The three-judge panel established by the Court of International Trade (CIT) to manage the China Section 301 tariff refund litigation has issued two procedural orders in the recently-established master case (Court No. 21-cv-00052-3JP) (see Update of February 8, 2021), setting a path forward for this massive litigation.

In a February 10, 2021 order, the panel announced:

  • All filings in the master case will be deemed to have been docketed and filed in each individual case and need not be separately filed in each case;
  • All filings relating to a specific case only that are not of interest except to the parties directly affected by them should use the original assigned case number — and not the master case number — and be filed in the original case;
  • To receive notices of filings in the master case, counsel for each Section 301 plaintiff must file a notice of appearance in the master case; and
  • The defendants must file their answer and affirmative defenses by March 12, 2021, which will constitute an answer in each of the Section 301 cases unless a later answer is filed separately in a specific case.

In a February 16, 2021 order, the panel announced:

  • It will proceed with a “representative sample of cases” under consolidated briefing. The plaintiffs must propose a sample of cases to be considered and submit such a proposal no later than March 19, 2021. No later than March 26, 2021, any plaintiff whose case was not included but that believes it should have been may submit a request and argument to the CIT for consideration. Once the sample cases are selected, the CIT anticipates staying all other Section 301 cases.
  • It will select counsel to serve as part of a plaintiffs’ steering committee. This counsel group will work with the three-judge panel to adopt further case management procedures and to coordinate with each other in the filing of consolidated briefs and other submissions. The plaintiffs must propose a list of steering committee members no later than March 19, 2021. No later than March 26, 2021, any attorneys who are not included in the proposed steering committee but believe that they should be may submit a request and argument to the CIT for consideration.
  • Once the representative sample cases and the members of the steering committee are selected, the panel will meet with the steering committee and counsel for the defendants to identify and discuss additional issues and establish a deadline for submitting a proposed briefing schedule. Any briefing schedule will allow for briefing by amicus curiae, including allowing the plaintiffs not selected in the sample cases to file as necessary.

The February 16, 2021 order notes that both the plaintiffs and the defendants have raised the issue of “interim relief” in prior filings and states that the parties should further confer on this issue. The panel anticipates requiring the submission of a joint status report at a later date, in which any terms regarding the stipulation of available relief will need to be addressed.

Thompson Hine attorneys and trade professionals will continue to monitor and report on significant developments in this litigation.

The Department of Justice (DOJ) has filed motions in federal court seeking a pause in litigation involving TikTok and WeChat until the new administration of President Joseph Biden has time to consider former President Trump’s August 6, 2020 Executive Orders declaring that these Chinese social media apps are a national security threat and prohibiting certain transactions with these entities.  Federal judges previously halted Trump’s ban from taking effect, and the apps are currently still permitted to be downloaded and used in the United States.

In each case, DOJ has asked the courts to “hold this case in abeyance, with status reports due at 60-day intervals.”  The motions, unopposed by counsel for TikTok and WeChat, note that the Department of Commerce plans to evaluate the underlying record justifying those prohibitions.  After such a review, the government will be “better positioned to determine whether the national security threat described in the President’s August 6, 2020 Executive Order, and the regulatory purpose of protecting the security of Americans and their data, continue to warrant the identified prohibitions.”  Each motion states that a review of the prohibitions at issue “may narrow the issues presented or eliminate the need for this Court’s review entirely.”

For previous information on the litigation, see Update of October 5, 2020.  For more details on the Executive Orders prohibiting transactions with TikTok and WeChat, see Update of August 7, 2020.

On February 12, 2021, the Department of Commerce’s Bureau of Industry and Security (BIS) announced that was implementing restrictions on the export of “sensitive items” to Burma’s Ministry of Defense, the Ministry of Home Affairs, armed forces, and security services in response to the Burmese military’s February 1 coup to overthrow the civilian government of Burma.  Effective immediately, BIS “will apply a presumption of denial for items requiring a license for export and reexport to these select Burmese government departments and agencies. In addition, BIS is revoking certain previously issued licenses to these departments and agencies which have not been fully utilized. BIS also will suspend certain license exceptions previously available to Burma as a result of its current Country Group placement under the Export Administration Regulations (EAR), including Shipments to Country Group B countries (GBS) and Technology and Software under restriction (TSR).”

