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`Case 1:21-cv-00455-N/A Document 4 Filed 08/19/21 Page 1 of 23
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`UNITED STATES COURT OF INTERNATIONAL TRADE
`
`
`
`
`Court No. 21-00455
`
`KEEN COMMUNICATIONS LLC,
` Plaintiff,
` v.
`UNITED STATES OF AMERICA; OFFICE
`OF THE UNITED STATES TRADE
`REPRESENTATIVE; U.S. TRADE
`REPRESENTATIVE; U.S. CUSTOMS &
`BORDER PROTECTION; and ACTING
`COMMISSIONER OF U.S. CUSTOMS &
`BORDER PROTECTION,
` Defendants.
`
`
`COMPLAINT
`
`Plaintiff Keen Communications LLC (“Plaintiff”), by and through its attorneys, alleges
`
`and states as follows:
`
`1.
`
`This action concerns Defendants’ prosecution of a trade action impacting over
`
`$500 billion in imports from the People’s Republic of China. This Complaint focuses on
`
`Defendants’ unlawful imposition of a fourth round of tariffs on products covered by so-called
`
`“List 4A.” Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices
`
`Related to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 43,304
`
`(Aug. 20, 2019) (publishing List 4A).
`
`2.
`
`The Trade Act of 1974 (“Trade Act”) did not confer authority on Defendants to
`
`escalate tariffs for however long, and by whatever means, they choose. The Office of the United
`
`States Trade Representative (“USTR”) conducted an investigation into China’s unfair intellectual
`
`property policies and practices pursuant to Section 301 of the Trade Act (19 U.S.C. § 2411).
`
`Section 304 of the Trade Act (19 U.S.C. § 2414) required USTR to determine what action to
`
`take, if any, within 12 months after initiation of that investigation. But USTR failed to issue List
`
`
`
`

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`Case 1:21-cv-00455-N/A Document 4 Filed 08/19/21 Page 2 of 23
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`4A within that window. USTR may not fall back on its “modification” authority under Section
`
`307 of the Trade Act (19 U.S.C. § 2417) to salvage List 4. Section 307 of the Trade Act does not
`
`permit USTR to expand the imposition of tariffs to other imports from China for reasons
`
`untethered to the unfair intellectual property policies and practices it originally investigated
`
`under Section 301 of the Trade Act. Yet that is exactly what Defendants did here when they
`
`promulgated List 4A duties in response to China’s retaliatory duties and other unrelated issues.
`
`And even if USTR deems the existing tariffs “no longer appropriate,” as it also did here, the
`
`Trade Act permits USTR only to delay, taper, or terminate—not ratchet up—the actions it has
`
`already taken.
`
`3.
`
`The arbitrary manner in which Defendants implemented the List 4A tariff actions
`
`also violates the Administrative Procedure Act (“APA”). USTR (1) failed to provide sufficient
`
`opportunity for comment; (2) failed to consider relevant factors when making its decision, e.g.,
`
`undertaking no analysis of the supposed “increased burden” imposed on U.S. commerce from the
`
`unfair policies and practices that it originally investigated; and (3) failed to connect the record
`
`facts to the choices it made. Indeed, despite receiving approximately 10,000 comments, USTR
`
`said absolutely nothing about how those comments shaped its final promulgation of List 4A.
`
`USTR’s preordained decision-making bears no resemblance to the standards that the APA
`
`demands.
`
`4.
`
`The Court should set aside Defendants’ actions as ultra vires and otherwise
`
`contrary to law, as well as order Defendants to refund (with interest) any duties paid by Plaintiff
`
`pursuant to List 4A.
`
`
`
`
`
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`Case 1:21-cv-00455-N/A Document 4 Filed 08/19/21 Page 3 of 23
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`JURISDICTION
`
`5.
`
`The Court possesses subject matter jurisdiction over this action pursuant to 28
`
`U.S.C. § 1581(i)(1)(B), which confers “exclusive jurisdiction” to the Court over “any civil action
`
`commenced against the United States, its agencies, or its officers, that arises out of any law of
`
`the United States providing for . . . tariffs, duties, fees, or other taxes on the importation of
`
`merchandise for reasons other than the raising of revenue.” 28 U.S.C. § 1581(i)(1)(B).
