Lawsuit Says USTR Went Beyond Authority by Extending Section 301 Tariffs to List 3 Goods

A vinyl tile supplier challenged the extension of tariffs to cover the third list of goods from China using Section 301 tariff authority, in a lawsuit filed Sept. 10 at the Court of International Trade. Represented by lawyers at Akin Gump, HMTX Industries and subsidiaries Halstead and Metroflor said the Office of the U.S. Trade Representative overstepped the Section 301 statute when it made more goods subject to the tariffs 12 months after the beginning of the investigation. The law doesn't provide authority for the government to “litigate a vast trade war for however long, and by whatever means, they choose,” the company said.

Section 304 of the Trade Act requires “USTR to determine what action to take, if any, within 12 months after initiation of that investigation,” HMTX said. “But USTR failed to issue List 3 (or subsequent List 4) within that window.” The administration also can't rely on authority to modify the tariffs because the statute “does not permit USTR to expand the imposition of tariffs to other imports from China for reasons untethered to the unfair intellectual property policies and practices it originally investigated under Section 301 of the Trade Act,” the company said. That's what happened “when they promulgated the List 3 duties in response to China’s retaliatory duties and other unrelated issues.”

Even if the existing tariffs were found to be “no longer appropriate,” as USTR claimed, “the Trade Act permits USTR only to delay, taper, or terminate -- not ratchet up -- the actions it has already taken,” it said. While the tile importers received an exclusion from the List 3 tariffs, that exclusion expired Aug. 7 (see 2008060056), the company said. “Since that time, however, Halstead and Metroflor have paid List 3 duties on all entries of vinyl tile made under HTSUS subheading 3918.10.1000.” The complaint asked the court to vacate the List 3 rulemaking and order the tariffs refunded with interest.

The USTR process for implementing the tariffs also violated the Administrative Procedures Act, it said. The agency “failed to provide sufficient opportunity for comment” when it required commenters to “submit affirmative and rebuttal comments on the same day,” it said. USTR also “failed to connect the record facts to the choices it made,” HMTX said. “Indeed, despite receiving over 6,000 comments, USTR said absolutely nothing about how those comments shaped its final promulgation of List 3. USTR’s preordained decision-making bears no resemblance to the standards that the APA demands.” USTR didn't comment.

Email ITTNews@warren-news.com for a copy of the complaint.