BIS is considering further actions, including: (i) possible Entity List additions, (ii) adding Burma to the list of countries subject to the EAR’s military end use and end user (MEU) and military intelligence end use and end user (MIEU) restrictions, and (iii) downgrading Burma’s Country Group status in the EAR.  These actions are directly related to the issuance of an Executive Order on February 10, 2021, by President Joseph Biden; see Update of February 11, 2021.

On February 11, 2021, in a unanimous 5-0 vote, the U.S. International Trade Commission (USITC) terminated its Section 201 global safeguard investigation of U.S. blueberry imports, determining that increased imports of fresh, chilled, or frozen blueberries are not a substantial cause of serious injury, or threat of serious injury, to the domestic industry producing an article like or directly competitive with these imports.  The USITC will submit its report containing its injury determination to President Joseph Biden by March 29, 2021, at which time a public version will also be released.

This Section 201 investigation was initiated in October 2020, after the U.S. Trade Representative requested the investigation.  For additional details, see Update October 7, 2020.

President Biden Issues Executive Order Regarding Military Coup in Burma and Sanctioning Military Leaders

On February 10, 2021, President Joe Biden issued an Executive Order concerning the military coup in Burma on February 1, 2021, in which the military overthrew the democratically elected civilian government and arrested numerous government leaders, politicians, human rights defenders, journalists, and religious leaders. In brief remarks, President Biden stated that the Burmese “military must relinquish the power it seized and demonstrate respect for the will of the people of Burma as expressed in their November 8th election.” In announcing the executive order he noted that the United States will take steps “to prevent the generals from improperly having access to the $1 billion in Burmese government funds held in the United States,” and will “sanction the military leaders who directed the coup, their business interests, as well as close family members.”

The order declares a national emergency “with respect to the unusual and extraordinary threat to the national security and foreign policy of the United States posed by the situation in Burma.” The order authorizes the blocking of property and interests in property of any foreign person determined by the Secretary of the Treasury (via the Office of Foreign Assets Control (OFAC)):

  • to operate in the defense sector of the Burmese economy or any other sector of the Burmese economy;
  • to be responsible for or complicit in, or to have directly or indirectly engaged or attempted to engage in, any of the following:
    • actions or policies that undermine democratic processes or institutions in Burma;
    • actions or policies that threaten the peace, security, or stability of Burma;
    • actions or policies that prohibit, limit, or penalize the exercise of freedom of expression or assembly by people in Burma, or that limit access to print, online, or broadcast media in Burma; or
    • the arbitrary detention or torture of any person in Burma or other serious human rights abuse in Burma;
  • to be or have been a leader or official of:
    • the military or security forces of Burma, or any successor entity to any of the foregoing;
    • the Government of Burma on or after February 2, 2021;
    • an entity that has, or whose members have, engaged in any activity described in the order;
  • to be a political subdivision, agency, or instrumentality of the Government of Burma;
  • to be a spouse or adult child of any person whose property and interests in property are blocked pursuant to the order;
  • to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of any person whose property and interests in property are blocked pursuant to the order; or
  • to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, the military or security forces of Burma or any person whose property and interests in property are blocked pursuant to the order.

On February 11, 2021, OFAC announced that it has placed 10 individuals and three entities connected to the military apparatus responsible for the coup on the Specially Designated Nationals (SDN) List. In addition, the order suspends entry into the United States of any noncitizen determined to meet one or more of the above criteria. President Biden has also indicated that strong export controls will be imposed and that his administration will coordinate with allies and partners around the world, “particularly in the Indo-Pacific region,” to coordinate an international response to the coup.

In a February 5, 2021 order, after months of delay, the U.S. Court of International Trade (CIT) is proceeding in the China Section 301 tariff refund litigation with the appointment of a three-judge panel consisting of Judge Mark A. Barnett, Judge Claire R. Kelly and Judge Jennifer Choe-Groves. This is the CIT’s first action in the matter since U.S. importers began filing more than 3,600 complaints on September 10, 2020. See Update of September 14, 2020. The complaints challenge the legality of Section 301 tariffs imposed on U.S. imports of Chinese products covered under Lists/Tranches 3 and 4A. Several plaintiffs sought the appointment of a three-judge panel, while the Department of Justice (DOJ) asked for the appointment of a single judge. See Update of October 21, 2020.

The three judges appointed are the most senior active judges at the CIT with extensive experience and excellent reputations. The bios of the three judges are available here – Barnett, Kelly, and Choe-Groves.  While the order addresses only the establishment of the three-judge panel, it is expected that consideration of the complaints will begin soon, starting with the establishment of a briefing schedule.

