In a trade skirmish, "Section 301" is considered one of the heavy pieces of artillery available to the United States.
As the White House describes it, that section of U.S. law allows the president to do almost anything to retaliate against countries that he believes violate international trade laws or restrict U.S. commerce in an "unjustifiable, unreasonable or discriminatory fashion."
Commerce Secretary Malcolm Baldrige calls it "such a strong, powerful law" that it must be used sparingly. To brandish it too often would be an "overreaction," he said.
Until now, it also has been the chosen weapon of President Reagan to fend off trade legislation being prepared by a Congress that has decided mounting trade deficits have become a political liability.
Reagan announced two weeks ago that, for the first time, he is initiating action under 301 against three countries -- Brazil, Japan and Korea -- that restrict American sales in their countries. Furthermore, he demanded that the European Community and Japan satisfactorily settle pending 301 cases in which international panels have determined that those countries have unfairly damaged American exporters.
"It's a historical precedent in the conduct of international trade and a very meaningful development indeed," said U.S. Trade Representative Clayton Yeutter. "It is one that sends a very strong message to our trading partners around the world, with respect to our attitudes toward unfair trade practices and hopefully to the American people as well . . . of the president's commitment to this cause."
Most frequently, the law is used by companies, industries or labor unions that believe they have been injured by other countries' restricting sales of U.S. products or illegally subsidize those countries' products. They bring their complaints to Yeutter's office, which decides if they have merit and then seeks redress from the offending countries.
Congress long has urged Reagan to make greater use of 301 by initiating cases himself, throwing the full weight of the American government behind the trade complaint. Congress last year strengthened the section to make it easier for the president to retaliate directly against unfair trade practices.
There is no doubt that the law is powerful if it is used to the fullest. Reagan, however, held back from using its full firepower -- deciding to order investigations by Yeutter's office instead of immediately determining that unfair trade practices exist and declaring quick sanctions.
Legally, the president could have done that, but "you just don't treat trading partners that way," Yeutter said. "For all practical purposes, one can say that the president can do essentially whatever he wishes in the way of retaliation against the countries involved," Yeutter said. "That'll likely be, of course, some kind of restraint on their trade flows into the United States if we chose to retaliate. But there is a broad range of retaliatory possibilities."
One brake on retaliatory action is the strong possibility that a trade war will erupt if another nation refuses to accept a presidential finding of unfair trade practices and counterattacks against the United States with its own retaliatory measures.