`
`
`Court No. 20-01400
`
`DOLE PACKAGED FOODS, LLC,
` Plaintiff,
` v.
`UNITED STATES OF AMERICA; OFFICE
`OF THE UNITED STATES TRADE
`REPRESENTATIVE; ROBERT E.
`LIGHTHIZER, U.S. TRADE
`REPRESENTATIVE; U.S. CUSTOMS &
`BORDER PROTECTION; MARK A
`MORGAN, U.S. CUSTOMS & BORDER
`PROTECTION ACTING COMMISSIONER,
` Defendants.
`
`Case 1:20-cv-01400-N/A Document 4 Filed 09/18/20 Page 1 of 20
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` UNITED STATES COURT OF INTERNATIONAL TRADE
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`
`
`
`COMPLAINT
`
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`Plaintiff, Dole Packaged Foods, LLC (“Dole”), by and through its attorneys, allege and
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`state as follows:
`
`1.
`
`This action concerns Defendants’ prosecution of a trade action impacting over
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`$500 billion in imports from the People’s Republic of China. This Complaint focuses on
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`Defendants’ unlawful imposition of a third round of tariffs on products covered by so-called
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`“List 3.” 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).
`
`2.
`
`The Trade Act of 1974 (“Trade Act”) did not confer authority on Defendants to
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`escalate tariffs for however long, and by whatever means, they choose. The Office of the United
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`States Trade Representative (“USTR”) conducted an investigation into China’s unfair intellectual
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`property policies and practices pursuant to Section 301 of the Trade Act (19 U.S.C. § 2411).
`
`Section 304 of the Trade Act (19 U.S.C. § 2414) required USTR to determine what action to
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`take, if any, within 12 months after initiation of that investigation. But USTR failed to issue List
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`

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`Case 1:20-cv-01400-N/A Document 4 Filed 09/18/20 Page 2 of 20
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`3 within that window. USTR may not fall back on its “modification” authority under Section 307
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`of the Trade Act (19 U.S.C. § 2417) to salvage List 3. Section 307 of the Trade Act does not
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`permit USTR to expand the imposition of tariffs to other imports from China for reasons
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`untethered to the unfair intellectual property policies and practices it originally investigated
`
`under Section 301 of the Trade Act. Yet that is exactly what Defendants did here when they
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`promulgated the List 3 duties in response to China’s retaliatory duties and other unrelated issues.
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`And even if USTR deems the existing tariffs “no longer appropriate,” as it also did here, the
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`Trade Act permits USTR only to delay, taper, or terminate—not ratchet up—the actions it has
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`already taken.
`
`3.
`
`The arbitrary manner in which Defendants implemented the List 3 tariff action
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`also violates the Administrative Procedure Act (“APA”). USTR (1) failed to provide sufficient
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`opportunity for comment, e.g., requiring interested parties to submit affirmative and rebuttal
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`comments on the same day; (2) failed to consider relevant factors when making its decision, e.g.,
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`undertaking no analysis of the supposed “increased burden” imposed on U.S. commerce from the
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`unfair policies and practices that it originally investigated; and (3) failed to connect the record
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`facts to the choices it made. Indeed, despite receiving over 6,000 comments, USTR said
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`absolutely nothing about how those comments shaped its final promulgation of List 3. USTR’s
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`preordained decision-making bears no resemblance to the standards that the APA demands.
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`4.
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`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 Dole
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`pursuant to List 3.
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`2
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`Case 1:20-cv-01400-N/A Document 4 Filed 09/18/20 Page 3 of 20
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`JURISDICTION
`
`
`The Court possesses subject matter jurisdiction over this action pursuant to 28
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`5.
`
`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
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`the 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).
`
`PARTIES
`
`Dole is a global leader in sourcing, processing, distributing, and marketing fruit products
`
`6.
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`throughout the world. The Company sources fruit from both the northern and southern
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`hemispheres to ensure a year-round supply and it markets a full line of canned, jarred, cup,
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`frozen, and dried fruit products in the United States. Dole has been a leader and innovator in
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`new forms of packaging and processing for fruit products and the Company takes pride in its
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`role of delivering nutritious snacks to consumers throughout the United States. The Dole brand
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`was introduced in 1933 and is one of the most recognized brands in the world. The Company
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`currently owns and farms hundreds of acres of peach orchards in California and owns and
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`operates a plant in Atwater, California that produces individually quick frozen fruit, with a
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`second production facility in Decatur, Michigan. Company affiliates operate pineapple
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`plantations, canneries, and production facilities in both the Philippines and Thailand. Dole has
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`made numerous entries of agricultural and food products classified under the subheadings listed
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`in the annex which are subject to the List 3 duties.
