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Case 1:22-cv-00012-N/A Document 2 Filed 01/19/22 Page 1 of 21
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`Court No. 22-00012
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`UNITED STATES COURT OF INTERNATIONAL TRADE
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`PHARMAX N. A. INC.,
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`Plaintiff,
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`UNITED STATES;
`OFFICE OF THE UNITED STATES TRADE
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`REPRESENTATIVE; U.S. TRADE REPRESENTATIVE; :
`U.S. CUSTOMS & BORDER PROTECTION;
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`U.S. CUSTOMS & BORDER PROTECTION
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`COMMISSIONER,
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`Defendants.
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`COMPLAINT
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`PHARMAX N. A. INC. (“Plaintiff”), by its undersigned attorneys, alleges the following:
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`1.
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`This action concerns Defendants’ unlawful imposition of ad valorem tariffs on
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`goods, 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 Representative
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`(“USTR”) conducted an investigation into China’s unfair intellectual property policies and
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`practices pursuant to Section 301 of the Trade Act. Section 304 of the Trade Act (19 U.S.C. §
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`2414) requires the USTR to determine what action to take, if any, within 12 months after initiation
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`of the investigation. Within the 12 months following initiation of the investigation, the USTR
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`determined to impose import tariffs on goods from China pursuant to Section 301(b) of the Trade
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`Act on two groupings of tariff codes, commonly referred to as “List 1” and “List 2.” USTR
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`subsequently implemented tariffs on additional tariff codes, known as “List 3” and “List 4A,” but
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`failed to do so within 12 months after initiation of the investigation. Section 307 of the Trade Act
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`(19 U.S.C. § 2417) authorizes USTR to modify a prior valid action under Section 301(b), but does
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`Case 1:22-cv-00012-N/A Document 2 Filed 01/19/22 Page 2 of 21
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`not authorize USTR to impose additional tariffs not tied to the acts, policies or practices that are
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`the subject of the investigation. USTR’s determination to implement tariffs on List 3 and List 4
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`was not a valid modification of its initial action because it was not based on the acts, policies or
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`practices covered by the investigation. The arbitrary manner in which Defendants implemented
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`the List 3 and List 4 tariff actions also violates the Administrative Procedure Act (“APA”). USTR:
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`(1) failed to provide sufficient opportunity for comment, e.g., requiring 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, 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 (3) failed
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`to connect the record facts to the choices it made. Despite receiving over 6,000 comments, USTR
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`was silent as to its consideration of those comments in promulgating List 3.
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`2.
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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 any duties paid by Plaintiff pursuant to List
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`3 and/or List 4A with interest as provided by law.
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`JURISDICTION
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`3.
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`The Court possesses subject matter jurisdiction over this action pursuant to 28
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`U.S.C. § 1581(i)(1)(B), which confers “exclusive jurisdiction” to the Court over “any civil action
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`commenced against the United States, its agencies, or its officers, that arises out of any law of the
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`United States providing for . . . tariffs, duties, fees, or other taxes on the importation of merchandise
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`for reasons other than the raising of revenue.” 28 U.S.C. § 1581(i)(1)(B).
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`4.
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`Plaintiff is an importer of various products subject to duties under List 3 or 4A.
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`PARTIES
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`Case 1:22-cv-00012-N/A Document 2 Filed 01/19/22 Page 3 of 21
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`5.
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`Defendant United States received the disputed tariffs and is the statutory defendant
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`under 5 U.S.C. § 702 and 28 U.S.C. § 1581(i).
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`6.
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`USTR is an executive agency of the United States charged with investigating a
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`foreign 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 Section
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`301 investigation at issue and made numerous decisions regarding List 3 and List 4.
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`7.
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`Ambassador Robert Lighthizer formerly held the position of USTR and served as
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`the director of the Office of the USTR. In these capacities, he made numerous decisions regarding
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`List 3 and List 4.
