As Section 301 List 4A Tariff Notice Hits Two-Year Anniversary, CIT Filings Pace Ticks Up

There’s been a steady recent uptick in the volume of Section 301 complaints at the Court of International Trade, but lawyers with active cases told us they're not sure if that has anything to do with the two-year anniversary of the Federal Register notice on Aug. 20, 2019, that put the List 4A tariffs into effect on Sept. 1, 2019, on goods from China. All the roughly 3,800 complaints inundating the court, and counting, seek to vacate the lists 3 and 4A tariffs and get the paid tariffs refunded on grounds that the duties are unlawful under the 1974 Trade Act and violate 1930 Administrative Procedure Act protections against sloppy rulemakings.

Trade Law Daily analyzed court records and found on average that 4.54 cases a day were filed in the first 13 business days of August, more than double the average daily volume of 2.05 cases in all of July and up significantly from the 0.91 average in all of June.

The court’s timeliness rules require an importer to file an action “within two years after the cause of action first accrues.” Attorneys pursuing the most conservative of strategies have tied the accrual date to FR publication of the Office of the U.S. Trade Representative tariff notices. Other strategies are based on starting the two-year clock when the tariffs actually take effect, while others say the clock starts from the date when an importer actually first paid the duties.

An Aug. 18 complaint from TEAC America, the high-end audio components vendor, typified the increasing number of Section 301 cases we observed that rely on multiple layers of fallback arguments to establish timeliness. “Plaintiff’s cause of action accrued at liquidation, when the final assessment of duties was fixed,” its filing said. The U.S. subsidiary of the age-old Japanese audio manufacturer once famous for its cassette decks still maintains a limited-distribution business in North America for component amplifiers and preamps. It imports "various goods" with lists 3 and 4A tariff exposure, the complaint said. Voxx subsidiary 11 Trading Co. took over exclusive U.S. distribution of the TEAC product line from Onkyo USA in April.

TEAC's challenge "properly encompasses all liquidations of entries assessing List 3 and List 4A duties that occurred in the two years prior to the date of this Complaint and all subsequent liquidations,” its filing said. Alternatively, argued TEAC, “Plaintiff’s claims accrued upon its deposit of List 3 and List 4A tariffs at the time of entry, and thus Plaintiff has timely filed this action with respect to all such entries filed within the previous two years of this action.”

As a final additional fallback, TEAC’s “cause of action with respect to List 4A entries accrued on September 1, 2019,” the date those tariffs took effect, it said. “Plaintiff has timely filed this complaint with respect to all entries made after this date.” The court's opinion, should it side with the plaintiffs that the lists 3 and 4A tariffs are unlawful, ultimately will set the timeliness bar for all the 3,800 cases filed, attorneys we polled said. Crowell & Moring represents TEAC in the complaint. It has a seat on the 15-member plaintiffs' steering committee.