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`Court No. 20-02630
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`UNITED STATES COURT OF INTERNATIONAL TRADE
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`INNOVATION FURNITURE CORP.,
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`Plaintiff,
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`UNITED STATES;
`OFFICE OF THE UNITED STATES TRADE
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`REPRESENTATIVE; ROBERT E. LIGHTHIZER, U.S.
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`TRADE REPRESENTATIVE; U.S. CUSTOMS &
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`BORDER PROTECTION; MARK A. MORGAN, U.S.
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`CUSTOMS & BORDER PROTECTION ACTING
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`COMMISSIONER,
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`Defendants.
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`________________________________________________:
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`COMPLAINT
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`Plaintiff Innovation Furniture Corp. (“Plaintiff”), by its undersigned attorneys, alleges the
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`following:
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`1. This action concerns Defendants’ unlawful imposition of ad valorem tariffs on goods,
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`imported by plaintiff, from the Peoples Republic of China pursuant to Section 301 of the
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`Trade Act of 1974 (19 U.S.C. § 2411) (“Trade Act”). The United States Trade
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`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. Section 304 of
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`the Trade Act (19 U.S.C. § 2414) requires the USTR to determine what action to take, if
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`any, within 12 months after initiation of the investigation. Within the 12 months following
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`initiation of the investigation, the USTR determined to impose import tariffs on goods
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`from China pursuant to Section 301(b) of the Trade Act on two groupings of tariff codes,
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`commonly referred to as “List 1” and “List 2.” USTR subsequently implemented tariffs
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`Case 1:20-cv-02637-N/A Document 2 Filed 09/20/20 Page 2 of 22
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`on additional tariff codes, known as “List 3” and “List 4A,” but failed to do so within 12
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`months after initiation of the investigation. Section 307 of the Trade Act (19 U.S.C. §
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`2417) authorizes USTR to modify a prior valid action under Section 301(b), but does not
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`authorize USTR to impose additional tariffs not tied to the acts, policies or practices that
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`are the subject of the investigation. USTR’s determination to implement tariffs on List 3
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`and List 4 was not a valid modification of its initial action because it was not based on the
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`acts, policies or practices covered by the investigation. The arbitrary manner in which
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`Defendants implemented the List 3 and List 4 tariff actions also violates the
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`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
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`rebuttal comments on the same day; (2) failed to consider relevant factors when making
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`its decision, e.g., undertaking no analysis of the supposed “increased burden” imposed on
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`U.S. commerce from the unfair policies and practices that it originally investigated; and
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`(3) failed to connect the record facts to the choices it made. Despite receiving over 6,000
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`comments, USTR was silent as to its consideration of those comments in promulgating
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`List 3.
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`2. The Court should set aside Defendants’ actions as ultra vires and otherwise contrary to
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`law, as well as order Defendants to refund any duties paid by Plaintiff pursuant to List 3
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`and/or List 4A with interest as provided by law.
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`JURISDICTION
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`3. The Court possesses subject matter jurisdiction over this action pursuant to 28 U.S.C. §
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`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
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`Case 1:20-cv-02637-N/A Document 2 Filed 09/20/20 Page 3 of 22
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`law of the United States providing for . . . tariffs, duties, fees, or other taxes on the
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`importation of merchandise for reasons other than the raising of revenue.” 28 U.S.C. §
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`1581(i)(1)(B).
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`PARTIES
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`4. Plaintiff is an importer of various products subject to duties under List 3 or 4A.
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`5. Defendant United States received the disputed tariffs and is the statutory defendant under
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`5 U.S.C. § 702 and 28 U.S.C. § 1581(i).
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`6. USTR is an executive agency of the United States charged with investigating a foreign
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`country’s trade practices under Section 301 of the Trade Act and implementing
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`“appropriate” responses, subject to the direction of the President. USTR conducted the
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`Section 301 investigation at issue and made numerous decisions regarding List 3 and List
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`4.
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`7. Ambassador Robert Lighthizer currently holds the position of USTR and serves as the
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`director of the Office of the USTR. In these capacities, he made numerous decisions
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`regarding List 3 and List 4.
