Section 301 provides a rather simple procedural framework. If a private interest files a Section 301 petition, USTR may accept or reject the petition. It is rare for a party to submit a Section 301 petition without pre-filing consultations with USTR, and so USTR rarely rejects petitions. More importantly, the question of whether USTR accepts a Section 301 petition and how vigorously it pursues the petition now also depends on the petitioner's ability to generate political support for its case.

In theory, USTR can self-initiate a Section 301 case. The statute authorizes this, but in practice USTR rarely takes such action. This reluctance reflects two concerns. First, if no private party cares enough about the issue to file a petition, USTR doubts that the issue should be a United States Government priority. Second, reacting to a petition allows the United States Government to deflect foreign country anger at the United States action. The Administration can shift the blame to Congress for creating the private right of action.

Although called an 'investigation', a Section 301 proceeding involves only limited fact-finding. The proceeding is more about deciding on United States objectives and how best to achieve them than about traditional fact-finding. In theory, USTR undertakes fact-finding and conducts an investigation. In practice, USTR does little more than rely on submissions made by the parties and presume that the United States party must be correct. This limited approach makes complete sense from USTR's perspective: why would it undertake fact-finding that might well undermine or destroy its negotiating leverage during the dispute?

Section 301 provides two avenues for a complaining United States company. Under the 'mandatory' first procedure the United States Government must retaliate against countries that violate trade agreements. Under the mandatory procedure, a United States company alleges that a foreign competitor is engaged in unfair trade practices that either (1) violate or are inconsistent with trade agreements; (2) nullify or impair benefits granted under a trade agreement; or (3) are unjustifiable and burden or restrict United States commerce. The statute does not define the term 'unjustifiable', so it has been defined on a case-by-case basis. The phrase 'burden or restrict' implies an injury-type finding, but again the statute does not provide a definition so USTR has wide discretion.

The term 'mandatory' under this provision is somewhat misleading. The 'mandatory' procedure is not really mandatory. Several broad statutory exceptions excuse the need for action. Moreover, this procedure seems to require the United States to go through WTO dispute settlement before imposing sanctions. In 1979, Congress amended Section 301 to require the United States to consult under the General Agreement on Tariffs and Trade (GATT) before imposing sanctions. Because GATT had no means to enforce its decisions at that time, this amendment meant little as a practical matter. In 1994, the international community adopted the WTO Dispute Settlement Understanding (DSU), and created binding dispute settlements. At United States insistence, the DSU's procedures track the timeline for Section 301 mandatory action, giving parties 18 months to settle their disputes. This parallel timetable suggests that the United States must go to WTO before it can impose retaliatory sanctions under Section 301.

The second procedure available under Section 301 is 'discretionary'. Under this procedure, a United States company alleges that a foreign country has engaged in 'unreasonable or discriminatory' trade practices which may not technically violate United States legal rights under trade agreements, but are nonetheless 'unfair and unreasonable' and a 'burden or restriction on United States commerce'. If USTR concurs with the allegations, action can be taken if USTR deems it appropriate.

Within the proceeding, the statute imposes few rules on how USTR should proceed. USTR must react to a petition within 45 days. It must decide within 6-18 months depending on the circumstances; most cases fall under a 12-month deadline. The statute provides neither guidance about the investigative process, nor guidance on what the vague standards really mean. The lack of specificity gives USTR broad flexibility.

Although USTR leads and coordinates Section 301 cases, the decisions emerge from an interagency process. The Section 301 Committee has representatives from the Departments of State, Treasury, Commerce, Agriculture, Labor, Justice, the Interior, Defense, and Transportation, and the Council of Economic Advisers, the Office of Management and Budget, the National Economic Council, the National Security Council, and the International Trade Commission. Depending on the issue, various agencies play different roles. For most key trade policy decisions, USTR, State, Treasury, and Commerce play the leading roles in shaping the interagency debate.

Source: Business Guide to Trade Remedies in the United States: Anti-dumping, countervailing and safeguards legislation practices and procedures