, to the extent practicable, corroborate that information from independent sources reasonably at its disposal. Judicial review An interested party dissatisfied with a final AD or CVD determination or review may file an action in the U.S. Court of International Trade for judicial review. To obtain judicial review of the administrative action, a summons and complaint must be filed concurrently within 30 days of publication of the final determination. As set forth in section 516A of the Tariff Act of 1930, as amended, the standard of review used by the Court is whether the determination is supported by "substantial evidence on the record" or "otherwise not in accordance with law." Appeal of negative preliminary determinations is based on whether the determination is "arbitrary, capricious, an abuse of discretion, or [is] otherwise not in accordance with law." Judicial review of interlocutory decisions, previously permitted, was eliminated by section 623 of the Trade and Tariff Act of 1984. Decisions of the Court of International Trade are subject to appeal to the U.S. Court of Appeals for the Federal Circuit. As a result of provisions in the North American Free Trade Agreement (NAFTA) and its implementing legislation, final deter minations in AD or CVD proceedings involving products of Canada and Mexico are reviewed by a NAFTA panel instead of by the U.S. Court of International Trade, if either the United States, Canadian or Mexican government so requests. The panel will apply U.S. law and U.S. standards of judicial review to decide whether U.S. law was applied correctly by the DOC and the ITC. WTO panel review As part of the Uruguay Round Agreements, the parties agreed to a strengthened dispute resolution process under the World Trade Organization (WTO), in which parties are permitted to bring their disputes to a review body for resolution. The Uruguay Round Agreements Act contains provisions relating to the adoption of panel reports in AD and CVD cases. Section 129 of the Uruguay Round Agreements Act provides that if a dispute settlement panel or appellate body finds that an action by the ITC is not in conformity with U.S. obligations, USTR may request that the ITC issue an advisory report on whether the stat ute permits it to take steps that would render its determination not inconsistent with those findings. If the ITC issues an affirmative report, USTR may request that it issue a determination not inconsistent with the findings of the panel or appellate body. If, by virtue of that determination, an AD or CVD order is no longer supported by an affirmative determination, USTR, after consultation with Congress, may direct the ITC to revoke the order. However, the President may, again after consultation with Congress, reduce, modify, or terminate the agency action. If a dispute settlement panel or appellate body finds that an action by the DOC is not in conformity with U.S. obligations, USTR may request that the DOC issue a determination that would render its determination not inconsistent with those findings, after consultation with Congress. USTR may further request that the DOC implement that determination. Any ITC and DOC action implemented as a result of dispute settlement is to apply to liquidated entries of the subject merchandise entered on or after the date on which USTR directs the ITC to revoke an order or the DOC to implement a determination. Enforcement of U.S. Rights Under Trade Agreements and Response to Certain Foreign Practices: Sections 301-310 of the Trade Act of 1974, as amended Chapter 1 of title III (sections 301-310) of the Trade Act of 1974, as amended, 17 provides the authority and procedures to enforce U.S. rights under international trade agreements and to respond to certain unfair foreign practices. The predecessor statute, section 252 of the Trade Expansion Act of 1962,18 was repealed and section 301 established in its place under the Trade Act of 1974. Section 301 was amended under title IX of the Trade Agreements Act of 1979 19 in two principal respects: (1) to include specific authority to enforce U.S. rights and to respond to actions by foreign countries 17 Public Law 93-618, approved January 3, 1975, 19 U.S.C. 2411. 18 Public Law 87-794, section 252, approved October 11, 1962. 19 Public Law 96-39, title IX, approved July 26, 1979. inconsistent with or otherwise denying U.S. benefits under trade agreements; and (2) to place specific time limits on the procedures for investigating and taking action on petitions. Some further amendments were enacted under sections 304 and 307(b) of the Trade and Tariff Act of 1984 20 to clarify certain authorities and practices covered by section 301, and to authorize certain actions with respect to foreign export performance requirements. The current statute reflects major modifications made by sections. 1301-1303 of the Omnibus Trade and Competitiveness Act of 1988 21 to what is commonly called "section 301," as well as enactment of additional authorities commonly known as "Super 301" to deal with priority practices and priority countries and "Special 301" to deal with priority intellectual property right practices. The principal amendments in 1988 to strengthen the basic section 301 authority were: (1) to require the U.S. Trade Representative (USTR) to make unfair trade practice determinations in all cases, and to transfer authority to determine and implement section 301 action from the President to the USTR, subject to the specific direction, if any, of the President; (2) to make section 301 action mandatory in cases of trade agreement violations or other "unjustifiable" practices, except in certain circumstances; (3) to include additional types of practices as specifically actionable under section 301; (4) to tighten and specify time limits on all investigations and actions; and (5) to require monitoring and enforcement of foreign settlement agreements and to provide for modification and termination of section 301 actions. Further modifications were made by the Uruguay Round Agreements Act 22 to sections 301-310 and 182 of the Trade Act of 1974 to conform to the time limits under the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes (Dispute Settlement Understanding) and to clarify and strengthen the scope and application of these domestic authorities. INTERNATIONAL CONSULTATIONS AND DISPUTE SETTLEMENT Article XII and XIII of the General Agreement on Tariffs and Trade (GATT), as elaborated upon by the Texts Concerning a Framework for the Conduct of World Trade concluded in the Tokyo Round of multilateral trade negotiations (MTN),23 provided the general consultation and dispute settlement procedures applicable to GATT rights and obligations. In addition, the GATT agreements concluded in the MTN on specific non-tariff barriers each contained procedures for consultation and resolution of disputes among signatories concerning practices covered by each agreement. As part of the Uruguay Round, the parties agreed to the Understanding on Rules and Procedures Governing the Settlement of Disputes which establishes a single, integrated Dispute Settlement Body dealing with disputes arising under any of the WTO agreements. One of the most marked changes in this new dispute resolution mechanism is that all of the key decisions in the dispute settlement process, including the establishment of panels, adoption of 20 Public Law 98-573, approved October 30, 1984. 