Section 337 of the Tariff Act of 1930, 19 USC Section 1337 (“Section 337”), gives the US International Trade Commission (“ITC”) extensive powers to investigate and combat unfair practices and competition in the importation of items into the United States States states. Most of the research in Section 337 deals with issues of infringement of legal intellectual property such as patents, trademarks, and copyrights. Recently, however, Section 337 has been increasingly used to address other unfair acts such as trade secret misuse, false advertising, breaches of contract, and antitrust violations. A key advantage of the ITC over other forums is the ITC’s ability to issue exclusion orders – powerful remedial measures enforced by the US Customs and Border Protection (“CBP”) to prevent the importation of offensive products into the US.
In a hearing for the Senate Finance Committee last week, Senator John Cornyn (R-Texas) suggested that the ITC should be expanded under Section 337. Senator Cornyn noted that he was examining the possibility of creating authority for a Section 337 National Security Exclusion Order that would block the importation of goods obtained through trade secret theft by foreign governments or state-owned companies. While Senator Cornyn did not provide specific details on this concept, it was suggested during the hearing that the agency would allow the ITC to act faster to block imports, presumably before a full investigation is completed. Senator Cornyn’s comments demonstrate the confidence that Congress has in the ITC’s decision-making process and the CBP’s ability to enforce exclusion orders issued by the ITC.
There are now three main laws that appear to be part of the Senate’s efforts to pass comprehensive laws regarding trade with China: (1) the Strategic Competition Law (p.1169), passed last week by the Committee on Foreign Affairs Senate Relationships was passed; (2) the Endless Frontier Act (p. 1260), which was introduced last week and referred to the Senate Commerce Committee; and (3) a yet-to-be-named bill to be prepared by the Senate Finance Committee. Senator Cornyn’s proposal would almost certainly fall within the jurisdiction of the Senate Finance Committee, and he will likely seek to include it in this bill.
Strategic Competition Act
Last week the Senate Foreign Relations Committee voted 21-1 to pass a revised strategic competition law. The bill would, among other things, call for a “diplomatic boycott” of the 2022 Beijing Winter Olympics and expand the types of transactions that the United States Foreign Investment Committee (“CFIUS”) can review. In particular, it would allow CFIUS to review certain transactions in which a “college” receives a gift or enters into a contract with a “foreign person”. The full text, approved by the committee, has not yet been published.
Endless Frontier Act
Last week Senate Majority Leader Chuck Schumer (D-New York) and Senator Todd Young (R-Indiana) released the revised text of the Endless Frontier Act for the Senate Trade Committee to review. The new invoice text can be found here and an invoice summary can be found here. The new version of the bill would grant the National Science Foundation $ 100 billion over five years to support basic research, commercialization and innovation in key technological areas. It would also approve $ 10 billion for the Department of Commerce to invest in regions across the country to lead the way in technology and innovation, including through the designation of 10 regional technology centers.
Legislation of the Senate Finance Committee
During a hearing last week, Senate Finance Committee Chairman Ron Wyden, Oregon, announced that he was working with ranking member Mike Crapo, Idaho on a China-focused bill, also known as the Part of the overall Senate effort should be considered. Wyden said the finance committee’s bill would focus on “combating the use of forced labor.” Fight against censorship. Protect US Jobs by Eliminating Counterfeiting. Supporting supply chains, including semiconductors and medical products. Reinforce enforcement and surveillance of trade. “
During the hearing, committee members discussed other proposals they would like to include in the Finance Committee’s bill, including Senator Cornyn and his ideas on reforming Section 337.
While the details of how the Senate will proceed with the broader China law remain unclear, the Finance Committee’s proposal will likely be combined or otherwise considered with the Strategic Competition Law and the Infinite Boundaries Law.
While there is no guarantee that this law will be passed in its current or otherwise form, practitioners should be aware of ongoing developments in Congress’s efforts to combat trade secret theft and other illegal activities by foreign governments or state-owned companies. In addition, the Commission and members of the ITC Bar Association should note the confidence that Congress has in the ITC’s decision-making process.