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On June 1, 2021, the U.S. Department of Justice (DOJ), representing U.S. government defendants, filed its <a href="https://www.thompsonhinesmartrade.com/wp-content/uploads/sites/783/2021/06/USCIT-Section-301-Motion-to-Dismiss-June-1-2021.pdf" target="_blank" rel="noopener">dispositive motion</a> &ndash; a motion to dismiss and, in the alternative, a motion for judgment on the agency record &ndash; in litigation at the U.S. Court of International Trade (CIT) involving the potential refund of Section 301 tariffs placed on certain imports of Chinese products. The motion provides both a detailed review of the relevant statutory framework surrounding the Office of the U.S. Trade Representative (USTR) and section 301 of the Trade Act of 1974 and a lengthy factual discussion of the investigation that resulted in the tariffs.
According to the DOJ&rsquo;s motion, the plaintiff group&rsquo;s allegations that the U.S. government violated the Administrative Procedure Act (APA) fail because the USTR was acting at the direction of former President Donald Trump and the president is not subject to the APA. As the DOJ explained, the USTR issued Lists 3 and 4A, which identify the products subject to the tariffs at issue, pursuant to presidential directives and these discretionary directives to the USTR do not constitute a reviewable agency action. The DOJ also claimed that the plaintiff group has not challenged an agency action but the action of a president in directing the USTR and the USTR did not exercise independent discretion in determining to impose additional duties pursuant to Lists 3 and 4A (as well as in increasing or reducing tariff rates on those lists). The DOJ further argued that the USTR&rsquo;s actions were &ldquo;wholly discretionary and thus non-justiciable because the statute contains no &lsquo;judicially discoverable and manageable standard.&rsquo;&rdquo; Since the president&rsquo;s decision and the USTR&rsquo;s implementation of that decision are &ldquo;entirely discretionary,&rdquo; the DOJ stated, the action is non-reviewable as it would require the CIT to &ldquo;move beyond the areas of judicial expertise.&rdquo;
The DOJ also argued that the plaintiff group has misconstrued the text and congressional intent of sections 301 and 307 of the Trade Act of 1974 and that modification of the USTR&rsquo;s actions after China refused to cease its unfair trade practices was appropriate and authorized. The DOJ wrote that the plaintiff group&rsquo;s mistaken reading of the statute is &ldquo;fundamentally inconsistent with the purpose of taking action under section 301 in the first place, which is taking all &lsquo;appropriate and feasible action&rsquo; within the power of the President&rdquo; to eliminate the unfair trade practice, policy or act. If the president and the USTR had no authority under section 307 to modify any action, the DOJ explained, such an interpretation would only &ldquo;incentivize other countries to refuse to negotiate and take wide-ranging retaliatory measures knowing the President and the USTR would be powerless to respond without conducting an entirely new investigation.&rdquo;
Even if the CIT were to reject these arguments, the DOJ claimed that the government&rsquo;s actions are exempt from the APA&rsquo;s notice-and-comment requirements because they fall within the &ldquo;foreign affairs function&rdquo; exception since this was an informal rulemaking and &ldquo;part of the negotiation of an international trade agreement.&rdquo; According to the DOJ, the USTR fulfilled all of the statutory requirements under section 307 of the Trade Act of 1974 by seeking comments and holding public hearings. Alternatively, the DOJ argued that the government still complied with APA requirements and that the government&rsquo;s actions were not arbitrary and capricious.
If the CIT doesn&rsquo;t dismiss the case(s) as non-judiciable and proceeds to the merits, the case(s) will likely turn on how the CIT interprets the executive branch&rsquo;s breadth of authority to modify its actions under section 307.
The plaintiff group&rsquo;s response brief is due August 2, and amicus briefs are due August 9.

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International Trade

U.S. Government Defendants at CIT File Motion to Dismiss China Section 301 Tariff Refund Cases