In response to criticism from a CIT panel in April that the USTR didn’t adequately respond to comments from importers aggrieved by the tariffs, the agency filed a 90-page redetermination with the court as well as a request seeking to add more than 130 pages to the administrative record in the case.
USTR mostly carried the day in the April ruling when the three-judge panel held that former President Donald Trump was within his authority to expand tariff orders under Section 301 of the Trade Act of 1974 in response to retaliation from China, even though the additional levies came several months after the window outlined in the statute. However, the court dinged the agency over its handling of more than 9,000 comments submitted in response to the later duties, directing the agency to show its work.
“With respect to the nature of the comments received, approximately 95 percent of the comments addressed ‘tariff subheadings to be covered’ by the proposed lists or specific products to be covered,” USTR said in Monday’s filing, specifying in a footnote that of the thousands of comments, only 440, or 4% were “non-product-specific.”
The first sets of Section 301 tariffs, known as Lists 1 and 2, were issued in 2018 following an investigation into China’s intellectual property regime and forced technology transfer rules. Those listings together covered approximately $50 billion worth of imports and have proven largely uncontroversial.
However, the Trump administration’s decision to impose more levies — covering an additional $300 billion in goods under Lists 3 and 4 — after China struck back with tariffs of its own sparked a deluge of litigation that has seen more than 3,700 importers challenge their legality at the trade court.
While relatively few commenters took on the legality of the action when USTR was setting up the tariffs, at least one, the Consumer Technology Association made similar arguments as importers have made at the CIT, namely that the government misinterpreted Section 301 of the Trade Act and Section 307, which concerns modifications to Section 301 duties.
“USTR explained that China’s unfair acts, policies, and practices included not just its specific technology transfer and IP policies referenced in the notice of initiation in the investigation, but also China’s subsequent defensive actions taken to maintain those policies (to include increased tariffs to further protect its policies), which had resulted in increased harm to the U.S. economy following the one-year period of investigation,” the agency said Monday.
The bulk of Monday’s filing addressed product-specific comments across eight categories, including USTR’s decision to exclude critical minerals, seafood, Chinese antiques, and health and safety products from the levies.
The agency also broke down its refusal to release other products from the duties, focusing specifically on component parts, some of which had to remain in the listings in order to maintain the level of coverage Trump sought to impose, according to USTR.
“Moreover, most comments urging for additional inputs to be removed failed to demonstrate how imposing the additional duties on the input would not be practicable or effective to eliminate China’s acts, policies, and practices or failed to show how imposing the additional duties would cause disproportionate economic harm to U.S. interests,” the agency said.
Along with the redetermination, or remand results, the Biden administration also filed a motion to correct the administrative record, asking the court to accept nine documents that it said shaped the third and fourth listings under Section 301 during the Trump administration’s escalation of trade tensions with China between 2018 and 2019.
“Upon drafting the remand results as ordered by the court, USTR determined that additional documents were directly or indirectly considered in the process of issuing List 3 and List 4,” USTR Associate General Counsel Megan Grimball said in a declaration accompanying Monday’s motion.
Among the documents attached to USTR’s motion were several Federal Register notices, starting with the one announcing the agency’s investigation into “China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation” in August 2017.
Most of the documents USTR is now seeking to add to the record were issued in relation to the initial investigation of the first sets of tariffs.
“USTR was aware of the contents and indirectly considered Exhibits C to H in the process of issuing List 3 and List 4. Thus, these documents should have been included with the administrative record that was filed on April 30, 2021,” Grimball said.
The agency previously tried to correct the record earlier this year, asking the court to add a presidential statement from June 2018 and a supplemental Section 301 report issued that same year.
The panel agreed to add the president’s statement but balked at the supplemental report, with Chief Judge Mark A. Barnett writing in the court’s April opinion that it “could not have been directly or indirectly considered by the USTR in reaching its decision to issue Final List 3 because the document did not exist at the time.”
The government is also seeking to add two press releases that accompanied the issuance of the List 3 and List 4 tariffs.
Representatives for USTR and the importers did not respond to requests for comment.
The importers in the Section 301 test case are represented by Matthew R. Nicely, Pratik A. Shah, James E. Tysse, Devin S. Sikes, Daniel M. Witkowski and Sarah B.W. Kirwin of Akin Gump Strauss Hauer & Feld LLP.
The government is represented by Brian M. Boynton, Jeanne E. Davidson, L. Misha Preheim, Justin R. Miller, Jamie L. Shookman, Sosun Bae and Ann C. Motto of the U.S. Department of Justice‘s Civil Division, Megan Grimball, Philip Butler and Edward Marcus of the Office of the U.S. Trade Representative’s Office of General Counsel and Paula Smith, Edward Maurer and Valerie Sorensen-Clark of U.S. Customs and Border Protection.
The consolidated case is In re: Section 301 Cases, case number 1:21-cv-00052, in the U.S. Court of International Trade.
–Editing by Michael Watanabe.
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