The Department of Justice (DOJ) has filed a “master answer” to the massive Section 301 litigation overwhelming the Court of International Trade (CIT). Thousands of complaints and cases are seeking to get list 3 and 4A Chinese tariffs vacated with duties refunded. Complaints have been coming in at the rate of about one a day, since mid-September, to join the nearly 4,000 on file. DOJ’s response is one of a series of “anticipated defenses” to litigation.

This is the DOJ’s first opportunity to defend against allegations that the Office of the U.S. Trade Representative (USTR) exceeded their Section 301 authority when imposing retaliatory lists 3 and 4A tariffs against Chinese products. Other allegations claim the Administrative Procedure Act was violated because of tariff rulemakings that lacked transparency.

The Answer

The DOJ’s answer argued that the Office of USTR, acting at the “direction” of President Donald Trump, had the authority under the 1974 Trade Act to impose the lists 3 and 4A Section 301 tariffs on Chinese imports.

Taking on Akin Gump’s complaint in the first-filed HMTX case DOJ stated, “the burden or restric­tion on United States commerce of China’s acts, policies, and practices that were the subject of the Section 301 action continued to increase” after the lists 1 and 2 tariffs were imposed, including after the yearlong investigation period ended.

“The previous actions taken in response to the Section 301 investigation proved to no longer be appropriate, as the actions were not effective in eliminating the unfair trade practices that were the subject of that investigation,” DOJ concluded.

The Trade Act does not limit USTR’s “modifications” or power to “merely delaying, tapering, or terminating actions,” DOJ stated.  Many attorneys have stated that establishing the connection between the Section 301 investigative report to lists 3 and 4A will be essential to DOJ’s defense.

DOJ said that a review of the president’s discretionary decisions, as well as the implementation of those decisions by USTR raises a “non-justiciable, political question.” They explained that case law gives USTR “substantial deference” to interpret the Trade Act, and the court as an agency that must abide by the APA. They are exempt from the statute’s notice-and-comment rulemaking requirements, as they qualify for the foreign affairs function exception.

What’s Next

Many attorneys have been waiting to see if the DOJ will support the plaintiff’s request for “interim relief” if importers succeed against the government. Interim relief would land plaintiff’s the guarantee that if the litigation is won, they will be granted full refunds of all tariffs paid. The DOJ was silent in its filling as to whether it will support plaintiff’s request for “interim relief”. Plaintiff’s lawyers have chosen the HMTX case to use as their only sample case.  

Statute says that the liquidation of an entry is final and binding for all parties unless it is protested within 180 days of liquidation. Many plaintiffs are or will be seeking refunds of List 3 duties on entries that have been liquidated and are far past the deadline for protests. However, Akin Gump has said they want a DOJ provision that plaintiffs will get their refunds, regardless of if entries have been protested or liquidated.

For further questions on Section 301 litigation, please contact Mohawk Global Trade Advisors.

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