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`8. Defendant U.S. Customs & Border Protection (“CBP”) is the agency that collects duties
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`on imports. CBP collected payments made by Plaintiff to account for the tariffs imposed
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`by USTR under List 3 and List 4.
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`9. Defendant Mark A. Morgan is the Acting Commissioner of CBP. In this capacity, he
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`oversees CBP’s collection of duties paid by Plaintiff under List 3 and/or List 4.Plaintiff
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`has standing to sue because it is “adversely affected or aggrieved by agency action within
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`the meaning of the APA. 5 U.S.C. § 702; 28 U.S.C. § 2631(i). Tariffs imposed by
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`Case 1:20-cv-02637-N/A Document 2 Filed 09/20/20 Page 4 of 22
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`Defendants pursuant to List 3 and/or List 4A adversely affected and aggrieved Plaintiff
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`because it was required to pay and did pay these unlawful duties.
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`TIMELINESS OF THE ACTION
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`10. A plaintiff must commence an action under 28 U.S.C. § 1581(i)(1)(B) “within two years
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`after the cause of action first accrues.” 28 U.S.C. § 2636(i).
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`11. Plaintiff contests action taken by Defendants that resulted in List 3 and List 4 and the
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`subsequent imposition of tariffs on Plaintiff. Notice of Modification of Section 301 Action:
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`China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual
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`Property, and Innovation, 83 Fed. Reg. 47,974 (Sept. 21, 2018). Plaintiff’s claims accrued
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`at the earliest on September 24, 2018, when tariffs were first levied on goods on List 3
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`pursuant to the USTR’s determination published in the Federal Register on September 21,
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`2018. Id.
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`12. The instant action was filed within two years of the date that Plaintiff paid the List 3 and
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`List 4A duties.
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`RELEVANT LAW
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`13. Section 301 of the Trade Act authorizes USTR to investigate a foreign country’s trade
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`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
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`on imports from the country that administered the unfair practice. Id. § 2411(b), (c)(1)(B).
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`14. Section 304 of the Trade Act requires USTR to determine what action to take, if any,
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`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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`Case 1:20-cv-02637-N/A Document 2 Filed 09/20/20 Page 5 of 22
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`15. Section 307 of the Trade Act (in pertinent part) allows USTR to “modify or terminate” an
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`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
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`practice has “increased or decreased” or when the action “is no longer appropriate.” Id. §
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`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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`16. On August 14, 2017, President Trump directed Ambassador Lighthizer to consider
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`initiating a targeted investigation pursuant to Section 301(b) of the Trade Act concerning
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`China’s laws, policies, practices, and actions related to intellectual property, innovation,
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`and technology. Addressing China’s Laws, Policies, Practices, and Actions Related to
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`Intellectual Property, Innovation, and Technology, 82 Fed. Reg. 39,007 (Aug. 17, 2017).
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`According to the President, certain Chinese “laws, policies, practices, and actions” on
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`intellectual property, innovation, and technology “may inhibit United States exports,
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`deprive United States citizens of fair remuneration for their innovations, divert American
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`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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`17. On August 18, 2017, USTR formally initiated an investigation into “whether acts, policies,
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`and practices of the Government of China related to technology transfer, intellectual
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`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:
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`China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual
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`Property, and Innovation, 82 Fed. Reg. 40,213 (Aug. 24, 2017).
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`18. On March 22, 2018, USTR released a report announcing the results of its investigation.
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`OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE , Findings of the Investigation
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`Into China’s Acts, Policies, And Practices Related to Technology Transfer, Intellectual
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`Property, and Innovation Under Section 301 of The Trade Act of 1974 (Mar. 22, 2018),
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`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
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`technology
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`transfer,
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`intellectual property, and
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`innovation are unreasonable or
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`discriminatory and burden or restrict U.S. commerce.” Id. at 17.
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`19. On March 22, 2018, USTR published a “Fact Sheet” stating that “[a]n interagency team
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`of subject matter experts and economists estimate 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
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`(Mar. 22, 2018), available at
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`https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2018/march/Section-301-
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`fact-sheet. USTR also indicated that, consistent with a directive from President Trump, it
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`would “propose additional tariffs” of 25% ad valorem “on certain products of China, with
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`an annual trade value commensurate with the harm caused to the U.S. economy resulting
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`from China’s unfair policies.” Id.; see Actions by the United States Related to the Section
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`301 Investigation of China’s Laws, Policies, Practices, or Actions Related to Technology
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`Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 13,099 (Mar. 27, 2018)
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`(President Trump’s directive).
