CTA Shopping Draft Complaint Among Trade Groups to Block Jan. 1 Tariff Hike
CTA hired Akin Gump to draft a complaint that, if pursued in the U.S. Court of International Trade, would seek a preliminary injunction blocking the Trade Act Section 301 tariffs on $200 billion of Chinese imports before the duties are scheduled to rise to 25 percent on Jan. 1, we learned from those familiar with the plans. The association is shopping the draft around with other anti-tariff trade groups, seeking their legal and financial backing to support a court challenge, they said.
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Association staffers briefed CTA members on the strategy during their annual Innovate Celebrate conference two weeks ago in Boston (see 1810160002), our sources said. Though CTA hasn’t persuaded another trade group to “step up to the plate yet,” there’s time to win backing for challenging the U.S. Trade Representative because no court action would be contemplated before January, said one high-placed individual in the CTA membership.
We canvassed roughly a half-dozen trade groups whose opposition to the tariffs is well-documented to gauge their interest in participating in and contributing resources to a court challenge. Few commented Monday, except for the Telecommunications Industry Association, which took itself out of the running, at least for now. "At this time TIA does not plan to join the litigation," emailed the group.
CTA wouldn't confirm or deny the strategy of drafting the complaint or shopping it around to other trade groups. "We are skeptical the $200 billion tariffs will be upheld in court if challenged," emailed CTA President Gary Shapiro Monday. "The extraordinary, six-day hearing before the USTR where nearly 300 businesses testified against tariffs is a testament that the administration is misguided on this issue," said Shapiro of the public testimony in August.
Though CTA doesn’t feel “there’s a lot of profit” in taking the Trump administration to court, it's responsive to the rank-and-file fear that the tariffs threaten to “really hurt” many members, said another individual who also attended the Boston briefings. If it "becomes clear" that the hike to 25 percent will inevitably take effect as scheduled on Jan. 1, there will be mounting member pressure on CTA to pursue a court case because the cost increase of the tariffs would be more than any entity would be able to "absorb," said the individual: “I don’t think CTA will go it alone, so I think it’s in the hands of these other organizations.”
CTA used Akin Gump to draft the association’s Sept. 6 comments in docket USTR-2018-0026, in which it first floated the idea publicly of a possible legal challenge to the tariffs, based on arguments that the USTR exceeded his authority under the 1974 Trade Act (see 1809070032). The statute doesn't permit the administration to use its original Section 301 investigation as a pretense to engage in an open-ended trade war, which is what CTA alleges the White House did when it imposed the third tranche of 10 percent tariffs Sept. 24, said those familiar with the association’s legal arguments. CTA also alleges the USTR violated statutory deadlines and exceeded his powers to modify the tariffs when he ordered them hiked to 25 percent, said the people.
The third tranche was the administration’s response to Chinese retaliatory actions that post date the appropriate action the USTR took under his original Section 301 investigation, said the individuals of CTA's argument. There’s no precedent for that in the 44-year history of the Trade Act, they said.
But nor is there much, if any, case law interpreting the USTR’s authority under court challenges, several legal scholars previously told us (see 1809170022). For CTA, the “difficulty" of its case is "the degree to which the statute gives broad discretion to the President and USTR in a way that makes it hard to challenge their actions, coupled with the strong evidence that China has indeed engaged in widespread IP theft, forced tech transfers and such,” emailed one scholar.