As the United States said it would invoke Section 301 of the Trade Act against 16 countries including Korea, attention is focusing on the power of the provision. Section 301 is a representative U.S. trade pressure tool that allows Washington to take wide-ranging retaliatory measures by targeting unfair trade practices by specific countries.
According to a news release on the 9th (local time) from Greenoaks and Altimeter, U.S. investment firms in Coupang, the firms said they withdrew their Section 301 petition related to the Korean government's treatment of Coupang. Earlier, the two firms had filed a Section 301 petition targeting the Korean government's investigation and regulation of Coupang, saying the "discriminatory treatment of U.S. corporations operating in Korea should be reviewed at the highest levels of the U.S. government."
The investment firms said, "In constructive discussions with the Office of the United States Trade Representative (USTR) over the past few weeks, we emphasized that the Korean government's actions pose a threat to U.S. technology corporations," and added, "We welcome public remarks by President Donald Trump and USTR Representative Jamieson Greer expressing their intention to enforce Korea's compliance with its trade commitments." It suggests the USTR may apply Section 301 of U.S. trade law to Korea going forward.
Section 301 is a sanction tool based on the Trade Act of 1974 that allows retaliatory measures if a foreign government's policies or regulations are deemed to burden or discriminate against U.S. corporations. When such cases are found, the USTR launches an investigation, and if the policies are determined to be unfair trade practices, measures such as additional tariff or import restrictions are implemented with presidential approval. Because it can pressure counterparties directly without going through multilateral consultations such as the World Trade Organization (WTO), it is also known as "Super 301."
The Trump administration has previously used Section 301 in various ways. In 2018, during the first term, it applied the law to China, launching the first U.S.-China trade war. At the time, President Trump conducted a Section 301 investigation by taking issue with China's forced technology transfer and intellectual property infringement, and later imposed mass tariffs on more than 2,200 Chinese products that included industrially important technologies.
The provision has also functioned as a tool to pressure specific industries or policies. Beginning with France in July 2019, the United States launched Section 301 investigations in June 2020 into the digital taxes of several countries, including the United Kingdom, Italy, Spain and India. As a result, by early 2021, Washington concluded the taxes were discriminatory and decided to impose tariffs, but actual collection did not proceed as negotiations on international taxation at the Organization for Economic Cooperation and Development (OECD) advanced in November of the same year. That is why Section 301 is often viewed more as a negotiating tool than a means of imposing tariffs in practice.
More recently, the United States has been moving to expand trade pressure by using Section 301. The government launched a Section 301 investigation on the grounds that Brazil's digital trade regulations and tariff policies disadvantage U.S. corporations, and also listed China's support policies for the semiconductor industry and the shipping and shipbuilding industries as those surveyed, arguing they undermine the competitiveness of U.S. corporations.
Korea has not been a Section 301 target for the first time. In 1985, the United States invoked Section 301 over Korea's insurance and film industries, and in 1989 took additional measures targeting three areas: agricultural policies, localization policies, and foreign investment regulations. In 1995, at the request of the American Automobile Manufacturers Association (AAMA), Washington launched an investigation, and the Korean government subsequently undertook a large-scale overhaul of automobile taxes.
In particular, as the reciprocal tariffs imposed by President Trump on the basis of the International Emergency Economic Powers Act (IEEPA) were ruled unlawful on the 20th, there is growing possibility the Trump administration will instead rely on Section 301 to apply tariffs. Kim Tae-hwang, a professor of international trade at Myongji University, said, "If major competing products or export items become targets, the impact could be much greater," adding, "There are also many cards that can be used together, such as raising defense cost-sharing and withdrawing U.S. Forces Korea."