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`8.
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`Defendant U.S. Customs & Border Protection (“CBP”) is the agency that collects
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`duties on imports. CBP collected payments made by Plaintiff to account for the tariffs imposed by
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`USTR under List 3 and List 4.
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`9.
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`Mark A. Morgan was the former Acting Commissioner of CBP. In this capacity, he
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`oversaw CBP’s collection of duties paid by Plaintiff under List 3 and/or List 4. Plaintiff has
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`standing to sue because it is “adversely affected or aggrieved by agency action within the meaning
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`of the APA. 5 U.S.C. § 702; 28 U.S.C. § 2631(i). Tariffs imposed by Defendants pursuant to List
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`3 and/or List 4A adversely affected and aggrieved Plaintiff because it was required to pay and did
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`pay these unlawful duties.
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`TIMELINESS OF THE ACTION
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`10.
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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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`11.
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`Plaintiff contests action taken by Defendants that resulted in List 3 and List 4 and
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`the subsequent imposition of tariffs on Plaintiff. Notice of Modification of Section 301 Action:
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`3
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`Case 1:22-cv-00012-N/A Document 2 Filed 01/19/22 Page 4 of 21
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`China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and
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`Innovation, 83 Fed. Reg. 47,974 (Sept. 21, 2018). Plaintiff’s claims accrued at the earliest on
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`September 24, 2018, when tariffs were first levied on goods on List 3 pursuant to the USTR’s
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`determination published in the Federal Register on September 21, 2018. Id. In some cases Plaintiff
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`was granted an exclusion for the payment of List 3 duties and did not have to begin to pay them
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`again until January 1, 2021. Plaintiff’s claims accrued with respect to entries where List 4a goods
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`were filed on or about September, 1, 2019, when List 4a was implemented and Plaintiff began to
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`pay List 4a duties on goods imported from China.
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`12.
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`The instant action was filed within two years of the date that Plaintiff paid the List
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`3 and List 4A duties.
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`RELEVANT LAW
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`13.
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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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`14.
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`Section 304 of the Trade Act requires USTR to determine what action to take, if
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`any, within 12 months after the initiation of the underlying investigation. Id. § 2414(a)(1)(B),
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`(2)(B).
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`15.
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`Section 307 of the Trade Act (in pertinent part) allows USTR to “modify or
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`terminate” an action taken pursuant to Section 301 of the Trade Act either when the “burden or
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`restriction on United States commerce” imposed by the investigated foreign country’s practice 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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`Case 1:22-cv-00012-N/A Document 2 Filed 01/19/22 Page 5 of 21
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`I.
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`USTR’s Investigation
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`16.
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`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 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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`17.
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`On August 18, 2017, USTR formally initiated an investigation into “whether acts,
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`policies, 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.” Initiation of
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`Section 301 Investigation; Hearing; and Request for Public Comments: China’s Acts, Policies,
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`and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 82 Fed. Reg.
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`40,213 (Aug. 24, 2017).
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`18.
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`On March 22, 2018, USTR released a report announcing the results of its
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`investigation. OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE , Findings of the
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`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.
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`19.
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`On March 22, 2018, 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-
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`us/policy-offices/press-office/fact-sheets/2018/march/Section-301-fact-sheet.
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`USTR
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`also
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`indicated that, consistent with a directive from President Trump, it would “propose additional
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`tariffs” of 25% ad valorem “on certain products of China, with an annual trade value
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`commensurate with the harm caused to the U.S. economy resulting from China’s unfair policies.”
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`Id.; see Actions by the United States Related to the Section 301 Investigation of China’s Laws,
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`Policies, Practices, or Actions Related to Technology Transfer, Intellectual Property, and
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`Innovation, 83 Fed. Reg. 13,099 (Mar. 27, 2018) (President Trump’s directive).
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`II.
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`Lists 1 & 2
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`20.