`
`PARTIES
`
`6.
`
`Plaintiff Keen Communications LLC (d/b/a AdventureKEEN) is a privately
`
`owned book publishing enterprise. AdventureKEEN is one of the top independent nature and
`
`outdoor activity publishers in the United States, reaching an audience of readers interested in the
`
`natural world through a broad cross-section of national and independent gift, book, library, and
`
`park channels. AdventureKEEN employs 33 individuals in the United States, supports more than
`
`400 authors and sales representatives, and generates more than $6 million in revenue annually.
`
`AdventureKEEN has made numerous entries of books subject to the additional ad valorem duties
`
`under List 4A, including, but not limited to, those classified under HTSUS statistical reporting
`
`numbers 4901.99.0070, 4901.99.0092, and 4901.99.0093.
`
`7.
`
`Defendant United States of America received the disputed tariffs and is the statutory
`
`defendant under 5 U.S.C. § 702 and 28 U.S.C. § 1581(i)(1)(B).
`
`8.
`
`The Office of the USTR is an executive agency of the United States charged with
`
`investigating a foreign country’s trade practices under Section 301 of the Trade Act and
`
`implementing “appropriate” responses, subject to the direction of the President. USTR conducted
`
`the Section 301 investigation at issue and made numerous decisions regarding List 4A.
`
`
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`Case 1:21-cv-00455-N/A Document 4 Filed 08/19/21 Page 4 of 23
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`9.
`
`Defendant U.S. Customs & Border Protection (“CBP”) is the agency that collects
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`duties on imports. CBP collected payments made by Plaintiff to account for the tariffs imposed
`
`by USTR under List 4A.
`
`STANDING
`
`10.
`
`Plaintiff has standing to sue because they are “adversely affected or aggrieved by
`
`agency action within the meaning of” the APA. 5 U.S.C. § 702; see 28 U.S.C. § 2631(i) (“Any
`
`civil action of which the Court of International Trade has jurisdiction . . . may be commenced in
`
`the court by any person adversely affected or aggrieved by agency action within the meaning of
`
`Section 702 of title 5.”). Tariffs imposed by Defendants pursuant to List 4A adversely affected
`
`and aggrieved Plaintiff because it was required to pay these unlawful duties.
`
`TIMELINESS OF THE ACTION
`
`11.
`
`A plaintiff must commence an action under 28 U.S.C. § 1581(i)(1)(B) “within
`
`two years after the cause of action first accrues.” 28 U.S.C. § 2636(i).
`
`12.
`
`The instant action contests action taken by Defendants that resulted in List
`
`4A duties assessed on goods imported from China. Notice of Modification of Section 301 Action:
`
`China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property and
`
`Innovation, 84 Fed. Reg. 43,304, 43,306-29 (Aug. 20, 2019). Plaintiff’s claims accrued at the
`
`earliest on August 20, 2019, when USTR published notice of List 4A in the Federal Register. Id.
`
`Plaintiff has therefore timely filed this action.
`
`RELEVANT LAW
`
`13.
`
`Section 301 of the Trade Act authorizes USTR to investigate a foreign country’s
`
`trade practices. 19 U.S.C. § 2411(b). If the investigation reveals an “unreasonable or
`
`
`
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`Case 1:21-cv-00455-N/A Document 4 Filed 08/19/21 Page 5 of 23
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`discriminatory” practice, USTR may take “appropriate” action, such as imposing tariffs on
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`imports from the country that administered the unfair practice. Id. § 2411(b), (c)(1)(B).
`
`14.
`
`Section 304 of the Trade Act requires USTR to determine what action to take, if
`
`any, within 12 months after the initiation of the underlying investigation. Id. § 2414(a)(1)(B),
`
`(2)(B).
`
`15.
`
`Section 307 of the Trade Act (in pertinent part) allows USTR to “modify or
`
`terminate” an action taken pursuant to Section 301 of the Trade Act either when the “burden or
`
`restriction on United States commerce” imposed by the investigated foreign country’s practice
`
`has “increased or decreased” or when the action “is no longer appropriate.” Id. § 2417(a)(1)(B),
`
`(C).
`
`I. USTR’s Investigation
`
`PROCEDURAL HISTORY
`
`16.
