The Special 301 Report is prepared annually by the Office of the United States Trade Representative (USTR) under Section 301 as amended of the Trade Act of 1974. The reports identify trade barriers to U.S. companies and products due to the intellectual property laws, such as copyright, patents and trademarks, in other countries. Each year the USTR must identify countries which do not provide "adequate and effective" protection of intellectual property rights or "fair and equitable market access to United States persons that rely upon intellectual property rights". Under the Special 301 provisions (Pub.L. 93–618, 19 U.S.C. § 2242) amended into Section 301 of the Trade Act of 1974 by section 1303 of the Omnibus Trade and Competitiveness Act of 1988, the USTR must also undertake annual surveys of foreign countries' intellectual property laws and policies. The Special 301 Report was first published in 1989.
By statute, the annual report must identify a list of "Priority Foreign Countries", those countries judged to have inadequate intellectual property laws; these countries may be subject to sanctions. In addition, the report contains a "Priority Watch List" and a "Watch List", containing countries whose intellectual property regimes are deemed of concern.
The Special 301 Sub-Committee of the Trade Policy Staff Committee (TPSC) advises the U.S. Trade Representative on which countries to designate as "priority foreign countries" or to include in the watchlists. The Special 301 Sub-Committee is chaired by the Office of the United States Trade Representative (USTR) and its members include the Department of Commerce, the Patent and Trademark Office, the Department of State, the Department of Health and Human Services, the Department of Agriculture, the Copyright Office, the Council of Economic Advisers, and other agencies. U.S. companies provide extensive comments in the annual National Trade Estimate Report. The Special 301 Sub-Committee also takes the views of foreign governments and the views of U.S. embassies on intellectual property rights.