Yesterday, in an unprecedented “section 301” lawsuit, the U.S. Court of International Trade (CIT) issued a preliminary injunction to suspend the liquidation of the plaintiff’s unliquidated items in China, which were subject to the so-called “section 301”. 301 clause. List 3″ and “List 4A”. Because this decision will affect more than 6,500 Chinese plaintiffs who have already filed a lawsuit, as well as other companies that may be considered for entering the case.
In August 2017, the Office of the United States Trade Representative (USTR) launched an investigation into China’s intellectual property practices. The Office of the United States Trade Representative announced the results of the investigation in March 2018 and initially took commensurate measures to address China’s unfair trade practices. But when China retaliated with tit-for-tat import tariffs, the U.S. Trade Representative’s Office launched a trade war, which eventually resulted in additional tariffs being imposed on most of the goods imported from China. In September 2018 and August 2019, the Office of the United States Trade Representative issued two lists-one is called List 3 and the other is called List 4A-for goods imported from China over US$300 billion An additional tariff ranging from 7.5% to 25% is imposed.
In September 2020, Akin Gump filed a lawsuit on behalf of four plaintiffs, alleging that List 3 and List 4A exceeded the authority of the Office of the United States Trade Representative under the trade law and violated the administrative procedure law in other respects. Since then, CIT has received more than 3,800 follow-up challenges involving more than 6,500 plaintiffs. Due to the unprecedented nature of the lawsuit, CIT assigned all the lawsuits to a panel of three judges, with the Akin Gump lawsuit filed first as the main case.
In April 2021, after months of silence, the U.S. government announced-breaking the binding precedent and its own recent practices-it believes that even if the plaintiff wins the case, CIT has no right to order the refund of List 3 or List paid after liquidation. 4A tariffs are on the merits. To protect their ability to seek refunds for such tariffs, the plaintiffs filed a preliminary injunction motion for suspension of liquidation.
On July 6, 2021, after a briefing and oral arguments, the three judges CIT issued a disagreement and agreed to the plaintiff’s preliminary injunction request to suspend the liquidation of unliquidated items subject to the obligations of List 3 and List 4A.
Judge Kelly wrote to himself and Judge Choe-Groves, agreeing with the plaintiff’s opinion that they have met the conditions of the preliminary injunction: given the uncertainty caused by the government’s position on refunds, if there is no interim relief, the plaintiff will suffer irreparable Harm; the plaintiff raised “sufficiently serious and substantive issues” on the merits of the case; equity and public interest are beneficial to the plaintiff. Chief Justice Barnett disagrees, but his disagreement with most people is limited: in his opinion, it is impossible to cause irreparable damage, because CIT clearly has the right to order refunds based on the jurisdictional statutes and the precedent of the Federal Circuit. Liquidated and unliquidated items (as claimed by the plaintiff), despite the government’s new position to the contrary.
CIT has now temporarily restricted the liquidation of any items in the next 28 days and ordered the U.S. government to establish a repository through which the plaintiff who filed a lawsuit can identify any outstanding items affected by the tariffs on List 3 and List 4A. For all such identified items, the U.S. government must either stipulate the availability of refunds or suspend liquidation to ensure the availability of refunds for duties paid if the plaintiff wins.
Disclaimer: Due to the generality of this update, the information provided here may not be applicable to all situations, and action should not be taken without specific legal advice based on specific circumstances.
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