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`7.
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`Defendant United States of America received the disputed tariffs and is the
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`statutory defendant under 5 U.S.C. § 702 and 28 U.S.C. § 1581(i)(1)(B).
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`3
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`Case 1:20-cv-01400-N/A Document 4 Filed 09/18/20 Page 4 of 20
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`8.
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`The Office of the USTR is an executive agency of the United States charged
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`with investigating a foreign country’s trade practices under Section 301 of the Trade Act and
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`implementing “appropriate” responses, subject to the direction of the President. USTR conducted
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`the Section 301 investigation at issue and made numerous decisions regarding List 3.
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`9.
`
`Ambassador Robert Lighthizer currently holds the position of USTR and serves
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`as the director of the Office of the USTR. In these capacities, he made numerous decisions
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`regarding List 3.
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`10.
`
`Defendant U.S. Customs & Border Protection (“CBP”) is the agency that
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`collects duties on imports. CBP collected payments made by Dole to account for the tariffs
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`imposed by USTR under List 3.
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`11.
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`Defendant Mark A. Morgan is the Acting Commissioner of CBP. In this capacity,
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`he oversees CBP’s collection of duties paid by Dole under List 3.
`
`
`
`12.
`
`Dole has standing to sue because it is “adversely affected or aggrieved by agency
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`STANDING
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`action within the meaning of” the APA. 5 U.S.C. § 702; see 28 U.S.C. § 2631(i) (“Any civil
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`action of which the Court of International Trade has jurisdiction . . . may be commenced in the
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`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 Dole because it was required to pay these unlawful duties.
`
`
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`TIMELINESS OF THE ACTION
`
`13.
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`A plaintiff must commence an action under 28 U.S.C. § 1581(i)(1)(B) “within
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`two years after the cause of action first accrues.” 28 U.S.C. § 2636(i).
`
`14.
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`The instant action contests action taken by Defendants that resulted in List
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`3. Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to
`
`
`
`4
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`Case 1:20-cv-01400-N/A Document 4 Filed 09/18/20 Page 5 of 20
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`Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 47,974 (Sept. 21,
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`2018). Dole’s claims accrued at the earliest on September 21, 2018, when USTR published
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`notice of List 3 in the Federal Register. Id. Dole has therefore timely filed this action.
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`
`
`RELEVANT LAW
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`15.
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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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`discriminatory” practice, USTR may take “appropriate” action, such as imposing tariffs on
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`imports from the country that administered the unfair practice. Id. § 2411(b), (c)(1)(B).
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`16.
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`Section 304 of the Trade Act requires USTR to determine what action to take,
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`if any, within 12 months after the initiation of the underlying investigation. Id. §
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`2414(a)(1)(B), (2)(B).
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`17.
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`Section 307 of the Trade Act (in pertinent part) allows USTR to “modify or
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`terminate” an action taken pursuant to Section 301 of the Trade Act either when the “burden or
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`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).
`
`
`
`
`
`PROCEDURAL HISTORY
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`I. USTR’s Investigation
`
`18.
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`The current U.S.-China trade war grew from a narrow dispute. On August 14,
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`2017, President Trump directed Ambassador Lighthizer to consider initiating a targeted
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`investigation pursuant to Section 301(b) of the Trade Act concerning China’s laws, policies,
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`practices, and actions related to intellectual property, innovation, and technology. Addressing
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`China’s Laws, Policies, Practices, and Actions Related to Intellectual Property, Innovation, and
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`Technology, 82 Fed. Reg. 39,007 (Aug. 17, 2017). According to the President, certain Chinese
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`5
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`“laws, policies, practices, and actions” on intellectual property, innovation, and technology “may
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`inhibit United States exports, deprive United States citizens of fair remuneration for their
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`innovations, divert American jobs to workers in China, contribute to our trade deficit with China,
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`and otherwise undermine American manufacturing, services, and innovation.” Id.
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`19.
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`Four days later, on August 18, 2017, USTR formally initiated an investigation
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`into “whether acts, policies, and practices of the Government of China related to technology
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`transfer, intellectual property, and innovation are actionable under [Section 301(b) of] the
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`Trade Act.” Initiation of Section 301 Investigation; Hearing; and Request for Public Comments:
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`China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and
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`Innovation, 82 Fed. Reg. 40,213 (Aug. 24, 2017).
