Food Companies Claim New Duties for Chinese Merchandise Breach U.S. Law

Over 20 cases were filed by food companies in the Court of International Trade starting on Thursday and continuing into this week challenging the imposition of duties on merchandise of Chinese origin. The complaints said the duties are reported by the defendants to fit under Section 301 of the Trade Act, but alleged that they are not authorized in that section and violate the Administrative Procedure Act (APA) by expanding the law.

The cases were filed against the United States of America, the Office of the United States Trade Representation, and Customs and Border Protection, and sometimes individuals associated with the entities. The defendants reportedly imposed the tariffs after an investigation into Chinese practices with technology and intellectual property.

Each of the plaintiffs imports products from China and claimed in the lawsuits that the new duties have a detrimental impact on their business. The plaintiffs who filed separate lawsuits include large agricultural companies like BASF Corporation and CNH Industrial America LLC and food packaging or production companies like Dole Packaged Foods, LLC and Del Monte Foods.

The complaints asked the Court of International Trade to rule that at least List 3 and List 4 duties are contrary to law and should be vacated, that the defendants actions are not authorized by the Trade Act or the APA, and order the defendants to refund duties paid by the plaintiffs and stop collecting further duties on these imported items.

Del Monte cited in its complaint that it imports many items which are subject to List 3, including mandarin oranges. The company requested an exclusion for canned mandarin oranges, which was denied, reportedly along with over 28,000 of 30,000 other requests. Del Monte called the duties “impermissible” and said they have adversely affected its business. The company argued that the United States Trade Representative (USTR) has the authority to “modify or terminate” an action, specifically when the action is no longer appropriate or when the reason it was imposed, specifically a foreign country’s actions, has increased or decreased.

The tariffs were reportedly imposed after the USTR found that actions of the Chinese government were “unreasonable or discriminatory and burden or restrict U.S. Commerce.” First duties were imposed on items placed in List 1 and List 2. After China imposed duties on goods originating in the United States, List 3 and List 4 were added. The defendants also reportedly increased the duties from 10 percent to 25 percent after retaliatory duties from China were imposed. At least Del Monte claimed that the defendants imposed the tariffs “for reasons unrelated to the unfair practices that USTR had investigated within the Section 301 investigation.”

The plaintiffs noted that their complaints are within the statute of limitations because they must be filed within two years of the first cause of the action. September 21, 2018 is cited in multiple complaints as the date the determination for tariffs for goods on List 3 was published in the Federal Register, the tariffs could begin to be collected on September 24, 2018. Tariffs for goods on List 4 were first published in the Federal Register in August of 2019. 

Other companies who filed lawsuits include: Global Food Trading Corp. and RD Foods Americas, Inc. represented by The Obert Law Firm; BG Foods, Inc. represented by Stein Shostak Shostak Pollack & O’Hara; KW Food Inc. represented by Aci Law Group; Nature’s Touch Frozen Foods represented by Neville Peterson;  International Food Source LLC, Brothers International Food Corp., and Nutra Food Ingredients LLC represented by Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP; ; Acme Food Sales Inc. represented by Fisher Broyles; Johnvince Foods represented by Roberts & Kehagiaras; Axiom Foods, Inc. represented by Benjamin L. England And Associates LLC; BC Foods, Inc. represented by Junker & Kakachi; Lotus Foods, Inc. represented by Miller & Chevalier Chartered; A La Carte Specialty Food LLC represented by Harris Bricken Sliwoski LLP; Green Food Ingredients LLC and Gemini Food Corporation represented by Law Offices of Gary C. Cooper; Shaver Foods LLC represented by Craven Trade Law LLC; The Kraft Heinz Company represented by Arnold & Porter Kay Scholer LLP; and Maestro Foods, represented by Law Offices of George R. Tuttle.

Del Monte is represented by Crowell & Moring , CNH by Foley & Lardner, Dole by Faegre Drinker Biddle & Reath, and BASF by Barnes, Richardson & Colburn.