23 MTN/FR/W/20/Rev. 2, reprinted in House Doc. No. 96-153, pt. I at 619. panel and Appellate Body reports, and the authorization to retaliate will be automatic unless there is a unanimous vote against the action. Accordingly, parties may no longer block panel reports adverse to them. In addition, timetables are established for each phase of the dispute resolution process. Moreover, an Appellate Body is established to examine issues of law covered in a panel report and legal interpretations developed by the panel. Retaliation, in the form of suspended concessions or obligations, is to be limited to the sector that is at issue in the proceeding, unless it is not practicable or effective. Issues related to the level of retaliation may be submitted to binding arbitration. ENFORCEMENT AUTHORITY AND PROCEDURES (SECTION 301) Sections 301-309 of the Trade Act of 1974, as amended, provide the domestic counterpart to the WTO consultation and dispute settlement procedures. They contain the authority under U.S. domestic law to take retaliatory action, including import restrictions if necessary, to enforce U.S. rights against violations of trade agreements by foreign countries and unjustifiable, unreasonable, or discriminatory foreign trade practices which burden or restrict U.S. commerce. Section 301 authority applies to practices and policies of countries whether or not the measures are covered by, or the countries are members of, GATT/WTO or other trade agreements. The USTR administers the statutory procedures through an interagency committee. Basis and form of authority Under section 301, if the U.S. Trade Representative determines that a foreign act, policy, or practice violates or is inconsistent with a trade agreement, or is unjustifiable and burdens or restricts U.S. commerce, then action by the USTR to enforce the trade agreement rights or to obtain the elimination of the act, policy, or practice is mandatory, subject to the specific direction, if any, of the President. The USTR is not required to act, however, if (1) a WTO/GATT panel has reported, or a dispute settlement ruling under a trade agreement finds, that U.S. trade agreement rights have not been denied or violated; (2) the USTR finds that the foreign country is taking satisfactory measures to grant U.S. trade agreement rights, has agreed to eliminate or phase out the practice or to an imminent solution to the burden or restriction on U.S. commerce, or has agreed to provide satisfactory compensatory trade benefits; or (3) the USTR finds, in extraordinary cases, that action would have an adverse impact on the U.S. economy substantially out of proportion to the benefits of action, or finds that action would cause serious harm to the U.S. national security. Any action taken must affect goods or services of the foreign country in an amount equivalent in value to the burden or restriction being imposed by that country on U.S. commerce. If the USTR determines that the act, policy, or practice is unreasonable or discriminatory and burdens or restricts U.S. commerce and action by the United States is appropriate, then the USTR has discretionary authority to take all appropriate and feasible action, subject to the specific direction, if any, of the President, to obtain the elimination of the act, policy, or practice. With respect to the form of action, the USTR is authorized to (1) suspend, withdraw, or prevent the application of benefits of trade agreement concessions to carry out a trade agreement with the foreign country involved; (2) impose duties or other import restrictions on the goods of, and notwithstanding any other provision of law, fees or restrictions on the services of, the foreign country for such time as the USTR deems appropriate; (3) withdraw or suspend perferential duty treatment under the Generalized System of Preferences, the Carribean Basin Initiative, or the Andean Trade Pref1erences Act; or (4) enter into binding agreements that commit the foreign country to (a) eliminate or phase out the act, policy, or practice, (b) eliminate any burden or restriction on U.S. commerce resulting from the act, policy, or practice, or (c) provide the United States with compensatory trade benefits that are satisfactory to the USTR. The USTR may also take all other appropriate and feasible action within the power of the President that the President may direct the USTR to take. With respect to services, the USTR may also restrict the terms and conditions or deny the issuance of any access authorization (e.g., license, permit, order) to the U.S. market issued under federal law, notwithstanding any other law governing the authorization. Such action can apply only prospectively to authorizations granted or applications pending on or after the date a section 301 petition is filed or the USTR initiates an investigation. Before imposing fees or other restrictions on services subject to federal or state regulation, the USTR must consult as appropriate with the federal or state agency concerned. Under section 301, action may be taken on a non-discriminatory basis or solely against the products or services of the country involved and with respect to any goods or sector regardless of whether they were involved in the particular act, policy, or practice. The statute does not require that action taken under section 301 be consistent with U.S. obligations under international agreements, but the dispute-settlement provisions of such agreement could be utilized. If the USTR determines that action is to be in the form of import restrictions, it must give preference to tariffs over other forms of import restrictions and consider substituting on an incremental basis an equivalent duty for any other form of import restriction imposed. Any action with respect to export targeting must reflect, to the extent possible, the full benefit level of the targeting over the period during which the action taken has an effect. Coverage of authority The term "unjustifiable" refers to acts, policies, or practices which violate or are inconsistent with U.S. international legal rights, such as denial of national or most-favored-nation treatment, right of establishment, or protection of intellectual property rights. The term "unreasonable" refers to acts, policies, or practices which are not necessarily in violation of or inconsistent with U.S. international legal rights, but are otherwise unfair and inequitable. In determining whether an act, policy, or practice is unreasonable, reciprocal opportunities in the United States for foreign nationals and firms must be taken into account, to the extent appropriate. 35-610 97-4 |