Thompson Hine attorneys and trade professionals will continue to monitor and report on the litigation status as warranted.

On February 4, 2021, a three-judge panel at the U.S. Court of International Trade (CIT) denied a broad challenge by Universal Steel Products and several other importers (“plaintiffs”) to Section 232 tariffs that former President Donald Trump placed on steel imports. The plaintiffs had challenged both the report by the U.S. Department of Commerce (“Commerce”) supporting the Section 232 steel tariffs (“Steel Report”) and President Trump’s executive order, Proclamation 9705, and its subsequent modifications (collectively, “Proclamations”), claiming that they violated various Section 232 procedural requirements and the Administrative Procedure Act (APA).

In their complaint, plaintiffs alleged: (1) the Steel Report is a reviewable, final agency action, is procedurally deficient, and invalidates subsequent presidential action; (2) both the secretary of Commerce and President Trump fundamentally misinterpreted the statute by failing to base their determinations on an “impending threat”; (3) President Trump violated Section 232 by failing to set the duration of the action he chose; and (4) tariffs imposed on Canada, Mexico and EU member countries violated Section 232 timing provisions.

The CIT rejected each of the plaintiffs’ four claims. For the first two claims, the CIT found that Commerce and President Trump’s actions are unreviewable. The CIT rejected the plaintiffs’ claims against Commerce, finding that the Steel Report is not a reviewable “final agency action” under the APA because it was within President Trump’s discretion to accept or reject Commerce’s recommendation. According to the CIT, President Trump, instead of the agency, acted to impose the tariffs. The CIT also denied the plaintiffs’ second claim that President Trump failed to identify an “impending threat,” holding that his exercise of discretion is unreviewable.

The CIT rejected the plaintiffs’ third claim that President Trump failed to set a duration for the tariffs in violation of Section 232, finding his edict that the tariffs remain in effect as long as national security is threatened satisfied this Section 232 requirement. The CIT disagreed with the plaintiffs that Section 232 requires the president to set a “definite duration” for the measures, stating that “even if the duration may be unlimited, it is not undefined, but bounded by whether, in the president’s judgment, the threat to impair national security exists.” In response to the plaintiffs’ fourth claim, the CIT disagreed with their statutory interpretation of Section 232’s timing provision, finding that the president does not need to wait for the 180-day negotiation period to expire before taking any action under Section 232.

Considerations for Cross-Border M&A: Canada, the UK & the U.S. – Trends in Antitrust & National Security Merger Review

A SmarTrade webinar presented by Thompson Hine LLP

The past year saw significant developments in the cross-border M&A review processes in Canada, the United Kingdom and the United States. National security reviews in Canada and the United States have been enhanced to cover a broader array of transactions, and there will also soon be a new wide-ranging national security regime in the UK. In addition, economic and political shifts continue to impact antitrust reviews.

Please join us for a panel discussion on these developments and how investors should anticipate and plan for their impact on cross-border deals in 2021.

Wednesday, February 24, Noon – 1:00 p.m. ET

Presenters:

Please click here to register and receive instructions on how to join the webinar.

CLE credit will be requested.

Key Notes:

  • Many countries have taken various health and safety measures to address the rising number of COVID-19 cases and the new COVID-19 variants.
  • Governments continue to support workers and employers affected by the economic instability caused by the pandemic.
  • Rollout of COVID-19 vaccines and investments in critical infrastructure are the key issues in government contracts.
  • Some governments continue to restrict exports of personal protective equipment and to subject foreign investments to increased scrutiny.

Since April 2020, we have collaborated with foreign law firm partners to monitor and report on the most relevant government measures worldwide addressing the COVID-19 pandemic. The newest version of the guide includes a concise, corporate-focused and user-friendly list of government measures and covers areas like tax, restructuring, business immigration, government contracts and international trade:

View/Download (PDF): Country-by-Country Guide:
Government Measures Taken in Response to COVID-19.

This month’s update includes new information as of early January 2021 for Australia, Belgium, Canada, Chile, China, Costa Rica, Czech Republic, El Salvador, European Union, Germany, Guatemala, Honduras, Hungary, India, Indonesia, Israel, Italy, Japan, Mexico, Netherlands, Panama, Philippines, Poland, Republic of Korea, Russia, South Africa, Spain, Thailand, Turkey, United Kingdom, United States and Vietnam.