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`Between April and August 2018 (i.e., within the 12-month statutory deadline from
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`the initiation of the investigation in August 2017, see 19 U.S.C. § 2414(a)(2)(B)), Defendants
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`undertook a series of actions to remedy the estimated harm to the U.S. economy caused by the
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`investigated unfair practices, ultimately imposing duties on imports from China covered by the so-
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`called Lists 1 and 2.
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`21.
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`On April 6, 2018, USTR published notice of its intent to impose “an additional duty
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`of 25 percent on a list of products of Chinese origin.” Notice of Determination and Request for
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`Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China’s
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`Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and
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`Innovation, 83 Fed. Reg. 14,906, 14,907 (Apr. 6, 2018). The products on the proposed list covered
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`1,333 tariff subheadings with a total value of “approximately $50 billion in terms of estimated
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`annual trade value for calendar year 2018.” Id. at 14,907.USTR explained that it chose $50 billion
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`because that amount was “commensurate with an economic analysis of the harm caused by China’s
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`unreasonable technology transfer policies to the U.S. economy, as covered by USTR’s Section 301
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`investigation.” OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Under Section 301
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`Action, USTR 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-section-301-
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`action-ustr.
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`22.
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`On June 20, 2018, USTR published notice of its final list of products subject to an
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`additional duty of 25% ad valorem, a list commonly known as “List 1.” Notice of Action and
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`Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section
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`301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property,
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`and Innovation, 83 Fed. Reg. 28,710 (June 20, 2018). USTR explained that it had “narrow[ed] the
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`proposed list in the April 6, 2018 notice to 818 tariff subheadings, with an approximate annual
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`trade value of $34 billion.” Id. at 28,711.
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`23.
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`At the same time that it finalized List 1, USTR announced that it intended to impose
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`a 25% ad valorem duty on a second proposed list of Chinese products in order to “maintain the
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`effectiveness of [the] $50 billion trade action” grounded in its Section 301 investigation. Id. at
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`28,712. USTR announced a proposed “List 2” covering 284 tariff subheadings with “an
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`approximate annual trade value of $16 billion.” Id. at 28,711-12.
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`24.
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`On August 16, 2018, USTR published notice of the final list of products subject to
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`an additional duty of 25% ad valorem in List 2, comprising “279 tariff subheadings” whose
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`Case 1:22-cv-00012-N/A Document 2 Filed 01/19/22 Page 8 of 21
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`“annual trade value . . . remains approximately $16 billion.” Notice of Action Pursuant to Section
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`301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property,
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`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.
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`Following USTR’s issuance of the results of its investigation in March 2018,
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`Defendants broadly expanded the scope of the tariffs imposed under Section 301 of the Trade Act
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`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. Shortly after President Trump
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`directed USTR in April 2018 to consider imposing duties on $50 billion in Chinese products, China
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`promptly threatened to impose retaliatory duties on the same value of imports from the United
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`States. In response, President Trump “instructed the USTR to consider whether $100 billion of
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`additional tariffs would be appropriate under Section 301” due to “China’s unfair retaliation.” THE
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`WHITE HOUSE, Statement from Donald J. Trump on Additional Proposed Section 301 Remedies
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`(Apr. 5, 2018), available at https://www.whitehouse.gov/briefings-statements/statement-
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`president-donald-j-trump-additional-proposed-section-301-remedies/.
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`26. When USTR finalized List 1 in mid-June 2018, President Trump warned China that
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`he would consider imposing additional tariffs on Chinese goods if China retaliated against the
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`United States. E.g., Vicki Needham & Max Greenwood, Trump Announces Tariffs on $50 Billion
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`in
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`Chinese
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`Goods,
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`THE
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`HILL
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`(June
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`15,
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`2018),
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`available
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`at
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`http://thehill.com/homenews/administration/392421-trump-announces-tariffs-on-50-billion-in-
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`chinese-goods (“The president said the United States will pursue additional tariffs if China
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`retaliates ‘such as imposing new tariffs on United States goods, services or agricultural products;
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`Case 1:22-cv-00012-N/A Document 2 Filed 01/19/22 Page 9 of 21
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`raising non-tariff barriers; or taking punitive actions against American exporters or American
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`companies operating in China.’”).
