Case 1:20-cv-00378-N/A Document 5 Filed 09/17/20 Page 1 of 19
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`UNITED STATES COURT OF INTERNATIONAL TRADE
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`DEL MONTE FOODS, INC.,
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`Plaintiff,
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`UNITED STATES OF AMERICA;
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`OFFICE OF THE UNITED STATES TRADE
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`REPRESENTATIVE; U.S. CUSTOMS &
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`BORDER PROTECTION,
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`Defendants.
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`________________________________________________:
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`COMPLAINT
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`Court No. 20-00378
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`Plaintiff Del Monte Foods, Inc. (“Del Monte”), by and through its attorneys, allege and
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`state as follows:
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`1.
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`The instant action concerns the unlawful expansion of the scope of Section 301 of
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`the Trade Act of 1974 by imposing tariffs on imports from the People’s Republic of China included
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`on what has commonly been referred to as List 3 (accounting for an approximate trade value of
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`$200 billion) Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices
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`Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 47,974 (Sept.
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`21, 2018) (publishing List 3). Neither the Trade Act of 1974 (“Trade Act”) nor the Administrative
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`Procedure Act (“APA”) authorizes the imposition of import duties beyond the remedial purpose
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`provided by statute. The Court should set aside Defendants’ actions as ultra vires and otherwise
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`contrary to law, as well as order Defendants to refund, with interest, any duties paid by Plaintiff
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`pursuant to List 3.
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`Case 1:20-cv-00378-N/A Document 5 Filed 09/17/20 Page 2 of 19
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`JURISDICTION
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`2.
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`The Court possesses subject matter jurisdiction over this action pursuant to 28
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`U.S.C. § 1581(i)(1)(B), which confers “exclusive jurisdiction” to the Court over “any civil action
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`commenced against the United States, its agencies, or its officers, that arises out of any law of the
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`United States providing for . . . tariffs, duties, fees, or other taxes on the importation of
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`merchandise for reasons other than the raising of revenue.” 28 U.S.C. § 1581(i)(1)(B).
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`PARTIES
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`3.
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`Plaintiff Del Monte is one of the country’s largest producers, distributors and
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`marketers of premium quality, branded food products, including processed fruits and vegetables
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`for the U.S. retail market. Del Monte operates 8 production facilities in the U.S. and, as of 2018,
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`employs approximately 2,100 fulltime and 5,100 seasonal employees in the United States. Plaintiff
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`is the importer of record of many products imported subject to List 3. By way of example, Plaintiff
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`has made numerous entries of canned mandarin oranges under HTSUS subheading 2008.30.4800,
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`which is subject to ad valorem duties under List 3.
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`4.
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`Defendant United States of America received the disputed tariffs and is the statutory
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`defendant under 5 U.S.C. § 702 and 28 U.S.C. § 1581(i)(1)(B).
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`5.
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`The Office of the United States Trade Representative (“USTR”) is an executive
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`agency of the United States charged with investigating a foreign country’s trade practices under
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`Section 301 of the Trade Act and implementing “appropriate” responses, subject to the direction
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`of the President. USTR conducted the Section 301 investigation at issue and made numerous
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`decisions regarding List 3.
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`Case 1:20-cv-00378-N/A Document 5 Filed 09/17/20 Page 3 of 19
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`6.
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`Defendant U.S. Customs & Border Protection (“CBP”) is the agency that collects
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`duties on imports. CBP collected payments made by Plaintiff to account for the tariffs imposed
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`by USTR under List 3.
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`STANDING
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`7.
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`Del Monte has standing to sue because it is “adversely affected or aggrieved by
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`agency action within the meaning of” the APA. 5 U.S.C. § 702; see 28 U.S.C. § 2631(i) (“Any
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`civil action of which the Court of International Trade has jurisdiction . . . may be commenced in
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`the court by any person adversely affected or aggrieved by agency action within the meaning of
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`Section 702 of title 5.”). Tariffs imposed by Defendants pursuant to List 3 adversely affected and
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`aggrieved Del Monte because they were required to pay these impermissible duties.
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`TIMELINESS OF THE ACTION
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`8.
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`A plaintiff must commence an action under 28 U.S.C. § 1581(i)(1)(B) “within two
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`years after the cause of action first accrues.” 28 U.S.C. § 2636(i).
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`9.
