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On July 6, 2021, the U.S. Court of International Trade (CIT) issued an <a href="https://filehost.thompsonhine.com/uploads/CIT_Section_301_PI_Decision_136d.pdf" target="_blank" rel="noopener">opinion</a> granting the Plaintiffs&rsquo; motion for a preliminary injunction in the ongoing China Section 301 tariff litigation. The preliminary injunction suspends liquidation of unliquidated entries subject to List 3 and List 4A Section 301 duties, which, the Plaintiffs allege, are not authorized under the original investigation of the U.S. Trade Representative (USTR) into China&rsquo;s actions adversely affecting U.S. intellectual property rights, innovation, or technology development.
The two-judge majority opinion states that the Plaintiffs &ldquo;demonstrated they will likely suffer irreparable harm because their entries of subject merchandise will liquidate absent an injunction.&rdquo; In addition to the potential unavailability of reliquidation or receiving any refund, the majority opinion notes that the group of U.S. government defendants failed &ldquo;to meaningfully dispute that liquidation will cause harm that cannot be undone and instead argues that any unlawfully collected duties would be forever unrecoverable.&rdquo; While stating that the CIT is granted broad authority to order appropriate relief, the opinion notes that several U.S. Court of Appeals decisions have &ldquo;cast sufficient doubt as to the scope of that authority&rdquo; and, until the higher court makes the scope of that authority clear, the CIT &ldquo;must conclude that liquidation will result in irreparable economic harm.&rdquo; As a result, the &ldquo;Plaintiffs&rsquo; interpretation of the statute raises serious and substantial questions about the scope of the USTR&rsquo;s statutory authority to act, which should be resolved via full litigation of the merits of these claims.&rdquo;
In ordering the suspension of liquidation, the CIT found that such an action &ldquo;maintains the status quo: the Government will still collect the duties pending the merits determination, but as liquidation is the final computation of duties, their finality is delayed.&rdquo; Thus, if &ldquo;Plaintiffs are unsuccessful in their challenge, the Government will not lose any revenue.&rdquo; The CIT&rsquo;s <a href="https://filehost.thompsonhine.com/uploads/CIT_Section_301_PI_Order_e73c.pdf" target="_blank" rel="noopener">order</a> requires the Plaintiffs to take the following steps in order to obtain suspension of liquidation of their unliquidated entries:
<ul>
<li>the government must meet with the Plaintiffs&rsquo; steering committee within seven days of the order to discuss the establishment of the repository for any unliquidated entries,</li>
<li>the government must establish such a repository within 14 days of the order,</li>
<li>any plaintiff requesting suspension of liquidation must provide (i) its full Importer of Record (IOR) number(s), including any suffix(es); (ii) the case/court number and filing date of the Section 301 complaint as well as the CBP Center and team assignment (if known); and (iii) the entry number and date of entry for any entries where suspension of liquidation is to be requested,</li>
<li>the government is enjoined during the remainder of this litigation from liquidating any entries for which they received a request for suspension of liquidation, unless within 14 days of receiving such a request, and at their option, the government stipulates to refund any duties found to have been illegally collected and notifies the Plaintiffs of such stipulation,</li>
<li>the government is temporarily restrained for 28 days from July 6, 2021 from liquidating any entries, and that should any subject entry be inadvertently liquidated during this 28-day period, such entry must be returned to unliquidated status,</li>
<li>any entry for which liquidation is suspended under the July 6, 2021 order will be liquidated in accordance with any final court decision, and</li>
<li>any entry inadvertently liquidated by CBP in contravention of the order must be returned to unliquidated status.</li>
</ul>
The parties will next appear before the CIT for a status conference on July 15, 2021.
Chief Judge Mark Barnett dissented from the opinion, arguing that, while he agreed with much of the analysis, the Plaintiffs failed to establish a likelihood of irreparable harm because the CIT has the authority to order refunds. Much of Chief Judge Barnett&rsquo;s dissent is based on precedent that there is &ldquo;no more than a remote chance that the appellate court would find that the [CIT] is not empowered to provide relief with respect to any liquidated entries.&rdquo;

core/freeform

SmarTrade

Senior Legislative and Regulatory Policy Advisor

Scott E. Diamond

International Trade

CIT Preliminarily Suspends Liquidation of Certain Entries Subject to China Section 301 Duties