Good-bye to Section 421 - What Was All the Bother About?

When China joined the World Trade Organization ("WTO") at the end of 2001, the United States, and other WTO members were successful in obtaining, in the text of the accession agreement, a Transitional Product-Specific Safeguard Mechanism which provided that,

"In cases where products of Chinese origin are being imported into the territory of any WTO Member in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of like or directly competitive products, the WTO Member so affected may request consultations with China with a view to seeking a mutually satisfactory solution, including whether the affected WTO Member should pursue application of a measure under the Agreement on Safeguards...If consultations do not lead to an agreement between China and the WTO Member concerned within 60 days of the receipt of a request for consultations, the WTO Member affected shall be free, in respect of such products, to withdraw concessions or otherwise to limit imports only to the extent necessary to prevent or remedy such market disruption"

This Transitional Product-Specific Safeguard Mechanism, known as "421" from its section number in the Trade Act of 1974, has a "sunset" date of the end of 2013. Under 421 procedures the President may provide relief in the form of increased duties and/or other import restrictions with respect to the product being imported from the People's Republic of China. He may grant such relief to the extent and for the period that he considers necessary to prevent or remedy the market disruption.

In the dozen years of operation of the Section 421 provision, seven petitions for relief were filed. One was acted favorably on by the President. China did not want this provision in the accession agreement, and, while we'll never know precisely what the U.S. had to give up to get it, it is assuredly the case that the U.S. did have to give in on something else to get this safeguard that was so little used. Millions of dollars were spend on lawyers' fees for petitions that never delivered relief. Meanwhile, from the outcry on the editorial pages of pro-free trade publications one might have inferred that Section 421 represented a return to the prohibitive tariffs of the Smoot-Hawley era. When Section 421 sunsets on Tuesday, I believe the question to ask is, was it ever worth all the agitation on both sides?

HISTORY OF SECTION 421

TA-421-7 Pneumatic tires for cars and light trucks ITC found in the affirmative; on September 11, 2009, President Obama determined to provide import relief--

• For the first year, the additional duty shall be in the amount of 35 percent;
• for the second year, the additional duty shall be in the amount of 30 percent; and
• in the third year, the additional duty shall be in the amount of 25 percent.

TA-421-6 Circular Welded Non-Alloy Steel Pipe From China ITC found in the affirmative; President Bush denied.

TA-421-5 Innersprings from China ITC did not find in the affirmative.

TA-421-4 Certain Ductile Iron Waterworks Fittings from China ITC found in the affirmative; President Bush denied.

TA-421-3 Brake Drums and Rotors ITC did not find in the affirmative.

TA-421-2 Wire Garment Hangers ITC found in the affirmative; President Bush denied.

TA-421-1 Pedestal Actuators ITC found in the affirmative; President Bush denied.