`
`The current U.S.-China trade war grew from a narrow dispute. On August 14,
`
`2017, President Trump directed Ambassador Robert Lighthizer to consider initiating a targeted
`
`investigation pursuant to Section 301(b) of the Trade Act concerning China’s laws, policies,
`
`practices, and actions related to intellectual property, innovation, and technology. Addressing
`
`China’s Laws, Policies, Practices, and Actions Related to Intellectual Property, Innovation, and
`
`Technology, 82 Fed. Reg. 39,007 (Aug. 17, 2017). According to President Trump, certain
`
`Chinese “laws, policies, practices, and actions” on intellectual property, innovation, and
`
`technology “may inhibit United States exports, deprive United States citizens of fair
`
`remuneration for their innovations, divert American jobs to workers in China, contribute to our
`
`trade deficit with China, and otherwise undermine American manufacturing, services, and
`
`innovation.” Id.
`
`
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`Case 1:21-cv-00455-N/A Document 4 Filed 08/19/21 Page 6 of 23
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`17.
`
`Four days later, on August 18, 2017, USTR formally initiated an investigation into
`
`“whether acts, policies, and practices of the Government of China related to technology transfer,
`
`intellectual property, and innovation are actionable under [Section 301(b) of] the Trade Act.”
`
`Initiation of Section 301 Investigation; Hearing; and Request for Public Comments: China’s Acts,
`
`Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 82
`
`Fed. Reg. 40,213 (Aug. 24, 2017).
`
`18.
`
`Seven months later, on March 22, 2018, USTR released a report announcing the
`
`results of its investigation. OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Findings of
`
`the Investigation Into China’s Acts, Policies, And Practices Related to Technology Transfer,
`
`Intellectual Property, and Innovation Under Section 301 of The Trade Act of 1974 (Mar. 22, 2018),
`
`available at https://ustr.gov/sites/default/files/Section%20301%20FINAL.PDF. USTR found
`
`that certain “acts, policies, and practices of the Chinese government related to technology
`
`transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or
`
`restrict U.S. commerce.” Id. at 17. USTR based its findings on (1) China’s use of foreign
`
`ownership restrictions, foreign investment restrictions, and administrative licensing and
`
`approval processes to pressure technology transfers from U.S. to Chinese companies, id. at
`
`45; (2) China’s use of licensing processes to transfer technologies from U.S. to Chinese
`
`companies on terms that favor Chinese recipients, id. at 48; (3) China’s facilitation of
`
`systematic investment in, and acquisition of, U.S. companies and assets by Chinese entities to
`
`obtain technologies and intellectual property for purposes of large-scale technology transfer, id.
`
`at 147; and (4) China’s cyber intrusions into U.S. computer networks to gain access to valuable
`
`business information, id. at 171. In its report, USTR did not quantify the burden or restriction
`
`imposed on U.S. commerce by the investigated practices.
`
`
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`Case 1:21-cv-00455-N/A Document 4 Filed 08/19/21 Page 7 of 23
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`19.
`
`On the same date, USTR published a “Fact Sheet” stating that “[a]n interagency
`
`team of subject matter experts and economists estimates that China’s policies result in harm to
`
`the U.S. economy of at least $50 billion per year.” OFFICE OF THE UNITED STATES TRADE
`
`REPRESENTATIVE, Section 301 Fact Sheet (Mar. 22, 2018), formerly available1 at
`
`https://ustr.gov/about- us/policy-offices/press-office/fact-sheets/2018/march/Section-301-fact-
`
`sheet. USTR also indicated that, consistent with a directive from President Trump, it would
`
`“propose additional tariffs” of 25% ad valorem “on certain products of China, with an annual
`
`trade value commensurate with the harm caused to the U.S. economy resulting from China’s
`
`unfair policies.” Id.; see Actions by the United States Related to the Section 301 Investigation of
`
`China’s Laws, Policies, Practices, or Actions Related to Technology Transfer, Intellectual
`
`Property, and Innovation, 83 Fed. Reg. 13,099 (Mar. 27, 2018) (President Trump’s directive).
`
`II.
`
`Lists 1 & 2
`
`20.
