The Tariff Act of 1930—Section 337: An Antitrust Ugly Duckling
| Author | Peter C. Ward |
| Published date | 01 June 1982 |
| Date | 01 June 1982 |
| DOI | http://doi.org/10.1177/0003603X8202700203 |
| Subject Matter | Article |
The Antitrust Bulletin/Summer 1982
The Tariff Act
of
1930-section
337:
an antitrust ugly duckling
BY PETER C. WARD·
355
In 1922, a measure designed to protect American industry from
unfair import competition was enacted by Congress. Now known
as section 337 of the Tariff Act of
1930,1
it prohibits "unfair
methods of competition and unfair acts in the importation
of
articles into the United States," if the effect or tendency
of
such
conduct is to destroy or substantially injure a domestic industry,
or to prevent the establishment of such an industry,
"or
to
restrain or monopolize trade and commerce in the United States."
This prohibition against unfair methods of competition in impor-
tation applies as well to the sale of imported articles by their
owner, importer, or consignee after the goods have reached the
U.S.2
• Baker &Daniels, Washington, D.C.lIndianapolis.
119 U.S.C. §1337 (1976). The operative part of the provision is
contained in subsection (a). The rest of the section is devoted to the
mechanics of implementation.
2In full, section 337(a) provides: "Unfair methods of competition
and unfair acts in the importation of articles into the United States, or
in their sale by the owner, importer, consignee, or agent of either, the
effect or tendency of which is to destroy or substantially injure an
industry, efficiently and economically operated, in the United States, or
to prevent the establishment of such an industry, or to restrain or
monopolize trade and commerce in the United States, are declared
©1982by Federal Legal Publications, Inc.
356 The antitrust bulletin
Traditionally, enforcement of section 337 has been accom-
plished by the issuance
of
an exclusion order denying entry to the
U.S.
of
imported articles involved in unfair acts or unfair
methods of competition.' Prior to 1974, the authority to exclude
imports belonged to the president.' The Tariff Commission was
authorized to investigate alleged violations and make a recom-
mendation to the president if it believed exclusion was appropri-
ate.' Amendments to section 337 in 1974
6abolished the Tariff
Commission and transferred the exclusion authority from the
president to the newly created International Trade Commission,'
with the caveat that ITC orders are subject to presidential
disapproval
"for
policy reasons."! Those amendments also gave
the ITC authority to issue orders to cease and desist as a less
drastic alternative to the exclusion remedy,"
Regardless
of
one's philosophy on international trade, there
exists at least an argument for section 337 when it is invoked to
prevent unfair competition by importers aimed at taking business
from U.S. producers. However, particularly since the 1974
amendments, the section has been interpreted to embody a
general trade regulation mandate." Such an interpretation has
unlawful, and when found by the Commission to exist shall be dealt
with, in addition to any other provisions
of
law, as provided in this
section."
3Tariff Act
of
1930, ch. 497, §337(e), 46 Stat. 703 (1930) (prior to
1974 amendments).
4Id.
Id. §337(c) &(d).
6Trade Act
of
1974, Pub. L. No. 93-618, §341, 88 Stat. 2053
(1975).
719 U.S.C. §1337(d) (1976).
8Id. §1337(g)(2).
9Id. §1337(f).
10 See Schaumberg, Section 337
of
the Tariff
Act
of
1930 as an
Antitrust Remedy, 27
ANTITRUST
BULL.
51 (1982).
Section 337 357
introduced
an ugly duckling
into
the
antitrust
family.
Only
when
enforcement
of
the
section is limited to serving
the
protectionist
objectives
for
which it was designed does it display
the
attributes
of
aswan.
II
The
protection
of
individual
competitors
is
not
necessarily
compatible
with
the
antitrust
objective
of
preserving
vigorous competition.
There
is no evidence
that
Congress in-
tended
the
ITC
to
operate
under
aschizophrenic
mandate
to
pursue
both
ends when dealing with
imports.
Antitrust
policy
should
playa
role in section 337 cases only in
the
manner
intended by Congress when
the
section was
amended
in
1974-as
acheck in
the
framing
of
relief
that
protects
U.S.
industry. 12
The
scope
of
the
section
should
be
reformulated
by
the
ITC
or
clarified by Congress
to
focus
on
its
true
purpose.
13
11 Of course, protectionist legislation is not viewed by everyone as
swan-like. An alternate metaphor would make section 337 with antitrust
characteristics an ugly cygnet that grows up to be a duck. In any event,
this discussion does not address the policy pros and cons of section 337
as a measure to protect U.S. industry from certain methods of import
competition, nor does it assess the effectiveness of its enforcement in
that context.
12 The
1974
amendments also would allow a respondent to raise
antitrust issues in defending against a complaint that an import infringes
a domestic patent held by a U.S. company. 19 U.S.C. §
1337(c)
(1976).
13 Suggestions for limiting or even repealing section 337 are not
new. See generally
Musrey,
Tariff
Act's
Section 337:
Vehicle
for
the
Protection and Extension
of
Monopolies, 5
LAW
&
POL.
INT'L
Bus. 56,
84
(1973);
LaRue, Section 337
of
the 1930 Tariff
Act
and Its Section 5
FTC
Act
Counterpart, 43
ANTITRUST
L.J.
608, 619
(1974);
Fischbach,
The Need to Improve Consistency in the Application and Interpretation
of
Section 337
of
the Tariff
Act
of
1930 and Section 5
of
the Federal
Trade Commission Act, 8
GA.
J.
INT'L
&
COMR
L.
65, 76-79 (1978);
Hemmendinger, Barringer &Kossl, Section 337: A Case
for
Repeal or
Change, 8
GA.
J.
INT'L
&
COMR
L.
81
(1978). The Nixon administra-
tion's initial proposal of legislation that ultimately amended the section
in
1974
would have narrowed Tariff Commission jurisdiction solely to
resolution of allegations that foreign manufacturers of imports were
infringing the U.S. patents of American companies.
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