Case 1:20-cv-00603-N/A Document 2 Filed 09/18/20 Page 1 of 10
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`UNITED STATES COURT OF INTERNATIONAL TRADE
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`BASF Corporation,
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`Plaintiff,
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`UNITED STATES OF AMERICA; ROBERT E.
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`LIGHTHIZER, IN HIS OFFICIAL CAPACITY AS
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`UNITED STATES TRADE REPRESENTATIVE;
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`OFFICE OF THE UNITED STATES TRADE
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`REPRESENTATIVE; MARK A. MORGAN, IN HIS
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`OFFICIAL CAPACITY AS ACTING
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`COMMISSIONER OF U.S. CUSTOMS & BORDER
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`PROTECTION; U.S. CUSTOMS & BORDER
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`PROTECTION,
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`Defendants.
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`________________________________________________:
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`COMPLAINT
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`Court No. 20-603
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`BASF Corporation, (hereafter “Plaintiff”) by and through its attorneys Barnes,
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`Richardson & Colburn, LLP, hereby allege the following:
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`STATEMENT OF THE CASE
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`1.
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`This action challenges the imposition of duties on Chinese origin merchandise
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`allegedly pursuant to Section 301 of the Trade Act of 1974, 19 U.S.C. § 2411 (hereafter “Section
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`301”). Specifically, Plaintiff alleges that Defendants’ imposition and collection of duties on
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`products covered by so-called “List 3” and “List 4” are not authorized under Section 301, violate
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`the Administrative Procedure Act, and are otherwise contrary to law.
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`1
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`Case 1:20-cv-00603-N/A Document 2 Filed 09/18/20 Page 2 of 10
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`THE PARTIES
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`2.
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`Plaintiff is an importer of various products subject to duty under List 3 or List 4,
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`including but not limited to merchandise imported under List 3 subheadings 3824.99.39,
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`2839.19.00, 8708.80.65, 8708.80.65, and 3204.19.11 and List 4 subheadings 1302.32.00,
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`2921.42.65, 6305.32.00, and 2933.69.60.
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`3.
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`Defendant United States of America is the federal government to which the
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`disputed duties were paid and is the statutory defendant under 28 U.S.C. ⸹ 1581 (i) and 5 U.S.C.
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`⸹ 702.
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`4.
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`Defendant Office of the United States Trade Representative (hereafter “USTR”) is
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`the executive agency of the United States charged with conducting investigations pursuant to
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`Section 301 and implementing appropriate responses thereto, subject to the direction of the
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`President. USTR conducted the Section 301 investigation at issue and made numerous decisions
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`regarding List 3 and List 4.
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`5.
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`Defendant Robert E. Lighthizer currently hold the position of USTR and serves as
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`the director of the Office of the USTR. In this capacity, he made numerous decisions regarding
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`List 3 and List 4.
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`6.
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`Defendant United States Customs and Border Protection (hereafter “CBP”) is the
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`agency that administers, enforces, and collects the tariffs imposed pursuant to List 3 and List 4,
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`including such payments made by plaintiff.
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`7.
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`Defendant Mark A. Morgan is the Acting Commissioner of CBP. In that capacity
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`he oversees CBP’s administration, enforcement and collection of tariffs imposed pursuant to List
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`3 and List 4, including such payments made by plaintiff.
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`Case 1:20-cv-00603-N/A Document 2 Filed 09/18/20 Page 3 of 10
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`STANDING
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`8.
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`Plaintiff has standing to bring this action pursuant to 28 U.S.C. ⸹ 2631(i), which
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`provides that “[a]ny civil action of which the Court of International Trade has jurisdiction, other
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`than an action specified in subsections (a)-(h), may be commenced in the court by any person
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`adversely affected or aggrieved by agency action within the meaning of section 702 of title 5.”
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`Plaintiff paid duties, and continues to pay duties, as a result of tariffs illegally imposed pursuant
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`to List 3 and List 4. Plaintiff, therefore, is a person that has been adversely affected or aggrieved
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`by an agency actions within the meaning of the Administrative Procedures Act. 5 U.S.C. § 702
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`and 28 U.S.C. § 2631(i).
