By John Magnus in Trade Remedies — 30 Sep 2009

What Is Section 421?

Am placing here, as a new post, part of a comment that otherwise would have been stuck under the wrong heading (antidumping). At issue was a piece in The Economist about the Tires 421 result.

What I found interesting in the Economist piece is that it stopped short of what seems an obvious punch line: that Section 421 apparently is not a “safeguard” remedy at all. If it were, there would be no presumption (see the legislative history) in favor of providing relief whenever the ITC finds market disruption, and there would be a baked-in requirement for adjustment plans. A basic premise of traditional safeguards is that the "problem" resides in the importing market whose producers simply need time to adjust. Import relief is a temporary umbrella, but the key thing is getting ready to live exposed to permanently heavy rain. That premise is seemingly reversed in Section 421, which embodies a presumption -- applicable throughout the transition period -- that the "problem" underlying any observed import-related market disruption resides in China.

There is a lively debate over whether one can find that same presumption in China’s WTO accession protocol. Regardless, classifying the Section 421 remedy is a puzzler. It grew out of Section 406 of the 1974 Trade Act, which is broadly similar to that same Act’s Section 201 (the United States’ global safeguard law). But the differences from traditional safeguard concepts seem, in today’s light, to be more important than the similarities.Maybe what Section 421 most resembles is the Special Safeguard Mechanism in the WTO agriculture agreement, which as the piece linked here explains amounts to strict liability for growing trade.

Except … Section 421 does have an injury test. So perhaps it’s a thing unto itself, and will have to remain uncategorized during its remaining lifetime.