Trade Court Gives USTR Another Shot to Consider Water Cooler Section 301 Exclusion

The Court of International Trade in a Sept. 1 order granted the Office of the U.S. Trade Representative's motion to voluntarily reconsider its decision to not reinstate an exclusion to the Section 301 duties on water coolers from China. Plaintiff DS Services of America, doing business as Primo Water North America, didn't oppose the motion. USTR said it wanted to reevaluate its decision given Prime Water's charges of the agency's alleged violation of the Administrative Procedure Act and Natural Choice's request to withdraw its opposition to the reinstatement of the exclusion (DS Services of America v. U.S., CIT #22-00157).

Primo Water is an importer of water coolers that fit under Harmonized Tariff Schedule subheading 8418.69.01. The water coolers were hit with Section 301 duties under secondary subheading 9903.88.01. In December 2018, USTR granted an exclusion covering drinking water cooler products under subheading 8418.69.0120, then extended the exclusion in December 2019.

In October 2021, USTR said it was considering possibly reinstating the duties. The agency then opened comments on the item, receiving one from Natural Choice opposing the reinstatement of the exclusion, arguing that it can make the covered water coolers. As a result of the comment, USTR didn't reinstate the water cooler exclusion, prompting Primo Water's lawsuit.

The plaintiff argued USTR violated the APA in failing to reinstate the exclusion because it didn't explain its decision to not reinstitute the exclusion and failed to back up it up with substantial evidence. USTR then requested a voluntary remand to reconsider the item. "In light of the allegations in the complaint regarding Natural Choice Corporation’s production of certain water coolers, and Natural Choice Corporation’s request to withdraw its comment opposing reinstatement of the exclusion, we seek a voluntary remand for USTR to consider whether these circumstances call for an opening of the record to consider Natural Choice Corporation’s withdraw request and whether a change in the determination regarding the Water Cooler Exclusion is warranted in light of the allegations in the complaint," the motion said.

Judge Mark Barnett granted the request. USTR now has 90 days to file remand results with the court.