US Says CIT Has No Jurisdiction to Reweigh Section 301 Modifications From USTR, President

The U.S. on Oct. 15 urged the Court of International Trade to dismiss a suit from importer Retractable Technologies challenging the recent 100% increase of Section 301 tariffs on needles and syringes from China. The government said the trade court lacks jurisdiction to "second-guess the President's findings" and discretion in telling the U.S. trade representative to modify the Section 301 action and that the company failed to state a claim on which relief could be provided (Retractable Technologies v. United States, CIT # 24-00185).

Retractable filed the case last month seeking an injunction and temporary restraining order against the rate hike, claiming that the tariffs could send the company out of business (see 2409270025). The importer took issue with the fact that the duties came as part of a supply chain resilience inquiry conducted by USTR rather than as part of the recently completed four-year Section 301 review.

The company said the duties exceeded the government's Section 301 modification authority, since it wasn't based on "any section 301 inquiry" as required. The complaint also said USTR failed to consult with any representative of Retractable in violation of the Trade Act of 1974.

In its motion to dismiss, the U.S. said CIT doesn't have the jurisdiction to review the president's exercise of discretion to tell the USTR to add tariffs on needles and syringes. The government claimed there's "no meaningful dispute that the statutory predicates for modification" here are based on the president's factual findings. In particular, the president here said China's continued attempts to acquire foreign technology and intellectual property added to the burden on U.S. commerce.

"Nothing more is required to justify the modification," the brief said.

The government added that CIT doesn't have jurisdiction to review the challenge to USTR's recommendation to the president regarding what Section 301 tariff modifications to make. The Supreme Court has held that where the president has complete discretion on whether to take an action in the first place, the courts are "without authority to review the validity of an agency recommendation to the President regarding such action." This is "precisely the case here," where the president has discretion to direct all "appropriate and feasible" action when modifying Section 301 duties, the brief said.

The U.S. added that Retractable failed to state a claim regarding the USTR's implementation of the president's directive, arguing that "once modification is appropriate, the statute authorizes imposition of tariffs on goods regardless of whether they were involved in the underlying unfair trade practice." As a result, the question is whether the action was "appropriate," which is a "discretion-heavy determination" delegated to USTR.

As the agency explained, the modification put "tariffs on 'categories of products targeted by China for dominance and/or sectors where the U.S. recently made significant domestic investments,'" the brief said. Retractable itself confirms that needles and syringes fall within this authority, claiming that during the COVID-19 pandemic, it and the government invested around $138 million to set up new production lines in Texas to "'one day enhance domestic manufacturing capacity.'"

The government said Retractable also failed to state a claim in arguing that USTR didn't engage in consultation with representatives of the domestic industry. The U.S. said the importer "misunderstands the meaning of 'representatives' of the domestic industry concerned," since the statute doesn't require consultation with every member of the domestic industry. In addition, the statue delineates between the domestic industry and interested parties that can present their views. The statute isn't meant to be expanded to cover "domestic importers of foreign merchandise," the brief said.

The U.S. also contested Retractable's bid for injunctive relief, claiming that it can't show irreparable harm. The sole fact that the company "will have to sell merchandise at a loss" isn't enough. "Nothing in the section 301 statutory scheme excuses payment of duties based on financial hardship alone," and allowing injunctive relief on this basis "would undercut the very purpose of the section 301 actions," which is to eliminate China's unfair trade practices, the brief said.