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`JURISDICTION
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`9.
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`This action is commenced against the United States, its agencies, or its officers
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`and arises out of a law 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, and the administration and
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`enforcement of that law. As such, the Court has exclusive jurisdiction over this action pursuant
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`to 28 U.S.C. § 1581(i)(1)(B) and ⸹1581(i)(1)(D).
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`TIMELINESS
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`10.
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`An action brought under 28 U.S.C. § 1581(i)(1) is timely if commenced “within
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`two years after the cause of action first accrues.” 28 U.S.C. § 2636(i).
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`11.
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`List 3 was published on September 21, 2018 as Notice of Modification of Section
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`301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual
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`Property, and Innovation, 83 Fed. Reg. 47,974 (Sept. 21, 2018). Plaintiff’s claims as to List 3
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`accrued at the earliest on September 21, 2018, when the USTR published in the Federal Register
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`its determination to levy tariffs on goods on List 3 starting September 24, 2018. List 4 was
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`Case 1:20-cv-00603-N/A Document 2 Filed 09/18/20 Page 4 of 10
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`published on August 20, 2019 as 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,
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`84 Fed. Reg. 43,304 (Aug. 20, 2019). Plaintiff’s claims as to List 4 accrued at the earliest on
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`August 20, 2019, when the USTR published in the Federal Register its determination to levy
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`tariffs on goods on List 4 starting September 1, 2019. The action is, therefore, timely.
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`RELEVANT LAW
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`12.
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`19 U.S.C. § 2411(b) and 19 U.S.C. § 2412 authorize the United States Trade
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`Representative (“USTR”) to investigate whether a foreign country has engaged in an
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`“unreasonable or discriminatory” practice that burdens or restricts U.S commerce.
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`13.
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`Pursuant to 19 U.S.C. § 2411(c)(1)(B), if the investigation reaches an affirmative
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`determination, the USTR may impose duties on imports from the offending country.
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`14.
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`Pursuant to 19 U.S.C. § 2414(a)(2)(B), USTR must determine what, if any, action
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`to take within 12 months after the initiation of the investigation.
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`15.
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`The USTR may modify or terminate an action taken in furtherance of Section 301
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`when, among other reasons, the burden or restriction on United States commerce as a result of
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`the acts, policies, or practices have increased or decreased or when the action is no longer
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`appropriate. 19 U.S.C. § 2417(a)(1)(B)-(C).
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`RELEVANT FACTS
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`16.
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`USTR initiated the investigation into Chinese technology transfer and intellectual
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`property practices on August 18, 2017. Initiation of Section 301 Investigation; Hearing; and
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`Request for Public Comments: China’s Acts, Policies, and Practices Related to Technology
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`Transfer, Intellectual Property, and Innovation, 82 Fed. Reg. 40,213 (Aug. 24, 2017).
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`Case 1:20-cv-00603-N/A Document 2 Filed 09/18/20 Page 5 of 10
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`17.
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`On March 28, 2018, USTR published its report announcing the results of its
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`investigation in OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Findings
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`of 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,
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`2018), available at https://ustr.gov/sites/default/files/Section%20301%20FINAL.PDF. The report
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`concludes that the investigated practices of the Chinese government are unreasonable and
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`discriminatory and burden or restrict U.S. commerce. Id. at 47.
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`18.
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`On June 20, 2018, USTR published Notice of Action and Request for Public
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`Comment Concerning Proposed Determination of Action Pursuant to Section 301: China’s Acts,
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`Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation,
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`83 Fed. Reg. 28,710 (June 20, 2018), imposing an addition 25% ad valorem duty on selected
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`products of China. This is the so-called “List 1.”
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`19.
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`On August 16, 2018, USTR published Notice of Action Pursuant to Section 301:
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`China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and
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`Innovation, 83 Fed. Reg. 40,823, 40,823-24 (Aug. 16, 2018), imposing an additional 25% ad
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`valorem duty on selected products of China. This is the so-called “List 2.”
