USITC Seeks Public Comments on Section 338 Responsibilities: What Clients Need to Know

The outcome could shape how the Commission monitors and evaluates allegations of foreign discrimination against US commerce and advises the president on potential responses.

Key Takeaways

• The USITC is accepting comments on how it should carry out its statutory responsibilities under Section 338(g) of the Tariff Act of 1930, relating to identifying certain discriminatory actions by countries that burden the commerce of the United States, collecting relevant information, or providing the president with information and recommendations. Comments are due by 5:15 PM on November 8.

• The request follows the first use of Section 338 tariff authority: three July 20 proclamations imposing 50% additional duties on certain Canadian imports, effective August 22.

• The notice creates an important opportunity for stakeholders to help shape how the Commission evaluates, monitors, and reports alleged foreign discrimination, including whether it establishes a new procedure for stakeholders to allege discriminatory foreign measures and respond to allegations raised by others.

• Interested parties such as companies, associations, and industry groups with exposure to foreign market-access barriers or discriminatory foreign measures should assess whether submitting comments would help protect their interests.

• Foreign producers, governments, and US importers may also use this process to ensure their interests are heard as the Commission considers how to implement its Section 338(g) responsibilities.

What Is Section 338?

Section 338 of the Tariff Act of 1930 (19 U.S.C. § 1338) authorizes the president, when the public interest would be served, to impose additional duties of up to 50% ad valorem on imports from a country found to impose certain unequal charges, exactions, regulations, or limitations on US commerce, or to discriminate against US commerce in a manner that places it at a disadvantage compared with commerce of other countries.

Section 338 functions differently compared to other trade provisions recently used by the Administration. Unlike Section 301 of the Trade Act of 1974, Section 338 does not appear to require an agency investigation or determination before tariffs may be imposed, and unlike Section 122 of the Trade Act of 1974, there appears to be no time limit on how long measures can be implemented. Until July of this year, the statute had never been used to impose tariffs. That changed when President Trump signed three proclamations imposing 50% additional ad valorem duties on certain Canadian imports in the alcoholic beverages, dairy, and motor vehicles sectors. Those duties took effect on August 22 and apply regardless of United States-Mexico-Canada Agreement origin. Subsequently, following Canadian retaliatory tariffs, President Trump announced additional tariffs and import bans on products from Canada on September 8, 2022, also pursuant to Section 338.

The USITC’s September 4 Notice

On September 4, the USITC announced in a notice and news release 26-129 that it is accepting public comments on how the Commission should meet its statutory obligations under Section 338(g). The notice is available on the Commission’s website and has been published in the Federal Register.

The Commission stated that the notice follows several years of internal deliberation and review of its prior work under Section 338 and its predecessor, Section 317 of the Tariff Act of 1922. The request is notable because it indicates that the Commission is considering how to operationalize its monitoring and advisory role at a time when Section 338 has moved from a dormant statutory authority to an active trade-policy tool.

Section 338(g) separately directs the USITC to ascertain and remain informed of foreign discriminations against US commerce and to bring those matters to the president’s attention with recommendations. The USITC already administers a range of trade-related proceedings, including antidumping and countervailing duty injury investigations, Section 337 investigations, safeguard investigations, and fact-finding investigations. As part of implementing its Section 338(g) responsibilities, the Commission could establish similar procedures for reviewing allegations of discrimination submitted by companies or individuals and for allowing stakeholders to respond to those allegations. The Commission’s request for comments focuses on how it should implement that monitoring and advisory function going forward, as well as how to define conduct that is “unreasonable” and “discriminatory” conduct that “burden United States commerce” under the statute.

Key Takeaways

• Evaluate whether to submit comments to help shape any new process for defining, identifying, monitoring, or reporting discriminatory foreign measures.

• If appropriate, draft and file comments.

• Monitor filed comments to identify positions that could affect company, sector, or association interests.

• Comment deadline: 5:15 PM on November 8.

Given the current trade environment and the recent use of Section 338 against Canada, the comment period offers a unique opportunity to influence how the Commission implements a previously dormant statutory authority.

Our International Trade & Investment team is closely tracking these developments and is available to discuss how the Commission’s request may affect your business and whether submitting comments would advance your objectives. Please contact a member of our team or the ArentFox Schiff attorney with whom you do business.