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`The instant action contests two actions taken by Defendants, which resulted in the
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`imposition of List 3. Notice of Modification of Section 301 Action: China’s Acts, Policies, and
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`Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg.
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`47,974 (Sept. 21, 2018). As to the action resulting in List 3, Plaintiff’s claims accrued at the earliest
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`on September 21, 2018, when USTR published notice of List 3 in the Federal Register. 83 Fed.
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`Reg. 47,974. Plaintiff has therefore timely filed this action.
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`RELEVANT LAW
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`10.
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`Section 301 of the Trade Act authorizes USTR to investigate a foreign country’s
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`trade practices. 19 U.S.C. § 2411(b). If the investigation reveals an “unreasonable or
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`Case 1:20-cv-00378-N/A Document 5 Filed 09/17/20 Page 4 of 19
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`discriminatory” practice, USTR may take “appropriate” action, such as imposing tariffs on imports
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`from the country that administered the unfair practice. Id. § 2411(b), (c)(1)(B).
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`11.
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`Section 307 of the Trade Act allows USTR to “modify or terminate” an action taken
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`pursuant to Section 301 of the Trade Act under certain circumstances, such as when the “burden
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`or restriction on United States commerce” imposed by the investigated foreign country’s practice
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`has “increased or decreased” or when the action “is no longer appropriate.” Id. § 2417(a)(1)(B),
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`(C).
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`I.
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`USTR’s Investigation
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`PROCEDURAL HISTORY
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`12.
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`On August 14, 2017, President Trump directed Ambassador Lighthizer to consider
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`initiating a targeted investigation pursuant to Section 301(b) of the Trade Act concerning China’s
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`laws, policies, practices, and actions related to intellectual property, innovation, and technology.
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`Addressing China’s Laws, Policies, Practices, and Actions Related to Intellectual Property,
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`Innovation, and Technology, 82 Fed. Reg. 39,007 (Aug. 17, 2017). According to the President,
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`certain Chinese “laws, policies, practices, and actions” regarding intellectual property, innovation,
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`and technology “may inhibit United States exports, deprive United States citizens of fair
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`remuneration for their innovations, divert American jobs to workers in China, contribute to our
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`trade deficit with China, and otherwise undermine American manufacturing, services, and
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`innovation.” Id.
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`13.
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`Four days later, USTR formally initiated an investigation on August 18, 2017 into
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`“whether acts, policies, and practices of the Government of China related to technology transfer,
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`intellectual property, and innovation are actionable under [Section 301(b) of] the Trade Act.”
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`Initiation of Section 301 Investigation; Hearing; and Request for Public Comments: China’s Acts,
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`Case 1:20-cv-00378-N/A Document 5 Filed 09/17/20 Page 5 of 19
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`Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 82
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`Fed. Reg. 40,213 (Aug. 24, 2017).
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`14.
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`Seven months later, USTR released a report on March 22, 2018 announcing the
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`results of its investigation. OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Findings of
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`the Investigation Into China’s Acts, Policies, And Practices Related to Technology Transfer,
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`Intellectual Property, and Innovation Under Section 301 of The Trade Act of 1974 (Mar. 22, 2018)
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`(“Section 301 Report”), available at https://ustr.gov/sites/default/files/Section%20301%20FINAL
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`.PDF. USTR found that certain “acts, policies, and practices of the Chinese government related to
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`technology transfer, intellectual property, and innovation are unreasonable or discriminatory and
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`burden or restrict U.S. commerce.” Id. at 17. USTR based its findings on (1) China’s use of
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`foreign ownership restrictions, foreign investment restrictions, and administrative licensing and
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`approval processes to pressure technology transfers from U.S. to Chinese companies, id. at 45;
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`(2) China’s use of licensing processes to transfer technologies from U.S. companies to Chinese
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`companies on terms that favor Chinese recipients, id. at 55; (3) China’s facilitation of systematic
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`investment in, and acquisition of, U.S. companies and assets by Chinese entities to obtain
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`technologies and intellectual property for purposes of large-scale technology transfer, id. at 147;
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`and (4) China’s cyber intrusions into U.S. computer networks to gain access to valuable business
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`information, id. at 171. In its report, USTR did not quantify the burden or restriction imposed on
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`U.S. commerce by the investigated practices.
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`15.