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`20.
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`Seven months later, on March 22, 2018, USTR released a report announcing
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`the results of its investigation. 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
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`Transfer, Intellectual Property, and Innovation Under Section 301 of The Trade Act of 1974 (Mar.
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`22, 2018), available at https://ustr.gov/sites/default/files/Section%20301%20FINAL.PDF.
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`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
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`45; (2) China’s use of licensing processes to transfer technologies from U.S. to Chinese
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`companies on terms that favor Chinese recipients, id. at 48; (3) China’s facilitation of
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`systematic investment in, and acquisition of, U.S. companies and assets by Chinese entities to
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`6
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`Case 1:20-cv-01400-N/A Document 4 Filed 09/18/20 Page 7 of 20
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`obtain technologies and intellectual property for purposes of large-scale technology transfer, id.
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`at 147; and (4) China’s cyber intrusions into U.S. computer networks to gain access to valuable
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`business information, id. at 171. In its report, USTR did not quantify the burden or restriction
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`imposed on U.S. commerce by the investigated practices.
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`21.
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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
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`the 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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`us/policy-offices/press-office/fact-sheets/2018/march/Section-301-fact-sheet. USTR 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
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`commensurate with the harm caused to the U.S. economy resulting from China’s unfair
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`policies.” Id.; see Actions by the United States Related to the Section 301 Investigation of
`
`China’s Laws, Policies, Practices, or Actions Related to Technology Transfer, Intellectual
`
`Property, and Innovation, 83 Fed. Reg. 13,099 (Mar. 27, 2018) (President Trump’s directive).
`
`
`
`II. Lists 1 & 2
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`22.
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`Between April and August 2018 (i.e., within the 12-month statutory deadline
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`from the initiation of the investigation in August 2017, see 19 U.S.C. § 2414(a)(2)(B)),
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`Defendants undertook a series of actions to remedy the estimated harm to the U.S. economy
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`caused by the investigated unfair practices, ultimately imposing duties on imports from China
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`covered by the so- called Lists 1 and 2.
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`23.
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`On April 6, 2018, USTR published notice of its intent to impose “an additional
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`duty of 25 percent on a list of products of Chinese origin.” Notice of Determination and Request
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`for Public Comment Concerning Proposed Determination 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. 14,906, 14,907 (Apr. 6, 2018). The products on the proposed list
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`covered 1,333 tariff subheadings with a total value of “approximately $50 billion in terms of
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`estimated annual trade value for calendar year 2018.” Id. at 14,907. USTR explained that it chose
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`$50 billion because that amount was “commensurate with an economic analysis of the harm
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`caused by China’s unreasonable technology transfer policies to the U.S. economy, as covered by
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`USTR’s Section 301 investigation.” OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE,
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`Under Section 301 Action, USTR Releases Proposed Tariff List on Chinese Products (Apr. 3,
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`2018), available at https://ustr.gov/about-us/policy-offices/press-office/press-
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`releases/2018/april/under-section-301- action-ustr.
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`24.
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`On June 20, 2018, USTR published notice of its final list of products subject to
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`an 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]
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`the proposed list in the April 6, 2018 notice to 818 tariff subheadings, with an approximate
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`annual trade value of $34 billion.” Id. at 28,711.
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`25.
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`At the same time that it finalized List 1, USTR announced that it intended to
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`impose a 25% ad valorem duty on a second proposed list of Chinese products in order to
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`“maintain the effectiveness of [the] $50 billion trade action” grounded in its Section 301
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`investigation. Id. at 28,712. USTR announced a proposed “List 2” covering 284 tariff
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`subheadings with “an approximate annual trade value of $16 billion.” Id. at 28,711-12.
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`Case 1:20-cv-01400-N/A Document 4 Filed 09/18/20 Page 9 of 20
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`26.
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`On August 16, 2018, USTR published notice of the final list of products subject
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`to an additional duty of 25% ad valorem in List 2, comprising “279 tariff subheadings” whose
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`“annual trade value . . . remains approximately $16 billion.” Notice of Action Pursuant to Section
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`301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual
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`Property, and Innovation, 83 Fed. Reg. 40,823, 40,823-24 (Aug. 16, 2018).
`
`
`
`III. List 3
`
`27.