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`27.
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`On June 18, 2018, President Trump formally directed USTR to consider whether
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`the United States should impose additional duties on products from China with an estimated trade
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`value of $200 billion—despite USTR having not yet implemented List 1 and List 2. President
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`Trump acknowledged that China’s threatened retaliatory “tariffs on $50 billion worth of United
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`States exports” motivated his decision. THE WHITE HOUSE, Statement from the President
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`Regarding Trade with China (June 18, 2018), available at https://www.whitehouse.gov/briefings-
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`statements/statement-president-regarding-trade-china-2/ (“This latest action by China clearly
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`indicates its determination to keep the United States at a permanent and unfair disadvantage, which
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`is reflected in our massive $376 billion trade imbalance in goods. This is unacceptable.”).
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`28.
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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 TRADE
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`REPRESENTATIVE, USTR Robert Lighthizer Statement on the President’s Additional China Trade
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`Action (June 18, 2018), available at https://ustr.gov/about-us/policy-offices/press-office/press-
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`releases/2018/june/ustr-robert-lighthizer-statement-0 (explaining that, although Lists 1 and 2
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`“were proportionate and responsive to forced technology transfer and intellectual property theft by
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`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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`Case 1:22-cv-00012-N/A Document 2 Filed 01/19/22 Page 10 of 21
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`29.
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`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 States began
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`collecting its own 25% tariffs under List 1 (July 6, 2018) and List 2 (August 23, 2018).
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`30.
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`About one week later, USTR published notice of its proposal to “modify the action
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`in this 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 percent ad
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`valorem duty on [a list of] products [from] China with an annual trade value of approximately
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`$200 billion.” Request for Comments Concerning Proposed Modification of Action Pursuant to
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`Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual
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`Property, and Innovation, 83 Fed. Reg. 33,608, 33,608 (July 17, 2018). USTR initially set a
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`deadline of August 17, 2018 for initial comments; August 20-23, 2018 for a public hearing; and
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`August 30, 2018 for rebuttal comments. Id. at 33,608.
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`31.
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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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`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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`Case 1:22-cv-00012-N/A Document 2 Filed 01/19/22 Page 11 of 21
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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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`32.
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`USTR’s contemporaneous press statements corroborated the contents of its notice:
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`China’s retaliatory duties motivated its proposed action. Ambassador Lighthizer stated that the
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`proposed action came “[a]s a result of China’s retaliation and failure to change its practice.”
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`OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE, Statement by U.S. Trade Representative
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`Robert Lighthizer on Section 301 Action (July 10, 2018), available at https://ustr.gov/about-
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`us/policy-offices/press-office/press-releases/2018/july/statement-us-trade-representative.
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`33.
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`On July 10, 2018, President Trump suggested that the United States’ trade
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`imbalance with China supported the decision. @realDonaldTrump, TWITTER (July 10, 2018, 9:17
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`PM EDT), https://twitter.com/realDonaldTrump/status/1005982266496094209. President Trump
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`also expressed his frustration over China’s purported manipulation of its currency and national
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`monetary policy, as well as his continued displeasure over China’s retaliatory tariffs and the
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`trade imbalance between the two nations. See, e.g., @realDonaldTrump, TWITTER (July 20,
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`2018, 8:43 AM EDT), https://twitter.com/realDonaldTrump/status/1020287981020729344;
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`@realDonaldTrump, TWITTER (July 20, 2018, 8:51 AM EDT),
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`https://twitter.com/realDonaldTrump/status/1020290163933630464; @realDonaldTrump,
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`TWITTER (July 25, 2018, 7:20 AM EDT), https://twitter.com/realDonaldTrump/status/
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`1022079127799701504; @realDonaldTrump, TWITTER (July 25, 2018, 7:01 AM EDT),
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`https://twitter.com/realDonaldTrump/ status/1022074252999225344.
