Case 1:21-cv-00492-N/A Document 2 Filed 08/20/21 Page 1 of 27
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` Court No. 21-00492
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`UNITED STATES COURT OF INTERNATIONAL TRADE
`__________________________________________
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`INTEL CORPORATION, and
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`INTEL AMERICAS, INC.
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`Plaintiffs,
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`v.
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`THE UNITED STATES;
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`OFFICE OF THE UNITED STATES TRADE
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`REPRESENTATIVE;
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`KATHERINE C. TAI, IN HER OFFICIAL
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`CAPACITY AS U.S. TRADE
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`REPRESENTATIVE;
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`UNITED STATES CUSTOMS AND BORDER
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`PROTECTION; and
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`TROY A. MILLER, IN HIS OFFICIAL
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`CAPACITY AS ACTING COMMISSIONER
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`OF U.S. CUSTOMS AND BORDER
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`PROTECTION,
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`Defendants.
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`__________________________________________)
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`COMPLAINT
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`Plaintiffs Intel Corporation and Intel Americas, Inc., by and through their attorneys, bring
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`this civil action, alleging the following:
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`SUMMARY
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`1.
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`This action concerns Defendants’ imposition of tariffs purportedly promulgated
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`pursuant to Section 301 of the Trade Act of 1974 (“Trade Act”), 19 U.S.C. § 2411 in furtherance—
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`and escalation—of an unprecedented trade war with the People’s Republic of China. Specifically,
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`Intel challenges Defendants’ unlawful imposition of a third and fourth round of Section 301 tariffs
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`on certain imported merchandise of Chinese origin, referred to as the “List 3” and “List 4A” tariffs.
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`Notice of Modification of Section 301 Action: China’s Acts, Policies, and Practices Related to
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`Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 47,974 (Sept. 21, 2018)
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`1
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`Case 1:21-cv-00492-N/A Document 2 Filed 08/20/21 Page 2 of 27
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`(publishing List 3); 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) (publishing List 4A).
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`2.
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`Article I, Section 8 of the U.S. Constitution entrusts the power “{t}o regulate
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`Commerce with foreign Nations” to Congress. The President and subordinate organs of the
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`executive branch—including Defendants—may regulate commerce with foreign nations only
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`pursuant to a valid delegation of power by Congress. The Trade Act is such a limited delegation
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`of Congressional power, pursuant to which the Office of the United States Trade Representative
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`(“USTR”) may initiate an investigation to determine whether a foreign nation has engaged in
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`unfair trade practices and, within twelve months, determine what action the United States shall
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`take to respond to those unfair trade practices. The Trade Act does not bestow upon Defendants
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`unbounded trade war powers or provision them with an unlimited arsenal for waging that trade
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`war at the time of Defendants’ choosing and by whatever means Defendants may choose.
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`3.
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`On August 18, 2017, USTR initiated an investigation into China’s unfair
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`intellectual property policies and practices pursuant to Section 301. Pursuant to Section 304 of the
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`Trade Act, 19 U.S.C. § 2414, USTR had to determine what action to take, if any, within 12 months
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`after initiation of that investigation, i.e., by August 18, 2018, which is precisely what USTR
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`initially did. After determining that China’s intellectual trade practices imposed an unfair burden
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`on U.S. trade, and that the appropriate action in response would be a 25 percent ad valorem tariff
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`on merchandise imported from China with an aggregate annual trade value of approximately $50
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`billion, USTR implemented this 25 percent tariff via “List 1” on June 20, 2018 and “List 2” on
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`August 16, 2018. List 1 (covering approximately $34 billion in aggregate annual imports) and List
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`2 (approximately $16 billion) explicitly addressed the Chinese intellectual property practices that
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`2
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`Case 1:21-cv-00492-N/A Document 2 Filed 08/20/21 Page 3 of 27
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`were the subject of USTR’s Section 301 investigation and conformed to the $50 billion aggregate
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`import value that USTR determined to be an appropriate response.
