By announcing a 50% rate against products in Brazil, US President Donald Trump also determined a commercial investigation under the so -called section 301 of the 1974 Commerce Law.
“Due to Brazil’s continuous attacks on US companies’ digital trade activities, as well as other unfair business practices, I am instructing the US commercial representative, Jamieson Greer, to immediately start an investigation in Section 301,” said Trump.
This is an instrument of US commercial legislation that the US government can use to investigate whether other countries adopt unfair commercial practices, illegal barriers, and intellectual property issues, for example, explains Oliver Stuenkel, FGV international relations professor.
Ultimately, this investigation may lead to the imposition of unilateral sanctions and tariffs.
After the calculation, section 301
- impose tariffs or other restrictions on import
- Remove or suspend concessions of commercial agreements
- and sign a binding agreement with the foreign government to cease the conduct in question or compensate for the United States
Still, it is highlighted that the US representative
“The compulsory level of action must ‘affect foreign goods or services in an equivalent amount in the amount or restriction imposed by that country’ on US commerce,” the United States Congress says.
Still, Stuenkel estimates that this action appears to have a “more political and symbolic than legal character.”
“It is an atypical use, as it were, this tool of American license,” concludes the expert.
The law also specifies requirements for monitoring, modifying and ending actions taken under section 301.
The US Congress also points out that the actions adopted under section 301 end after four years, unless the commercial representative receives a request for continuation and conducts a review of the case.
In some cases, it may restore an action of section 301 that has already been closed.
How does the investigation work?
According to the US Congress, anyone can submit a petition to the United States Commercial Representative’s office requesting to start an investigation under section 301.
The representative can also start an investigation on his own after consulting “appropriate public and private stakeholders”.
These investigations are conducted by a “section committee 301”, established as a subordinate body of the Commercial Policy Committee, which is led by the commercial representative’s office.
The Committee of Section 301 analyzes petitions, holds public hearings and makes recommendations to the Commercial Policy Committee on possible actions pursuant to Section 301.
The commercial representative base his decision on the recommendations provided by the Commercial Policy Committee.
Also according to Congress, the office of the commercial representative must request consultations with the foreign government at the beginning of an investigation.
If consultations do not have a “mutually acceptable result”, he must request formal procedures for disputing resolution under the current trade agreement (World Trade Organization or Free Trade Agreement).
For investigations that do not involve an agreement, the commercial representative usually requests consultations with the foreign government and contacts the appropriate commercial advisory committees when starting the investigation.
Still, according to Oliver Stuenkel, this is a relatively time consuming process.
