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`Plaintiffs,
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`v.
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` --------------------------------------------------------------------- X
`NATURE’S TOUCH FROZEN FOODS (WEST)
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`INC., and NATURE’S TOUCH FROZEN FOODS
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`LLC,
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`Defendants.
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` --------------------------------------------------------------------- X
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`
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`THE 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,
`
`
`
`
`Court No. 20-02538
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`COMPLAINT
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`Plaintiffs, NATURE’S TOUCH FROZEN FOODS (WEST) INC., and NATURE’S
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`TOUCH FROZEN FOODS LLC, by and through undersigned counsel, for its Complaint in this
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`matter against Defendants, THE UNITED STATES OF AMERICA; OFFICE OF THE UNITED
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`STATES TRADE REPRESENTATIVE; ROBERT E. LIGHTHIZER, U.S. TRADE
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`REPRESENTATIVE; U.S. CUSTOMS & BORDER PROTECTION; MARK A. MORGAN, U.S.
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`CUSTOMS & BORDER PROTECTION ACTING COMMISSIONER, does hereby state, plead,
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`and allege as follows:
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`1.
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`This action concerns Defendants’ prosecution of an unprecedented, unbounded,
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`and unlimited trade war impacting over $500 billion in imports from the People’s Republic of
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`China. This Complaint focuses on Defendants’ unlawful escalation of that trade war through the
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`imposition of a third and fourth round of tariffs on products covered by so-called “List 3,” and so-
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`called “List 4a.” Notice of Modification of Section 301 Action: China’s Acts, Policies, and
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`
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`Case 1:20-cv-02538-N/A Document 4 Filed 09/20/20 Page 2 of 23
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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); 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, 84 Fed. Reg.
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`43,304 (Aug. 20, 2019); 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, 84 Fed. Reg.
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`45,821 (Aug. 30, 2019).
`
`2.
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`The Trade Act of 1974 (“Trade Act”) did not confer authority on Defendants to
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`prosecute a vast trade war for however long, and by whatever means, they choose. The Office of
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`the United States Trade Representative (“USTR”) conducted an investigation into China’s unfair
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`intellectual property policies and practices pursuant to Section 301 of the Trade Act (19 U.S.C.
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`§ 2411). Section 304 of the Trade Act (19 U.S.C. § 2414) required USTR to determine what action
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`to take, if any, within 12 months after initiation of that investigation. But USTR failed to issue
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`List 3 (or subsequent List 4a) within that window. USTR may not fall back on its “modification”
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`authority under Section 307 of the Trade Act (19 U.S.C. § 2417) to salvage List 3 (or subsequent
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`List 4a). Section 307 of the Trade Act does not permit USTR to expand the imposition of tariffs to
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`other imports from China for reasons untethered to the unfair intellectual property policies and
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`practices it originally investigated under Section 301 of the Trade Act. Yet that is exactly what
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`Defendants did here when they promulgated the List 3 and List 4a duties in response to China’s
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`retaliatory duties and other unrelated issues. And even if USTR deems the existing tariffs “no
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`longer appropriate,” as it also did here, the Trade Act permits USTR only to delay, taper, or
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`terminate—not ratchet up—the actions it has already taken.
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`3.
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`The arbitrary manner in which Defendants implemented the List 3 and List 4a tariff
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`action also violates the Administrative Procedure Act (“APA”). USTR (1) failed to provide
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`2
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`Case 1:20-cv-02538-N/A Document 4 Filed 09/20/20 Page 3 of 23
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`sufficient opportunity for comment, e.g., requiring interested parties to submit affirmative and
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`rebuttal comments on the same day; (2) failed to consider relevant factors when making its
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`decision, e.g., undertaking no analysis of the supposed “increased burden” imposed on U.S.
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`commerce from the unfair policies and practices that it originally investigated; and (3) failed to
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`connect the record facts to the choices it made. Indeed, despite receiving over 6,000 comments,
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`USTR said absolutely nothing about how those comments shaped its final promulgation of List 3
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`and List 4a. USTR’s preordained decision-making bears no resemblance to the standards that the
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`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 Plaintiffs
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`pursuant to List 3 and/or List 4a.