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`On the same date, USTR published a “Fact Sheet” stating that “[a]n interagency
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`team of subject matter experts and economists estimates that China’s policies result in harm to the
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`U.S. economy of at least $50 billion per year.” OFFICE OF THE UNITED STATES TRADE
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`REPRESENTATIVE, Section 301 Fact Sheet (Mar. 22, 2018), available at https://ustr.gov/about-
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`Case 1:20-cv-00378-N/A Document 5 Filed 09/17/20 Page 6 of 19
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`us/policy-offices/press-office/fact-sheets/2018/march/Section-301-fact-sheet.
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` USTR
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`also
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`indicated that, consistent with a directive from President Trump, it would “propose additional
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`tariffs” of 25% ad valorem “on certain products of China, with an annual trade value commensurate
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`with the harm caused to the U.S. economy resulting from China’s unfair policies.” Id.; see Actions
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`by the United States Related to the Section 301 Investigation of China’s Laws, Policies, Practices,
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`or Actions Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg.
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`13,099 (Mar. 27, 2018) (President Trump’s directive).
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`II.
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`Lists 1 & 2
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`16.
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`Between April and August 2018, Defendants acted in earnest to remedy the
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`estimated harm to the U.S. economy caused by the investigated unfair practices, ultimately
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`imposing duties on imports from China covered by the so-called List 1 (accounting for an
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`approximate trade value of $34 billion) and List 2 (accounting for an approximate trade value of
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`$16 billion).
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`17.
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`On April 6, 2018, USTR published notice of its intent to impose “an additional duty
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`of 25 percent on a list of products of Chinese origin.” Notice of Determination and Request for
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`Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China’s
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`Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and
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`Innovation, 83 Fed. Reg. 14,906, 14,907 (Apr. 6, 2018). The products on the proposed list covered
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`1,333 tariff subheadings with a total value of “approximately $50 billion in terms of estimated
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`annual trade value for calendar year 2018.” Id. at 14,907. USTR explained that it chose $50 billion
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`because that amount was “commensurate with an economic analysis of the harm caused by China’s
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`unreasonable technology transfer policies to the U.S. economy, as covered by USTR’s Section 301
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`investigation.” OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Under Section 301 Action,
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`Case 1:20-cv-00378-N/A Document 5 Filed 09/17/20 Page 7 of 19
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`USTR Releases Proposed Tariff List on Chinese Products (Apr. 3, 2018), available at
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`https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/april/under-section-301-
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`action-ustr.
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`18.
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`On June 20, 2018, USTR published notice of its final list of products subject to an
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`additional duty of 25% ad valorem, a list commonly known as “List 1.” Notice of Action and
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`Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section
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`301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property,
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`and Innovation, 83 Fed. Reg. 28,710 (June 20, 2018). USTR explained that it had “narrow[ed] the
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`proposed list in the April 6, 2018 notice to 818 tariff subheadings, with an approximate annual
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`trade value of $34 billion.” Id. at 28,711.
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`19.
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`At the same time that it finalized List 1, USTR announced that it intended to impose
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`a 25% ad valorem duty on a second proposed list of Chinese products in order to “maintain the
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`effectiveness of [the] $50 billion trade action” grounded in its Section 301 investigation. Id. USTR
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`announced a proposed “List 2” covering 284 tariff subheadings with “an approximate annual trade
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`value of $16 billion.” Id. at 28,711-12.
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`20.
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`On August 16, 2018, USTR published notice of the final list of products subject to
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`an additional duty of 25% ad valorem in List 2, comprising “279 tariff subheadings” whose “annual
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`trade value . . . remains $16 billion.” Notice of Action Pursuant to Section 301: China’s Acts,
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`Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83
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`Fed. Reg. 40,823 (Aug. 16, 2018).
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`III. List 3
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`21.
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`Beginning in March 2018, Defendants expanded the scope of the tariffs imposed
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`under Section 301 of the Trade Act to cover imports worth more than $500 billion. Defendants
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`Case 1:20-cv-00378-N/A Document 5 Filed 09/17/20 Page 8 of 19
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`did so for reasons unrelated to the unfair practices that USTR had investigated within the Section
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`301 investigation.
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`22.
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`On June 18, 2018, President Trump formally directed USTR to consider whether
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`the United States should impose additional duties on products from China with an estimated trade
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`value of $200 billion, despite USTR having not yet implemented List 1 and List 2.
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`23.