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`As soon as USTR announced the results of its investigation in March 2018,
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`tensions between the governments of China and the United States escalated dramatically. In the
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`months that followed, Defendants wildly expanded the scope of the tariffs imposed under
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`Section 301 of the Trade Act to cover imports worth more than $500 billion—ten times the
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`amount it had deemed “commensurate” with the findings of USTR’s original investigation.
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`Defendants did so for reasons untethered to the unfair practices that USTR had investigated,
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`namely China’s tit-for-tat countermeasures and a hodgepodge of grievances related to China’s
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`role on the world stage.
`
`28.
`
`Shortly after President Trump directed USTR in April 2018 to consider
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`imposing duties on $50 billion in Chinese products, China promptly threatened to impose
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`retaliatory duties on the same value of imports from the United States. In response, President
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`Trump “instructed the USTR to consider whether $100 billion of additional tariffs would be
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`appropriate under Section 301” due to “China’s unfair retaliation.” THE WHITE HOUSE, Statement
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`from Donald J. Trump on Additional Proposed Section 301 Remedies (Apr. 5, 2018), available
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`at https://www.whitehouse.gov/briefings-statements/statement-president-donald-j-trump-
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`additional -proposed-section-301-remedies/.
`
`29.
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`When USTR finalized List 1 in mid-June 2018, President Trump warned China
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`that he would consider imposing additional tariffs on Chinese goods if China retaliated
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`against the United States. E.g., Vicki Needham & Max Greenwood, Trump Announces Tariffs on
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`$50 Billion in Chinese Goods, THE HILL (June 15, 2018), available at
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`http://thehill.com/homenews/ administration/392421-trump-announces-tariffs-on-50-billion-in-
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`chinese-goods (“The president said the United States will pursue additional tariffs if China
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`retaliates ‘such as imposing new tariffs on United States goods, services or agricultural
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`products; raising non-tariff barriers; or taking punitive actions against American exporters or
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`American companies operating in China.’”).
`
`30.
`
`Following through on his warning, on June 18, 2018, President Trump
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`formally directed USTR to consider whether the United States should impose additional duties on
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`products from China with an estimated trade value of $200 billion—despite USTR having not
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`yet implemented List 1 and List 2. President Trump acknowledged that China’s threatened
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`retaliatory “tariffs on $50 billion worth of United States exports” motivated his decision. THE
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`WHITE HOUSE, Statement from the President Regarding Trade with China (June 18, 2018),
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`available at https://www.whitehouse.gov/briefings-statements/statement-president-regarding-
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`trade-china-2/ (“This latest action by China clearly indicates its determination to keep the
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`United States at a permanent and unfair disadvantage, which is reflected in our massive $376
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`billion trade imbalance in goods. This is unacceptable.”).
`
`31.
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`Acknowledging the purpose of the President’s directive, USTR stated that it
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`would design the newly proposed duties to address China’s threatened retaliatory measures,
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`rather than any of the harms identified in its Section 301 investigation. OFFICE OF THE UNITED
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`STATES TRADE REPRESENTATIVE, USTR Robert Lighthizer Statement on the President’s
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`Additional China Trade Action (June 18, 2018), available at https://ustr.gov/about-us/policy-
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`offices/press-office/press-releases/2018/june/ustr-robert-lighthizer-statement-0 (explaining that,
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`10
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`although Lists 1 and 2 “were proportionate and responsive to forced technology transfer and
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`intellectual property theft by the Chinese” identified in the Section 301 investigation, the
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`proposed duties for a third list of products were necessary to respond to the retaliatory and
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`“unjustified tariffs” that China may impose to target “U.S. workers, farmers, ranchers, and
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`businesses”).
`
`32.
`
`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
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`(July 6, 2018) and List 2 (August 23, 2018).
`
`33.
`
`About a week after China imposed its first round of retaliatory duties,
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`USTR published notice of its proposal to “modify the action in this investigation by
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`maintaining the original $34 billion action and the proposed $16 billion action, and by taking a
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`further, supplemental action” in the form of “an additional 10 percent ad valorem duty on [a
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`list of] products [from] China with an annual trade value of approximately $200 billion.”