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`JURISDICTION
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`5.
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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 merchandise
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`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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`6.
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`Plaintiffs NATURE’S TOUCH FROZEN FOODS (WEST) INC., and NATURE’S
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`TOUCH FROZEN FOODS LLC are importers of frozen fruit products. Plaintiffs have made
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`numerous entries of merchandise under HTSUS subheadings which are subject to additional duties
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`under List 3 and/or List 4a. Plaintiffs have paid additional duties under List 3 and/or 4a on these
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`entries.
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`3
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`Case 1:20-cv-02538-N/A Document 4 Filed 09/20/20 Page 4 of 23
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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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`8.
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`The Office of the USTR is an executive agency of the United States charged with
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`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 and List 4a.
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`9.
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`Ambassador Robert Lighthizer currently holds the position of USTR and serves as
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`the director of the Office of the USTR. In these capacities, he made numerous decisions regarding
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`List 3 and List 4a.
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`10.
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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 Plaintiffs to account for the tariffs imposed
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`by USTR under List 3 and List 4a.
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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 Plaintiffs under List 3 and List 4a.
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`STANDING
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`12.
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`Plaintiffs NATURE’S TOUCH FROZEN FOODS (WEST) INC., and NATURE’S
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`TOUCH FROZEN FOODS LLC have standing to sue because they are “adversely affected or
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`aggrieved by agency action within the meaning of” the APA. 5 U.S.C. § 702; see 28 U.S.C.
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`§ 2631(i) (“Any civil action of which the Court of International Trade has jurisdiction … may be
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`commenced in the court by any person adversely affected or aggrieved by agency action within
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`the meaning of Section 702 of title 5.”). Tariffs imposed by Defendants pursuant to List 3 and/or
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`List 4a adversely affected and aggrieved Plaintiffs because they were required to pay these
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`unlawful duties.
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`4
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`Case 1:20-cv-02538-N/A Document 4 Filed 09/20/20 Page 5 of 23
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`TIMELINESS OF THE ACTION
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`13.
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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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`14.
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`The instant action contests action taken by Defendants that resulted in List 3. Notice
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`of 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. 47,974 (Sept. 21, 2018). Plaintiffs’
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`claims accrued at the earliest on September 21, 2018, when USTR published notice of List 3 in
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`the Federal Register. Id. This action also contests actions taken by Defendants that resulted in
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`List 4a. 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 (Aug.
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`20, 2019); 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. 45,821 (Aug.
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`30, 2019). Plaintiffs have 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 imports
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`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, if
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`any, within 12 months after the initiation of the underlying investigation. Id. § 2414(a)(1)(B),
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`(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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`5
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`Case 1:20-cv-02538-N/A Document 4 Filed 09/20/20 Page 6 of 23
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`restriction on United States commerce” imposed by the investigated foreign country’s practice has
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`“increased or decreased” or when the action “is no longer appropriate.” Id. § 2417(a)(1)(B), (C).
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`PROCEDURAL HISTORY
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`I.
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`USTR’s Investigation
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`18.
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`The current U.S.-China trade war grew from a narrow dispute. On August 14, 2017,
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`President Trump directed Ambassador Lighthizer to consider initiating a targeted investigation
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`pursuant to Section 301(b) of the Trade Act concerning China’s laws, policies, practices, and
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`actions related to intellectual property, innovation, and technology. Addressing China’s Laws,
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`Policies, Practices, and Actions Related to Intellectual Property, Innovation, and Technology, 82
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`Fed. Reg. 39,007 (Aug. 17, 2017). According to the President, certain Chinese “laws, policies,
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`practices, and actions” on intellectual property, innovation, and technology “may inhibit United
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`States exports, deprive United States citizens of fair remuneration for their innovations, divert
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`American jobs to workers in China, contribute to our trade deficit with China, and otherwise
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`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 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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`Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 82
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`Fed. Reg. 40,213 (Aug. 24, 2017).
`
`20.
