This month, President Obama will face his first decision under Section 421 of the Trade Act of 1974, and many are watching to see if his administration will treat such claims differently than did his predecessor's. Under Section 421, U.S. industries and workers may petition for relief from surging Chinese imports that result in “market disruption.” The U.S. International Trade Commission (ITC) considers such petitions, and makes a recommendation to the President as to whether relief should be granted, and the form that it should take (import quotas, increased customs duties, etc). The ultimate decision as whether to grant relief, however, belongs to the President.
President Bush rejected a number of Section 421 recommendations for trade relief during his administration, and industries suffering from import competition looked to other areas of the law to find relief. As a result, Section 421 remedies have never been imposed on China by the United States.
But with a new administration in power, Section 421 may be due for a return to prominence. The current 421 determination pending before the White House involves Chinese tires for passenger vehicles and light trucks. The United Steelworkers filed the petition in April on behalf of workers in the U.S. tire industry. In June, the ITC voted, 4-2, in favor of finding that Chinese imports had caused market disruption, and announced that they would recommend increased tariffs of up to 55% on these imports. The President is required to issue his determination on whether to grant relief by September 17, 2009.
The ITC’s press release regarding its finding of market disruption and recommended remedy may be found here.