`
`Between April and August 2018 (i.e., within the 12-month statutory deadline from
`
`the initiation of the investigation in August 2017, see 19 U.S.C. § 2414(a)(2)(B)), Defendants
`
`undertook a series of actions to remedy the estimated harm to the U.S. economy caused by the
`
`investigated unfair practices, ultimately imposing duties on imports from China covered by the
`
`so-called Lists 1 and 2.
`
`21.
`
`On April 6, 2018, USTR published notice of its intent to impose “an additional
`
`duty of 25 percent on a list of products of Chinese origin.” Notice of Determination and Request
`
`for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301:
`
`China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and
`
`
`1 Where used in conjunction with a government website address, the term “formerly available” denotes a website
`address that is no longer active due to the change in administration following the inauguration of President Joseph R.
`Biden on January 20, 2021.
`
`
`
`
`7
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`Case 1:21-cv-00455-N/A Document 4 Filed 08/19/21 Page 8 of 23
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`Innovation, 83 Fed. Reg. 14,906, 14,907 (Apr. 6, 2018). The products on the proposed list
`
`covered 1,333 tariff subheadings with a total value of “approximately $50 billion in terms of
`
`estimated annual trade value for calendar year 2018.” Id. at 14,907. USTR explained that it chose
`
`$50 billion because that amount was “commensurate with an economic analysis of the harm
`
`caused by China’s unreasonable technology transfer policies to the U.S. economy, as covered by
`
`USTR’s Section 301 investigation.” OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE,
`
`Under Section 301 Action, USTR Releases Proposed Tariff List on Chinese Products (Apr. 3,
`
`2018), formerly available at https://ustr.gov/about-us/policy-offices/press-office/press-
`
`releases/2018/april/under-section-301- action-ustr.
`
`22.
`
`On June 20, 2018, USTR published notice of its final list of products subject to an
`
`additional duty of 25% ad valorem, a list commonly known as “List 1.” Notice of Action and
`
`Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section
`
`301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property,
`
`and Innovation, 83 Fed. Reg. 28,710 (June 20, 2018). USTR explained that it had “narrow[ed]
`
`the proposed list in the April 6, 2018 notice to 818 tariff subheadings, with an approximate
`
`annual trade value of $34 billion.” Id. at 28,711.
`
`23.
`
`At the same time that it finalized List 1, USTR announced that it intended to impose
`
`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
`
`approximate annual trade value of $16 billion.” Id. at 28,711-12.
`
`24.
`
`On August 16, 2018, USTR published notice of the final list of products subject to
`
`an additional duty of 25% ad valorem in List 2, comprising “279 tariff subheadings” whose
`
`
`
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`8
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`

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`Case 1:21-cv-00455-N/A Document 4 Filed 08/19/21 Page 9 of 23
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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
`
`25.
`
`As soon as USTR announced the results of its investigation in March 2018,
`
`tensions between the governments of China and the United States escalated dramatically. In the
`
`months that followed, Defendants wildly expanded the scope of the tariffs imposed under
`
`Section 301 of the Trade Act to cover imports worth more than $500 billion—ten times the
`
`amount it had deemed “commensurate” with the findings of USTR’s original investigation.
`
`Defendants did so for reasons untethered to the unfair practices that USTR had investigated,
`
`namely China’s tit-for-tat countermeasures and a hodgepodge of grievances related to China’s
`
`role on the world stage.
`
`A.
`
`26.
`
`List 3
`
`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
`
`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 301” due to “China’s unfair retaliation.” THE WHITE HOUSE, Statement from Donald J.
`
`Trump on Additional Proposed Section 301 Remedies (Apr. 5, 2018), formerly available at
`
`https://www.whitehouse.gov/briefings-statements/statement-president-donald-j-trump-additional
`
`-proposed-section-301-remedies/.
`
`27. When USTR finalized List 1 in mid-June 2018, President Trump warned China that
`
`he would consider imposing additional tariffs on Chinese goods if China retaliated against the
`
`
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`Case 1:21-cv-00455-N/A Document 4 Filed 08/19/21 Page 10 of 23
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`United States. E.g., Vicki Needham & Max Greenwood, Trump Announces Tariffs on $50 Billion
`
`in Chinese Goods, THE HILL (June 15, 2018), available at
`
`http://thehill.com/homenews/administration/392421-trump-announces-tariffs-on-50-billion-in-
`
`chinese-goods (“The president said the United States will pursue additional tariffs if China
`
`retaliates ‘such as imposing new tariffs on United States goods, services or agricultural
`
`products; raising non-tariff barriers; or taking punitive actions against American exporters or
`
`American companies operating in China.’”).