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`Seven months later, on March 22, 2018, USTR released a report announcing the
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`results of its investigation. OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE,
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`Findings of the Investigation Into China’s Acts, Policies, And Practices Related to Technology
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`6
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`Case 1:20-cv-02538-N/A Document 4 Filed 09/20/20 Page 7 of 23
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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. USTR
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`found that certain “acts, policies, and practices of the Chinese government related to technology
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`transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or
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`restrict U.S. commerce.” Id. at 17. USTR based its findings on (1) China’s use of foreign
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`ownership restrictions, foreign investment restrictions, and administrative licensing and approval
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`processes to pressure technology transfers from U.S. to Chinese companies, id. at 45; (2) China’s
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`use of licensing processes to transfer technologies from U.S. to Chinese companies on terms that
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`favor Chinese recipients, id. at 48; (3) China’s facilitation of systematic investment in, and
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`acquisition of, U.S. companies and assets by Chinese entities to obtain technologies and
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`intellectual property for purposes of large-scale technology transfer, id. at 147; and (4) China’s
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`cyber intrusions into U.S. computer networks to gain access to valuable business information, id.
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`at 171. In its report, USTR did not quantify the burden or restriction imposed on U.S. commerce
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`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 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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`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
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`commensurate with the harm caused to the U.S. economy resulting from China’s unfair policies.”
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`Id.; see Actions by the United States Related to the Section 301 Investigation of China’s Laws,
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`7
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`Case 1:20-cv-02538-N/A Document 4 Filed 09/20/20 Page 8 of 23
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`Policies, Practices, or Actions Related to Technology Transfer, Intellectual Property, and
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`Innovation, 83 Fed. Reg. 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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`22.
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`Between April and August 2018 (i.e., within the 12-month statutory deadline from
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`the initiation of the investigation in August 2017, see 19 U.S.C. § 2414(a)(2)(B)), Defendants
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`undertook a series of actions to remedy the estimated harm to the U.S. economy caused by the
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`investigated unfair practices, ultimately imposing duties on imports from China covered by the so-
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`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 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
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`Section 301 Action, USTR Releases Proposed Tariff List on Chinese Products (Apr. 3, 2018),
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`available at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/april/under-
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`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 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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`8
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`Case 1:20-cv-02538-N/A Document 4 Filed 09/20/20 Page 9 of 23
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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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`25.
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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.
`
`at 28,712. USTR announced a proposed “List 2” covering 284 tariff subheadings with “an
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`approximate annual trade value of $16 billion.” Id. at 28,711-12.
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`26.
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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
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`“annual trade value … remains approximately $16 billion.” Notice of Action Pursuant to
`
`Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual
`
`Property, and Innovation, 83 Fed. Reg. 40,823, 40,823-24 (Aug. 16, 2018).
`
`III. List 3 and List 4
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`27.
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`As soon as USTR announced the results of its investigation in March 2018, tensions
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`between the governments of China and the United States escalated dramatically. In the months
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`that followed, Defendants wildly expanded the scope of the tariffs imposed under Section 301 of
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`the Trade Act to cover imports worth more than $500 billion—ten times the amount it had deemed
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`“commensurate” with the findings of USTR’s original investigation. Defendants did so for reasons
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`untethered to the unfair practices that USTR had investigated, namely China’s tit-for-tat
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`countermeasures and a hodgepodge of grievances related to China’s role on the world stage.
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`9
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`Case 1:20-cv-02538-N/A Document 4 Filed 09/20/20 Page 10 of 23
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`A.
`
`List 3
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`28.
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`Shortly after President Trump directed USTR in April 2018 to consider imposing
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`duties on $50 billion in Chinese products, China promptly threatened to impose retaliatory duties
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`on the same value of imports from the United States. In response, President Trump “instructed the
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`USTR to consider whether $100 billion of additional tariffs would be appropriate under Section
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`301” due to “China’s unfair retaliation.” THE WHITE HOUSE, Statement from Donald J. Trump
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`on Additional Proposed Section 301 Remedies
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`(Apr. 5, 2018), available at
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`https://www.whitehouse.gov/briefings-statements/statement-president-donald-j-trump-additional
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`-proposed-section-301-remedies/.
