Friederike Gorgens, previously with Arent Fox, joined Greenberg Traurig as of counsel in the firm's international trade practice. At Arent Fox, Gorgens was listed as one of the litigators in the case challenging lists 3 and 4A of the Section 301 China tariffs. Arent Fox is one of the largest law firms involved in the litigation, representing more than 50 of the lawsuits against the tariffs.
Section 301 Tariffs
Section 301 Tariffs are levied under the Trade Act of 1974 which grants the Office of the United States Trade Representative (USTR) authority to investigate and take action to protect U.S. rights from trade agreements and respond to foreign trade practices. Section 301 of the Trade Act of 1974 provides statutory means allowing the United States to impose sanctions on foreign countries violating U.S. trade agreements or engaging in acts that are “unjustifiable” or “unreasonable” and burdensome to U.S. commerce. Prior to 1995, the U.S. frequently used Section 301 to eliminate trade barriers and pressure other countries to open markets to U.S. goods.
The founding of the World Trade Organization in 1995 created an enforceable dispute settlement mechanism, reducing U.S. use of Section 301. The Trump Administration began using Section 301 in 2018 to unilaterally enforce tariffs on countries and industries it deemed unfair to U.S. industries. The Trump Administration adopted the policy shift to close what it deemed a persistent "trade gap" between the U.S. and foreign governments that it said disadvantaged U.S. firms. Additionally, it pointed to alleged weaknesses in the WTO trade dispute settlement process to justify many of its tariff actions—particularly against China. The administration also cited failures in previous trade agreements to enhance foreign market access for U.S. firms and workers.
The Trump Administration launched a Section 301 investigation into Chinese trade policies in August 2017. Following the investigation, President Trump ordered the USTR to take five tariff actions between 2018 and 2019. Almost three quarters of U.S. imports from China were subject to Section 301 tariffs, which ranged from 15% to 25%. The U.S. and China engaged in negotiations resulting in the “U.S.-China Phase One Trade Agreement”, signed in January 2020.
The Biden Administration took steps in 2021 to eliminate foreign policies subject to Section 301 investigations. The administration has extended and reinstated many of the tariffs enacted during the Trump administration but is conducting a review of all Section 301 actions against China.
The American Apparel and Footwear Association told President Joe Biden that the Section 301 exclusion that covers cloth masks will be expired on April 1, and that it needs to be extended past then, since the COVID-19 pandemic will not be over. They said in a news release that without that exclusion, the tariff rate on personal protective equipment will double.
Thompson Hine trade attorney Dan Ujczo expects the only activity on trade in the first eight months of Joe Biden's presidency will be on issues either so small that they don't make a splash -- such as the Miscellaneous Tariff Bill and the Generalized System of Preferences benefits program -- or on issues that have an immediate need for action.
The following lawsuits were filed at the Court of International Trade during the week of Feb. 15-21:
Katharine Tai, President Joe Biden’s nominee for U.S. trade representative, enjoys broad bipartisan support in Congress through her work as a USMCA negotiator when she was House Ways and Means Committee chief trade counsel, Nicole Bivens Collinson, Sandler Travis president-international trade and government relations, told a Sports & Fitness Industry Association webinar Feb. 23. Tai’s Senate Finance Committee confirmation hearing is set for 10 a.m. Feb. 25, and she’s going to be asked a lot of questions about the Biden administration’s posture toward the Section 301 tariffs on China, Collinson said. If all goes as well as expected with her confirmation process, Tai could be sworn in as USTR as soon as March 8, she said.
Some major publishing houses, along with several other smaller publishers, filed a lawsuit in the U.S. Court of International Trade challenging the legality of List 4A of the Section 301 tariffs on China goods. In a Feb. 17 filing, Hachette Book Group, HarperCollins Publishers, Penguin Random House and Simon & Schuster, with others, said the 10% tariff extension to more than $120 billion in List 4A goods violated the Administrative Procedure Act -- a legal theory used by more than 3,500 other companies in similar cases against the tariffs. Also party to the suit are Bloomsbury Publishing, HarperCollins Christian Publishing, Holtzbrinck Publishers, Storey Publishing, Teacher Created Materials, The Experiment, Timber Press and Workman Publishing.
Many expect trade policy under the Biden administration to be more worker-focused than consumer-focused, but many specifics remain undecided. “The jury is still out on what that pro-worker trade policy will look like in practice,” said Joshua Boswell, a lawyer at Crowell & Moring. Boswell spoke to a webinar audience Feb. 17 on the 2021 trade outlook and said such predictions don't tell you much about tariffs, free trade negotiations or trade remedies in and of themselves.
TCL Communication Technology Holdings’ North American smartphone subsidiary became one of the largest importers to join the massive Section 301 litigation when it filed a complaint Feb. 12 in the Court of International Trade. Like the roughly 3,500 other lawsuits inundating the court, TCT Mobile (US) seeks to get the lists 3 and 4A tariffs on Chinese goods vacated and the duties refunded with interest. TCT's claims “accrued with each and every entry of products” with List 3 or List 4A tariff exposure, the company said. The “instant action” was filed within two years of the date that TCT paid the lists 3 and 4A duties, it said, satisfying the court’s two-year statute of limitations on the timeliness of complaints.
The following lawsuits were filed at the Court of International Trade during the week of Feb.8-14:
Board members and people who provide services to foreign-trade zones talked about what the National Association of Foreign-Trade Zones should work on now that it lost the battle on USMCA rules of origin treatment for goods produced in those zones. “Now that provision’s back in the act, it’s going to be a real challenge,” said Melissa Irmen, chair of the NAFTZ board. The group wants to make sure a U.S.-United Kingdom free trade agreement doesn't prohibit goods made in FTZs from qualifying for rules of origin, as USMCA does. “They are concerned that the USMCA approach could be a precedent.”