Judges Withhold Questions in Advance of Section 301 Oral Argument

The massive Section 301 litigation that inundated the U.S. Court of International Trade since the first cases were filed 16 months ago enters a critical new phase Tuesday when oral argument is scheduled for 10 a.m. EST before the three-judge panel of Mark Barnett, Claire Kelly and Jennifer Choe-Groves. Virtually all the thousands of complaints seek to vacate the Lists 3 and 4A tariffs on Chinese imports and get the duties already paid refunded with interest on grounds that the Office of the U.S. Trade Representative overstepped its tariff-wielding authority under the 1974 Trade Act and violated protections in the 1946 Administrative Procedure Act (APA) against sloppy federal agency rulemakings.

Chief Judge Barnett at a Nov. 10 status conference indicated the panel “more than likely” would issue questions up to a week in advance of oral argument to guide the parties during the proceeding. But no questions had materialized in docket 1:21-cv-52 through midday Monday, leaving lawyers with active Section 301 cases to speculate what the panel’s silence might mean. One attorney cautioned not to read into it. Another saw it as a signal that the panel may be nearing a decision on the merits. “If that’s the case,” said the second lawyer, “we should expect the questions asked at oral argument to be more confirming something the judges think than getting answers to open questions.”

The court’s opinion ultimately may turn on how the panel interprets USTR’s Section 307 modification authority under the Trade Act. At stake is whether USTR was within its legal bounds to impose the Lists 3 and 4A duties without launching a new Section 301 investigation into China's allegedly unfair trade practices. Barnett indicated at the November status conference that the panel wouldn't give the parties time limits during oral argument, but expected them to be "concise and direct" in arguing their cases.

“Reading the modification provision as a whole confirms that Section 307(a)(1)(C) permits only reductions, not increases, in tariff actions,” Akin Gump lawyers for test-case plaintiffs HMTX Industries and Jasco Products told the court Jan. 10. “Section 307(a) of the Trade Act unambiguously supports that the word ‘modify’ permits an increase in tariffs,” responded DOJ Jan. 20. “To imply a limitation permitting only a decrease in tariffs would be inconsistent with section 307(a)(1)(B), and would require adding language that Congress omitted in section 307(a)(1)(C).”

Three parties filed amicus briefs in the case at the court’s Aug. 9 deadline, and they will get seats at the table during Tuesday’s oral argument. One of the briefs, filed by Morrison & Foerster on behalf of a coalition of seven trade associations, including CTA and the National Retail Federation, said “amici agree” with HMTX and Jasco that USTR “exceeded its statutory authority” when imposing Lists 3 and 4A. “But even assuming that USTR had statutory authority to do so,” argued the brief, “it was not free to act without providing stakeholders an opportunity for meaningful comment and a reasoned explanation for its action,” as the APA required.