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`20.
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`21.
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`China retaliated against the U.S. action by imposing duties on U.S.-origin goods.
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`In explicit response to China’s retaliation and without reference to China’s
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`technology transfer, intellectual property, or innovation policies, the USTR proposed to impose
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`duties on additional Chinese-origin products. Request for Comments Concerning Proposed
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`Modification of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to
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`Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 33,608, 33,609 (July
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`17, 2018). See also Statement by U.S. Trade Representative Robert Lighthizer on Section 301
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`Action (July 10, 2018), available at https://ustr.gov/about-us/policy-offices/press-office/press-
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`releases/2018/july/statement-us-trade-representative.
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`22.
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`Furthermore, public statements by the President indicate the additional duties
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`were tied to the trade imbalance between the United States and China. See., e.g.,
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`@realDonaldTrump, TWITTER (July 10, 2018, 9:17 PMEDT),
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`https://twitter.com/realDonaldTrump/status/1005982266496094209.; @realDonaldTrump,
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`Twitter (July 25, 2018, 7:01 AM EDT),
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`https://twitter.com/realDonaldTrump/status/1022074252999225344.
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`23.
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`Citing allegedly illegal retaliation against the United States, on August 1, 2018,
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`USTR announced that it would impose an additional 25% ad valorem duty on selected products
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`of China. 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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`24.
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`On September 17, 2018, President Trump announced that he had directed USTR
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`to impose 10% additional tariffs on $200 billion of imports from China. THE WHITE HOUSE,
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`Statement from the President (Sep. 17, 2018), https://www.whitehouse.gov/briefings-
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`statements/statement-from-the-president-4/. The additional tariffs were explicitly linked to
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`China’s decision to “impose new tariffs in an effort to hurt the United States economy.”
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`25.
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`USTR published the next list of affected products subject to the additional duties,
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`so-called “List 3,” on September 21, 2018. Notice of Modification of Section 301 Action: China's
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`Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and
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`Case 1:20-cv-00603-N/A Document 2 Filed 09/18/20 Page 7 of 10
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`Innovation, 83 Fed. Reg. 47,974 (Sep. 21, 2018). This publication was more than 12 months after
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`the initiation of the investigation on August 24, 2017.
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`26.
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`In the September 21, 2018 notice, USTR justified the action as a modification of
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`the existing Section 301 action because the burden on United States commerce had continued to
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`increase, citing Section 307(a)(1)(B). USTR also stated that Chinese retaliation made the existing
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`action no longer “appropriate,” citing Section 307(a)(1)(C).
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`27.
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`On May 17, 2019, USTR announced its intention to proceed with the
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`implementation of Section 301 duties on additional products in what would become so-called
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`“List 4.” Request for Comments Concerning Proposed Modification of Action Pursuant to
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`Section 301: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual
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`Property, and Innovation, 84 Fed. Reg. 22,564, 22,564 (May 17, 2019). The rational for List 4
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`was not China’s policies with respect to technology transfer, intellectual property, or innovation.
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`It was to punish China for its failure to meet specific commitments made in prior negotiations
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`and its further retaliation against the U.S. Id.
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`28.
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`On August 20, 2019, USTR announced that it would implement List 4 in two
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`phases. 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, 84 Fed. Reg. 43,304
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`(Aug. 20, 2019). USTR again relied on Section 307(a)(1)(B) and (C) for authority to modify its
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`prior action. Nevertheless, the Notice does not identify intellectual property, technology transfer
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`or innovation as the reasons for List 4. Rather, the Notice refers to China’s defensive actions
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`including retaliatory tariffs. This publication was more than 12 months after the initiation of the
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`investigation on August 24, 2017.
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`Case 1:20-cv-00603-N/A Document 2 Filed 09/18/20 Page 8 of 10
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`29.
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`The second phase of List 4 has been suspended and not applied to imported
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`goods. They may, however, be imposed if directed by the President.
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`STATEMENT OF CLAIMS
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`COUNT 1—DECLARATORY JUDGMENT
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`30.
