On Friday, November 4, 2022, the government defendants in the ongoing Court of International Trade (CIT) litigation challenging the validity of the China Section 301 tariffs filed their response to the comments of the plaintiff group and amici curiae on the remand explanation of the Office of the U.S. Trade Representative (USTR).  In filing their response, the government defendants argue that the CIT should sustain the remand as the USTR “did not act in an arbitrary or capricious manner when, at the specific direction of the President, it imposed additional tariffs on merchandise imported from [China]” pursuant to Section 301 of the Trade Act of 1974.

In their response, the government defendants claimed that the USTR’s remand explanation responded “to all significant comments”, satisfying the USTR’s obligations under the Administrative Procedure Act (APA) and complying with the CIT’s instructions in the April 1, 2022 remand order, which only required that the USTR “state the main reasons for its decision and indicate it has considered the most important objections.”  The government defendants argue  that the USTR has complied with all instructions provided by the CIT, including:

  • Inclusion of Exclusion of Specific Tariff Subheadings –  reflecting that USTR “balanced numerous factors” in determining the potential benefit or harm of additional duties.
  • The Level of Duty – showing that the USTR balanced concerns of potential harm of the List 3 and 4A tariffs and the amount of those duty rates.
  • The Aggregate Amount of Trade – stating, among other things, that “no commenter disputed that the Lists 1 and 2 actions had not been effective.”
  • Harm to the Consumers and the U.S. Economy – noting that “mitigating harm to U.S. consumers was an important consideration in developing and finalizing lists of products that would be subject to additional duties.”
  • The Legality and Efficacy of the Tariffs – arguing that, in initially responding to the Remand Order, the USTR provided a “fuller explanation of how it evaluated public comments on the efficacy of additional tariffs based upon its experience negotiating with China,” and how it balanced those comments with the President’s specific direction.
  • Alternatives to Additional Section 301 Tariffs – indicating that in responding to comments on the efficacy and legality of additional tariffs, “and by explaining that after the close of public comment, the President had directed it to take a specific final action.”

Per the remand order, the government defendants further claimed in their response that they addressed “whether and how” the USTR modified Lists 3 and 4 at the direction of former President Donald Trump.  This process included consideration of public comment and inter-agency recommendations to determine which duties would “not be practicable or effective to eliminate China’s acts, policies, and practices,” and which would cause “disproportionate economic harm.”  This also included the need to follow Presidential directives in guiding the aggregate amount of trade and duty rate.

In rebuttal to the comments of the plaintiff group and amici curiae, the government defendants argued that they provided “further explanation” per the CIT’s remand order and may “further explain a prior justification” in accordance with a U.S. Supreme Court’s 2020 decision – despite the plaintiff group “contending that USTR could not re-examine the record and could instead only parrot existing statements in the administrative record” and that USTR “engaged in impermissible, post hoc reasoning.” The government defendants added that, according to case law, the “USTR is presumed to have considered all of the issues and all of the evidence in the record in making its decision” and that the USTR in this investigation based its comments and responses on materials available on the full record.  In reply to the plaintiff group’s criticism that the USTR relied on presidential direction as a significant factor in its trade actions in lieu of responses to significant comments, the government defendants explained that this was a factor among many and that they were complying with the CIT’s request in its remand order to explain how it considered the President’s instruction.

To conclude, the government defendants claimed that not one of the plaintiff group’s objections carries the plaintiff group’s burden of establishing that Lists 3 and 4A violate the APA, and that the remand should be sustained. Once the plaintiff group files its short – no more than 10 pages – reply due on December 5, 2022, the CIT will issue its final ruling.  The CIT is under no deadline to issue a final ruling.

See Update of September 15, 2022 for details on the plaintiff group’s comments in response to the USTR’s remand explanation. See also Update of August 2, 2022 for more details on the USTR’s Remand Results explanation and Update of April 6, 2022 for the CIT’s decision directing such further explanation.