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`4.
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`List 3 and List 4A bear little resemblance to those earlier trade actions. First, USTR
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`did not promulgate either List 3 (September 21, 2018) or List 4A (August 20, 2019) within the
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`twelve-month window provided by Section 304, which expired August 18, 2018. Second, neither
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`List 3 nor List 4A were promulgated in response to the Chinese intellectual property practices that
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`were the subject of USTR’s Section 301 investigation. Rather, USTR promulgated List 3 and List
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`4A in response to China’s imposition of certain retaliatory tariffs and other Chinese actions
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`unrelated to intellectual property. Thus, Defendants lacked power under Section 304 to promulgate
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`or implement the List 3 and List 4A tariffs.
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`5.
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`Nor may USTR fall back on its authority—under Section 307 of the Trade Act, 19
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`U.S.C. § 2417—to “modify” a prior action under Section 301. Section 307 only permits USTR to
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`modify its prior action when the unfair trade practice that was the subject of the Section 301
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`investigation either increases or decreases, or to terminate or otherwise limit its prior action when
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`USTR determines that the action “is no longer appropriate.” Section 307 does not permit USTR to
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`impose new tariffs for a reason different from the unfair trade practices it investigated under
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`Section 301.
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`6.
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`The arbitrary manner in which Defendants implemented the List 3 and List 4A tariff
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`actions also violates the Administrative Procedure Act (“APA”). USTR (1) failed to provide
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`sufficient opportunity for comment, particularly because it required interested parties to submit
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`affirmative and rebuttal comments on the same day; (2) failed to consider relevant factors when
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`making its decision, such as whether there was any “increased burden” imposed on U.S. commerce
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`due to the unfair intellectual property practices that it originally investigated; and (3) failed to
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`3
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`Case 1:21-cv-00492-N/A Document 2 Filed 08/20/21 Page 4 of 27
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`connect its decisions to the factual record. Indeed, despite receiving over 6,000 comments,
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`including comments from Plaintiffs, USTR provided no analysis regarding how those comments
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`shaped its final promulgation of List 3 or List 4A. USTR’s preordained decision-making bears no
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`resemblance to the standards that the APA demands.
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`7.
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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 List 4A.
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`JURISDICTION
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`8.
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`This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1581(i)(1)(B),
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`which provides that “the U.S. Court of International Trade shall have exclusive jurisdiction of any
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`civil action commenced against the United States, its agencies, or its officers, that arises out of any
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`law of the United States providing for . . . tariffs, duties, fees, or other taxes on the importation of
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`merchandise for reasons other than the raising of revenue.”
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`PARTIES
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`9.
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`Plaintiff Intel Corporation (“Intel”) is a publicly traded company (NASDAQ INTC)
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`headquartered in Santa Clara, California. Intel Corporation is a world leader in the design and
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`manufacturing of essential products and technologies that power the cloud and an increasingly
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`smart, connected world. The company has approximately 110,600 employees worldwide,
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`approximately half of which are in offices around the United States. Intel Corporation has made
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`numerous entries of merchandise subject to List 3—including, but not limited to Intel NUC (Next
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`Unit of Computing) small form factor computers, server systems, computer components, server
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`components, bare printed circuit boards, power supplies, static converters, Intel RealSense
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`cameras, cables, glass wafers, quartz sleeves, and copper laminates, which fall under HTSUS
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`subheadings 7020.00.60, 7409.19.50, 8471.50.01, 8471.80.10, 8473.30.11, 8473.30.51,
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`4
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`Case 1:21-cv-00492-N/A Document 2 Filed 08/20/21 Page 5 of 27
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`8504.40.60, 8504.40.95, 8534.00.00, 8537.10.91, 8544.20.00, 8544.42.20 and 8544.42.90—and
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`as importer of record has paid the additional ad valorem duties for these subject products. Intel
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`Corporation has also made numerous entries of merchandise subject to List 4A—including, but
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`not limited to solid state drives, network interface cards, fiberoptic network components, antennas,
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`EMI (electro-magnetic interference) shields, and computer systems, which fall under HTSUS
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`subheadings 8471.49.00, 8517.62.00, 8517.70.00 and 8523.51.00—and as importer of record has
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`paid the additional ad valorem duties for these subject products.
