The Court of International Trade in its April 1 remand order gave the Office of the U.S. Trade Representative “one final opportunity” to cure its Administrative Procedure Act violations and "flesh out" the reasons why it rejected the 9,000+ comments it received in the lists 3 and 4A Section 301 tariff rulemakings, without devising “new rationales for dismissing them,” Akin Gump lawyers for lead Section 301 plaintiffs HMTX Industries and Jasco Products said in comments on USTR’s Aug. 1 remand determination. “USTR’s response to that directive flunks the Court’s test,” they said (In Re Section 301 Cases, CIT #21-00052).
Section 301 tariffs
Section 301 Tariffs are levied under the Trade Act of 1974 which grants the Office of the United States Trade Representative (USTR) authority to investigate and take action to protect U.S. rights from trade agreements and respond to foreign trade practices. Section 301 of the Trade Act of 1974 provides statutory means allowing the United States to impose sanctions on foreign countries violating U.S. trade agreements or engaging in acts that are “unjustifiable” or “unreasonable” and burdensome to U.S. commerce. Prior to 1995, the U.S. frequently used Section 301 to eliminate trade barriers and pressure other countries to open markets to U.S. goods.
The founding of the World Trade Organization in 1995 created an enforceable dispute settlement mechanism, reducing U.S. use of Section 301. The Trump administration began using Section 301 in 2018 to unilaterally enforce tariffs on countries and industries it deemed unfair to U.S. industries. The Trump administration adopted the policy shift to close what it deemed a persistent "trade gap" between the U.S. and foreign governments that it said disadvantaged U.S. firms. Additionally, it pointed to alleged weaknesses in the WTO trade dispute settlement process to justify many of its tariff actions -- particularly against China. The administration also cited failures in previous trade agreements to enhance foreign market access for U.S. firms and workers.
The Trump Administration launched a Section 301 investigation into Chinese trade policies in August 2017. Following the investigation, President Trump ordered the USTR to take five tariff actions between 2018 and 2019. Subsequent rounds of Section 301 actions against China have continued since. The Office of the U.S. Trade Representative administers Section 301 tariffs, and has also created an exclusion process for importers to seek exemptions from the tariffs.
The Court of International Trade “bent over backwards” to allow the Office of the U.S. Trade Representative to comply with its Administrative Procedure Act obligations in its imposition of the lists 3 and 4A Section 301 tariffs on Chinese goods when it remanded the duties to the agency for further explanation on the rationale for the actions it took in the context of the comments it received, said an amicus brief filed Sept. 14 in the massive Section 301 litigation from the Retail Litigation Center, CTA, the National Retail Federation and four other trade associations. With USTR’s “non-responsive” answer to the remand order, the time has come for the court “to impose the normal remedy for unlawful agency action” and to vacate the lists 3 and 4A tariffs, it said (In Re Section 301 Cases, CIT #21-00052).
The Office of the U.S. Trade Representative often found itself weighing the possible harm to U.S. consumers from the lists 3 and 4A Section 301 tariffs against the need to give the duties enough teeth to curb China’s allegedly unfair trade practices, the agency said in its 90-page “remand determination,” filed Aug. 1 at the Court of International Trade (In Re Section 301 Cases, CIT #21-00052). Submitting its bid to ease the court's concerns over modifications made to the third and fourth tariff waves, USTR provided its justifications for removing various goods from the tariff lists ranging from critical minerals to seafood products.
With less than two weeks to spare before the June 30 deadline for the Office of the U.S. Trade Representative to file its remand results in the Section 301 litigation, the agency needs a 60-day extension to Aug. 29 due to the volume of work involved, the agency’s limited staff resources and other projects that are compounding its workload, DOJ said June 17 at the Court of International Trade. Akin Gump lawyers for test-case plaintiffs HMTX Industries and Jasco Products oppose the motion and soon will file a response, DOJ said. Matthew Nicely, Akin Gump’s lead attorney, declined to comment June 17.
The unanimous three-judge opinion at the U.S. Court of International Trade remanding the lists 3 and 4A Section 301 tariffs to the Office of the U.S. Trade Representative on April 1 for correcting deficiencies in the agency’s Administrative Procedure Act compliance extends the current litigation at least until mid-summer. The opinion, written by Chief Judge Mark Barnett and coming two months to the day after Feb. 1 oral argument was held (see 2202010059), gives USTR 90 days, to June 30, to respond to the remand order, and orders the plaintiffs and the government to submit a joint status report 14 days after that, including a proposed schedule on “the further disposition of this litigation.”
The Office of the U.S. Trade Representative “properly exercised its authority” under the Section 307 modification provisions of the 1974 Trade Act when it ordered the imposition of the lists 3 and 4A Section 301 tariffs on Chinese imports, the Court of International Trade ruled in an April 1 opinion. Test-case plaintiffs HMTX Industries and Jasco Products, plus the more than 3,600 complaints that followed, sought to vacate the tariffs on grounds that lists 3 and 4A were unlawful without USTR launching a new Section 301 investigation.
The Office of the U.S. Trade Representative sought confidential advice from “private-sector advisory committees,” believed to be under the Industry Trade Advisory Committee (ITAC) program managed jointly by USTR and the Commerce Department, before imposing the List 3 Section 301 tariffs on Chinese imports, Stephen Vaughn, the agency’s then-general counsel, wrote then-USTR Robert Lighthizer on Sept. 17, 2018. The document was one of about a dozen “decision memos” spanning 488 pages that DOJ filed March 24 in the Section 301 litigation docket (In Re Section 301 Cases, CIT #21-00052) at the Court of International Trade as an “appendix” to oral argument held Feb. 1 (see 2202010059).
The U.S. Court of International Trade should deny the Department of Justice's motion to add a November 2018 investigatory “update” report from the Office of the U.S. Trade Representative to the administrative record in the Section 301 litigation (see 2202160033) because the government has failed to show that USTR “actually relied on or considered” the report when it was deciding to impose either the Lists 3 or List 4A tariffs on Chinese imports, Akin Gump lawyers for sample-case plaintiffs HMTX Industries and Jasco Products said in a partial opposition brief filed Feb. 16.
The Department of Justice wants the U.S. Court of International Trade to include two documents that the Office of the U.S. Trade Representative “realized” were missing from the administrative record filed April 30 by the government in the Section 301 litigation, it said in a Feb. 15 motion to correct the record. USTR Assistant General Counsel Megan Grimball said in a declaration that the documents were “inadvertently omitted.” DOJ said USTR discovered the omissions in the two weeks since the Feb. 1 oral argument.
The Court of International Trade heard oral argument on Feb. 1 over whether lists 3 and 4A of Section 301 tariffs were properly imposed, marking one of the largest cases in the CIT's history. The hourslong affair saw the judges push back on arguments made by both the Department of Justice and the plaintiffs, with significant attention paid to the procedural elements of the president's decision to impose the retaliatory Section 301 tariffs on billions of dollars worth of Chinese goods. In all, the three-judge panel of Mark Barnett, Claire Kelly and Jennifer Choe-Groves heard from the Department of Justice, counsel for the test case plaintiffs HMTX Industries and Jasco Products, and amici.