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`II.
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`Lists 1 & 2
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`20. Between April and August 2018 (i.e., within the 12-month statutory deadline from the
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`initiation of the investigation in August 2017, see 19 U.S.C. § 2414(a)(2)(B)), Defendants
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`Case 1:20-cv-02637-N/A Document 2 Filed 09/20/20 Page 7 of 22
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`undertook a series of actions to remedy the estimated harm to the U.S. economy caused
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`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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`21. On April 6, 2018, USTR published notice of its intent to impose “an additional duty of 25
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`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:
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`China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual
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`Property, and Innovation, 83 Fed. Reg. 14,906, 14,907 (Apr. 6, 2018). The products on
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`the proposed list covered 1,333 tariff subheadings with a total value of “approximately
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`$50 billion in terms of estimated annual trade value for calendar year 2018.” Id. at
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`14,907.USTR explained that it chose $50 billion because that amount was “commensurate
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`with an economic analysis of the harm caused by China’s unreasonable technology
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`transfer policies to the U.S. economy, as covered by USTR’s Section 301 investigation.”
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`OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Under Section 301 Action, USTR
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`Releases Proposed Tariff List on Chinese Products (Apr. 3, 2018), available at
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`https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/april/under-
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`section-301-action-ustr.
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`22. 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
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`and Request for Public Comment Concerning Proposed Determination of Action Pursuant
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`to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer,
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`Intellectual Property, and Innovation, 83 Fed. Reg. 28,710 (June 20, 2018). USTR
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`explained that it had “narrow[ed] the proposed list in the April 6, 2018 notice to 818 tariff
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`subheadings, with an approximate annual trade value of $34 billion.” Id. at 28,711.
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`23. At the same time that it finalized List 1, USTR announced that it intended to impose a
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`25% ad valorem duty on a second proposed list of Chinese products in order to “maintain
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`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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`24. On August 16, 2018, USTR published notice of the final list of products subject to an
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`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
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`Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer,
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`Intellectual Property, and Innovation, 83 Fed. Reg. 40,823, 40,823-24 (Aug. 16, 2018).
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`III. List 3 and 4
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`25. Following USTR’s issuance of the results of its investigation in March 2018, Defendants
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`broadly expanded the scope of the tariffs imposed under Section 301 of the Trade Act to
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`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. Shortly after
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`President Trump directed USTR in April 2018 to consider imposing duties on $50 billion
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`in Chinese products, China promptly threatened to impose retaliatory duties on the same
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`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
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`Section 301” due to “China’s unfair retaliation.” THE WHITE HOUSE, Statement from
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`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/.
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`26. When USTR finalized List 1 in mid-June 2018, President Trump warned China that he
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`would consider imposing additional tariffs on Chinese goods if China retaliated against
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`the United States. E.g., Vicki Needham & Max Greenwood, Trump Announces Tariffs on
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`$50 Billion
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`in Chinese Goods, THE HILL
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`(June 15, 2018), available at
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`http://thehill.com/homenews/administration/392421-trump-announces-tariffs-on-50-
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`billion-in-chinese-goods (“The president said the United States will pursue additional
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`tariffs if China retaliates ‘such as imposing new tariffs on United States goods, services or
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`agricultural products; raising non-tariff barriers; or taking punitive actions against
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`American exporters or American companies operating in China.’”).
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`27. On June 18, 2018, President Trump formally directed USTR to consider whether the
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`United States should impose additional duties on products from China with an estimated
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`trade value of $200 billion—despite USTR having not yet implemented List 1 and List 2.
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`President Trump acknowledged that China’s threatened retaliatory “tariffs on $50 billion
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`worth of United States exports” motivated his decision. THE WHITE HOUSE, Statement
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`from the President Regarding Trade with China (June 18, 2018), available at
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`https://www.whitehouse.gov/briefings-statements/statement-president-regarding-trade-
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`china-2/ (“This latest action by China clearly indicates its determination to keep the United
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`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.”).