`
`28.
`
`Following through on his warning, on June 18, 2018, President Trump formally
`
`directed USTR to consider whether the United States should impose additional duties on products
`
`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
`
`“tariffs on $50 billion worth of United States exports” motivated his decision. THE WHITE HOUSE,
`
`Statement from the President Regarding Trade with China (June 18, 2018), formerly available
`
`at https://www.whitehouse.gov/briefings-statements/statement-president-regarding-trade-china-
`
`2/ (“This latest action by China clearly indicates its determination to keep the United States
`
`at a permanent and unfair disadvantage, which is reflected in our massive $376 billion trade
`
`imbalance in goods. This is unacceptable.”).
`
`29.
`
`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 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 China Trade Action (June 18, 2018), formerly available at https://ustr.gov/about-
`
`us/policy-offices/press-office/press-releases/2018/june/ustr-robert-lighthizer-statement-0,
`
`
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`10
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`Case 1:21-cv-00455-N/A Document 4 Filed 08/19/21 Page 11 of 23
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`explaining that, although Lists 1 and 2 “were proportionate and responsive to forced technology
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`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”).
`
`30.
`
`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 $16
`
`billion on the same dates the United States began collecting its own 25% tariffs under List 1
`
`(July 6, 2018) and List 2 (August 23, 2018).
`
`31.
`
`About a week after China imposed its first round of retaliatory duties, USTR
`
`published notice of its proposal to “modify the action in this investigation by maintaining the
`
`original $34 billion action and the proposed $16 billion action, and by taking a further,
`
`supplemental action” in the form of “an additional 10 percent ad valorem duty on [a list of]
`
`products [from] China with an annual trade value of approximately $200 billion.” Request for
`
`Comments Concerning Proposed Modification of Action Pursuant to Section 301: China’s Acts,
`
`Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83
`
`Fed. Reg. 33,608, 33,608 (July 17, 2018). USTR invoked Section 307(a)(1)(C) of the Trade Act,
`
`pursuant to which USTR “may modify or terminate any action, subject to the 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
`
`public hearing; and August 30, 2018 for rebuttal comments. Id. at 33,608.
`
`
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`Case 1:21-cv-00455-N/A Document 4 Filed 08/19/21 Page 12 of 23
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`32.
`
`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
`
`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
`
`proposed action to the level of retaliatory duties imposed by China on U.S. imports, noting that
`
`“action at this level is appropriate in light of the level of China’s announced retaliatory action
`
`($50 billion) and the level of Chinese goods imported into the United States ($505 billion in
`
`2017).” Id.; see also id. (Because “China’s retaliatory action covers a substantial percentage of
`
`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
`
`retaliatory measures, USTR did not identify any increased burdens or restrictions on U.S.
`
`commerce resulting from the unfair practices that USTR had investigated. See id.
`
`33.
`
`USTR’s contemporaneous press statements corroborated the contents of its notice:
`
`China’s retaliatory duties motivated its proposed action. Ambassador Lighthizer stated that the
`
`proposed action came “[a]s a result of China’s retaliation and failure to change its practice.”
`
`OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Statement by U.S. Trade Representative
`
`Robert Lighthizer on Section 301 Action (July 10, 2018), formerly available at
`
`https://ustr.gov/about- us/policy-offices/press-office/press-releases/2018/july/statement-us-trade-
`
`representative.
`
`34.
`
`That same day, President Trump suggested that the United States’ trade imbalance
`
`with China supported the decision. @realDonaldTrump, TWITTER (July 10, 2018, 9:17 PM
`
`EDT), formerly available at https://twitter.com/realDonaldTrump/status/1005982266496094209.
