Section 401 of the Title IV of the US 1974 Trade Act required annual review of normal trade relation status if Vietnam complies with the requirement of emigration freedom. Section 401 of the Title IV of the US 1974 Trade Act required annual review of normal trade relation status if Vietnam complies with the requirement of emigration freedom. It’s a significant step for the two countries that the permanent normal trade relations (PNTR) status between the US and Vietnam has been approved. That means Section 401 and the Jackson-Vanik amendment is no longer applied.

Section 301 of the US 1974 Trade Act is, however, still there in effect causing a threat of trade sanctions to certain countries. Vietnam is not an exception if one day any of its industries is viewed as complementing “an unfair trade practice” affecting the US trade. Section 301 went through four amendments in 1979, 1984, 1988 and most recently in 1994 in the Uruguay Round implementing legislation.

Section 301 of the US 1974 Trade Act authorizes the US government to set forth certain measures dealing with unfair trade practices of other countries. It directs the US Trade Representative (USTR) to identify countries that are engaging in unfair trade practices, and to take appropriate actions against those countries. Sanctions may be used if necessary to remedy the problem. The USTR can initiate a case itself and it can accept outside petitions as well from any individuals or organizations.

US retaliatory measures in accordance with Section 301 may be applied on the violating conducts under bilateral and multilateral trade agreement that deny the US rights under those agreements. The retaliation can be used also with respect to unreasonable, unjustifiable, or discriminatory foreign governments’ practices that burden or restrict US commerce even if those practices do not violate the explicit terms of an international agreement.

The applicable measures under Section 301 are broad. Section 301 authorizes USTR to suspend benefits under a trade agreement, impose duties or other restrictions on imports, impose fees or restrictions on services, enter into a binding agreement with the country to end its unfair trade practices, restrict sector authorizations, and take all other appropriate and feasible action to eliminate the unfair trade practices.

“Unfair trade practices” under Section 301 do cover not only ‘mere’ commerce matters, but also employment problems. In the 1988 amendment of the 1974 Trade Act, the US Congress specified that persistent violations of internationally recognized workers’ rights, including freedom of association, the right to organize and bargain collectively, prohibitions on forced and child labor, and standards for minimum wages, hours and occupational safety and health, constitute an “unreasonable practice” that is actionable under Section 301.

IN fact, the USTR has never self-initiated a case on workers’ rights under Section 301, and no outside petitions have been filed on workers’ rights grounds. The said provisions vis-à-vis workers’ right protections still remain a threat to certain countries.
Another part of the Section 301 covers the enforcement of intellectual property rights and vests the power on the same authority for remedy of unfair trade practices. USTR will supervise the countries that deny adequate protection for intellectual property rights as stipulated in any of bilateral and multilateral agreements; or deny fair and equitable market access for US citizens who rely on intellectual property rights.

It should be noted that, even with the US Government committed to resolve trade disputes with all the WTO members through the WTO dispute settlement mechanism, the US laws do not require that the USTR must wait for the authorization from the WTO for applying measures countervailing an unfair trade practice.

According to the WTO rules as revealed under the Understanding on Rules and Procedures Governing the Settlement of Disputes, a WTO member taking of trade countervailing measures against another member without WTO’s prior approval through its dispute settlement mechanism can be regarded as a violation of the WTO Agreement. Even though, the Section 301 is still there as a threat of sanctions against many countries having trade with the US.

From its enactment in 1974 to the present, about 110 cases had been triggered in accordance with Section 301provisions. Through years the US used Section 301 aggressively on bilateral trade tie with other countries. On that basis, the US has been successful in gaining market access agreements with China, Korea, Taiwan, and Japan for supercomputers, satellites, citrus, and other sectors. Particularly, Section 301 was importantly influenced China entailing its movement to reach new market-opening agreements with the US on textiles and apparel and intellectual property.

Setting aside the past influences of Section 301, if any, to the execution of the BTA several years ago, Vietnam has become a member of the WTO and thus it can believe that the US will always fairly comply with the WTO rules and procedures before imposing any trade countervailing measures. It will be unnecessary for local industries in Vietnam to retain a chilling effect, but they should be better prepared against the implicit sanctions under the Section 301.