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`28. Acknowledging the purpose of the President’s directive, USTR stated that it would design
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`the newly proposed duties to address China’s threatened retaliatory measures, rather than
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`Case 1:20-cv-02637-N/A Document 2 Filed 09/20/20 Page 10 of 22
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`any of the harms identified in its Section 301 investigation. OFFICE OF THE UNITED STATES
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`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-
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`us/policy-offices/press-office/press-releases/2018/june/ustr-robert-lighthizer-statement-0
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`(explaining that, although Lists 1 and 2 “were proportionate and responsive to forced
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`technology transfer and intellectual property theft by the Chinese” identified in the Section
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`301 investigation, the proposed duties for a third list of products were necessary to respond
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`to the retaliatory and “unjustified tariffs” that China may impose to target “U.S. workers,
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`farmers, ranchers, and businesses”).
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`29. China retaliated by imposing 25% ad valorem tariffs on $50 billion in U.S. goods
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`implemented in two stages of $34 billion and $16 billion on the same dates the United
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`States began collecting its own 25% tariffs under List 1 (July 6, 2018) and List 2 (August
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`23, 2018).
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`30. About one week later, USTR published notice of its proposal to “modify the action in this
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`investigation by maintaining the original $34 billion action and the proposed $16 billion
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`action, and by taking a further, supplemental action” in the form of “an additional 10
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`percent ad valorem duty on [a list of] products [from] China with an annual trade value of
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`approximately $200 billion.” Request for Comments Concerning Proposed Modification
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`of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to
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`Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 33,608, 33,608
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`(July 17, 2018). 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.
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`at 33,608.
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`31. In its notice, USTR confirmed that it had relied on China’s decision to impose “retaliatory
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`duties” as the primary basis for its proposed action. Id. at 33,609 (asserting as justification
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`“China’s response to the $50 billion action announced in the investigation and its refusal
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`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
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`that “action at this level is appropriate in light of the level of China’s announced retaliatory
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`action ($50 billion) and the level of Chinese goods imported into the United States ($505
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`billion in 2017).” Id.; see also id. (Because “China’s retaliatory action covers a substantial
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`percentage of U.S. goods exported to China ($130 billion in 2017),” “the level of the U.S.
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`supplemental action must cover a substantial percentage of Chinese imports.”). Although
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`it pointed to China’s retaliatory measures, USTR did not identify any increased burdens
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`or restrictions on U.S. commerce resulting from the unfair practices that USTR had
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`investigated. See id.
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`32. 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
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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.
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`Trade Representative Robert Lighthizer on Section 301 Action (July 10, 2018), available
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`at
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`https://ustr.gov/about-us/policy-offices/press-office/press-
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`releases/2018/july/statement-us-trade-representative.
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`33. On July 10, 2018, President Trump suggested that the United States’ trade imbalance with
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`China supported the decision. @realDonaldTrump, TWITTER (July 10, 2018, 9:17 PM
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`EDT), https://twitter.com/realDonaldTrump/status/1005982266496094209. President
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`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
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`tariffs and the trade imbalance between the two nations. See, e.g., @realDonaldTrump,
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`(July
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`20,
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`2018,
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`8:43
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`AM
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`EDT),
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`https://twitter.com/realDonaldTrump/status/1020287981020729344;
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`@realDonaldTrump,
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`(July
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`20,
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`2018,
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`8:51
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`AM
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`EDT),
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`https://twitter.com/realDonaldTrump/status/
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`1020290163933630464; @realDonaldTrump, TWITTER (July 25, 2018, 7:20 AM EDT),
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`https://twitter.com/realDonaldTrump/status/1022079127799701504; @realDonaldTrump,
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`TWITTER (July 25, 2018, 7:01 AM EDT), https://twitter.com/realDonaldTrump/
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`status/1022074252999225344.
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`34. On August 1, 2018, Ambassador Lighthizer announced that, in light of China’s retaliatory
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`duties, USTR would propose to increase the additional duty from 10% to 25% ad valorem.
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`Rather than addressing the practices that USTR investigated pursuant to Section 301 of
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`the Trade Act, he stated that China “[r]egrettably . . . has illegally retaliated against U.S.