`
`Over the following weeks, President Trump also expressed his frustration over China’s purported
`
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`Case 1:21-cv-00455-N/A Document 4 Filed 08/19/21 Page 13 of 23
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`manipulation of its currency and national monetary policy, as well as his continued displeasure
`
`over China’s retaliatory tariffs and the trade imbalance between the two nations. See, e.g.,
`
`@realDonaldTrump, Twitter (July 20, 2018, 8:43 AM EDT), formerly available at
`
`https://twitter.com/realDonaldTrump/status/1020287981020729344; @realDonaldTrump,
`
`TWITTER (July 20, 2018, 8:51 AM EDT), formerly available at
`
`https://twitter.com/realDonaldTrump/status/1020290163933630464; @realDonaldTrump,
`
`TWITTER (July 25, 2018, 7:20 AM EDT), formerly available at
`
`https://twitter.com/realDonaldTrump/status/1022079127799701504; @realDonaldTrump,
`
`Twitter (July 25, 2018, 7:01 AM EDT), formerly available at
`
`https://twitter.com/realDonaldTrump/status/1022074252999225344.
`
`35. Within days of these statements, Ambassador Lighthizer announced that, in light
`
`of China’s retaliatory duties, USTR would propose to increase the additional duty from 10% to
`
`25% ad valorem. Rather than addressing the practices that USTR investigated pursuant to
`
`Section 301 of the Trade Act, he stated that China “[r]egrettably . . . has illegally retaliated
`
`against U.S. workers, farmers, ranchers and businesses.” OFFICE OF THE UNITED STATES TRADE
`
`REPRESENTATIVE, Statement by U.S. Trade Representative Robert Lighthizer on Section 301
`
`Action (Aug. 1, 2018), formerly available at https://ustr.gov/about-us/policy-offices/press-
`
`office/press-releases/2018/august/statement-us-trade-representative.
`
`36.
`
`Shortly thereafter, USTR, at the direction of President Trump, formally proposed
`
`“raising the level of the additional duty in the proposed supplemental action from 10 percent to
`
`25 percent.” Extension of Public Comment Period Concerning Proposed Modification of Action
`
`Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer,
`
`Intellectual Property, and Innovation, 83 Fed. Reg. 38,760, 38,760 (Aug. 7, 2018). USTR also
`
`
`
`
`13
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`

`

`Case 1:21-cv-00455-N/A Document 4 Filed 08/19/21 Page 14 of 23
`
`set new dates for a public hearing over six days ending on August 27, 2018. See id.; see also
`
`OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Public Hearings on Proposed Section
`
`301 Tariff List (Aug. 17, 2018) (modifying hearing schedule), formerly available at
`
`https://ustr.gov/about-us/policy- offices/press-office/press-releases/2018/august/public-hearings-
`
`proposed-section-301.
`
`37.
`
`At the same time, USTR adjusted the deadlines for the submission of written
`
`comments, setting September 6, 2018—less than a month later—as the new deadline for both
`
`initial and rebuttal comments from the public. 83 Fed. Reg. at 38,761. That adjustment, deviating
`
`from its past practices, prevented both USTR and the public from considering initial comments at
`
`the hearing, and left insufficient time for interested parties to review and respond to the initial
`
`comments filed by other parties. USTR also limited each hearing participant to five minutes.
`
`Docket No. USTR-2018-0026, https://beta.regulations.gov/document/USTR-2018-0026-0001.
`
`Despite those obstacles, approximately 350 witnesses appeared at the six-day hearing, and the
`
`public submitted over 6,000 comments.
`
`38.
`
`Just eleven days after receiving final comments from the public, President Trump
`
`announced that he had directed USTR “to proceed with placing additional tariffs on roughly
`
`$200 billion of imports from China.” THE WHITE HOUSE, Statement from the President (Sep. 17,
`
`2018), formerly available at https://www.whitehouse.gov/briefings-statements/statement-from-
`
`the-president-4/. Once again, President Trump made clear that China’s response to the $50
`
`billion tariff action (i.e., List 1 and List 2 duties) motivated his decision, and he immediately
`
`promised to proceed with “phase three” of the plan—an additional $267 billion tariff action—“if
`
`China takes retaliatory action against our farmers or other industries.” Id.
`
`
`
`
`14
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`

`

`Case 1:21-cv-00455-N/A Document 4 Filed 08/19/21 Page 15 of 23
`
`39.
