The US International Trade Commission (ITC) might soon be assigned another task under its mandate. Last year, the bill, “Stopping and Excluding Chinese Rip-offs and Exports with United States Trade Secrets Act of 2021” (The “SECRETS Act of 2021”) was introduced in the US Congress. According to the proposed federal statute, the ITC would have the power to “direct the exclusion from the United States of […] imports of articles that contain, were produced using, benefit from, or use any trade secret acquired through improper means or misappropriation by a foreign agent or foreign instrumentality.”

Goals and objectives of the SECRETS Act

The SECRETS Act would amend the existing Section 337 of the Tariff Act of 1930, which aims to protect US industries from unfair trade or competition exercised by foreign competitors. The amendments concern trade secret misappropriation by foreign importers. Contrary to its (long-form) name, the SECRETS Act is directed at all countries. The drafting of the bill, however, has been primarily incited by allegations of Chinese entities violating trade secrets. It also illustrates the response to the increased number of complaints filed by US businesses in this regard.

Involvement of the ITC

Under the SECRETS Act, competence for protecting owners of trade secrets would lie with the ITC. Once a complaint is filed by the owner of a trade secret, a special committee set up within the ITC would then investigate the importation of products related to the alleged trade secret misappropriation. If it reaches the conclusion that the imported product “more likely than not” involves trade secret misappropriation, the committee would have to order it excluded from entry into the US. It would also have to notify the president, who would then have to (dis-)approve the ITC’s determination.

Impact on international trade

So far, the SECRETS Act has been read twice and referred to the Senate Committee on Finance. If it passes, it could ensure comprehensive protection for trade secret owners. However, the “more likely than not” principle could significantly restrict trade practices and foreign traders’ interests. The ITC would therefore have to be careful when exercising its wide discretion in order to safeguard and balance the colliding interests. Otherwise, it could end up wrestling with a Sisyphean rock at the expense of traders and trade secret owners.