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`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
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`301 Action (Aug. 1, 2018), available at https://ustr.gov/about-us/policy-offices/press-
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`office/press-releases/2018/august/statement-us-trade-representative.
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`35. On August 7, 2018, USTR formally proposed “raising the level of the additional duty in
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`the proposed supplemental action from 10 percent to 25 percent.” Extension of Public
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`Comment Period Concerning Proposed Modification of Action Pursuant to Section 301:
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`China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual
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`Property, and Innovation, 83 Fed. Reg. 38,760, 38,760 (Aug. 7, 2018). USTR also set new
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`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
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`Section 301 Tariff List (Aug. 17, 2018) (modifying hearing schedule), available at
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`https://ustr.gov/about-us/policyoffices/press-office/press-releases/2018/august/public-
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`hearings-proposed-section-301.
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`36. At the same time, USTR adjusted the deadlines for the submission of written comments,
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`setting September 6, 2018—less than a month later—as the new deadline for both initial
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`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
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`comments at the hearing, and left insufficient time for interested parties to review and
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`respond to the initial comments filed by other parties. USTR also limited each hearing
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`participant to five minutes. Docket No. USTR-2018-0026, https://beta.regulations.gov
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`/document/USTR-2018-0026-0001. Approximately 350 witnesses appeared at the six-day
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`hearing, and the public submitted over 6,000 comments. Id.
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`37. 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
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`roughly $200 billion of imports from China.” THE WHITE HOUSE, Statement from the
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`President (Sep. 17, 2018) https://www.whitehouse.gov/briefings-statements/statement-
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`from-the-president-4/. Once again, the President made clear that China’s response to the
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`$50 billion tariff action (i.e., List 1 and List 2 duties) motived his decision, and he
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`immediately promised to proceed with “phase three” of the plan—an additional $267
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`billion tariff action—“if China takes retaliatory action against our farmers or other
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`industries.” Id.
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`38. Following the President’s announcement, USTR published notice of the final list of
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`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
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`25% on January 1, 2019. Id. USTR determined that the List 3 duties would apply to all
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`listed products that enter the United States from China on or after September 24, 2018. Id.
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`USTR did not respond to any of the over 6,000 comments that it received or any of the
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`testimony provided by roughly 350 witnesses. Id.
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`39. As legal support for its action, USTR for the first time cited Section 307(a)(1)(B) of the
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`Trade Act.
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`40. 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
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`February 2019, that it would delay the scheduled increase in the List 3 duty rate from 10
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`to 25%. Notice of Modification of Section 301 Action: China’s Acts, Policies, and
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`Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed.
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`Reg. 65,198 (Dec. 19, 2018); Notice of Modification of Section 301 Action: China’s Acts,
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`Policies, and Practices Related to Technology Transfer, Intellectual Property, and
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`Innovation, 84 Fed. Reg. 7,966 (Mar. 5, 2019).
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`41. In May 2019, when the trade negotiations ultimately fell apart, USTR announced its intent
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`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:
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`Case 1:20-cv-02637-N/A Document 2 Filed 09/20/20 Page 15 of 22
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`China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual
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`Property, and Innovation, 84 Fed. Reg. 20,459 (May 9, 2019) (“List 3 Rate Increase
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`Notice”); see also Implementing Modification to Section 301 Action: China’s Acts,
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`Policies, and Practices Related to Technology Transfer, Intellectual Property, and
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`Innovation, 84 Fed. Reg. 21,892 (May 15, 2019). The notice cited China’s decision to
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`“retreat from specific commitments agreed to in earlier rounds” of negotiations as the basis
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`for the increase in the duty rate. List 3 Rate Increase Notice, 84 Fed. Reg. at 20,459. Unlike
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`with past imposition of new tariffs, USTR did not seek public comment but rather simply
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`announced that the increase would occur. Id.
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`42. The duties imposed on products covered by List 3 remain in effect as of the date of this
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`Complaint, with the exception of a limited number of products for which USTR granted
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`exclusions from the duties. See, e.g., Notice of Product Exclusion Extensions: China’s
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`Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and
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`Innovation, 85 Fed. Reg. 48,600 (Aug. 11, 2020).
