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| Scott Kieff |
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| Thomas Grant |
At first blush, Russian President Vladimir Putin's unprovoked invasion of Ukraine might seem of no concern to the ITC, an independent federal commission known more for wrestling with the intricacies of patent protection and international trade law than with questions of war and peace.
However, the senators are right to call on the ITC to step up to the plate as the U.S. and its allies confront the most serious challenge to international security since World War II. Precedent strongly favors calling on the ITC to help.
Moreover, if the parties and lawyers who bring cases before the commission frame and substantiate their claims the right way, then the commission itself can carry out its proper role. This will strengthen the U.S. as we work to secure our own defense and that of the system of international trade from which the free world has benefited for so long.
It is therefore timely to recall the basics of what the ITC does and how Russia is perpetrating a litany of violations against international order — including the rules of international trade.
The ITC is a uniquely strong adjudicative, analytical and advisory body in the federal system, thanks to statutory structures that provide specialist skills and experience from fully integrated, diverse political perspectives to yield rigorous written actions grounded in transparent analysis of factual records.
It has long provided adjudicative opinions in trade remedy disputes and technical advice and support to policymaking parts of the U.S. government.
The central insight that parties and counsel need to bear in mind is that, unlike the many parts of the government that are designed to respond to political direction, the ITC has earned trust through its independence and its skill as an objective fact-finder. Therefore, any claim brought to the ITC must demonstrate the clear connections between malign conduct, such as Russia's aggression, and the injuries to American industry that such conduct has caused.
A complaint before the ITC that gives careful attention to providing clear ties of factual causality of actual injury to a domestic industry or market under established rules of law can win an ITC-determined remedy that justly withstands scrutiny within the U.S. appellate system, as well as before any international tribunal faithful to established international order.
The ITC's Long-Standing Role in International Trade — and International Security
Until it received its current name in 1975 under the Trade Act,[2] the ITC had been functioning as the U.S. Tariff Commission for close to 60 years, and before that in other forms, including as the Special Revenue Commission that Congress established near the end of the Civil War.[3]
Throughout that history, the ITC's predecessors repeatedly were called on to help strengthen national security.
The commissions that Congress set up in the years after the Civil War aided both political branches by supplying objective data and insights to mediate between competing economic interests and trade philosophies.
The differences between protectionists and champions of free trade in particular had riven the country before the war and continued to do so after. The ITC's progenitors thus contributed to finding nonpartisan ways forward in the face of challenges that had threatened the very existence of the U.S., and still could harm the national interest if not judiciously addressed.[4]
The ITC's predecessors also played a significant, if largely unsung, role in the world wars. President Woodrow Wilson signed the Revenue Act of 1916 that created the U.S. Tariff Commission,[5] which physically opened its doors only six days before the U.S. declared war on Germany in 1917.[6] Wilson directed the commission to assist with a range of wartime priorities.
Among other tasks, the commission chairman served on the U.S. War Industries Board and later advised the U.S. delegation to the 1919 Paris Peace Conference. There the chairman lent expertise in drafting the customs provisions of the peace treaty.[7]
The commission gathered information about the impact of the war on tariffs.[8] One particularly energetic commissioner, William S. Culbertson, took it upon himself to travel worldwide to gain better data about the trade policies of then-U.S. allies, including Russia.[9]
The commission performed data-gathering and analysis, including in regard to supply chains that the war interrupted. This role presaged the ITC's Section 332 studies, which have helped inform legislative and executive decision making in recent decades.[10]
World War II saw the political branches again call upon the commission to contribute to the national defense. As Will Leonard and David Foster recall in the ITC's official history, the commission "provided data and support to the War Production Board and ... to the Bureau of Stockpiling and Transportation."[11]
The commission compiled data on domestic production and on cost-of-production. It played a key role in costing the famous lend-lease deal, whereby the U.S. supplied military assistance to the United Kingdom that was critical to that nation surviving the bleak period when it alone stood against the totalitarian aggressors in Europe.[12]
The commission also supported Congress and the president after the war, as the U.S. led the world economy to recovery and peace. Its reports were important to the U.S.' understanding of U.S. industries and their place in the world in the radically changed landscape of the postwar era.[13]
The commission was also significantly involved in the emergence of the new trade system, under the General Agreement on Tariffs and Trade, which still governs global trade.[14]
The ITC's Tools
The ITC has five main tools. Some include the ability to impose binding remedies after careful investigation and determination. Others focus on supporting other parts of the U.S. government with data, analysis, and the ITC's institutional and human resources.