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`USTR stated that it would design the proposed duties on $200 billion in goods from
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`China to address China’s threatened retaliatory measures, rather than any of the harms identified
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`in its Section 301 investigation. OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, USTR
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`Robert Lighthizer Statement on the President’s Additional China Trade Action (June 18, 2018),
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`available at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/june/ustr-
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`robert-lighthizer-statement-0. (explaining that, although Lists 1 and 2 “were proportionate and
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`responsive to forced technology transfer and intellectual property theft by the Chinese” identified
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`in the investigation, the proposed duties for a third list of products were necessary to respond to
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`the retaliatory and “unjustified tariffs” that China may impose to target “U.S. workers, farmers,
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`ranchers, and businesses”).
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`24.
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`Despite these warnings from Defendants, China retaliated by imposing 25% ad
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`valorem tariffs on $50 billion in U.S. goods implemented in two stages of $34 billion and $16
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`billion on the same dates the United States began collecting its own 25% tariffs under List 1 (July
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`6, 2018) and List 2 (August 23, 2018).
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`25.
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`A little over a week after China imposed its first round of retaliatory duties, USTR
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`published notice of its proposal to “modify the action in this investigation by maintaining the
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`original $34 billion action and the proposed $16 billion action, and by taking a further,
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`supplemental action” in the form of “an additional 10 percent ad valorem duty on [a list of]
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`Case 1:20-cv-00378-N/A Document 5 Filed 09/17/20 Page 9 of 19
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`products [from] China with an annual trade value of approximately $200 billion.” Request for
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`Comments Concerning Proposed Modification of Action Pursuant to Section 301: China’s Acts,
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`Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83
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`Fed. Reg. 33,608, 33,608 (July 17, 2018). As authority for its proposed action, USTR invoked
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`Section 307(a)(1)(C) of the Trade Act, pursuant to which USTR “may modify or terminate any
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`action, subject to the specific direction, if any, of the President with respect to such action, . . . if
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`. . . such action is being taken under [Section 301(b)] of this title and is no longer appropriate.” Id.
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`at 33,609 (citing 19 U.S.C. § 2417(a)(1)(c)). USTR initially set a deadline of August 17, 2018 for
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`initial comments; August 20 to 23, 2018 for a public hearing; and August 30, 2018 for rebuttal
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`comments. Id. at 33,608.
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`26.
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`In its notice, USTR confirmed that it had relied on China’s decision to impose
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`“retaliatory duties” as the primary basis for its proposed action. Id. at 33,609 (asserting as
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`justification “China’s response to the $50 billion action announced in the investigation and its
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`refusal to change its acts, policies, and practices”). USTR explicitly tied the $200 billion of trade
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`value in its proposed action to the level of retaliatory duties imposed by China on U.S. imports,
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`noting that “action at this level is appropriate in light of the level of China’s announced retaliatory
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`action ($50 billion) and the level of Chinese goods imported into the United States ($505 billion
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`in 2017).” Id.; see also id. (Because “China’s retaliatory action covers a substantial percentage of
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`U.S. goods exported to China ($130 billion in 2017),” “the level of the U.S. supplemental action
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`must cover a substantial percentage of Chinese imports.”). Although it pointed to China’s
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`retaliatory measures, USTR did not identify any increased burdens or restrictions on U.S.
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`commerce resulting from the unfair practices related to technology transfer, intellectual property,
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`and innovation that USTR had investigated nor did USTR suggest the additional trade value
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`Case 1:20-cv-00378-N/A Document 5 Filed 09/17/20 Page 10 of 19
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`represented by List 3 tariffs was commensurate with harm caused to the United States subject of
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`the Section 301 investigation. See id.
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`27.
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`USTR’s contemporaneous press statements corroborated the contents of its notice:
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`China’s retaliatory duties motivated its proposed action, without mention of the necessity for such
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`additional tariffs to remedy harm identified in the Section 301 investigation. Ambassador
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`Lighthizer stated that the proposed action came “[a]s a result of China’s retaliation and failure to
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`change its practice.” OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Statement by U.S.
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`Trade Representative Robert Lighthizer on Section 301 Action (July 10, 2018), available at
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`https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/july/statement-us-trade-
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`representative.
