On July 14, 2020, the United States Court of International Trade issued a judgement in the case of Transpacific Steel LLC v. United States. Importers questioned the validity of Proclamation 9772 which imposed an additional 50% tariff on Turkish imports of steel into the United States under Section 232 of the Trade Expansion Act, 1962. Even though the duties under the said Proclamation have been removed, this judgement is important since it impacts various other Proclamations made under Section 232.
Issue 1: Whether the President violated Section 232 Procedural Requirement.
The procedural timeline under Section 232 is as follows:
The procedural timeline followed in the present scenario is as follows:
The Plaintiff claimed that the President is bound to make a decision based on the Secretary’s report and recommendation within 90 days, and implement any chose action within 15 days of that decision. Proclamation 9772, which imposed an additional tariff of 50% on Turkish imports, was in violation of such procedural requirements. They argued that there is no statutory basis for a modification of a previous proclamation, i.e. Proclamation 9705. Further, they argued that Proclamation 9772 was issued following information received by the President.
The Government of USA, on the other hand, argued that the legislative intent of Section 232 was to confer ‘continuing authority and flexibility’ on the President to counter the threat. Strict implementation of the time restraints would frustrate the statutory purpose of the provision. Strict temporal windows would ‘undermine the purpose of Section 232 and would convert the time-deadlines into impermissible sanctions’. The deadlines are directory, and not mandatory.
HELD: Proclamation 9772 was issued far beyond the temporal window. The deadlines are not merely directory, but are mandatory. They are a restriction which require strict adherence. The history of the statute also supports that time limits were intended to be mandatory. The President exceeded his authority in issuing Proclamation 9772 outside of the temporal limits required by Section 232.
Issue II: Whether the President Exceeded his Authority by issuing a Proclamation without a nexus to National Security
The Plaintiff argued that the President argued that Proclamation 9772 lacked a nexus to the requirement of national security objective. Any action must be motivated by national security considerations listed under 19 U.S.C. § 1862(d). However, it was argued by the Plaintiff that the tariff was issued to employ “diplomatic leverage against a foreign government”. Plaintiffs also asked the court to consider President Trump’s tweets with regard to Pastor Andrew Brunson’s detainment in Turkey, and how the doubling of tariffs on steel and aluminium with respect to Turkey would devalue the Turkish Lira.
The Government of USA argued that in order to determine if the actions had a nexus with national security, the court would have to overstep its bounds to examine the fact-finding done by the President. The role of the court is only to determine whether the President’s action was permitted by the statute or not, and not judge the motivations behind the action.
Held: The Court refused to go into the motivations behind Proclamation 9772. Instead, it held that there was no procedurally proper finding of that threat (since Proclamation 9772 was issued much after the Secretary’s Report). Therefore, the President was not empowered under Section 232 to issue Proclamation 9772.
Issue III. Whether Proclamation 9772 denies the Plaintiffs the equal protection of the law.
Plaintiff argued that proclamation 9772 discriminates between similarly situated importers based on the origin of their imports without rational justification. Nothing in the Report produced by the Secretary supports additional duties on Turkish steel imports alone.
The Government, on the other hand, claimed that the intention of the Government to discriminate is not evident, and therefore the Plaintiffs’ equal protection claim fails.
HELD: An intent to discriminate is not an important element for an Equal Protection claim to succeed. The fundamental question is whether the government’s action is justified by sufficient purpose. Proclamation 9772 distinguishes between imports on the basis of the country of origin. However, disparate treatment alone cannot violate the Equal Protection Clause. While National Security is a legitimate purpose, the decision to increase the tariffs on imported steel products from Turkey without any justification is arbitrary and irrational. Proclamation 97772 denies the Plaintiffs the equal protection of the law.
IV. Whether Proclamation 9772 was issued without a Constitutional Due Process.
The Constitution’s Due Process clause protects every person from being deprived of their ‘life, liberty and property’ without a ‘due process of law’. For a procedural due process claim to succeed, it must be determined If a ‘protected property interest’ existed in the first place.
The Plaintiffs have identified property interest as the large amounts of duties paid to the US Government by the plaintiff for the imports, and the incurrence of various other expenses associated with the imposition of 50% tariffs on Turkish imports.
Held: The Plaintiffs have failed to articulate a constitutionally protected property interest in the present case. Proclamation 9772 not violative of Due Process clause.
Way Forward
Appeals from the Court of International Trade are heard by the United States Court of Appeals for the Federal Circuit. This can be further appealed at the Supreme Court of the United States.
Interestingly, if upheld/un-appealed, the following Proclamations of the President could be challenged on the grounds of not meeting procedural requirements: