Starting with a Piece of News (excerpted)
Now, let us probe into a piece of news from People’s Daily dated December 14, 2001.
China Concerns Over US 201 Steel Case
“China is strongly concerned over the recent support measures suggested by the US International Trade Commission (USITC) in the 201 steel case. The USITC published the suggested measures concerning imported steel products based on Section 201 on December 7, which will be referred to President Bush soon, said Gao Yan, spokeswoman of the Chinese Ministry of Foreign Trade and Economic Cooperation (MOFTEC).
Gao pointed out that most of the USITC commissioners suggested to carry on the high import duty and tariff quota on the steel products under investigation, which have lasted four years already. The Chinese government is very concerned about this suggestion and the possible result of the 201 investigations.
According to Gao, the Chinese side holds that the USITC suggestion will bar the steel products of other countries from entering the US market.
Such a barrier would run counter to the policy of trade liberalization advocated by the World Trade Organization（WTO）, and it will not only affect the stability of international trade order under the present conditions of slowed world economic development, but also harm the healthy growth of the US steel enterprises in international competition, said Gao.
On June 28 this year, the USITC started to investigate four types of steel products imported from countries and regions including China.
The investigation was carried out under the Section 201 of the US Trade Act of 1974, aiming to determine whether the imported products would threaten or harm the relevant US domestic industries.
Gao noted that China has always objected to trade protectionism in any form, and is unwilling to see the normal international trade disturbed by improper trade policies and measures. She added that the Chinese government would closely follow the issue, and said that she hoped that the US side would further consider the stances of China and other countries, and handle the issue properly. “ (the END)
After we read this news, several questions come to our minds. Clearly, there is certain problem between China and the US in terms of “201 Steel Case”. So what does “201 Steel Case” mean? Simply put, it means a case involving steel products under the Section 201 of US Trade Act of 1974. In detail, it is a long story.
Background of “201 Steel Case”
“Given the marked financial loss and declined profits, returns on investment and market share of the US steel industry, on June 5 2001, the US President Bush announced a comprehensive initiative to respond to the challenges facing the US steel industry. As part of this initiative, the US President directed the US Trade Representative Office (USTR) to request the US International Trade Commission (USITC) to initiate an investigation under Section 201 of US Trade Act of 1974 of the effect of the steel imports to the US steel industry. “(Excerpted from the request letter by USTR to USITC)
On June 28 2001, the USITC started to investigate four types of steel products imported from countries and regions including China.
On December 19, 2001, the (USITC) transmitted to the President a report on its investigation under section 202 of the Trade Act of 1974, with respect to imports of certain steel products.
On March 5 2002, the US President Bush announced, in a proclamation, his determination with regard to safeguard measures in various forms on some steel imports to the US from several countries including China.
Section 201 of US Trade Act of 1974
Under section 201, domestic industries seriously injured or threatened with serious injury by increased imports may petition the USITC for import relief. The USITC determines whether an article is being imported in such increased quantities that it is a substantial cause of serious injury, or threat thereof, to the U.S. industry producing an article like or directly competitive with the imported article. If the Commission makes an affirmative determination, it recommends to the President relief that would prevent or remedy the injury and facilitates industry adjustment to import competition. The President makes the final decision whether to provide relief and the amount of relief.
Section 201 does not require a finding of an unfair trade practice, as do the antidumping and countervailing duty laws and section 337 of the Tariff Act of 1930. However, the injury requirement under section 201 is considered to be more difficult than those of the unfair trade statutes. Section 201 requires that the injury or threatened injury be "serious" and that the increased imports must be a "substantial cause" (important and not less than any other cause) of the serious injury or threat of serious injury.
Criteria for import relief under section 201 are based on those in article XIX of the GATT, as further defined in the WTO Agreement on Safeguards. Article XIX of the GATT is sometimes referred to as the escape clause because it permits a country to "escape" temporarily from its obligations under the GATT with respect to a particular product when increased imports of that product are causing or are threatening to cause serious injury to domestic producers. Section 201 provides the legal framework under U.S. law for the President to invoke U.S. rights under article XIX.
When: The ITC conducts an investigation under section 201 upon receipt of a petition from a trade association, firm, certified or recognized union, or group of workers which is representative of a domestic industry; upon receipt of a request from the President or the USTR; upon receipt of a resolution of the House Committee on Ways and Means or Senate Committee on Finance; or upon its own motion.
Duration: The ITC generally must make its injury finding within 120 days (150 days in more complicated cases) of receipt of the petition, request, resolution, or institution on its own motion and must transmit its report to the President, together with any relief recommendations, within 180 days after receipt of the petition, request, resolution, or institution on its own motion.
Finding: If the ITC finding is affirmative, it must recommend a remedy to the President, who determines what relief, if any, will be imposed. Such relief may be in the form of a tariff increase, quantitative restrictions, or orderly marketing agreements.
Follow-up: If import relief is provided, the ITC periodically reports on developments within the industry during the period of relief. Upon request, the ITC advises the President of the probable economic effect on the industry of the reduction, modification, or termination of the relief in effect. At the conclusion of any relief period, the ITC is required to report to the President and Congress on the effectiveness of the relief action in facilitating the positive adjustment of the domestic industry to import competition.
If no mutually satisfactory solution is found after consultations…
Well, if parties fail to reach consensus, Dispute Settlement Body of the WTO is the right place to go. The relevant agreements governing dispute settlement is the Understanding on Rules and Procedures Governing the Settlement of Disputes. With regard to safeguard measures, the relevant WTO agreement is the Agreement on Safeguards.
We are to have a detailed discussion of these two agreements, in particular, the Agreement on Safeguards, which are of great interests and importance to China.