United States: CIT Holds Oral Argument In China Section 301 Tariff Refund Litigation

On February 1, 2022, a three-judge panel at the U.S. Court of International Trade (CIT) held oral argument in the China Section 301 tariff refund litigation to consider the government defendants' motion to dismiss and the plaintiffs' cross motion for judgment on the record. Arguments by both parties focused on three main issues: (1) justiciability; (2) the plain meaning of the relevant statute under Section 301 of the Trade Act of 1974; and (3) the applicability of the Administrative Procedures Act (APA).

Government's Argument

In support of its motion to dismiss, the government defendants argued that the Section 301 trade action and the resulting tariffs were "issued at the direction of the president" - a political act that is not reviewable by the CIT and outside of the APA process. The judges questioned the role of former President Donald Trump in the implementation of additional tariffs under Lists 3 and 4 (which were applied after the U.S. Trade Representative (USTR) issued its determination of injury in the amount of $50 billion covered by Lists 1 and 2). Other than arguing that the various Federal Register notices served as the president's directives, the government attorneys had to acknowledge that implementation was handled by the USTR.

The government defendants then argued that Sections 301 and 307 of the Trade Act of 1974 are "negotiating tools" and that plaintiffs' arguments that the Lists 3 and 4 actions and tariffs went beyond the intent of the statute would undermine the plain reading of the statutory language. Finally, the government argued that this Section 301 trade action is "unreviewable" under the APA given the exemption for matters involving the foreign affairs function of the United States. If the judges consider this argument, the government attorney argued the USTR nevertheless met the required threshold for providing notice, allowing public comment, and providing sufficient reasoning for its decisions.

Plaintiffs' Argument

In support of its motion for a judgment on the record, the plaintiffs argued that the actions taken by the president through the USTR are reviewable since it was the USTR that promulgated the lists and undertook formal agency actions to implement the Section 301 determination and tariffs against China. The plaintiffs' attorney then made several detailed arguments pertaining to the scope and congressional intent of Section 307 as to the USTR's authority to modify any Section 301 trade action, particularly since the promulgation of Lists 3 and 4 were not part of the original investigation. As to the applicability of the APA, the plaintiffs' attorney argued that the CIT does not even need to address the APA to support plaintiffs' position. Nevertheless, the attorney argued that with the thousands of comments filed, the USTR provided no meaningful discussion as to its reasoning and decision-making process. Noting that the term "reasonable consultation" may be vague, the attorney argued that it does not mean "you ask and ignore," and that in this instance, the USTR failed to provide any meaningful justification.

Amicus Parties

Two amicus parties offered brief arguments, and questioning by the judges was limited. However, these parties did raise one novel issue — the standing of parties who are not U.S. importers of record and their right to recovery.

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