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`28. Within days of these statements, Ambassador Lighthizer announced that, in light of
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`China’s retaliatory duties, USTR would propose to increase the additional duty from 10% to 25%
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`ad valorem. Rather than addressing the practices that USTR investigated pursuant to Section 301,
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`he stated that China “[r]egrettably . . . has illegally retaliated against U.S. workers, farmers,
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`ranchers and businesses.” OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Statement by
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`U.S. Trade Representative Robert Lighthizer on Section 301 Action (Aug. 1, 2018), available at
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`https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/august/statement-us-
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`trade-representative.
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`29.
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`Shortly thereafter, USTR formally proposed “rais[ing] the level of the additional
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`duty in the proposed supplemental action from 10 percent to 25 percent.” Extension of Public
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`Comment Period Concerning Proposed Modification of Action Pursuant to Section 301: China’s
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`Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and
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`Innovation, 83 Fed. Reg. 38,760, 38,760 (Aug. 7, 2018). USTR set new dates for a public hearing
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`Case 1:20-cv-00378-N/A Document 5 Filed 09/17/20 Page 11 of 19
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`over six days ending on August 27, 2018. See id.; see also OFFICE OF THE UNITED STATES TRADE
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`REPRESENTATIVE, Public Hearings on Proposed Section 301 Tariff List (Aug. 17, 2018) (modifying
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`hearing
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`schedule), available at https://ustr.gov/about-us/policy-offices/press-office/press-
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`releases/2018/august/public-hearings-proposed-section-301.
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`30.
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`At the same time, USTR adjusted the deadlines for the submission of written
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`comments, setting September 6, 2018 as the new deadline for both initial and rebuttal comments
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`from the public. Id. at 38,761. That adjustment prevented both USTR and the public from
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`considering initial comments at the hearing, and left insufficient time for interested parties to
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`review and respond to the initial comments filed by other parties. USTR also limited each hearing
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`participant to five minutes. Id. Approximately 350 witnesses appeared at the six-day hearing, and
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`the
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`public
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`submitted
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`over
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`6,000
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`comments.
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`List
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`3
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`Docket,
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`https://www.regulations.gov/docket?D= USTR-2018-0026.
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`31.
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`USTR published notice of another list of products subject to an additional duty, a
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`list commonly known as “List 3.” 83 Fed. Reg. 47,974. USTR imposed a 10% ad valorem tariff
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`that was set to rise automatically to 25% on January 1, 2019. Id. at 47,975. USTR determined
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`that the additional duty would apply to all listed products that enter the United States from China
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`on or after September 24, 2018. Id. USTR did not respond to any of the over 6,000 comments
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`that it received nor did it address any of the testimony provided by roughly 350 witnesses pursuant
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`to the hearing and comment period on this action. Id.
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`32.
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`As legal support for its action, USTR first raised Section 307(a)(1)(B) of the Trade
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`Act as justification, which provides that USTR “may modify or terminate any action, subject to
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`the specific direction . . . of the President . . . taken under [Section 301] if . . . the burden or
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`restriction on United States commerce of the denial [of] rights, or of the acts, policies, or practices,
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`Case 1:20-cv-00378-N/A Document 5 Filed 09/17/20 Page 12 of 19
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`that are the subject of such action has increased or decreased.” Id. at 47,974. USTR stated that
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`the relevant burden “continues to increase, including following the one-year investigation period,”
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`adding that “China’s unfair acts, policies, and practices include not just its specific technology
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`transfer and IP polices referenced in the notice of initiation in the investigation, but also China’s
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`subsequent defensive actions taken to maintain those policies.” Id. USTR also cited Section
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`307(a)(1)(C) of the Trade Act, arguing that China’s response to the $50 billion tariff action “has
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`shown that the current action no longer is appropriate” because “China openly has responded to
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`the current action by choosing to cause further harm to the U.S. economy, by increasing duties on
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`U.S. exports to China.” Id.
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`33.
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`In the months that followed, China and the United States attempted to resolve their
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`differences through trade negotiations. Based on the progress made with China in those
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`negotiations, the Trump Administration announced in December 2018, and again in February
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`2019, that it would delay the scheduled increase in the List 3 duty rate from 10 to 25%. Notice of
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`Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology
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`Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 65,198 (Dec. 19, 2018); Notice of
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`Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology
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`Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 7,966 (Mar. 5, 2019).
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`34.