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`Request for Comments Concerning Proposed Modification 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. 33,608, 33,608 (July 17, 2018). USTR invoked Section 307(a)(1)(C) of
`
`the Trade Act, pursuant to which USTR “may modify or terminate any action, subject to the
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`specific direction, if any, of the President with respect to such action, . . . if . . . such action is being
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`taken under [Section 301(b)] of this title and is no longer appropriate.” Id. at 33,609 (citing 19
`
`U.S.C. § 2417(a)(1)(c)). USTR initially set a deadline of August 17, 2018 for initial comments;
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`August 20-23, 2018 for a public hearing; and August 30, 2018 for rebuttal comments. Id. at
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`33,608.
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`34.
`
`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
`
`refusal to change its acts, policies, and practices”). USTR explicitly tied the $200 billion in its
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`proposed action to the level of retaliatory duties imposed by China on U.S. imports, noting that
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`“action at this level is appropriate in light of the level of China’s announced retaliatory action
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`($50 billion) and the level of Chinese goods imported into the United States ($505 billion in
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`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.
`
`commerce resulting from the unfair practices that USTR had investigated. See id.
`
`35.
`
`USTR’s contemporaneous press statements corroborated the contents of its
`
`notice: China’s retaliatory duties motivated its proposed action. Ambassador Lighthizer stated
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`that the proposed action came “[a]s a result of China’s retaliation and failure to change its
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`practice.” OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Statement by U.S. Trade
`
`Representative Robert Lighthizer on Section 301 Action (July 10, 2018), available at
`
`https://ustr.gov/about- us/policy-offices/press-office/press-releases/2018/july/statement-us-trade-
`
`representative.
`
`36.
`
`That same day, President Trump suggested that the United States’ trade
`
`imbalance with China supported the decision. @realDonaldTrump, TWITTER (July 10, 2018, 9:17
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`PM EDT), https://twitter.com/realDonaldTrump/status/1005982266496094209. Over the
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`following weeks, President Trump also expressed his frustration over China’s purported
`
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`manipulation of its currency and national monetary policy, as well as his continued displeasure
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`over China’s retaliatory tariffs and the trade imbalance between the two nations. See, e.g.,
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`@realDonaldTrump, Twitter (July 20, 2018, 8:43 AM EDT),
`
`https://twitter.com/realDonaldTrump/status/1020287981020729344; @realDonaldTrump,
`
`TWITTER (July 20, 2018, 8:51 AM EDT),
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`https://twitter.com/realDonaldTrump/status/1020290163933630464; @realDonaldTrump,
`
`TWITTER (July 25, 2018, 7:20 AM EDT),
`
`https://twitter.com/realDonaldTrump/status/1022079127799701504; @realDonaldTrump,
`
`Twitter (July 25, 2018, 7:01 AM EDT),
`
`https://twitter.com/realDonaldTrump/status/1022074252999225344.
`
`37.
`
`Within days of these statements, Ambassador Lighthizer announced that, in light
`
`of China’s retaliatory duties, USTR would propose to increase the additional duty from 10% to
`
`25% ad valorem. Rather than addressing the practices that USTR investigated pursuant to
`
`Section 301 of the Trade Act, he stated that China “[r]egrettably . . . has illegally retaliated
`
`against U.S. workers, farmers, ranchers and businesses.” OFFICE OF THE UNITED STATES TRADE
`
`REPRESENTATIVE, Statement by U.S. Trade Representative Robert Lighthizer on Section 301
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`Action (Aug. 1, 2018), available at https://ustr.gov/about-us/policy-offices/press-office/press-
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`releases/2018/august/statement-us-trade-representative.
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`38.
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`Shortly thereafter, USTR, at the direction of President Trump, formally proposed
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`“raising the level of the additional duty in the proposed supplemental action from 10 percent to
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`25 percent.” Extension of Public Comment Period Concerning Proposed Modification of Action
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`Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer,
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`Intellectual Property, and Innovation, 83 Fed. Reg. 38,760, 38,760 (Aug. 7, 2018). USTR also
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`set new dates for a public hearing over six days ending on August 27, 2018. See id.; see also
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`OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Public Hearings on Proposed Section
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`301 Tariff List (Aug. 17, 2018) (modifying hearing schedule), available at https://ustr.gov/about-
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`us/policy- offices/press-office/press-releases/2018/august/public-hearings-proposed-section-301.
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`39.