Many countries continue to reintroduce health and safety measures previously implemented in March 2020, and later relaxed, to restrict public gatherings or movement of persons to address the rising number of COVID-19 cases. In Europe, some country-wide lockdowns were put in place. Other countries continue to keep social distancing requirements in place and have introduced new regional curfews or lockdown requirements based on the numbers of infections within local populations. In the United States, states and counties continue to differ in their approaches to both business closures/reopenings and face mask requirements. In Asia and the Americas, the general trend indicates that countries have adopted a risk-based system to identify high-risk populations and to restrict their activities accordingly. In Asia, international travel restrictions have been eased in some countries, with a focus on workers. That said, following the discovery of new COVID-19 variants, some countries introduced travel bans from countries with the presence of the new variants.

Most governments continue to support workers and employers affected by the economic instability caused by the pandemic. Most have taken various measures, including tax deferrals or exemptions and loan facilities, to address the difficulties endured by businesses affected by the pandemic-related economic instability. Measures include short-term compensation procedures, social security benefits or other regulations to ensure that workers receive personal protective equipment or do not face discrimination. In the United States, Congress enacted the Consolidated Appropriations Act of 2021 to provide additional benefits for businesses and extend some provisions of the original CARES Act.

As to government contracts, some governments issued measures to address COVID-19-related economic difficulties, including easing the termination of contracts for force majeure or introducing emergency procurement regimes to speed up the procurement process. Further, some governments have introduced measures to facilitate the rollout of COVID-19 vaccines. Additionally, there is increased attention on investment and regulations involving critical infrastructure in the Americas and Europe to support COVID-19 efforts.

In the area of international trade, some countries continue to restrict exports of certain personal protective equipment and have introduced new measures to subject foreign investments to increased scrutiny, especially investments linked to public health emergencies. Foreign investment in health care and related infrastructure continues to be regulated around the world.

On January 27, 2021, the U.S. Court of International Trade (CIT) issued an opinion in which it dismissed all but one claim challenging on various grounds a proclamation by former President Donald Trump (Proclamation 9980) that imposed 25% tariffs on, inter alia, various imported products made of steel pursuant to Section 232 of the Trade Expansion Act of 1962. However, the CIT will continue to consider the claim that President Trump implemented additional and new duties on certain steel derivative products after the statutory time period for such action had lapsed.

PrimeSource Building Products, Inc., a U.S. importer of various steel derivative products, filed a complaint (subsequently amended) in the CIT on February 4, 2020, arguing that President Trump’s Proclamation 9980 was unlawful and unconstitutional. See Update of February 14, 2020. On March 20, 2020, the U.S. Department of Justice (DOJ) filed a motion to dismiss the complaint, arguing that the new tariffs did not violate the Section 232 procedural requirements or PrimeSource’s right to due process. See Update of March 31, 2020.

In its January 27, 2021 order, the CIT dismissed PrimeSource’s claims that: (i) the imposition of Section 232 duties on the derivative products was procedurally deficient; (ii) the secretary of commerce violated all of the Section 232 statutory provisions; (iii) PrimeSource was deprived of its Fifth Amendment due process constitutional rights; and (iv) Section 232 is unconstitutional as it unlawfully delegates legislative authority from Congress to the president.

The CIT did not dismiss PrimeSource’s claim that Proclamation 9980 was issued 638 days after the transmittal of the Section 232 steel investigation report to the president (well after the 105 days set forth in 19 U.S.C. § 1862(c)(1)) and is thus null and void. Despite DOJ arguing that the president has the authority to modify Section 232 tariffs at any time to protect national security (including adjusting imports of articles not addressed in Proclamation 9705 that the president designated as “derivatives” of identified steel articles), the CIT found that this claim rests upon a “plain meaning” interpretation of the statute. The opinion states that DOJ’s “’flexible’ reading of [19 U.S.C. § 1862(c)(1)] would require us to interpret the ‘action’ taken by Proclamation 9980 and that taken by Proclamation 9705 as parts of the same ‘action’,” which “presents several interpretive problems.” The opinion concludes that there “is no ‘flexible’ reading of [19 U.S.C. § 1862(c)(1)] Section 232(c)(1) that suffices to allow the President to adjust, through new tariffs, imports of derivatives of previously-affected articles outside of the time limits Congress imposed, and the appellate decisions on which defendants rely do not lend support to any such reading.”

The parties now have until February 26, 2021, to file a joint schedule that will govern the briefing and hearing schedule for the remaining “unresolved factual issues” of this claim.