§2451, a trade remedy statute aimed at import surges from China. Further, while President Obama was authorized to review the tariffs after six months and to modify, reduce, or terminate them, he allowed the tariffs to remain in place as originally imposed. Section 421, which was enacted as one element of an October 2000 statute addressing various issues involving the accession of China to the World Trade Organization (WTO), authorizes the President to impose safeguards—that is, temporary measures such as import surcharges or quotas—on Chinese products in the event that the ITC finds that these imports have resulted in market disruption in the United States. Market disruption occurs under Section 421 if an import surge of a Chinese product is a significant cause of material injury or threat of material injury to the domestic industry producing the like or directly competitive product. This provision is separate from XIX of the General Agreement on Tariffs and Trade 1994 (GATT 1994) and the WTO Agreement on Safeguards, which allow WTO members to respond to injurious import surges generally but on a stricter basis than provided for under China's Accession Protocol. China requested consultations with the United States under the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes on September 14, 2009, and requested a panel on December 21, 2009, claiming that the additional tariffs are inconsistent with U.S. GATT obligations to accord Chinese tires MFN tariff treatment and not to exceed negotiated tariff rates, that the United States imposed tariffs under the special safeguard mechanism in China's WTO Accession Protocol without first attempting to justify them under general GATT and WTO safeguard provisions, and that Section 421 and its application in this case are inconsistent with U.S. obligations under the Protocol. In a report circulated September 5, 2011, the WTO Appellate Body upheld the challenged panel determinations and thus U.S. actions under the Protocol. The safeguard may be applied only to goods of Chinese origin, a significant difference from the WTO Safeguards Agreement, which requires that a safeguard be imposed on the subject product regardless of its source. The statute, which also permitted the President to grant most-favored-nation (MFN) tariff treatment to Chinese goods upon China's accession to the WTO, was enacted in October 2000, a little more than a year before China became a WTO member. Section 406 in turn was adapted from Section 201 of the Trade Act of 1974, 19 U.S.C. Section 421 Investigation: Chinese Passenger Vehicle and Light Truck Tires from China (2009)

On April 20, 2009, the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union filed a petition with the U.S. International Trade Commission requesting that it institute a Section 421 investigation involving certain passenger vehicle and light truck tires from China. The ITC instituted the investigation (TA-421-7) on April 24, 2009. As a result of its investigation, the ITC in June 2009 voted 4-2 that imports of the subject tires were causing market disruption to domestic producers and recommended that the President impose an addition duty on the imported tires for three years, beginning with an additional 55% ad valorem duty in the first year, 45% ad valorem in the second year, and 35% ad valorem in the third year. The ITC also recommended expedited consideration of trade adjustment assistance if applications for such assistance were filed by affected firms or workers. The President subsequently decided to provide import relief regarding the subject tires and on September 11, 2009, proclaimed increased tariffs for three years, albeit at lower rates than those recommended by the ITC, effective September 26, 2009. The President also directed the Secretaries of Labor and Commerce to expedite applications for trade adjustment assistance and to provide other available economic assistance to affected workers, firms, and communities. No formal requests have been made under section 421(o) for the ITC to investigate whether it is necessary to extend the tariffs, which are scheduled to expire on September 25, 2012. Before proceeding with its analysis, the panel set out context for the case, including that the case raised questions that had not yet been dealt with in a WTO dispute settlement proceeding, such as the relationship of the China-specific safeguard to the WTO global safeguard mechanisms; that the U.S. International Trade Commission causation determination was not unanimous, warranting "very careful consideration" by the panel of this aspect of the determination; that the unanimous ITC material injury finding was not before the panel, thus making causation a crucial issue, though complicated by the fact that the ITC's period of investigation had "involved in part a period of massive global economic downturn or recession"; that the Section 421 petition had been filed by a labor union concerned with job losses and not by the domestic tire industry, which had reduced investment in the United States and increased investment in China, arguably precipitating the increase in Chinese tire imports that resulted in the safeguard; and that the domestic industry indicated that it would not make adjustments even though a safeguard was put in place. Panel and Appellate Body Reports Adopted

The panel and Appellate Body reports were adopted by the WTO Dispute Settlement Body on October 5, 2011.
On April 20, 2009, the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union filed a petition with the U.S. International Trade Commission (ITC) requesting an investigation under Section 421 of the Trade Act of 1974, 19 U.S.C. §2451, a trade remedy statute addressing import surges from China, to examine whether Chinese passenger vehicle and light truck tires were causing market disruption to U.S. tire producers. Market disruption will be found to occur under Section 421 whenever imports of a Chinese product that is "like or directly competitive with" a domestic product "are increasing rapidly ... so as to be a significant cause of material injury, or threat of material injury, to the domestic industry." The ITC initiated the investigation (TA-421-7) on April 24, 2009.
As a result of its investigation, the ITC in June 2009 voted 4-2 that Chinese tire imports were causing domestic market disruption and recommended that the President impose an added duty on these items for three years at an annually declining rate. The ITC also recommended expedited consideration of trade adjustment assistance (TAA) applications filed by affected firms or workers. On September 11, 2009, President Obama proclaimed increased tariffs on Chinese tires for three years effective September 26, 2009, albeit at lower rates than recommended by the ITC. The proclaimed increase was 35% ad valorem in the first year, 30% in the second, and 25% in the third year. The President also directed the Secretaries of Labor and Commerce to expedite TAA applications and to provide other assistance to affected workers, firms, and communities. While the President was authorized to review the tariffs after six months and to modify, reduce, or terminate them, he did not take any of these actions. No formal requests have been made to extend the tire tariffs, which are scheduled to expire on September 25, 2012. Six petitions had been previously filed under Section 421, with the ITC finding market disruption in four out of six of its investigations. President Bush decided not to provide import relief in these earlier cases.
Section 421 was enacted as part of an October 2000 statute that also permitted the President to grant most-favored-nation (MFN) tariff treatment to Chinese products upon China's accession to the World Trade Organization (WTO). Section 421 authorizes the President to impose safeguards—that is, temporary measures such as import surcharges or quotas—on Chinese goods if domestic market disruption is found. The statute implements a China-specific safeguard mechanism in China's WTO Accession Protocol that may be utilized by WTO members through December 2013. The provision is separate from Article XIX of the General Agreement on Tariffs and Trade (GATT) 1994 and the WTO Agreement on Safeguards, which allow WTO members to respond to injurious import surges but on a stricter basis than under the Protocol. A major difference is that the Protocol allows a safeguard to be applied only to Chinese products while the Safeguards Agreement requires that any safeguard be applied to a product regardless of its source.
China filed a WTO complaint against the United States in September 2009, claiming that the Section 421 tariffs violate U.S. GATT obligations to accord Chinese tires MFN tariff treatment and not to exceed negotiated tariff rates, that the United States imposed tariffs under the safeguard mechanism in China's Accession Protocol without first attempting to justify them under GATT and WTO safeguard provisions, and that Section 421 and its application in this case violate U.S. obligations under the Protocol. In a December 2010 report, the WTO panel rejected all of China's claims. China later appealed panel findings related to the Accession Protocol. The WTO Appellate Body upheld the panel, and thus U.S. actions under the Protocol, in a September 2011 report. The panel and Appellate Body reports were adopted by the WTO Dispute Settlement Body on October 5, 2011, ending the WTO dispute.