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`The trade negotiations ultimately fell apart. In May 2019, USTR announced its
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`intent to raise tariffs on List 3 goods to 25%, effective either May 10, 2019 or June 1, 2019,
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`depending on the day of export. See Notice of Modification of Section 301 Action: China's Acts,
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`Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 84
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`Fed. Reg. 20,459 (May 9, 2019) (“List 3 Rate Increase Notice”); see also Implementing
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`Modification to Section 301 Action: China’s Acts, Policies, and Practices Related to Technology
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`Case 1:20-cv-00378-N/A Document 5 Filed 09/17/20 Page 13 of 19
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`Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 21,892 (May 15, 2019). The notice
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`cited China’s decision to “retreat from specific commitments made in earlier rounds [of
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`negotiations]” as the basis for the increase in the duty rate. List 3 Rate Increase Notice, 84 Fed.
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`Reg. at 20,459. USTR did not seek public comment but simply announced that the increase would
`
`occur. Id. In June 2019, USTR invited the public to seek exclusions from List 3 duties on a
`
`product-specific basis. Procedures for Requests To Exclude Particular Products From the
`
`September 2018 Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to
`
`Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 29,576 (June 24, 2019).
`
`USTR’s request for comments for exclusions from List 3 tariffs stated that any “exclusion will be
`
`effective starting from the September 24, 2018, the effective date of the September 2018 action,
`
`and extending for one year after the publication of the exclusion determination.” Id.
`
`35.
`
`USTR later amended the duration of its List 3 exclusions to be valid only until
`
`August 7, 2020 on the basis that adhering to a one-year exclusion would create disparities between
`
`exclusions granted at different times. Notice of Product Exclusions, Amendment to the Exclusion
`
`Process, and Technical Amendments: China’s Acts, Policies, and Practices Related to Technology
`
`Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 49,591 (Sept. 20, 2019).
`
`36.
`
`USTR received in excess of 30,000 requests for exclusion from List 3 tariffs and
`
`published its decisions through a series of notices from August 7, 2019 to June 19, 2020. Over
`
`28,000 of these requests were denied.
`
`37.
`
`Plaintiff Del Monte filed a request seeking exclusion of products from the List 3
`
`tariffs which was denied. On February 14, 2020, Del Monte received notice from USTR that its
`
`request for tariff exclusion for canned mandarin oranges under HTSUS 2008.30.4800 was denied
`
`
`
`13
`
`

`

`Case 1:20-cv-00378-N/A Document 5 Filed 09/17/20 Page 14 of 19
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`
`
`“because the request failed to show that the imposition of additional duties on the particular
`
`product would cause severe economic harm to you or other U.S. interests.”
`
`38.
`
`In May and June, 2020, USTR published its procedure for parties to request
`
`renewals of exclusion requests previously granted under List 3. Requests for Comments
`
`Concerning the Extension of Particular Exclusions Granted Under the $200 Billion Action
`
`Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer,
`
`Intellectual Property, and Innovation, 85 Fed. Reg. 27,011 (May 6, 2020); Request for Comments
`
`Concerning the Extension of Particular Exclusions Granted Under the $200 Billion Action
`
`Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer,
`
`Intellectual Property, and Innovation, 85 Fed. Reg. 34,279 (June 3, 2020). USTR indicated that it
`
`would “evaluate the possible extension of each request on a case-by-case basis.” Id.
`
`39.
`
`On August 11, 2020, USTR published its notice granting particular exclusion
`
`extensions under List 3. Notice of Product Exclusion Extensions: China’s Acts, Policies, and
`
`Practices Related to Technology Transfer, Intellectual Property, and Innovation, 85 Fed. Reg.
`
`48,600 (Aug. 11, 2020). No justification was provided for why certain exclusion renewal requests
`
`were denied.
`
`40.
`
`The duties imposed on products covered by List 3 remain in effect as of the date of
`
`this complaint, with the exception of the limited number of products for which USTR extended its
`
`originally granted exclusions from the List 3 duties.
`
`
`
`14
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`

`

`Case 1:20-cv-00378-N/A Document 5 Filed 09/17/20 Page 15 of 19
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`
`
`STATEMENT OF CLAIMS
`
`COUNT ONE
`
`(VIOLATION OF THE TRADE ACT OF 1974)
`
`Paragraphs 1 through 40 are incorporated by reference.
`
`The Trade Act of 1974 does not authorize the actions taken by Defendants that
`
`41.
