CTA Has ‘Plausible’ Case to Block Tariffs, but USTR’s ‘Discretion’ Broad, Experts Say
The Consumer Technology Association “will decide our best course of action if and when the President imposes retaliatory tariffs,” said CTA President Gary Shapiro when asked if the association will sue the Trump administration to block proposed Section 301 tariffs from taking effect. The trade group filed its “objections” to the third tranche of Trade Act Section 301 tariffs on Chinese imports in Sept. 6 comments that also questioned the duties’ legality (see 1809070025).
CTA in the document cited no case law backing its argument that U.S. Trade Representative Robert Lighthizer will have overstepped his authority if he orders the imposition of the third tranche of tariffs. “We're looking into all of that, and basing the argument for now on the reading of section 301,” emailed Sage Chandler, CTA vice president-international trade. “We believe the administration has the authority to launch an investigation, and find damage, but not to continue into an unfettered trade war, based on the reaction of china to its initial findings,” Chandler said. A Congressional Research Service report from earlier this year noted that the Court of International Trade has jurisdiction over challenges to Section 301 tariffs and that CIT has historically given wide deference to the USTR (see 1804100056).
In the current trade war with China, “the US is not using 301 to oppose actions of a foreign country that violate US trade agreement rights, but instead that involve actions not regulated in existing [World Trade Organization] rules, but which the US still finds unreasonable or unfair,” emailed Cornell Law School professor John Barcelo. On the “plausibility of claims that the President does not have authority to continue a tit for tat trade war under section 301, without first obtaining a further USTR investigation, I would say I know of no precedent for this situation,” Barcelo told us. “Still, the arguments to that effect sound seem plausible to me -- that is, that the President needs a further USTR investigation and finding. Though presumably USTR would easily find Chinese retaliation to be unreasonable or unfair.”
Jennifer Hillman, an international trade law expert at Georgetown Law Center, agrees “that the petitioners in the case have made strong arguments” about the USTR overstepping his authority, she said in an email. “The difficulty is the degree to which the statute gives broad discretion to the President and USTR in a way that makes it hard to challenge their actions, coupled with the strong evidence that China has indeed engaged in widespread [intellectual property] theft, forced tech transfers and such. So the substance of the 301 report is strong but the tactic of using ever escalating tariffs to address it is not.”
Questioning the USTR’s authority under Section 301 is “certainly a justification" for a court challenge, said consultant Robert Heiblim, incoming chairman of CTA’s Small Business Council. "And I suspect that we'll see it, whether it's CTA or they join with the National Retail Federation or one of those many trade organizations that are all pretty much aligned against this," he said.
Heiblim, who sits on CTA’s 45-member board of industry leaders, hasn't heard anything in that capacity from the association "about next steps" in the ongoing legal strategy, he told us. The industry-leaders board doesn’t set policy, nor does it get involved in CTA’s “day-to-day,” as the higher-tier executive board does, Heiblim said. Any decision to mount a court challenge "almost certainly” would come after an authorization vote of the executive board, he said.