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Refund Updates Regarding Section 301 of the Trade Act of 1974 

December 11, 2020

The U.S. Court of International Trade’s (CIT) docket is overflowing these days, all thanks to importers who have initiated more than 3,500 actions to date challenging the Trump Administration’s use of Section 301 of the Trade Act of 1974 (the Act).  

Section 301 of the Trade Act of 1974 authorizes the USTR to impose duties to combat certain “unreasonable” or “discriminatory” trade acts by a foreign government. In the case of the Section 301 tariffs imposed against Chinese origin imports, the USTR initiated the investigation and initially imposed 25% tariffs on certain imports because of the failure of the Government of China to protect intellectual property of U.S. companies when exporting Chinese products to the U.S. market. 

Recent Lawsuits 

Lawsuits challenging the Trump Administration’s use of Section 301 are being filed under the CIT’s residual jurisdiction provision. Actions filed thereunder must be commenced “within two years after the cause of action first accrues.” An issue on everyone’s mind is how will the CIT determine the date of “first” accrual? Some may argue that the date of first accrual is importer-specific and depends on when the importer first entered and had additional Section 301 tariffs assessed on its imported List 3 and/or 4A Chinese-origin goods. Others may point to the U.S. Court of Appeals for the Federal Circuit and Ninth Circuit precedent that differentiates between actions challenging an agency’s rulemaking on substantive versus procedural grounds and, as such, starts the clock at a different point. Notwithstanding the competing interpretations of the relevant legal text, it is recommended that importers preserve their right to a refund of duties paid by commencing an action at the CIT. 

Where Do the Lawsuits Stand Today? 

The CIT has yet to designate a “test” case or cases; finalize the form and format of the associated briefing schedule; or determine whether a single judge or a panel of three will hear the designated case(s). The reason — an ongoing battle over whether the U.S. Department of Justice (representing all of the U.S. Government Defendants) deprived the majority of plaintiffs of notice by filing a motion to adopt case management procedures solely on the docket of HMTX Industries LLC v. United States; prematurely selected who among the plaintiffs’ attorneys will represent that group’s interests before the CIT; and proposed an unreasonable briefing schedule. Further, and importantly, the United States has yet to respond to Plaintiffs’ request for a stipulation that all eligible entries, notwithstanding liquidation status, would be eligible for refunds should they prevail. Barring Defendants formally requesting permission to file a reply or the court affirmatively seeking such a filing, Defendants’ motion will be decision-ready mid-November 2020. The CIT’s Chief Judge is likely to resolve all non–dispositive challenges within 30 days thereafter. 

Conclusion 

The bottom line is that the wheels of justice turn slowly, but there is still time to preserve your right to a refund. For assistance initiating an action at the CIT or for more information, please contact QuestaWeb representatives today. 

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Filed Under: Trade News

Importers and the Trade Reconciliation and Trade Enforcement Act of 2015

May 31, 2016

West side view of the United States Capitol against a blue sky.

by Felix Pekar

On February 24, 2016, the Trade Reconciliation and Trade Enforcement Act of 2015 (TRTEA) became law. TRTEA addresses many areas of interest to importers. Some of the more important provisions include stronger prohibitions against dumping goods to evade duties, expanded rules allowing substitution drawback of duties, and a longer time period in which to file drawback claims. Other key aspects address intellectual property and enforcement of Antidumping and Countervailing Duties.

Importers will see major changes to U.S. Customs and Border Protection’s (CBP’s) duty drawback program, hopefully making it more profitable for many companies. Beyond removing some of the complexities and burdensome requirements, TRTEA will allow matching of imports of one product with exports of the “same kind and quality” product, rather than requiring use of the same 8-digit Harmonized Tariff Schedule (HTS) subheading. TRTEA also will extend the time period during which import and export of the matched products occurred to 5 years.

Notably, TRTEA does not address the North American Free Trade Agreement (NAFTA) drawback rule commonly known as the “lesser of the two.” So, importers of goods from Canada and Mexico are largely unaffected, as many, but not all, goods manufactured in Canada and Mexico are already eligible for duty-free treatment or reduced duty rates under NAFTA. Here, importers provide CBP a Certificate of Origin and/or display a country of origin marking on the goods. Thus, the “lesser of the two” rule is not usually a major factor at play in import duty drawbacks.

Phase-in of the new drawback rules will occur over a two-year period due partially to the need for new CBP regulations to implement TRTEA. Claims can be filed under the new rules starting in February 2018. To take full advantage of the matching rule and the retroactive provision, importers that regularly claim drawbacks should start evaluating what products coincide best with the new schema now. Remember, starting in 2018, goods imported as far back as 2013 will be eligible for the substitution method.

In what can be considered good news for U.S. consumers and importers, TRTEA also increases the duty-free threshold from $200 to $800 and simplifies recordkeeping.

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Filed Under: General, Importers, Trade News

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