Proposed Legislation Would Expand ITC’s Authority Under Section 337

Trade Update • JUNE 17, 2021

A bipartisan bill introduced this week by Republican Senator John Cornyn and Democratic Senator Christopher Coons would amend Section 337 of the Tariff Act of 1930 to create a new committee at the U.S. International Trade Commission, according to reporting by The Wall Street Journal.

The committee, led by the U.S. attorney general, would investigate the allegation of trade theft waged by a competitor that has the backing of a foreign government (i.e.,  state-owned enterprises or other government-controlled firms). Allegations could be made by owners of intellectual property who submit statements under oath in addition to those initiated by the attorney general’s office itself.

The bill, the text of which hasn’t yet been published, would apply to imports of any country, but appears clearly aimed at addressing widespread intellectual property theft by Chinese companies.

“Foreign governments like China make billions of dollars annually by selling goods and technology made from stolen US trade secrets,” said Cornyn.

Section 337 gives the ITC broad powers to investigate and address unfair trade practices and competition regarding the importation of goods into the U.S. Most investigations under this authority deal with the infringement of trademarks and other intellectual property rights.

Taking advantage of the ITC’s ability to issue Exclusion Orders, the expanded authority proposed in the bill would allow the commission to act more quickly to block imports by setting a 30-day deadline for investigators of the claim to decide whether to halt imports prior to completion of the review.

“Protecting our investors requires swift responses to trade secret misappropriation, particularly when the theft is perpetrated by sovereign powers like China and state-owned enterprises,” said Coons.

As part of the “Phase 1” trade deal signed last year with the Trump administration, China was to have stepped up efforts to protect American intellectual property, however, the USTR’s last “Special 301” report found that the reform measures Beijing has so far taken, “fall short of the full range of fundamental changes needed to improve the IP landscape in China.”