`
`Following President Trump’s announcement, USTR published notice of the final
`
`list of products subject to an additional duty, a list commonly known as “List 3.” 83 Fed. Reg.
`
`at 47,974. USTR imposed a 10% ad valorem tariff that was set to rise automatically to 25%
`
`on January 1, 2019. Id. USTR determined that the List 3 duties would apply to all listed
`
`products that enter the United States from China on or after September 24, 2018. Id. USTR did
`
`not respond to any of the over 6,000 comments that it received or any of the testimony provided
`
`by roughly 350 witnesses. Id.
`
`40.
`
`As legal support for its action, USTR for the first time cited Section 307(a)(1)(B)
`
`of the Trade Act, which provides that USTR “may modify or terminate any action, subject to the
`
`specific direction . . . of the President . . . taken under Section 301 if . . . the burden or restriction
`
`on United States commerce of the denial of rights, or of the acts, policies, or practices, that are the
`
`subject of such action has increased or decreased.” Id. (brackets omitted). USTR stated that the
`
`relevant burden “continues to increase, including following the one-year investigation period,”
`
`adding that “China’s unfair acts, policies, and practices include not just its specific technology
`
`transfer and IP policies referenced in the notice of initiation in the investigation, but also
`
`China’s subsequent defensive actions taken to maintain those policies.” Id. USTR also cited
`
`Section 307(a)(1)(C) of the Trade Act, arguing that China’s response to the $50 billion tariff
`
`action “has shown that the current action no longer is appropriate” because “China openly has
`
`responded to the current action by choosing to cause further harm to the U.S. economy, by
`
`increasing duties on exports to China.” Id. at 47,975.
`
`41.
`
`In the months that followed, China and the United States attempted to resolve
`
`their differences through trade negotiations. Based on the progress made with China in those
`
`negotiations, the Trump Administration announced in December 2018, and again in February
`
`
`
`
`15
`
`

`

`Case 1:21-cv-00455-N/A Document 4 Filed 08/19/21 Page 16 of 23
`
`2019, that it would delay the scheduled increase in the List 3 duty rate from 10 to 25%. Notice of
`
`Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology
`
`Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 65,198 (Dec. 19, 2018); Notice of
`
`Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology
`
`Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 7,966 (Mar. 5, 2019).
`
`42.
`
`The trade negotiations ultimately fell apart. In May 2019, USTR announced its
`
`intent to raise the tariff rate on List 3 goods to 25%, effective either May 10, 2019 or June 1,
`
`2019, depending on the day of export. See Notice of Modification of Section 301 Action: China's
`
`Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and
`
`Innovation, 84 Fed. Reg. 20,459 (May 9, 2019) (“List 3 Rate Increase Notice”); see also
`
`Implementing Modification to Section 301 Action: China’s Acts, Policies, and Practices Related
`
`to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 21,892 (May 15,
`
`2019). The notice cited China’s decision to “retreat from specific commitments agreed to in
`
`earlier rounds” of negotiations as the basis for the increase in the duty rate. List 3 Rate Increase
`
`Notice, 84 Fed. Reg. at 20,459. Unlike with past imposition of new tariffs, USTR did not seek
`
`public comment but rather simply announced that the increase would occur. Id.
`
`43.
`
`The duties imposed on products covered by List 3 remain in effect as of the date
`
`of this Complaint. Exclusions from List 3 duties granted by USTR for a limited number of
`
`products have expired.
`
`B.
`
`44.
`
`List 4
`
`On May 17, 2019, a mere eight days after it published notice of its decision to
`
`increase the duty rate on imports covered by List 3, USTR announced its intent to proceed with
`
`yet another list—List 4—covering even more products subject to additional duties. Under
`
`
`
`
`16
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`

`

`Case 1:21-cv-00455-N/A Document 4 Filed 08/19/21 Page 17 of 23
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`USTR’s proposal, List 4 would impose an additional duty of 25% ad valorem on products worth
`
`$300 billion. Request for Comments Concerning Proposed Modification of Action Pursuant to
`
`Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual
`
`Property, and Innovation, 84 Fed. Reg. 22,564, 22,564 (May 19, 2019). USTR explained that its
`
`decision was motivated by China’s “retreat[] from specific commitments made in previous
`
`[negotiating] rounds [and] announce[ment of] f

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