`
`29.
`
`Shortly after President Trump directed USTR in April 2018 to consider imposing
`
`duties on $50 billion in Chinese products, China promptly threatened to impose retaliatory duties
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`on the same value of imports from the United States. In response, President Trump “instructed the
`
`USTR to consider whether $100 billion of additional tariffs would be appropriate under Section
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`301” due to “China’s unfair retaliation.” THE WHITE HOUSE, Statement from Donald J. Trump
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`on Additional Proposed Section 301 Remedies
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`(Apr. 5, 2018), available at
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`https://www.whitehouse.gov/briefings-statements/statement-president-donald-j-trump-additional
`
`-proposed-section-301-remedies/.
`
`30.
`
`Following through on his warning, on June 18, 2018, President Trump formally
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`directed USTR to consider whether the United States should impose additional duties on products
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`from China with an estimated trade value of $200 billion—despite USTR having not yet
`
`implemented List 1 and List 2. President Trump acknowledged that China’s threatened retaliatory
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`“tariffs on $50 billion worth of United States exports” motivated his decision. THE WHITE
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`HOUSE, Statement from the President Regarding Trade with China (June 18, 2018), available at
`
`10
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`Case 1:20-cv-02538-N/A Document 4 Filed 09/20/20 Page 11 of 23
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`https://www.whitehouse.gov/briefings-statements/statement-president-regarding-trade-china-2/
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`(“This latest action by China clearly indicates its determination to keep the United States at a
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`permanent and unfair disadvantage, which is reflected in our massive $376 billion trade imbalance
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`in goods. This is unacceptable.”).
`
`31.
`
`Acknowledging the purpose of the President’s directive, USTR stated that it would
`
`design the newly proposed duties to address China’s threatened retaliatory measures, rather than
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`any of the harms identified in its Section 301 investigation. OFFICE OF THE UNITED STATES
`
`TRADE REPRESENTATIVE, USTR Robert Lighthizer Statement on the President’s Additional
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`China Trade Action (June 18, 2018), available at https://ustr.gov/about-us/policy-offices/press-
`
`office/press-releases/2018/june/ustr-robert-lighthizer-statement-0 (explaining that, although Lists
`
`1 and 2 “were proportionate and responsive to forced technology transfer and intellectual property
`
`theft by the Chinese” identified in the Section 301 investigation, the proposed duties for a third list
`
`of products were necessary to respond to the retaliatory and “unjustified tariffs” that China may
`
`impose to target “U.S. workers, farmers, ranchers, and businesses”).
`
`32.
`
`Despite these warnings from Defendants, China retaliated by imposing 25% ad
`
`valorem tariffs on $50 billion in U.S. goods implemented in two stages of $34 billion and
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`$16 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, 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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`products [from] China with an annual trade value of approximately $200 billion.” Request for
`
`11
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`Case 1:20-cv-02538-N/A Document 4 Filed 09/20/20 Page 12 of 23
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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). USTR invoked Section 307(a)(1)(C) of the Trade Act,
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`pursuant to which USTR “may modify or terminate any action, subject to the specific direction, if
`
`any, of the President with respect to such action, … if … such action is being 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; August 20-23, 2018 for a
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`public hearing; and August 30, 2018 for rebuttal comments. Id. at 33,608.
`
`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
`
`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 that USTR had investigated. See id.
`
`35.
`
`USTR’s contemporaneous press statements corroborated the contents of its notice:
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`China’s retaliatory duties motivated its proposed action. Ambassador Lighthizer stated that the
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`proposed action came “[a]s a result of China’s retaliation and failure to change its practice.”