To start with its advisory role, the ITC supplies nonpartisan technical advice to the two political branches of the U.S. government. The public-facing side of this role is seen in the ITC's Section 332 docket.
Under Section 332 of the Tariff Act, the president, the U.S. Senate Finance Committee, the U.S. House of Representatives Ways and Means Committee or the U.S. trade representative may request that the ITC launch fact-finding investigations on any subject involving tariffs or international trade.[15] The ITC also may start Section 332 investigations at its own initiative.
This wide-ranging function has been used recently, for example, to probe censorship by foreign powers,[16] just one example of the intersection between trade and wider security concerns long present at the ITC. The ITC also handles the Harmonized Tariff Schedule and the relationship of the U.S. to the World Customs Organization.[17]
Perhaps best known among the ITC's tools is the powerful injunctive relief that it can order in cases brought by complaining parties or on its own initiative against unfair imports. This is called the Section 337 docket.
The Section 337 docket covers cases involving imported articles that infringe patent or trademark rights, or otherwise injure U.S. industry, or restrain or monopolize U.S. markets.[18]
The ITC's administrative law judges adjudicate such claims in interparty adversarial proceedings with rules of evidence and procedure analogous to federal court civil litigation, and the commissioners then review the determinations.
The results are a thorough and well-reasoned factual record and legal conclusions.[19] Where a Section 337 claim is proved, the commission then may issue exclusion orders for U.S. Customs and Border Protection to keep the articles out, and cease and desist orders against importers and others.[20]
Finally, and the main focus of Portman and Brown's March 11 letter, the ITC carries out import injury investigations.
In line with Title VII of the Tariff Act, these investigations examine dumping and unfair subsidies by foreign countries. A Title VII action starts with a U.S. industry petitioning the U.S. Department of Commerce. The department's International Trade Administration[21] hears the complaint and makes a factual assessment.
If the ITA finds that a foreign country has engaged in dumping or impermissible subsidization of exports, then the door is open to an anti-dumping or countervailing duty measure. However, before the U.S. actually adopts an anti-dumping or countervailing duty measure, the ITC needs to consider whether that foreign activity actually harms a domestic U.S. industry.
Important here, but sometimes overlooked by parties and their counsel, is the need to demonstrate a causal connection between the illegal foreign activity — the dumping or the subsidization — and a harmful impact in the U.S. This is a factual question requiring good, logical connecting of dots.
Connecting the Dots — Russia's Aggression and What the ITC Can Do
Turning again to Russia's aggression against Ukraine, Portman and Brown are right when they say that it is "important for the [ITC] to ensure full enforcement of our trade remedy laws"[22] and that, to do so, the ITC should take account the extraordinary danger that Russia's aggression presents.[23]
The system of trade from which the U.S. and the world have benefited so much for so long depends on peace, security and respect for rule of law. For that system to endure, those to whom its integrity is entrusted must act.
Coordinated trade sanctions against Russia are a vital step toward denying Russia the resources it needs to prosecute aggression against free nations. However, the ITC can strengthen our response in further important ways.
First, there is the ITC's best-known docket, Section 337. Russia has declared that patent protection no longer applies to foreigners in Russia.[24] This escalatory step puts practically any Russian product that might have a U.S. patent in its supply chain in the crosshairs of potential Section 337 action.
In addition, existing and new sanctions laws present a thicket of possible violations that could affect the interests of U.S. industry, giving rise to a range of legitimate complaints about competitors who might engage in false advertising or collusion of the types codified in Section 337.
Russia has all but vitiated various treaties addressing trade and investment — treaties upon which U.S. industry relies for a vast range of activities, including the maintenance of supply chains and lawful access to foreign markets, in which companies are both buyers and sellers.
The drift of Russia toward a state-centered economy of central government-directed subsidies has accelerated since Russia invaded Ukraine. It is now going to be harder to find parts of the Russian economy not affected by illegal subsidies and other market practices than parts that are.
Emerging, too, from Russia's aggression are highly specific, and in many instances outrageous, violations, such as the pillage and plunder of Ukrainian property[25] and, reportedly, large-scale plans to denude the country of key natural resources, including timber.[26]
All of this in turn impacts the many industries outside Russia who do business with Russian individuals, businesses, financial firms, and goods and services providers.
Then there is the Title VII docket, under which parties can pursue remedies for import injury. As Portman and Brown recall, the statutory authority under which the ITC conducts import injury investigations requires that the commission consider all relevant economic factors that bear on the state of the industry in the U.S.[27] The relevant factors in regard to Russia's aggression against Ukraine are legion.
