Trade Act of 1974
The Trade Act of 1974 gave the President of the United States new power over tariffs and trade agreements. Congress let that authority expire in 1982, then extended it again and again, all the way to 2010. What specific tools did this law put in the President's hands, and why did Congress keep renewing them for nearly four decades?
Section 122 of the Act let the President impose tariffs of up to 15% for up to 150 days. The trigger was a 'large and serious' balance-of-payments deficit, the law's own phrase. The law demanded nothing more than the President's own finding that such a deficit was real, no independent proof required. Any tariffs imposed under Section 122 expired automatically after 150 days unless Congress voted to extend them. That measure had to apply uniformly across every trading partner, so a president invoking Section 122 could never aim a tariff at a single country.
Section 135 of the Act created the Labor Advisory Committee for Trade Negotiations and Trade Policy, known as the LAC. Its job was to advise the Office of the United States Trade Representative and the Secretary of Labor. The committee weighed in on the country's negotiating objectives and bargaining positions. That advice had to arrive before the United States entered any trade agreement with a foreign country. The committee met on every agreement under negotiation and, once talks wrapped up, delivered its report to the President, to Congress, and to the USTR. That reporting duty meant no finished trade deal could bypass organized labor's formal input, at least on paper.
Section 201 directed the International Trade Commission to investigate any petition filed by a domestic industry or group of workers. Those petitions had to claim injury, or the threat of injury, from a surge of imports. The Commission was required to finish each investigation within six months. If it found genuine injury, or the threat of it, restrictive measures could follow. This path ran through the GATT escape clause, spelled out in Article XIX of the General Agreement on Tariffs and Trade. Section 201 addressed import surges in general, leaving the harder question of deliberately unfair foreign practices to a different part of the law.
Section 301 took aim at foreign trade practices that were unjustifiable, unreasonable, or discriminatory, and that burdened or restricted American trade in goods and services. Once the President determined a practice met that standard, the law directed that all appropriate and feasible action be taken to eliminate it. Each year, the Office of the USTR compiles a Special 301 Report. That report names 'Priority Foreign Countries,' nations judged to have inadequate intellectual property laws, which can then face sanctions. The report has appeared every year since 1989. It traces its authority to the Omnibus Foreign Trade and Competitiveness Act of 1988 and to the Uruguay Round Agreements Act, enacted in 1994. The Special 301 process would go on to become one of the tools cited decades later, in the China-United States trade war.
Common questions
What did the Trade Act of 1974 do?
The Trade Act of 1974 gave the President of the United States new power over tariffs and trade agreements. Its authority expired in 1982 but Congress kept extending it, all the way until 2010.
What is fast track authority under the Trade Act of 1974?
Fast track authority let the President negotiate trade agreements that Congress could approve or disapprove but not amend or filibuster. It was created for the Tokyo Round of trade negotiations while Gerald Ford was President.
What does Section 122 of the Trade Act of 1974 allow the President to do?
Section 122 lets the President impose tariffs of up to 15% for up to 150 days in response to a 'large and serious' balance-of-payments deficit. Any tariffs imposed this way expire automatically after 150 days unless Congress votes to extend them, and they must apply uniformly rather than targeting one country.
What is the Labor Advisory Committee created under the Trade Act of 1974?
Section 135 of the Trade Act of 1974 created the Labor Advisory Committee for Trade Negotiations and Trade Policy, known as the LAC. It advises the Office of the United States Trade Representative and the Secretary of Labor, and it delivers a report to the President, Congress, and the USTR once trade negotiations conclude.
What does Section 201 of the Trade Act of 1974 cover?
Section 201 requires the International Trade Commission to investigate petitions from domestic industries or workers claiming injury from expanding imports, completing each investigation within six months. Action under Section 201 is allowed under the GATT escape clause, Article XIX.
What is the Special 301 Report tied to the Trade Act of 1974?
The Special 301 Report is an annual report from the Office of the USTR identifying 'Priority Foreign Countries' judged to have inadequate intellectual property laws, which may then face sanctions. It has been issued every year since 1989.
All sources
7 references cited across the entry
- 2BookThe Impact of Trade Agreements: Effect of the Tokyo Round, U.S.–Israel FTA, U.S.–Canada FTA, NAFTA, and the Uruguay Round on the U.S. EconomyU.S. International Trade Commission — August 2003
- 3BookOverview and Compilation of U.S. Trade StatutesU.S. House Committee on Ways and Means — June 2001