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`31.
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`Plaintiff repeats and re-asserts paragraphs 1 through 29 of this Complaint.
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`The Court may “declare the rights and other legal relations of any interested party
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`seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. §
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`2201(a).
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`32.
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`USTR’s decisions to impose Section 301 duties on Chinese products covered by
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`List 3 and List 4 were not based on the acts or policies that the USTR had identified in its March
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`28, 2018 report as “burden[ing] or restrict[ing]” U.S. commerce, as required by 19 U.S.C. §
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`2411(b)(1).
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`33.
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`USTR failed to take action to impose duties on List 3 and List 4 products from
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`China within the 12-month period required by 19 U.S.C. § 2414(a)(1)(B) and (2)(B).
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`34.
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`USTR may “modify or terminate” a Section 301 action when the burden on U.S.
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`commerce from the investigated unfair policies or practices investigated increases or decreases.
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`USTR may not increase the duties assessed in furtherance of Section 301 for reasons other than
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`the acts, policies, or practices that were found in the March 28, 2018 report to burden U.S.
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`Commerce.
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`35.
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`Section 301 actions may be modified or terminated when no longer appropriate.
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`19 U.S.C. § 2417(a)(1)(C). This authorization does not permit USTR to increase an existing
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`remedy action. Rather, it is the authorization to decrease, remove, or pause the action.
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`Case 1:20-cv-00603-N/A Document 2 Filed 09/18/20 Page 9 of 10
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`36.
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`Plaintiff is, therefore, entitled to a declaratory judgment that the duties imposed
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`on products of China covered by List 3 and List 4 are contrary to law and void ab initio.
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`COUNT 2—APA VIOLATION
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`37.
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`38.
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`Plaintiff repeats and re-asserts paragraphs 1 through 36 of this Complaint.
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`The Administrative Procedure Act requires that this Court invalidate any final
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`agency action that is “(A) arbitrary, capricious, an abuse of discretion, or otherwise not in
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`accordance with law; (B) contrary to constitutional right, power, privilege, or immunity; (C) in
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`excess of statutory jurisdiction, authority, or limitations, or short of statutory right; (D) without
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`observance of procedure required by law; [or] (E) unsupported by substantial evidence.” 5
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`U.S.C. § 706(2).
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`39.
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`USTR’s imposition of List 3 and List 4 duties more than 12 months after the
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`initiation of the investigation exceeded its statutory authority and is without the observance of
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`procedure required by law.
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`40.
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`USTR’s imposition of List 3 and List 4 duties for reasons other than China’s
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`policies relating to technology transfer, intellectual property, and innovation exceeded its
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`statutory authority and is arbitrary, capricious, and abuse of discretion.
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`PRAYER FOR RELIEF
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`Wherefore, Plaintiff respectfully requests that this Court enter judgment in favor of plaintiff, and:
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`1. Declare the Defendants’ actions resulting in tariffs on products covered by List 3 and List
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`4 are unauthorized by, and contrary to, Section 301;
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`2. Declare that Defendants arbitrarily and unlawfully promulgated List 3 and List 4 in
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`violation of the APA;
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`Case 1:20-cv-00603-N/A Document 2 Filed 09/18/20 Page 10 of 10
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`3. Vacate the List 3 and List 4 rulemaking;
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`4. Order Defendants to refund, with interest as provided by law, all duties paid by Plaintiff
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`pursuant to List 3 and List 4;
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`5. Permanently enjoy Defendants from applying List 3 or List 4 against Plaintiff and
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`collecting any duties from Plaintiff pursuant to List 3 or List 4; and
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`6. Grant such other relief as the Court may deem just and proper.
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`Dated, September 18, 2020
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`Respectfully submitted,
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`/s/ Frederic D. Van Arnam, Jr.
`Frederic D. Van Arnam, Jr.
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`BARNES, RICHARDSON & COLBURN, LLP
`100 William Street, Suite 305
`New York, NY 10022
`212-725-0200, ex. 126
`rvanarnam@barnesrichardson.com
`Counsel to Plaintiff
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