`
`12
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`Case 1:20-cv-02538-N/A Document 4 Filed 09/20/20 Page 13 of 23
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`OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Statement by U.S. Trade
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`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 PMEDT),
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`https://twitter.com/realDonaldTrump/status/1005982266496094209. Over the following weeks,
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`President Trump also expressed his frustration over China’s purported manipulation of its currency
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`and national monetary policy, as well as his continued displeasure over China’s retaliatory tariffs
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`and the trade imbalance between the two nations. See, e.g., @realDonaldTrump, Twitter (July 20,
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`2018, 8:43 AM EDT), https://twitter.com/realDonaldTrump/status/1020287981020729344;
`
`@realDonaldTrump, TWITTER (July 20, 2018, 8:51 AM EDT), https://twitter.com/realDonald
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`Trump/status/1020290163933630464; @realDonaldTrump, TWITTER (July 25, 2018, 7:20 AM
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`EDT), https://twitter.com/realDonaldTrump/status/1022079127799701504; @realDonaldTrump,
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`Twitter (July 25, 2018, 7:01 AM EDT), https://twitter.com/realDonaldTrump/status/1022074
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`252999225344.
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`37. Within days of these statements, Ambassador Lighthizer announced that, in light
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`of China’s retaliatory duties, USTR would propose to increase the additional duty from 10% to
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`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
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`U.S. workers, farmers, ranchers and businesses.” OFFICE OF THE UNITED STATES TRADE
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`REPRESENTATIVE, Statement by U.S. Trade Representative Robert Lighthizer on Section 301
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`13
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`
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`Case 1:20-cv-02538-N/A Document 4 Filed 09/20/20 Page 14 of 23
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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/state ment-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 set
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`new dates for a public hearing over six days ending on August 27, 2018. See id.; see also OFFICE
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`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.
`
`39.
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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—less than a month later—as the new deadline for both
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`initial and rebuttal comments from the public. 83 Fed. Reg. at 38,761. That adjustment, deviating
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`from its past practices, prevented both USTR and the public from considering initial comments at
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`the hearing, and left insufficient time for interested parties to review and respond to the initial
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`comments filed by other parties. USTR also limited each hearing participant to five minutes.
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`Docket No. USTR-2018-0026, https://beta.regulations.gov/document/USTR-2018-0026-0001.
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`Despite those obstacles, approximately 350 witnesses appeared at the six-day hearing, and the
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`public submitted over 6,000 comments. Id.
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`40.
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`Just eleven days after receiving final comments from the public, President Trump
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`announced that he had directed USTR “to proceed with placing additional tariffs on roughly
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`$200 billion of imports from China.” THE WHITE HOUSE, Statement from the President
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`14
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`
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`Case 1:20-cv-02538-N/A Document 4 Filed 09/20/20 Page 15 of 23
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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 (i.e.,
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`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 list
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`of products subject to an additional duty, a list commonly known as “List 3.” 83 Fed. Reg. at
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`47,974. USTR imposed a 10% ad valorem tariff that was set to rise automatically to 25% on
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`January 1, 2019. Id. USTR determined that the List 3 duties would apply to all listed products that
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`enter the United States from China on or after September 24, 2018. Id. USTR did not respond to
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`any of the over 6,000 comments that it received or any of the testimony provided by roughly 350
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`witnesses. Id.
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`42.
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`As legal support for its action, USTR for the first time cited Section 307(a)(1)(B)
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`of the Trade Act, which provides that USTR “may modify or terminate any action, subject to the
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`specific direction … of the President … taken under Section 301 if … the burden or restriction on
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`United States commerce of the denial of rights, or of the acts, policies, or practices, that are the
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`subject of such action has increased or decreased.” Id. (brackets omitted). USTR stated that the
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`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
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`Section 307(a)(1)(C) of the Trade Act, arguing that China’s response to the $50 billion tariff action
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`“has shown that the current action no longer is appropriate” because “China openly has responded
`
`15
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`
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`Case 1:20-cv-02538-N/A Document 4 Filed 09/20/20 Page 16 of 23
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`to the current action by choosing to cause further harm to the U.S. economy, by increasing duties
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`on U.S. 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 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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`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, 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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`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 agreed to 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. Reg.
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`at 20,459. Unlike with past imposition of new tariffs, USTR did not seek public comment but
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`rather simply announced that the increase would occur. Id.
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`45.
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`Recognizing that List 3 would cause substantial harm to U.S. compan