USTR Improperly Considered Withdrawn Statements on Section 301 Exclusion for Water Coolers, Importer Says

The Office of the U.S. Trade Representative erred when it decided not to reinstate a Section 301 tariff exclusion on water coolers even though the only party in opposition to the exclusion subsequently withdrew its comments, DS Services of America said in its Feb. 27 filing on the remand results at the Court of International Trade (DS Services of America v. United States, CIT # 22-00157).

DS Services had requested the exclusion, and filed suit after it was denied despite Natural Choice withdrawing its comment that it could make the covered water coolers. DS Services argued that the USTR violated the Administrative Procedure Act because the office failed to both explain its decision and to back up the decision with substantial evidence, given Natural Choice's withdrawal. USTR then requested a voluntary remand to reconsider the item (see 2209010023). In December 2022, USTR released its remand results, in which it stuck by its decision not to reinstate the tariff exclusion for the water coolers (see 2212150043).

USTR’s decision "erroneously fails to consider that the only objection to the reinstatement of the exclusion, and the only possible justification ... not to reinstate the exclusion, was withdrawn," DS Services said in its response brief. “USTR claims that Natural Choice 'confirmed that it domestically produced water coolers, that, if imported, would be covered by the Water Cooler Exclusion.'” However, Natural Choice admitted that it does not know what tariff classification applies to its products, so "at best, Natural Choice, and by extension USTR, is speculating that Natural Choice’s water coolers would be eligible for the Water Cooler Exclusion," DS Services argued. USTR also ignored evidence that Natural Choice actually makes water filters and not water coolers, making those products ineligible as substitutes, DS Services said.

"Most importantly," DS Services argued, USTR's decision to include Natural Choice's statement as part of the record despite the company's withdrawal and questionable usefulness, was improper. "Natural Choice’s comment was the only comment from a domestic producer on the record opposing reinstatement of the Water Cooler Exclusion. By withdrawing its comment, Natural Choice removed the only possible justification for USTR’s initial decision not to reinstate the Water Cooler Exclusion."