Industry News

Section 301 Argument Summary

Feb. 8, 2022
By: Lawrence M. Friedman

Yesterday, a three-judge panel of the Court of International Trade held an oral argument to consider whether the United States Trade Representative had proven that it adequately considered significant public comments before imposing Section 301 duties on products from China covered by “List 3” and “List 4A.” Most of those comments asked the government to exclude certain products and a smaller number of comments questioned both the aggregate amount of trade to be covered and suggested possible alternatives to the imposition of tariffs. In the argument, counsel for the plaintiffs agreed that the record shows careful consideration of whether to include or exclude individual items.

However, plaintiffs argued that the USTR’s report to the Court lacked any significant discussion of the other two categories of comments and no evidence that the USTR gave serious consideration to the issues raised in those comments.

The discussion largely centered on whether the USTR could show that it exercised any independent judgment with respect to the amount of trade to be subject to the duties. Counsel for the United States carefully explained that the USTR acted at the direction of President Trump while also fulfilling its statutory obligation to craft a remedy designed to influence Chinese policy. Essentially, the Government stated that the President suggested $200 billion for List 3 and $300 Billion (initially) for List 4 and that the USTR agreed with those numbers. There is, however, little or no evidence of that in USTR’s report to the Court. The Court probed whether the United States has additional documents showing its consideration of these issues.

What will happen next is not clear. Plaintiff’s argued that the USTR has already had a second opportunity and 90 pages to explain its actions and that no further opportunity will change the outcome. The plaintiffs, therefore, asked the Court to “vacate” the rule, which may result in an order directing the United States to refund the List 3 and List 4A duties paid.

The Court might also find that the United States has provided sufficient evidence of its consideration of the comments. This is a relatively low bar. In that event, the Court will uphold the agency’s action, affirming the collection of Section 301 duties.

A final option is for the Court the once again order the USTR to review its records and more fully explain how the record indicates that the agency considered comments relating to the amount of trade to be subject to the duties and alternatives to the duties.

There is no set time in which the Court of International Trade must act. However, given the public attention to this matter, we expect a relatively quick decision. Regardless of the outcome, this case will almost certainly be appealed to the U.S. Court of Appeals for the Federal Circuit and, very likely, to the U.S. Supreme Court.