If it wasn’t for the COVID-19 pandemic, the trade war with China (along with Brexit) would still be dominating the global trade headlines. Back in November 2019, for example, we published Trade And Tariffs: Preparing For The Year Ahead, which highlighted my conversation with Ben Bidwell, Director of U.S. Customs at C.H. Robinson, about what to expect in 2020 with regards to trade and tariffs.
Despite the pandemic, the trends and challenges we discussed last November remain relevant today, as two news items from last week remind us.
First, as reported by The New York Times, “a World Trade Organization panel said Tuesday [September 15] that the United States violated international trade rules by imposing tariffs on China in 2018 in the middle of President Trump’s trade war.” Here are some additional details from the article:
The panel of trade experts sided with a complaint that China had filed, which argued that Mr. Trump’s tariffs violated several global rules, including a provision that requires all W.T.O. members to offer equal tariff rates among the body’s trading partners.
Mr. Trump broke with that tradition. During his trade war with China, the president imposed tariffs on more than $360 billion worth of Chinese products, in an effort to persuade the country to strengthen its intellectual property protections and make other changes to policies that Mr. Trump said put American workers at a disadvantage. The administration drew on an American legal provision — called Section 301 — to impose the tariffs, which allows the president to restrict foreign commerce that unfairly burdens the United States.
As the article goes on to explain, “the ruling may have little practical effect, since the United States effectively crippled the W.T.O. panel responsible for handling appeals of trade disputes, by refusing to appoint new members to it.”
In related news, as reported by The National Law Review, “three importers filed a complaint [on September 10, 2020] at the U.S. Court of International Trade (CIT), HMTX Industries LLC et al. v. United States, which challenges the procedural steps and authority of the U.S. Trade Representative (USTR) to assess Section 301 duties against so-called ‘List 3’ imports of a wide range of products from China.” According to the article:
This lawsuit, if successful, would eliminate Section 301 List 3 duties and result in refunds to the plaintiffs. This legal challenge also presents an opportunity for importers potentially to obtain refunds of Section 301 duties deposited on List 3 imports and halt future duties on those imports. However, given the jurisdictional basis for this lawsuit, importers that wish to pursue a similar legal action need to file suit by September 21, 2020 in order to preserve their right to possible relief.
According to the plaintiffs, while the initial retaliatory tariff actions reflected in the implementation of List 1 and List 2 may have been lawful under Section 301, the USTR’s subsequent rounds of tariff actions (i.e., List 3 and list 4A) against Chinese origin imports overstepped the USTR’s authority and failed to comply with requirements under the Administrative Procedures Act (APA).
Based on some comments I’ve read from trade experts, this is a long shot attempt by importers to seek relief from these tariffs, but if they’re willing to take their case to court, why not try.
The bottom line is that even though the pandemic has pushed China tariffs from the front page headlines, they are still in effect. As we get closer to 2021, Ben’s advice from last year remains relevant today: speak with trade experts and customs brokers before you settle on your strategies to deal with these ongoing global trade issues. He also said to stay close to the changing situation because, “everything can change with a tweet” — or with the upcoming election results.
