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IV.  TERMS RELATED TO US TRADE LEGISLATION

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Adjustment Assistance. Relocation, reemployment, and financial assistance to workers, firms, and industries designed to help them adjust to import competition. Trade Adjustment Assistance (TAA) provided by the Trade Acts of 1974 and 1979 is designed to help an industry become more competitive or phase workers into other economic pursuits. Proponents claim that TAA can promote trade liberalization by facilitating shifts of resources from less productive to more productive industries. Critics argue that the T AA program --provided primarily in the form of a supplement to unemployment compensation --distorts incentives by compensating only workers who have failed to adjust to import competition.

 

Agricultural Trade Development and Assistance Act of 1954. See PL. 480.

Buy American Act. Legislation mandating preferential treatment for US products in the award of certain government contracts. The act is waived for purchases covered by the Government Procurement Code (Sec. I).

Escape Clause. (See also entry under same name in Section I). Provisions under US law authorizing temporary relief for domestic producers and workers injured by import competition. Originally limited to those whose losses resulted from prior US trade concessions, escape clause eligibility was extended in Section 201 of the Trade Act of 1974 to all who could establish that imports were "a substantial cause of serious injury, or the threat thereof' (see injury, Sec. /). The Trade Act of 1988 stipulated that the goal of any relief must be "positive adjustment." If the US International Trade Commission (USITC) finds injury and recommends relief, the President must grant it or report to Congress why, after reviewing the US national economic interest, he has decided there is no appropriate and feasible action to take. Congress may override this decision through enactment of a joint resolution, imposing the remedy recommended by the USITC. Import restrictions imposed under the escape clause authority usually last no longer than five years.

 

Exon-Florio Amendment. A measure attached to the Trade Act of 1988 to provide a means of monitoring foreign direct investment in the United States. The amendment .authorizes the President to block mergers and joint ventures with foreign interests, or acquisitions or takeovers of US companies by foreign interests, on grounds of national security. See Committee on Foreign Investment in the United States (Sec. III).

 

Export Administration Acts of 1969 and 1977. Legislation providing authority for the President to limit or suspend exports of US commodities or technical data to foreign destinations in order to protect national security , to ensure against a drain of scarce goods, or to further foreign policy objectives.

 

Export Control Act. Legislation enacted in 1949 requiring that all commercial exports from the United States be licensed. Authority was granted to the President -- subsequently delegated to the Secretary of Commerce --to devise specific regulations to control exports. In the case of certain products such as munitions or narcotics, a "validated license" (i.e., explicit written authorization) was required for exportation to any destination; another cases, it was not the product but the destination (e.g., all shipments to Cuba) that was controlled. Largely incorporated within and superseded by the Export Administration Act.

 

Export Trading Company Act of 1982. Legislation designed to promote US exports by encouraging the foundation of export trading companies, and by modifying the application of antitrust laws and reducing restrictions on export financing for certain transactions. Title III of the Act permits the Department of Commerce, with the concurrence of the Department of Justice, to issue antitrust preclearance certificates on certain transactions involving the export of goods or services. Title IV of the Act amended two key elements of US antitrust law --the Sherman Act and the Federal Trade Commission Act --to exclude their application to export transactions, except where such activities have an anticompetitive impact on trade in the United States or the export trade of a US resident.

Fast-Track. Legislative procedures, originally set forth in Section 151 of the Trade Act of 1974 and extended in the Trade Act of 1988, designed to assure foreign governments that Congress will act expeditiously on a trade agreement negotiated with the United States, and will not "re-negotiate" the agreement by accepting pans of the deal while rejecting others. These procedures stipulate that once the President formally submits a bill to implement an international agreement concerning nontariff trade barriers2 negotiated under the Act's authority , both Houses must vote on the bill within 90 days through an up-or-down vote, without possibility of amendments. Fast-track negotiating authority currently extends through 16 April 1994.

 

Foreign Corrupt Practices Act. Legislation that prohibits US firms from making payments to foreign officials in order to influence their actions or to assist the firm in obtaining business.

Jones Act. A statute requiring that vessels carrying goods or passengers between US ports (see cabotage, Sec. /) must be built and documented in the United States and be, owned and operated by US citizens. The original Act dates from 1898, and was, subsequently incorporated into the Merchant Marine Act of 1920.

Manufacturing Clause. A provision of US copyright law that restricts importation of certain printed materials not manufactured in the United States.

 

Meat Import Act of 1979. Legislation requiring the President to impose import quotas on fresh, chilled, and frozen beef, veal, mutton, and goat meat if the Secretary of Agriculture estimates annual imports will exceed a basic import level. The basic import level --approximately 7 percent of US domestic production --is modified annually by a production adjustment factor and a countercyclical factor.

Omnibus Trade and Competitiveness Act. See Trade Act of 1988.