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`10.
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`Plaintiff Intel Americas, Inc. (“Intel Americas”), is a wholly-owned subsidiary of
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`Intel headquartered in Santa Clara, California. Intel Americas purchases products from Intel and
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`certain affiliates and resells them to third parties. The company has approximately 2,700
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`employees. Intel Americas has made numerous entries of merchandise subject to List 3—
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`including, but not limited to Intel NUC small form factor computers, server systems, computer
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`components, server components, bare printed circuit boards, power supplies, static converters,
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`Intel RealSense cameras, cables, which fall under HTSUS subheadings 8471.50.01, 8471.80.10,
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`8473.30.11, 8473.30.51, 8504.40.60, 8504.40.95, 8534.00.00, 8537.10.91, 8544.20.00,
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`8544.42.20 and 8544.42.90—and as importer of record has paid the additional ad valorem duties
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`for these subject products. Intel Americas has also made numerous entries of merchandise subject
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`to List 4A—including, but not limited to solid state drives, network interface cards, fiberoptic
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`network components, antennas, and EMI shields, which fall under HTSUS subheadings
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`8517.62.00, 8517.70.00 and 8523.51.00—and as importer of record has paid the additional ad
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`valorem duties for these subject products.
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`11.
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`Defendant United States is the recipient and beneficiary of the List 3 and List 4A
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`tariffs at issue and is the statutory defendant under 5 U.S.C. § 702 and 28 U.S.C. § 1581(i)(1)(B).
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`12.
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`Defendant 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 that is the purported legal basis for List 3 and list 4A, promulgated
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`List 3 and List 4A, and made numerous decisions at issue in this case regarding List 3 and List 4A.
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`13.
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`Defendant Ambassador Katherine Tai currently holds the position of United States
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`Trade Representative and serves as head of the USTR. In these capacities, she makes numerous
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`decisions regarding List 3 and List 4A. She is sued in her official capacity only.
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`14.
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`Defendant United States Customs and Border Protection (“CBP”) is the agency that
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`assesses and enforces the tariffs imposed under List 3 and List 4A. CBP has collected payments
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`made by Plaintiffs for the tariffs imposed under List 3 and List 4A.
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`15.
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`Defendant Troy A. Miller 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 List 4A. He is sued in his
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`official capacity only.
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`STANDING
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`16.
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` Plaintiffs have standing to bring this action pursuant to 28 U.S.C. § 2631(i), which
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`states that “{a}ny civil action of which the Court of International Trade has jurisdiction, other than
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`an action specified in subsections (a)–(h), may be commenced in the court by any person adversely
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`affected or aggrieved by agency action within the meaning of section 702 of title 5,” and under the
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`APA, 5 U.S.C. § 702, which states that “{a} person suffering legal wrong because of agency
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`action, or adversely affected or aggrieved by agency action within the meaning of a relevant
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`statute, is entitled to judicial review thereof.” Tariffs imposed by Defendants pursuant to List 3
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`and List 4A adversely affected and aggrieved Intel and Intel Americas because each company was
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`required to pay these unlawful duties.
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`Case 1:21-cv-00492-N/A Document 2 Filed 08/20/21 Page 7 of 27
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`TIMELINES OF ACTION
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`17.
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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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`18.
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`Plaintiffs’ cause of action accrues on the date of injury, which, with respect to a
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`particular entry of merchandise, is the date on which the entry is liquidated and the duties for that
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`entry are definitively assessed.
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`19.