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`43. On May 17, 2019, USTR announced its intent to proceed with List 4 covering even more
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`products subject to additional duties. Under USTR’s proposal, List 4 would impose an
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`additional duty of 25% ad valorem on products worth $300 billion. Request for Comments
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`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
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`Innovation, 84 Fed. Reg. 22,564, 22,564 (May 17, 2019). USTR explained that its decision
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`was motivated by China’s “retreat[] from specific commitments made in previous
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`[negotiating] rounds [and] announce[ment of] further retaliatory action against U.S.
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`commerce.” Id.
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`Case 1:20-cv-02637-N/A Document 2 Filed 09/20/20 Page 16 of 22
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`44. USTR invited the public to comment on proposed List 4 and participate in a hearing. Id.
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`The public submitted nearly 3,000 comments. Docket No. USTR-2019-0004,
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`https://beta.regulations.gov/document/USTR-2019-0004-0001.
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`The
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`timeline
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`for
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`participation in the hearing left little room for meaningful input as USTR required
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`witnesses to submit drafts of their testimony by June 10, 2019, some seven days before
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`the deadline for fully developed written comments, and then it again limited witnesses to
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`five minutes of testimony at the hearing. Id.
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`45. On August 1, 2019, citing China’s failure to follow through on agricultural purchases and
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`to reduce exports of fentanyl flowing into the United States, President Trump announced
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`that the List 4 tariffs would become effective September 1, 2019 at a rate of 10% ad
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`valorem. @realDonaldTrump, TWITTER
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`(Aug. 1, 2019, 1:26 PM EDT),
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`https://twitter.com/realDonaldTrump/status/1156979446877962243 (noting a “small
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`additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products
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`coming from China into our Country”).
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`46. On August 20, 2019, USTR issued a final notice adopting List 4 in two tranches. Notice
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`of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to
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`Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 43,304 (Aug.
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`20, 2019). List 4A would impose a 10% ad valorem duty on goods worth roughly $120
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`billion, effective September 1, 2019. Id. at 43,304. List 4b would impose a 10% ad
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`valorem duty on the remaining goods (with limited exclusions “based on health, safety,
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`national security, and other factors”), effective December 15, 2019. Id. at 43,305. Once
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`again, USTR did not address any of the nearly 3,000 comments submitted or any of the
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`Case 1:20-cv-02637-N/A Document 2 Filed 09/20/20 Page 17 of 22
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`testimony provided by witnesses, other than to claim that its determination “takes account
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`of the public comments and the testimony.” Id.
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`47. As legal support for its action, USTR again cited Section 307(a)(1)(B) and (C) of the Trade
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`Act and pointed to “China’s subsequent defensive actions taken to maintain those unfair
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`acts, policies, and practices as determined in that investigation,” including retaliatory
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`tariffs on U.S. imports, retreating from commitments during negotiations, and devaluing
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`its currency as a basis for this decision. Id.
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`48. On August 30, 2019, USTR published notice of its decision to increase the tariff rate
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`applicable to goods covered by List 4A and List 4B from 10% to 15%. Notice of
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`Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to
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`Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 45,821 (Aug.
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`30, 2019). USTR explained that it increased the tariff rate because, shortly after it finalized
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`List 4A and List 4B, “China responded by announcing further tariffs on U.S. goods.” Id.
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`at 45,822. USTR once again cited to China’s retreat from its negotiation commitments and
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`devaluation of its currency as grounds for its action. Id.
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`49. On December 18, 2019, as a result of successfully negotiating a limited trade deal with
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`China, USTR published notice that it would “suspend indefinitely the imposition of
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`additional duties of 15 percent on products of China covered by” List 4B. Notice of
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`Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to
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`Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 69,447, 69,447
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`(Dec. 18, 2019). USTR also stated its intent to reduce the tariff rate applicable to products
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`covered by List 4A, id., an action that ultimately became effective on February 14, 2020,
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`when USTR halved the applicable duty rate, Notice of Modification of Section 301 Action:
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`Case 1:20-cv-02637-N/A Document 2 Filed 09/20/20 Page 18 of 22
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`China’s Acts, Policies, and Practices Related to Technol