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`34.
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`On August 1, 2018, Ambassador Lighthizer announced that, in light of China’s
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`retaliatory duties, USTR would propose to increase the additional duty from 10% to 25% ad
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`valorem. Rather than addressing the practices that USTR investigated pursuant to Section 301 of
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`11
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`Case 1:22-cv-00012-N/A Document 2 Filed 01/19/22 Page 12 of 21
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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 301
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`Action (Aug. 1, 2018), available at https://ustr.gov/about-us/policy-offices/press-office/press-
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`releases/2018/august/statement-us-trade-representative.
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`35.
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`On August 7, 2018, USTR formally proposed “raising the level of the additional
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`duty in 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: 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. 38,760, 38,760 (Aug. 7, 2018). USTR also set new dates for a public
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`hearing over six days ending on August 27, 2018. See id.; see also OFFICE OF THE UNITED STATES
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`TRADE REPRESENTATIVE, Public Hearings on Proposed Section 301 Tariff List (Aug. 17, 2018)
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`(modifying hearing schedule), available at https://ustr.gov/about-us/policyoffices/press-
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`office/press-releases/2018/august/public-hearings-proposed-section-301.
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`36.
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`At the same time, USTR adjusted the deadlines for the submission of written
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`comments, setting September 6, 2018—less than a month later—as the new deadline for both
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`initial and rebuttal comments from the public. 83 Fed. Reg. at 38,761. That adjustment, deviating
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`from its past practices, prevented both USTR and the public from considering initial comments at
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`the hearing, and left insufficient time for interested parties to review and respond to the initial
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`comments filed by other parties. USTR also limited each hearing participant to five minutes.
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`Docket No. USTR-2018-0026, https://beta.regulations.gov/document/USTR-2018-0026-0001.
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`Approximately 350 witnesses appeared at the six-day hearing, and the public submitted over 6,000
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`comments. Id.
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`Case 1:22-cv-00012-N/A Document 2 Filed 01/19/22 Page 13 of 21
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`37.
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`Just eleven days after receiving final comments from the public, President Trump
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`announced that he had directed USTR “to proceed with placing additional tariffs on roughly $200
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`billion of imports from China.” THE WHITE HOUSE, Statement from the President (Sep. 17, 2018)
`
`https://www.whitehouse.gov/briefings-statements/statement-from-the-president-4/. Once again,
`
`the President made clear that China’s response to the $50 billion tariff action (i.e., List 1 and List
`
`2 duties) motived 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.
`
`38.
`
`Following the President’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.
`
`39.
`
`As legal support for its action, USTR for the first time cited Section 307(a)(1)(B)
`
`of the Trade Act.
`
`40.
`
`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
`
`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
`
`
`
`
`13
`
`

`

`Case 1:22-cv-00012-N/A Document 2 Filed 01/19/22 Page 14 of 21
`
`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).
`
`41.
`
` In May 2019, when the trade negotiations ultimately fell apart, 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.
`
`42.
`
`The duties imposed on products covered by List 3 remain in effect as of the date of
`
`this Complaint, with the exception of a limited number of products for which USTR granted
`
`exclusions from the duties. See, e.g., Notice of Product Exclusion Extensions: China’s Acts,
`
`Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 85
`
`Fed. Reg. 48,600 (Aug. 11, 2020).
`
`43.
`
`On May 17, 2019, USTR announced its intent to proceed with List 4 covering even
`
`more products subject to additional duties. Under 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.