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`In addition, to the extent the instant action contests action taken by Defendants that
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`resulted in List 4A, Plaintiffs’ claims accrued at the earliest on August 20, 2019, when USTR
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`published notice of List 4 in the Federal Register.
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`20.
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`Plaintiff has therefore timely filed this action with respect to any entry of
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`merchandise on which List 4A duties have been assessed, and any entry of merchandise on which
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`List 3 duties were not definitively assessed before August 20, 2019.
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`RELEVANT LAW
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`21.
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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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`22.
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`Section 304 of the Trade Act requires USTR to determine whether to take action
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`based on the conclusions of its investigation, and if so, what action to take, within 12 months after
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`the initiation of the underlying investigation. Id. § 2414(a)(1)(B), (2)(B).
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`23.
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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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`Case 1:21-cv-00492-N/A Document 2 Filed 08/20/21 Page 8 of 27
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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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`24.
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`On August 14, 2017, President Donald J. Trump directed USTR to consider
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`initiating a targeted investigation pursuant to Section 301(b) of the Trade Act concerning China’s
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`laws, policies, practices, and actions related to intellectual property, innovation, and technology.
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`Addressing China’s Laws, Policies, Practices, and Actions Related to Intellectual Property,
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`Innovation, and Technology, 82 Fed. Reg. 39,007 (Aug. 17, 2017). According to the President,
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`certain Chinese “laws, policies, practices, and actions” on intellectual property, innovation, and
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`technology “may inhibit United States exports, deprive United States citizens of fair remuneration
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`for their innovations, divert American jobs to workers in China, contribute to our trade deficit with
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`China, and otherwise undermine American manufacturing, services, and innovation.” Id.
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`25.
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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).
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`26.
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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, Findings
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`of the Investigation Into China’s Acts, Policies, And Practices Related to Technology Transfer,
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`Intellectual Property, and Innovation Under Section 301 of The Trade Act of 1974 (Mar. 22, 2018),
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`available at https://ustr.gov/sites/default/files/Section%20301%20FINAL.PDF. USTR found that
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`certain “acts, policies, and practices of the Chinese government related to technology transfer,
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`intellectual property, and innovation are unreasonable or discriminatory and burden or restrict U.S.
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`commerce.” Id. at 17. USTR based its findings on (1) China’s use of foreign ownership restrictions,
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`foreign investment restrictions, and administrative licensing and approval processes to pressure
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`technology transfers from U.S. to Chinese companies, id. at 45; (2) China’s use of licensing
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`processes to transfer technologies from U.S. to Chinese companies on terms that favor Chinese
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`recipients, id. at 48; (3) China’s facilitation of systematic investment in, and acquisition of, U.S.
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`companies and assets by Chinese entities to obtain technologies and intellectual property for
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`purposes of large-scale technology transfer, id. at 147; and (4) China’s cyber intrusions into U.S.
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`computer networks to gain access to valuable business information, id. at 171. In its report, USTR
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`did not quantify the burden or restriction imposed on U.S. commerce by the investigated practices.
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`27.
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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 estimate 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-us/
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`policy-offices/press-office/fact-sheets/2018/march/Section-301-fact-sheet. USTR indicated that at
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`President Trump’s direction, it would “propose additional tariffs” of 25 percent ad valorem “on
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`certain products of China, with an annual trade value commensurate with the harm caused to the
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`U.S. economy resulting from China’s unfair policies.” Id.; see Actions by the United States Related
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`to the Section 301 Investigation of China’s Laws, Policies, Practices, or Actions Related to
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`Technology 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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`Case 1:21-cv-00492-N/A Document 2 Filed 08/20/21 Page 10 of 27
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`II.
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`LIST 1 AND LIST 2
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`28.
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`Accordingly, and as set forth in greater detail below, between April and August
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`2018—i.e., within the 12-month statutory deadline from the initiation of the investigation—
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`Defendants 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. These actions, which resulted in the “List 1” and “List 2”
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`tariffs, ultimately imposed the precise remedy announced by USTR in its March 2018 “Fact
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`Sheet”: 25 percent ad valorem duties on imports from China with an aggregate annual value of
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`$50 billion.