Peril Point. A hypothetical limit beyond which a reduction in tariff protection would cause serious injury to a domestic industry. US legislation in 1949 required the Tariff Commission to establish "peril points" for all US industries, and for the President to submit specific reasons to Congress if and when any US tariff was reduced below such levels. This requirement was an important constraint on US negotiating positions in early ..GATT Rounds ( Sec .I ), and was finally eliminated by the Trade Act of 1962.

 

P.L. 480. Full name is the Agricultural Trade Development and Assistance Act. Legislation enacted in 1954 to assist LDC economic development through the ~ concessional sale or grant of US farm products. Title I of the Act authorizes low-interest, long-term financing of US farm exports to LDCs; payments for such sales are earmarked for use in the importing country to fund agricultural development projects and programs. Title II of the Act permits donation of US food products to countries suffering from famines or natural disasters. Title III established the Food for Peace Program and the Export Credit Guarantee Program of the Commodity Credit Corporation (Sec./V).

 

Proclamation Authority. Legislation delegating authority to the President --for a specified period and subject to certain guidelines --to negotiate and implement tariff reductions without having to seek congressional approval. (For provisions concerning trade agreements dealing with matters other than tariffs, see Fast-Track.)

Quasi-Judicial Procedures. Procedures through which law is made by regulatory agencies applying general statutes to specific cases. On trade issues, procedures administered by the International Trade Commission and the Department of Commerce determine the eligibility of petitioners for import relief under the escape clause, countervailing duty , antidumping, or other trade statutes.

Reciprocal Trade Agreements Act. See Trade Act of 1934.

Section 22. A provision of the Agriculture Act of 1933 requiring the President to limit imports of agricultural products that could undermine or interfere with US farm programs.

 

Section 201. See escape clause.

 

Section 203. A provision of the Trade Act of 1974 providing authority to the President to negotiate Orderly Marketing Agreements (Sec. I) with foreign governments. OMAs are ~ to be limited initially to a period of five years, and import relief must be phased down after three years unless the President determines that doing so would damage national interests. If such a determination is made, import relief may be extended for an additional three years. Products covered by contractually binding OMAs are listed in a separate appendix of the Tariff Schedules of the United States.

 

Section 204. A provision of the Agricultural Act of 1956 authorizing the President to negotiate bilateral agreements to limit exports to the United States of "any agricultural commodity or product manufactured there from or textiles or textile products." US participation in the Multifiber Arrangement (Sec. I) is based on Section 204 authority.

 

Section 232. A provision of the Trade Act of 1962 authorizing the President to restrict imports that threaten to impair US national security .On the basis of a formal investigation and report by the Department of Commerce --required within 270 days of initiation --the President must decide within 90 days what action should be taken to prevent national security impairment.

 

Section 301. Legislation establishing domestic procedures to enforce US rights under international trade agreements as well as to eliminate unfair foreign government trade practices that adversely affect US investment and exports of goods and services. Under Section 301 of the Trade Act of 1974 as amended by the Trade Act of 1988 --the US Trade Representative is required to take appropriate action to obtain the removal of any policy or practice of a foreign government that violates a bilateral or multilateral trade agreement or is "unreasonable, unjustifiable, or discriminatory" and "burdens or restricts US commerce." Section 301 authorizes the President to retaliate against foreign countries that impose such burdens; such retaliation can take the form of suspending the benefits of trade concessions previously granted by the United States, or restrictions or fees on the trade of the offending nation. In addition to initiating Section 301 investigations based upon petitions by private parties, USTR also may initiate such investigations at its own discretion. See Special 301 and Super 301; see also discussion under retaliation in Section I..

 

Section 332. A provision of the Tariff Act of 1930 authorizing self-initiated or Presidentially-directed studies of domestic industries by the US International Trade Commission. Such studies may subsequently lead to investigations of foreign dumping or subsidization, or Section 301 cases.

 

Section 337. A provision of the Tariff Act of 1930 making it unlawful to engage in unfair acts or unfair methods of competition when importing or selling imported goods. Most Section 337 cases involve alleged violations of US patents, copyrights, or trademarks. See also Special 301.

 

Section 406. A provision of the Trade Act of 1974 giving the President authority to restrict imports of products from nonmarket-economy countries when the US International Trade Commission determines such imports cause or threaten market --.disruption (Sec. I).

 

Section 501. A provision of the Trade Act of 1974 providing for duty-free entry of merchandise imported from beneficiary developing countries under the Generalized ~ System of Preferences or GSP (Sec.1). Section 501 specifically excludes some countries --as well as certain products regardless of origin --from asp eligibility .Criteria are provided for withdrawing or suspending eligibility for asp treatment.

 

Sherman Act. Legislation enacted in 1890 making illegal all contracts, combinations, and conspiracies in restraint of trade, as well as monopolies and attempts to monopolize. See competition policy (Sec. II).

