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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 11 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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On May 14, 2021, the U.S. government defendants in the ongoing Court of International Trade (CIT) litigation over Section 301 tariffs on certain imports of Chinese products filed their <a href="https://filehost.thompsonhine.com/uploads/USG_Opposition_to_Prelminary_Injunction_67ad.pdf" target="_blank" rel="noopener">opposition to the plaintiffs&rsquo; motion for a preliminary injunction</a> that would suspend collection of these tariffs on imports covered by List 3 and List 4A as implemented by the Trump administration. See Update of <a href="https://www.thompsonhinesmartrade.com/2021/05/plaintiff-group-in-china-section-301-tariff-refund-litigation-seeks-preliminary-injunction-on-liquidation-of-list-3-and-4a-entries/">May 3, 2021</a> for details on the plaintiffs&rsquo; motion). In its opposition, the government argued that the plaintiffs &ldquo;cannot demonstrate&rdquo; any of the four required factors: (1) they have not demonstrated a likelihood of success on the merits; (2) the public interest and balance of hardships &ldquo;weigh heavily in favor of the United States&rdquo; and compel denial; (3) plaintiffs have not demonstrated irreparable harm; and (4) implementing an order to suspend liquidation of the millions of entries &ldquo;would impose an enormous administrative burden.&rdquo;
Broadly, the U.S. government&rsquo;s argument rests on its claims that plaintiffs have a &ldquo;flawed view&rdquo; of section 307 of the Trade Act of 1974 and that the U.S. Trade Representative (USTR) has the authority to modify an action because the USTR otherwise would be rendered &ldquo;a completely ineffective negotiator&rdquo; in instances where the offending country refused to cease its unlawful activities or retaliated. It is undisputed, the U.S. government argued, that China refused to initially change its practices after the implementation of Section 301 tariffs on Chinese products appearing the USTR&rsquo;s Lists 1 and 2, and only from the increased scope of covered products and modifications under Lists 3 and 4A did China engage in serious negotiations. Referencing U.S. Court of Appeals for the Federal Circuit precedent, the government argued that &ldquo;[i]n international trade controversies of this highly discretionary kind &mdash; involving the President and foreign affairs ... [f]or a court to interpose, there has to be a clear misconstruction of the governing statute, a significant procedural violation, or action outside delegated authority.&rdquo; The opposition brief stated that the plaintiffs have failed to establish any violation of the Trade Act of 1974, much less a &ldquo;clear misconstruction.&rdquo;
The U.S. government&rsquo;s argument also focused on the burden that would be placed on U.S. Customs and Border Protection (CBP), which was supported by a <a href="https://filehost.thompsonhine.com/uploads/CBP_Declaration_9e97.pdf" target="_blank" rel="noopener">declaration</a> from a CBP official, to gather and organize the necessary entry data and implement an order suspending the liquidation of millions of entries subject to the Lists 3 and 4A tariffs. On this point, the government argued that the plaintiffs&rsquo; claims of harm in paying these tariffs have been undermined by the plaintiffs themselves, who waited more than a year before challenging these tariffs before the CIT. As of March 31, 2021, the government highlighted, more than 12.7 million entries have been made that are subject to these Section 301 tariffs under Lists 3 or 4A. The manner in which the entry information is entered by the importers, the government claimed, would not allow for automatic suspension of the duties but would be &ldquo;an extremely resource-intensive and burdensome task&rdquo; that would be an ongoing exercise for an agency with &ldquo;limited resources&rdquo; and &ldquo;competing priorities.&rdquo; As a result, the U.S. government argued, the balance of hardships between plaintiffs and the government strongly favors denying the motion for a preliminary injunction.
If the CIT were to grant the motion, the U.S. government defendants offered an <a href="https://filehost.thompsonhine.com/uploads/Alternative_Proposal_5939.pdf" target="_blank" rel="noopener">alternative proposed order</a> that would require (1) the plaintiffs&rsquo; steering committee within 30 days of the order to provide a &ldquo;spreadsheet&rdquo; with importer of record numbers and case information from each plaintiff and (2) the government, in turn, within 90 days of receipt of that spreadsheet to implement the suspensions but not &ldquo;to return any entries that liquidate during that 90-day period to unliquidated status.&rdquo; During the litigation, according to the proposed order, the plaintiffs&rsquo; steering committee would be required to update the spreadsheet every 30 days, triggering the 90-day waiting period process each time.

core/freeform

SmarTrade

Senior Legislative and Regulatory Policy Advisor

Scott E. Diamond

International Trade

U.S. Government Files Opposition to Motion for Preliminary Injunction in CIT Section 301 Tariff Refund Litigation