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`29.
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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 the $50-
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`billion amount because it was “commensurate with an economic analysis of the harm caused by
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`China’s unreasonable technology transfer policies to the U.S. economy, as covered by USTR’s
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`Section 301 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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`30.
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`On June 20, 2018, following public comment on its prior proposal, USTR published
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`notice of its final list of products subject to an additional duty of 25 percent ad valorem, commonly
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`known as “List 1.” Notice of Action and Request for Public Comment Concerning Proposed
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`Case 1:21-cv-00492-N/A Document 2 Filed 08/20/21 Page 11 of 27
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`Determination of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related
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`to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 28,710 (June 20,
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`2018). USTR explained that it had “narrow[ed] the proposed list in the April 6, 2018 notice to 818
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`tariff subheadings, with an approximate annual trade value of $34 billion.” Id. at 28,711.
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`31.
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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 percent 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 investigation. Id. at
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`28,712. USTR therefore 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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`32.
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`On August 16, 2018, following public comment on its List 2 proposal, USTR
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`published notice of the final list of products subject to an additional duty of 25 percent ad valorem
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`in List 2, comprising “279 tariff subheadings” whose “annual trade value . . . remains
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`approximately $16 billion.” Notice of Action Pursuant to Section 301: China’s Acts, Policies, and
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`Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg.
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`40,823, 40,823-24 (Aug. 16, 2018).
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`33.
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`In addition to being promulgated within the twelve-month window permitted by
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`Section 304, List 1 and List 2 were an explicit response to China’s “acts, policies, and practices
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`related to technology transfer, intellectual property, and innovation,” which USTR had found to
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`be “unreasonable or discriminatory and burden or restrict U.S. commerce.” 83 Fed. Reg. at 28,711
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`(List 1); Id. at 40,823 (List 2). They were also commensurate with USTR’s assessment of the
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`magnitude of the burden imposed on U.S. commerce by the investigated practices. Id. at 28,711;
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`Id. at 40,823.
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`III. LIST 3 AND LIST 4
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`34.
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`Unfortunately, List 1 and List 2 would prove to be an early volley in what would
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`become an increasingly bitter trade war between the United States and China. But while the Trade
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`Act may have authorized this initial action, Defendants erred when they attempted to use the Trade
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`Act to wage the entire war. In the year following USTR’s issuance of List 1 and List 2, Defendants
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`substantially and unlawfully expanded the scope of the tariffs imposed under Section 301 of the
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`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—in response to Chinese
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`policies and practices that were not the subject of the USTR’s investigation.
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`A.
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`35.
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`List 3
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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 threatened to impose retaliatory duties on the
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`same value of imports from the United States. In response, President Trump “instructed the USTR
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`to consider whether $100 billion of additional tariffs would be appropriate under Section 301” due
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`to “China’s unfair retaliation.” THE WHITE HOUSE, Statement from Donald J. Trump on Additional
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`Proposed Section 301 Remedies (Apr. 5, 2018), available at https://www.whitehouse.gov/
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`briefings-statements/statement-president-donald-j-trump-additional-proposed-section-301-
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`remedies/.
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`36. When USTR finalized List 1 in June 2018, President Trump warned China that he
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`would consider imposing additional tariffs on Chinese goods if China retaliated against the United
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`States. See e.g., Vicki Needham & Max Greenwood, Trump Announces Tariffs on $50 Billion in
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`Chinese Goods, THE HILL (June 15, 2018), available at http://thehill.com/homenews/
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`administration/392421-trump-announces-tariffs-on-50-billion-in-chinese-goods (“The president
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`said the United States will pursue additional tariffs if China retaliates ‘such as imposing new tariffs
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`on United States goods, services or agricultural products; raising non-tariff barriers; or taking
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`punitive actions against American exporters or American companies operating in China.’”).
