4 Law Professors Tell CAFC USTR Had No Authority to Impose Retaliatory Section 301 Tariffs

The Office of the U.S. Trade Representative's defense of its decisions to impose lists 3 and 4A Section 301 tariffs "makes a mockery of a detailed law in which Congress circumscribed what USTR may do and on what basis," four administrative and trade law professors said in an amicus brief. Filing at the U.S. Court of Appeals for the Federal Circuit July 24, the professors said USTR did not have the statutory authority to impose the retaliatory duties on $320 billion worth of Chinese goods because the statute did not allow retaliation to serve as the basis for the duties, nor did it allow the drastically larger price tag (HMTX Industries, et al. v. U.S., Fed. Cir. # 23-1891).

The four professors -- Raj Bhala from the University of Kansas Law School, Steven Charnovitz and Alan Morrison from the George Washington University Law School and Timothy Meyer from Duke Law School -- said that while USTR clearly had the authority to impose the lists 1 and 2 tariffs, the question is whether, before imposing vast additional duties, USTR must conduct a new investigation looking at whether China's retaliation rises to Section 301's substantive requirements. The amicus brief said that if USTR can do anything it wants "under the rubric of 'Modification'" as it says, "there would be no point in Congress providing detailed procedures" and defining categories of unreasonable foreign conduct in the law.

Congress said in the statute that USTR can modify prior discretionary Section 301 actions if the burden on U.S. commerce of the "denial rights, or of the acts, policies, and practices, which are the subject of such action has increased or decreased." This text centers on the basis for USTR's past action, which in this case was China's intellectual property theft, and it allows modifications if the burdens from those practices have increased. "But here, USTR made no finding of an increase in those burdens, and instead relied on the putative burden on U.S. commerce from a different source -- retaliatory tariffs," and imposed tariffs "far in excess of its original tariffs," without a finding as to the burden imposed by the Chinese retaliatory tariffs to which it was responding, the brief said.

This move "effectively eviscerates the careful restrictions that Congress established for taking action under section 301," the professors argued. USTR's construction of the statute clearly leads to "absurd results" since USTR was not authorized to impose new tariffs on billions of dollars worth of goods without a "meaningful investigation." In their opening brief, the appellants, led by HMTX Industries and Jasco Products Co., made similar claims, arguing that responding to retaliatory tariffs is not a justification as allowed by the law to impose the duties (see 2307180069).

The four professors said USTR's defense of its actions raises "serious delegation problems under recent Supreme Court precedent." The brief points to the high court's 2019 ruling in Gundy v. U.S., in which the petitioner claimed that Congress unconstitutionally delegated its authority to the attorney general by allowing him to decide whether the Sex Offender Registration and Notification Act applied retroactively. The Supreme Court upheld the delegation of authority, finding that the statute laid out an "intelligible principle" to guide the AG's discretion, which cleared the non-delegation doctrine.

The USTR, in contrast, said that Congress acted without imposing any "intelligible principle" to govern how the Section 301 modification authority is to be used, adding that it can impose any modification of any size without adhering to any statutory requirements.

The professors said this commits at least four violations of the non-delegation authority: (1) USTR clamors for the "open-ended, no standards claim of unfettered authority that would make the statute unsupportable" under the doctrine; (2) USTR's defense fails to read the statute's words in their context; (3) USTR failed to provide any governing principle that would show why Congress would have wanted to put guardrails on USTR action when it initially imposed the Section 301 action; and (4) it is "especially important to heed the statutory construction principle" during modification since it can be just as, or even more, consequential.