Skip Global Navigation to Main Content
Skip Breadcrumb Navigation
Official Text

Policy: Special 301 Trade Law and Intellectual Property Protection

In 1988, U.S. trade law was amended to allow the U.S. government to respond to inadequate or ineffective protection of intellectual property rights with penalties under Section 301 of the Trade Act of 1974. The annual review of foreign-country practices required by the amendment is known as a Special 301 Annual Review. By the end of April, 1998, the Office of the U.S. Trade Representative (USTR) will announce the results of its latest Annual Review.

Section 301 is the provision of the Trade Act of 1974, as amended, that gives USTR the authority to negotiate to eliminate unfair foreign trade practices. The authority to take such action requires a finding that a foreign government has denied U.S. rights under a trade agreement, or has taken action that is inconsistent with, or otherwise denies benefits to the United States under a trade agreement; or engaged in an act, policy or practice that is unjustifiable, unreasonable or discriminatory and that burdens or restricts U.S. commerce. Without successful resolution of a Section 301 dispute, the President has authority to impose retaliatory trade sanctions.

Pursuant to Section 182 of the Trade Act of 1974, as amended by Section 303 of the Omnibus Trade and Competitiveness Act of 1988, USTR is required to identify on an annual basis those countries that deny adequate and effective protection for intellectual property rights, or deny fair and equitable market access for persons that rely on intellectual property protection.

Those countries that have the most onerous or egregious acts, policies or practices, resulting in the greatest adverse impact (actual or potential) on the relevant U.S. products must be designated as priority foreign countries. Priority foreign countries are potentially subject to a Section 301 investigation. USTR may not designate a country as a priority foreign country if it is entering into good-faith negotiations or making significant progress in bilateral or multilateral negotiations to provide adequate and effective intellectual property rights protection.

USTR is required to initiate a Section 301 investigation within 30 days after identification of a priority foreign country with respect to any act, policy or practice that was the basis of the identification, unless it determines that such an investigation would be detrimental to U.S. economic interests.

USTR has established a "Priority Watch List" of countries whose acts, policies and practices meet some, but not all, of the criteria for priority foreign country identification. The problems of these countries warrant active work for resolution and close monitoring to determine whether further Special 301 action is needed.

USTR also maintains a "Watch List" of countries that warrant special attention because they maintain intellectual property practices or barriers to market access that are of particular concern.

USTR must make its Special 301 identifications each year within 30 days after issuance of the National Trade Estimate (NTE) report, which details foreign trade barriers by country. In addition, USTR may identify a trading partner as a priority foreign country or remove such identification whenever warranted. The NTE report is expected to be released by USTR on March 31, 1998.