 

Smoot-Hawley Act. Formally known as the Tariff Act of 1930, the Smoot-Hawley tariff is regarded by many scholars as the high-water mark of an extremely protectionist period in US trade policy; all major trading nations were highly protectionist at the time, however. The Act raised tariffs on over 20,000 items to record levels, provoking retaliatory tariff increases by other countries. The cycle of retaliation and counter- retaliation led to a decline in world trade by roughly two-thirds, contributing significantly to the spread and deepening of the Great Depression.

 

Special 301. A provision of the Trade Act of 1974, as amended by the Trade Act of 1988, requiring USTR to identify countries with a history of violating existing laws and agreements dealing with intellectual property rights (Sec. I). Countries with the poorest record of IPR protection --and with which negotiations on IPR protection have failed to make adequate progress --must be designated as "priority foreign countries" and are potentially subject to a Section 301 investigation on an accelerated timetable. USTR must make such designations each year within 30 days after issuance of the National Trade Estimate report (see Sec. I). In addition, USTR has established a "watch list" and "priority watch list" under Special 301, indicating countries in which there exist particular problems with respect to IPR protection, or problems of market access for exporters relying on intellectual property. Countries placed on the "priority watch list" are the focus of increased bilateral discussions concerning the problem areas.

 

Super 301. See Section 301. Under this amendment to the Trade Act of 1988, the US Trade Representative was required in 1989 and 1990 to designate "priority foreign countries" chosen for the number and pervasiveness of their policies or practices impeding US exports, and for the US export gains that might come from removal of those practices. The law called for retaliation (Sec. I) if foreign action was insufficient or not forthcoming.

Tariff Act of 1930. See Smoot-Hawley Act.

 

Trade Act of 1934 (Reciprocal Trade Agreements Act, or RTA). Legislation that provided authority for the President to enter into bilateral agreements for reciprocal tariff reductions. The RT A was enacted in the midst of the Great Depression, and reflected declining public sympathy with protectionism in the wake of the SmooI-Hawley Act. By 1939, the United States had concluded 21 trade agreements with other countries under the RTA, and another 11 agreements were reached during the course of World War II.3 Through successive extensions and amendments, the RTA also authorized US participation in the first five GATT Rounds (Sec. I) of multilateral trade negotiations. It was eventually superseded by the Trade Act of 1962.

 

Trade Act of 1962 (Trade Expansion Act). Legislation granting the President authority ~ to participate in multilateral trade negotiations subsequently known as the Kennedy Round (Sec. I), while also amending US escape clause procedures and establishing the Trade Adjustment Assistance (T AA) program. The Act also authorized appointment by the President of a Special Representative for Trade Negotiations (see discussion under USTR, Sec. II).

Trade Act of 1974 (Trade Reform Act). Legislation granting the President authority to participate in the Tokyo Round (Sec. I) and negotiate international agreements to reduce tariffs and nontariff barriers. The Act, enacted in January 1975, also amended US law governing the escape clause, antidumping duties, and countervailing duties; expanded trade adjustment assistance; established guidelines for granting MFN trade status to East Bloc countries; and granted limited trade preferences to developing countries (see GSP , Sec. /).

 

Trade Act of 1979 (Trade Agreements Act). Legislation adopted under fast-track procedures ratifying and implementing the international trade agreements negotiated during the Tokyo Round (Sec. I) and making US law consistent with those agreements. (The agreements negotiated during the Tokyo Round were not self-executing and, accordingly, did not have independent effect under US law. The Act thus incorporated into US law the Tokyo Round agreements on countervailing and antidumping duties, customs valuation, government procurement, product standards, civil aircraft, meat and dairy products, and liquor duties.) The Act also extended the President's authority to negotiate agreements covering nontariff barriers, and mandated reorganization of executive branch trade functions. The Act became effective on 19 June 1979.

 

Trade and Tariff Act of 1984. Legislation that extended the President's authority to grant trade preferences; authorized negotiation of bilateral free trade agreements (Sec. I); and provided authority to enforce export restraint agreements on steel. The Act also amended the countervailing duty and antidumping laws and clarified conditions under which unfair trade cases could be pursued under Section 301.

 

Trade Act of 1988 (Omnibus Trade and Competitiveness Act). The first comprehensive ("omnibus") trade legislation enacted by Congress in the postwar era. Its important features included strengthening of unilateral trade retaliation instruments (see Section 301 ); provision of fast-track negotiating authority for US participation in the Uruguay Round (Sec. I ); and enhancement of the authority of the US Trade Representative.

 

Trading With the Enemy Act. Legislation originally enacted in 1917, and amended in 1941, granting the President authority to prohibit or regulate trade, investments, remittances, travel, or any other economic transaction with any designated country or its nationals during times of war or national emergency.

Watch List. See Specia1301.

 

Webb-Pomerene Act. Legislation enacted in 1916 exempting from restrictions on monopolies and other trusts the activities of associations, which have "the sole purpose of engaging in export trade," provided their activities do not interfere with US markets.

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