The many violations entailed by Russia's war of aggression seem likely to affect supply chains directly and indirectly, including those on which U.S. industries depend.
Proving the violations — the ITA's job at the Commerce Department — and connecting the cause-and-effect dots to establish the injury to a U.S. industry — party and counsel's job at the ITC — together potentially widen the scope for meaningful action against Russia's war of aggression.
It remains for all involved to respond to the call in defense of our shared values and interests, and to use these potent tools. Both history and the present-day achievements of this important institution show us the way.
F. Scott Kieff is a professor at George Washington University Law School and previously served as an ITC commissioner.
Thomas D. Grant is a fellow of the Lauterpacht Centre for International Law at Cambridge University and previously served as senior adviser for strategic planning in the U.S. Department of State's Bureau of International Security and Nonproliferation.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the organization, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] See https://www.portman.senate.gov/newsroom/press-releases/portman-brown-urge-us-international-trade-commission-enforce-us-trade.
[2] See https://www.govinfo.gov/content/pkg/STATUTE-88/pdf/STATUTE-88-Pg1978-2.pdf.
[3] For late 19th century commentary on which see Joseph A. Hill, "The Civil War Income Tax," 8(4) The Quarterly Journal of Economics 416-452 (1894).
[4] John M. Dobson, Two Centuries of Tariffs: The Background and Emergence of the U.S. International Trade Commission (Dec. 1976) p. 83, available at https://www.usitc.gov/publications/332/pub0000.pdf.
[5] For the Revenue Act of 1916, signed into law on Sept. 8, 1916, see https://www.usitc.gov/publications/332/tradeshifts/foundinglegislation.pdf.
[6] Shara L. Aranoff, Deanna Tanner Okun & Daniel R. Pearson, Chapter 5, Centennial History, p. 146.
[7] Id.
[8] Gene Rosengarden, Janis Summers & Arun Butcher, Chapter 7, Centennial History, p. 174.
[9] Alfred E. Eckes, Jr., Chapter 8, Centennial History, p. 194.
[10] Michael O. Moore, Chapter 14, Centennial History, p. 411.
[11] Will E. Leonard & F. David Foster, Chapter 4, Centennial History, p. 127.
[12] Id. at pp. 127-128. Alos, as former Commission Chairman Alfred Eckes, Jr. recalls, the Commission was heavily engaged assisting war-related agencies, including the War Production Board, the Office of Economic Warfare, and the War Department. Alfred E. Eckes, Jr., Chapter 8, Centennial History, p. 217.
[13] Leonard & Foster, op. cit., p. 128.
[14] Rosengarden, Summers & Butcher, op. cit., p. 178.
[15] https://www.usitc.gov/research_and_analysis/what_we_are_working_on.htm.
[16] As initiated by the Senate Finance Committee under Chairman Chuck Grassley (R-IA): https://insidetrade.com/trade/itc-launches-section-332-probe-censorship-non-tariff-barrier.
[17] As the ITC describes its role, crucial here are the commission's professional staff of trade and nomenclature analysts, investigators, financial analysts, statisticians, lawyers, economics, information technology specialists, and administrative staff. See https://www.usitc.gov/press_room/about_usitc.htm.
[18] 17 USC 1337 (a)(1)(A-B).
[19] F. Scott Kieff, "Pragmatism, Perspective, and Trade: AD/CVD, Patents, and Antitrust as Mostly Private Law," 30 Harv. J.L. & Tech. 97 (2017).
[20] For discussion in the technology sector, see https://www.iptechblog.com/2020/07/the-itc-expands-its-approach-to-issuing-cease-and-desist-orders/.
[21] See https://www.trade.gov/.
[22] Supra n. 1.
[23] Id.
[24] Hannah Knowles & Zina Pozen, "Russia says its businesses can steal patents from anyone in 'unfriendly' countries," Washington Post (March 9, 2022), available at https://www.washingtonpost.com/business/2022/03/09/russia-allows-patent-theft/.
[25] See observations of Andrew Stroehlein, European Media Director, Human Rights Watch: https://mobile.twitter.com/astroehlein/status/1503621115989700609 (March 15, 2022).
[26] Jack Haugh, "Russian invasion of Ukraine: Country's forests could be 'mass felled' to make money for Vladimir Putin's army," Forestry Journal (March 15, 2022), available at https://www.forestryjournal.co.uk/news/19994037.russian-invasion-ukraine-countrys-forests-mass-felled-make-money-vladimir-putins-army/.
[27] https://www.law.cornell.edu/uscode/text/19/1677.
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