`
`42.
`
`resulted in the List 3 tariffs.
`
`43.
`
`Pursuant to Section 301 of the Trade Act, USTR may impose tariffs when it
`
`determines that “an act, policy, or practice of a foreign country is unreasonable or discriminatory
`
`and burdens or restricts United States commerce, and action by the United States is appropriate.”
`
`19 U.S.C. § 2411(b). USTR failed to predicate its actions giving rise to List 3 on any such
`
`determination.
`
`44.
`
`If USTR concludes upon investigation that a foreign country maintains an unfair
`
`trade practice, Section 304 of the Trade Act requires USTR to “determine what action to take, if
`
`any,” within “12 months after the date on which the investigation is initiated.” 19 U.S.C.
`
`§ 2414(a)(1)(B), (2)(B). USTR’s actions giving rise to List 3 occurred in September 2018, well
`
`over a year after USTR initiated the underlying Section 301 investigation on August 18, 2017.
`
`45.
`
`Section 307 of the Trade Act authorizes USTR to “modify or terminate” an action
`
`taken pursuant to Section 301 of the Trade Act when the burden or restriction imposed on U.S.
`
`commerce by the investigated foreign country’s unfair acts, policies, or practices increases or
`
`decreases. 19 U.S.C. § 2417(a)(1)(B). Section 307 of the Trade Act, however, does not permit
`
`Defendants to increase tariffs imposed pursuant to an investigation conducted pursuant to Section
`
`301 of the Trade Act for reasons unrelated to the acts, policies, or practices that USTR investigated.
`
`Congress did not provide authorization to USTR to expand its focused investigatory findings.
`
`
`
`15
`
`

`

`Case 1:20-cv-00378-N/A Document 5 Filed 09/17/20 Page 16 of 19
`
`
`
`46.
`
`Section 307 also authorizes USTR to “modify or terminate” an action under Section
`
`301(b) if the initial action taken by USTR “is no longer appropriate.” 19 U.S.C. § 2417(a)(1)(C).
`
`Section 307 of the Trade Act, however, does not provide Defendants with the authority to increase
`
`tariff actions that are no longer “appropriate,” but rather only to delay, taper, or terminate such
`
`actions.
`
`47.
`
`Plaintiff is therefore entitled to a holding that Defendants’ actions giving rise to List
`
`3 are ultra vires and contrary to law.
`
`COUNT TWO
`
`(VIOLATION OF THE ADMINISTRATIVE PROCEDURE ACT)
`
`Paragraphs 1 through 47 are incorporated by reference
`
`The APA authorizes the Court to hold unlawful and set aside agency action that is:
`
`48.
`
`49.
`
`“(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (B)
`
`contrary to constitutional right, power, privilege, or immunity; (C) in excess of statutory
`
`jurisdiction, authority, or limitations, or short of statutory right; (D) without observance of
`
`procedure required by law; [or] (E) unsupported by substantial evidence.” 5 U.S.C. § 706(2).
`
`50.
`
`Defendants’ exceeded their statutory authority in promulgating List 3 and therefore
`
`acted unlawfully when publishing and collecting duties on imports of products on List 3.
`
`51.
`
`Defendants also promulgated List 3 in an arbitrary and capricious manner because
`
`they did not provide a sufficient opportunity for comment, failed to meaningfully consider relevant
`
`factors when making their decisions, and failed to adequately explain their rationale. Defendants’
`
`preordained decision-making resulted in the unlawful imposition of tariffs on imports covered by
`
`List 3 whose value exceeds $200 billion.
`
`
`
`16
`
`
`
`

`

`Case 1:20-cv-00378-N/A Document 5 Filed 09/17/20 Page 17 of 19
`
`
`
`COUNT THREE
`
`(VIOLATION OF THE ADMINISTRATIVE PROCEDURE ACT)
`
`52. Paragraphs 1 through 51 are incorporated by reference.
`
`53.
`
`The APA authorizes the Court to hold unlawful and set aside agency action that is:
`
`“(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (B)
`
`contrary to constitutional right, power, privilege, or immunity; (C) in excess of statutory
`
`jurisdiction, authority, or limitations, or short of statutory right; (D) without observance of
`
`procedure required by law; [or] (E) unsupported by substantial evidence.” 5 U.S.C. § 706(2).
`
`54.
`
`Defendants issued a ta