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`37.
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`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
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`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 HOUSE,
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`Statement 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-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.”).
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`38.
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`Acknowledging the purpose of the President’s directive, USTR stated that it would
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`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
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`TRADE REPRESENTATIVE, USTR Robert Lighthizer Statement on the President’s Additional China
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`Trade Action (June 18, 2018), available at https://ustr.gov/about-us/policy-offices/press-office/
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`press-releases/2018/june/ustr-robert-lighthizer-statement-0 (explaining that, although Lists 1 and
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`2 “were proportionate and responsive to forced technology transfer and intellectual property theft
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`by the Chinese” identified in the Section 301 investigation, the proposed duties for a third list of
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`products were necessary to respond to the retaliatory and “unjustified tariffs” that China may
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`impose to target “U.S. workers, farmers, ranchers, and businesses”).
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`13
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`Case 1:21-cv-00492-N/A Document 2 Filed 08/20/21 Page 14 of 27
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`39.
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`Following through on its own earlier threat, China retaliated by imposing 25 percent
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`ad valorem tariffs on $50 billion in U.S. goods implemented in two stages of $34 billion and $16
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`billion on the same dates the United States began collecting its own 25 percent tariffs under List 1
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`(July 6, 2018) and List 2 (August 23, 2018).
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`40.
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`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
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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
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`any, of the President with respect to such action, . . . if . . . such action is being taken under [Section
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`301(b)] of this title and is no longer appropriate.” Id. at 33,609 (citing 19 U.S.C. § 2417(a)(1)(c)).
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`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.
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`41.
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`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
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`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 ($50
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`Case 1:21-cv-00492-N/A Document 2 Filed 08/20/21 Page 15 of 27
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`billion) and the level of Chinese goods imported into the United States ($505 billion in 2017).”
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`Id.; see also id. (Because “China’s retaliatory action covers a substantial percentage of U.S. goods
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`exported to China ($130 billion in 2017),” “the level of the U.S. supplemental action must cover a
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`substantial percentage of Chinese imports.”). Although it pointed to China’s retaliatory measures,
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`USTR did not identify any increased burdens or restrictions on U.S. commerce resulting from the
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`unfair practices that USTR had investigated. See id.
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`42.
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`USTR’s contemporaneous press statements corroborated that China’s retaliatory
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`duties motivated its proposed action. Ambassador Lighthizer stated that the proposed action came
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`“[a]s a result of China’s retaliation and failure to change its practice.” OFFICE OF THE UNITED
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`STATES TRADE REPRESENTATIVE, Statement by U.S. Trade Representative Robert Lighthizer on
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`Section 301 Action (July 10, 2018), available at https://ustr.gov/about-us/policy-offices/press-
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`office/press-releases/2018/july/statement-us-trade-representative.
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`43.
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`Ambassador Lighthizer subsequently announced that, in light of China’s retaliatory
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`duties, USTR would propose to increase the additional duty from 10 percent to 25 percent ad
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`valorem. 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. workers,
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`farmers, ranchers and businesses.” OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE,
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`Statement by U.S. Trade Representative Robert Lighthizer on Section 301 Action (Aug. 1, 2018),
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`available
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`at
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`https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/august/
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`statement-us-trade-representative.
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`44.
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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 25
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`percent.” Extension of Public Comment Period Concerning Proposed Modification of Action
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`15
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`Case 1:21-cv-00492-N/A Document 2 Filed 08/20/21 Page 16 of 27
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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 301
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`Tariff List (Aug. 17, 2018) (modifying hearing schedule), available at https://ustr.gov/about-us/
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`policy-offices/press-office/press-releases/2018/august/public-hearings-proposed-section-301.
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`45.
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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://regulations.gov/document/USTR-2018-0026-0001. Despite
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`those obstacles, approximately 350