`
`
`
`
`14
`
`

`

`Case 1:22-cv-00012-N/A Document 2 Filed 01/19/22 Page 15 of 21
`
`22,564, 22,564 (May 17, 2019). USTR explained that its decision was motivated by China’s
`
`“retreat[] from specific commitments made in previous [negotiating] rounds [and] announce[ment
`
`of] further retaliatory action against U.S. commerce.” Id.
`
`44.
`
` USTR invited the public to comment on proposed List 4 and participate in a
`
`hearing. Id. The public submitted nearly 3,000 comments. Docket No. USTR-2019-0004,
`
`https://beta.regulations.gov/document/USTR-2019-0004-0001. The timeline for participation in
`
`the hearing left little room for meaningful input as USTR required witnesses to submit drafts of
`
`their testimony by June 10, 2019, some seven days before the deadline for fully developed written
`
`comments, and then it again limited witnesses to five minutes of testimony at the hearing. Id.
`
`45.
`
`On August 1, 2019, citing China’s failure to follow through on agricultural
`
`purchases and to reduce exports of fentanyl flowing into the United States, President Trump
`
`announced that the List 4 tariffs would become effective September 1, 2019 at a rate of 10% ad
`
`valorem. @realDonaldTrump,
`
`TWITTER
`
`(Aug.
`
`1,
`
`2019,
`
`1:26
`
`PM
`
`EDT),
`
`https://twitter.com/realDonaldTrump/status/1156979446877962243 (noting a “small additional
`
`Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into
`
`our Country”).
`
`46.
`
`On August 20, 2019, USTR issued a final notice adopting List 4 in two tranches.
`
`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).
`
`List 4A would impose a 10% ad valorem duty on goods worth roughly $120 billion, effective
`
`September 1, 2019. Id. at 43,304. List 4b would impose a 10% ad valorem duty on the remaining
`
`goods (with limited exclusions “based on health, safety, national security, and other factors”),
`
`effective December 15, 2019. Id. at 43,305. Once again, USTR did not address any of the nearly
`
`
`
`
`15
`
`

`

`Case 1:22-cv-00012-N/A Document 2 Filed 01/19/22 Page 16 of 21
`
`3,000 comments submitted or any of the testimony provided by witnesses, other than to claim that
`
`its determination “takes account of the public comments and the testimony.” Id.
`
`47.
`
`As legal support for its action, USTR again cited Section 307(a)(1)(B) and (C) of
`
`the Trade Act and pointed to “China’s subsequent defensive actions taken to maintain those unfair
`
`acts, policies, and practices as determined in that investigation,” including retaliatory tariffs on
`
`U.S. imports, retreating from commitments during negotiations, and devaluing its currency as a
`
`basis for this decision. Id.
`
`48.
`
`On August 30, 2019, USTR published notice of its decision to increase the tariff
`
`rate applicable to goods covered by List 4A and List 4B from 10% to 15%. Notice of Modification
`
`of Section 301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer,
`
`Intellectual Property, and Innovation, 84 Fed. Reg. 45,821 (Aug. 30, 2019). USTR explained that
`
`it increased the tariff rate because, shortly after it finalized List 4A and List 4B, “China responded
`
`by announcing further tariffs on U.S. goods.” Id. at 45,822. USTR once again cited to China’s
`
`retreat from its negotiation commitments and devaluation of its currency as grounds for its action.
`
`Id.
`
`49.
`
`On December 18, 2019, as a result of successfully negotiating a limited trade deal
`
`with China, USTR published notice that it would “suspend indefinitely the imposition of additional
`
`duties of 15 percent on products of China covered by” List 4B. Notice of Modification of Section
`
`301 Action: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual
`
`Property, and Innovation, 84 Fed. Reg. 69,447, 69,447 (Dec. 18, 2019). USTR also stated its intent
`
`to reduce the tariff rate applicable to products covered by List 4A, id., an action that ultimately
`
`became effective on February 14, 2020, when USTR halved the applicable duty rate, Notice of
`
`
`
`
`16
`

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