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`At the same time, USTR adjusted the deadlines for the submission of
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`written comments, setting September 6, 2018—less than a month later—as the new deadline
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`for both initial and rebuttal comments from the public. 83 Fed. Reg. at 38,761. That adjustment,
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`deviating from its past practices, prevented both USTR and the public from considering initial
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`comments at the hearing, and left insufficient time for interested parties to review and respond
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`to the initial comments filed by other parties. USTR also limited each hearing participant to
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`five minutes. Docket No. USTR-2018-0026, https://beta.regulations.gov/document/USTR-
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`2018-0026-0001. Despite those obstacles, approximately 350 witnesses appeared at the six-
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`day hearing, and the public submitted over 6,000 comments.
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`40.
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`Just eleven days after receiving final comments from the public, President
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`Trump announced that he had directed USTR “to proceed with placing additional tariffs on
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`roughly $200 billion of imports from China.” THE WHITE HOUSE, Statement from the President
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`(Sep. 17, 2018) https://www.whitehouse.gov/briefings-statements/statement-from-the-president-
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`4/. Once again, the President made clear that China’s response to the $50 billion tariff action
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`(i.e., List 1 and List 2 duties) motived his decision, and he immediately promised to proceed with
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`“phase three” of the plan—an additional $267 billion tariff action—“if China takes retaliatory
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`action against our farmers or other industries.” Id.
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`41.
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`Following the President’s announcement, USTR published notice of the final
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`list of products subject to an additional duty, a list commonly known as “List 3.” 83 Fed. Reg.
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`at 47,974. USTR imposed a 10% ad valorem tariff that was set to rise automatically to 25%
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`on January 1, 2019. Id. USTR determined that the List 3 duties would apply to all listed
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`products that enter the United States from China on or after September 24, 2018. Id. USTR did
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`not respond to any of the over 6,000 comments that it received or any of the testimony provided
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`by roughly 350 witnesses. Id.
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`42.
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`As legal support for its action, USTR for the first time cited Section
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`307(a)(1)(B) of the Trade Act, which provides that USTR “may modify or terminate any action,
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`subject to the specific direction . . . of the President . . . taken under Section 301 if . . . the burden
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`or restriction on United States commerce of the denial of rights, or of the acts, policies, or
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`practices, that are the subject of such action has increased or decreased.” Id. (brackets omitted).
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`USTR stated that the relevant burden “continues to increase, including following the one-year
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`investigation period,” adding that “China’s unfair acts, policies, and practices include not just
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`its specific technology transfer and IP polices referenced in the notice of initiation in the
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`investigation, but also China’s subsequent defensive actions taken to maintain those policies.”
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`Id. USTR also cited Section 307(a)(1)(C) of the Trade Act, arguing that China’s response to the
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`$50 billion tariff action “has shown that the current action no longer is appropriate” because
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`“China openly has responded to the current action by choosing to cause further harm to the U.S.
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`economy, by increasing duties on exports to China.” Id. at 47,975.
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`43.
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`In the months that followed, China and the United States attempted to resolve
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`their 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).
`
`44.
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`The trade negotiations ultimately fell apart. In May 2019, USTR announced its
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`intent to raise the tariff rate on List 3 goods to 25%, effective either May 10, 2019 or June 1,
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`2019, depending on the day of export. See 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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`Innovation, 84 Fed. Reg. 20,459 (May 9, 2019) (“List 3 Rate Increase Notice”); see also
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`Implementing Modification to Section 301 Action: China’s Acts, Policies, and Practices Related
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`to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 21,892 (May 15,
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`2019). The notice cited China’s decision to “retreat from specific commitments agreed to in
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`earlier rounds” of negotiations as the basis for the increase in the duty rate. List 3 Rate Increase
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`Notice, 84 Fed. Reg. at 20,459. Unlike with past imposition of new tariffs, USTR did not seek
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`public comment but rather simply announced that the increase would occur. Id.
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`45.
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`The duties imposed on products covered by List 3 remain in effect as of the date
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`of this Complaint, with the exception of the limited number of products for which USTR
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`extended its originally granted exclusions from the List 3 duties. See, e.g., Notice of Product
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`Exclusion Extensions: China’s Acts, Policies, and Practices Related to Technology Transfer,
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`Intellectual Property, and Innovation, 85 Fed. Reg. 48,600 (Aug. 11, 2020).
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`STATEMENT OF CLAIMS
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`COUNT ONE
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`(DECLARATORY JUDGMENT—VIOLATION OF THE TRADE ACT OF 1974)
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`46.
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`Paragraphs 1 through 45 are incorporated by reference.
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`47.
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`The Declaratory Judgment Act authorizes any court of the United States to
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`“declare the rights and other legal relations of any interested party seeking such declaration,
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`whether or not further