Consumer Electronics Group Shopping Draft Complaint Among Trade Groups to Block Jan. 1 Tariff Hike

The Consumer Technology Association has hired Akin Gump to draft a complaint, which, if pursued in the Court of International Trade, would seek an injunction blocking the Section 301 tariffs on $200 billion worth of Chinese imports before the duties are scheduled to rise to 25 percent on Jan 1., said several sources familiar with CTA’s plans. The association is shopping the draft around with other anti-tariff trade groups, seeking their legal and financial backing to support a court challenge, the sources said.

Association staffers briefed CTA members on the strategy during an annual conference two weeks ago in Boston, the sources said. Though CTA hasn’t persuaded another trade group to “step up to the plate yet,” there’s time to win their backing because no court action would be contemplated before January, said one high-placed individual in the CTA membership. Only one trade groups whose opposition to the tariffs is well-documented commented. The Telecommunications Industry Association took itself out of the running, at least for now. "At this time TIA does not plan to join the litigation," the group emailed. CTA wouldn't confirm or deny the strategy of drafting the complaint or shopping it around to other trade groups.

Though CTA doesn’t feel “there’s a lot of profit” in taking the Trump administration to court, the tariffs do threaten to “really hurt” many members, said another individual who attended the Boston briefings. If it "becomes clear" that the hike to 25 percent will inevitably take effect as scheduled on Jan. 1, there will be mounting member pressure on CTA to pursue a court case because the cost increase would be more than any entity would be able to "absorb," the individual said: “I don’t think CTA will go it alone, so I think it’s in the hands of these other organizations.”

CTA used Akin Gump to draft the association’s Sept. 6 comments in docket USTR-2018-0026 in which it first floated the idea publicly of a possible legal challenge to the tariffs, based on arguments that the Office of the U.S. Trade Representative exceeded its authority under the 1974 Trade Act (see 1809070025). The statute doesn't permit the administration to use its original Section 301 investigation as a pretense to engage in an open-ended trade war, which is what CTA alleges the White House did when it imposed the third tranche of 10 percent tariffs Sept. 24, said sources familiar with the association’s legal arguments. CTA also alleges USTR violated statutory deadlines and exceeded its powers to modify the tariffs when it ordered them hiked to 25 percent, the sources said.

The third tranche was the administration’s response to Chinese retaliatory actions that post-date the appropriate action USTR took under the original Section 301 investigation, the sources said. There’s no precedent for that in the 44-year history of the Trade Act, they said. Nor is there much case law interpreting USTR’s authority under court challenges, several legal scholars previously said (see 1809170028). For CTA, 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 IP theft, forced tech transfers and such,” one scholar said.