Kemet Electronics Corp. v. Barshefsky

• Decision Date: 19 August 1997
• Docket Number: Slip Op. No. 97-115.,Court No. 97-06-00930.
• Citation: 976 F.Supp. 1012
• Parties: KEMET ELECTRONICS CORPORATION, Vishay Intertechnology, Inc., Cornell Dubilier, Inc., Aerovox Corp., Barker Microfarad, Inc., collectively, Passive Electronics Coalition, Plaintiffs, v. Charlene BARSHEFSKY, United States Trade Representative, and George Weise, Commissioner of Customs, Defendants.
• Court: U.S. Court of International Trade

976 F.Supp. 1012

KEMET ELECTRONICS CORPORATION, Vishay Intertechnology, Inc., Cornell Dubilier, Inc., Aerovox Corp., Barker Microfarad, Inc., collectively, Passive Electronics Coalition, Plaintiffs, v. Charlene BARSHEFSKY, United States Trade Representative, and George Weise, Commissioner of Customs, Defendants.

Slip Op. No. 97-115.

Court No. 97-06-00930.

United States Court of International Trade.

August 19, 1997.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Porter, Wright, Morris & Arthur (Richard M. Markus, David C. Tryon, Leslie A. Glick and Bart Fisher), Washington, DC, for plaintiffs.

Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Jeffrey M. Telep), Susan G. Esserman, General Counsel, and Hal Shapiro, Assistant General Counsel, Office of the United States Trade Representative, and Ellen Daly, Office of the Chief Counsel, United States Customs Service, of counsel, Washington, DC, for defendants.

Democratic Trade Counsel (Gregg Elias), Washington, DC, for Senator Ernest F. Hollings, amici curiae.

Dewey Ballantine (Alan Wm. Wolff, Michael H. Stein, and Elizabeth A.B. McMorrow), Washington, DC, for Semiconductor Industry Association, amici curiae.

Wilmer, Cutler & Pickering (John Greenwald), Washington, DC, for Information Technology Industry Council, amici curiae.

OPINION

RESTANI, Judge.

Plaintiffs Kemet Electronics Corp., et al. (collectively, "the Passive Electronics Coalition"), seek a preliminary injunction against defendants, United States Trade Representative Charlene Barshefsky ("USTR") and Commissioner of Customs George Weise, to enjoin the reduction and eventual elimination of tariffs on capacitors and resistors as part of the Information Technology Agreement ("Agreement") negotiated by the USTR under the auspices of the World Trade Organization ("WTO"). Plaintiffs contend that the authority to proclaim tariff reductions delegated by Congress to the President under the Uruguay Round Agreements Act ("URAA") is unconstitutionally broad or, alternatively, that the President exceeded his delegated authority when he proclaimed the staged elimination of tariffs on capacitors and resistors. Defendants move to dismiss the complaint pursuant to USCIT Rule 12(b)(1) and (5), claiming that this court lacks subject matter jurisdiction and plaintiffs fail to state a claim upon which relief can be granted.

BACKGROUND

Capacitors and resistors are passive electronic components that perform integral functions in the operations of most electrical systems, including computers, communication devices, consumer electronics, automobiles, and industrial equipment. See International Trade Comm'n, Advice Concerning the Proposed Modification of Duties on Certain Information Technology Products and Distilled Spirits, Pub. No. 3031 at 5-30 (Apr. 1997) (report to President) [hereinafter "ITC Report"]. Capacitors and resistors have many uses due to their electrical characteristics and are used frequently in concert with semiconductors to construct a functional circuit on a printed circuit board. Id. They are largely produced and consumed in those countries that produce electronic systems — the United States, the European Union, Japan, and various other Asian countries. Id.

During the Uruguay Round of multilateral trade negotiations, the United States negotiated a series of reciprocal agreements to reduce tariff and non-tariff barriers to trade. The results of the Uruguay Round were implemented in two ways. Tariff reductions that were within the limits of the proclamation authority that had been delegated to the President by the Congress under 19 U.S.C. § 2902(a)(2)(A) (1994) were implemented by proclamation without further Congressional action. Agreements to reduce tariffs beyond the limits in the President's proclamation authority, and non-tariff barrier agreements, were implemented by "fast track" legislation under 19 U.S.C. § 2903 (1994). "Fast track" implementation of Uruguay Round tariff rate reductions that exceeded the duty reductions which the President was authorized to proclaim is expressly provided for by 19 U.S.C. § 2902(a)(6) (1994).

Recognizing the interest of the United States in concluding negotiations that were not completed at the time the Uruguay Round ended, Congress delegated to the President authority under Section 111(b) of the URAA (codified as 19 U.S.C. § 3521(b)) to proclaim the elimination of tariffs if their elimination is provided for by "multilateral negotiation under the auspices of the WTO" and the tariff elimination applied to "the rate of duty on an article contained in a tariff category that was the subject of reciprocal duty elimination or harmonization negotiations during the Uruguay Round of multilateral trade negotiations." 19 U.S.C. §§ 3521(b)(1)(A),(B) (1994); see also 108 Stat. 4819, 4819-20 (1994). The proclamation authority of Section 111(b) was, in another respect, broader and, in one respect, narrower than the tariff proclamation authority that had been delegated to the President under 19 U.S.C. § 2902(a)(2)(A) for purposes of implementing the results of the Uruguay Round. Section 111(b) eliminated the restrictions on the degree of tariff modifications that could be proclaimed, but further restricted the articles for which tariff rate changes could be proclaimed.¹ 19 U.S.C. § 3521; 108 Stat. at 4819-20.

At the first Ministerial Conference of the World Trade Organization in December 1996, the United States and 27 other countries concluded negotiation of the Ministerial Declaration on Trade in Information Technology Products (commonly referred to as the "Information Technology Agreement"), which provides for "zero-for-zero" tariff rate concessions on over $500 billion in annual global trade in electronic products. Ministerial Declaration on Trade in Information Technology Products, Dec. 13, 1996, 36 I.L.M. 375, 383 (1997) [hereinafter "Agreement"]; see also Renato Ruggiero, Statement Issued to WTO Information and Media Relations Division, Press Release No. 69 at 1 (Mar. 3, 1997); Defs.' Attachment O. As part of its commitments under the Agreement, the United States agreed to the staged elimination of tariffs on capacitors and resistors over a four year period. See Agreement, 36 I.L.M. at 385.

Prior to the Presidential Proclamation challenged herein, there was a 9.4% ad valorem tariff on the importation of capacitors under Item No. 8532 of the Harmonized Tariff Schedule of the United States, USITC Pub. 3001, Sec. XVI, ch. 85, at 49 (1997) [hereinafter "HTSUS"].² HTSUS Item No. 8533 imposed a 6% ad valorem tariff on the importation of resistors.³ Id. at 50. The USTR announced on December 13, 1996 that the United States would reduce these tariffs by 25% each year starting on July 1, 1997 and would completely eliminate such tariffs by January 1, 2000. See Agreement, 36 I.L.M. at 385, 388. The Agreement came into effect by Presidential Proclamation, dated June 30, 1997. Proclamation No. 7011, 62 Fed.Reg. 35,909 (1997).

Plaintiffs own and operate manufacturing facilities in the United States for the production and sale of electronic capacitors and resistors. Plaintiffs seek to enjoin the reduction of the tariffs on capacitors and resistors. Defendants filed a motion to dismiss.

DISCUSSION

I. Preliminary Injunction

In determining whether to grant a preliminary injunction, the court must balance four factors: 1) the threat of immediate, irreparable harm to plaintiffs; 2) the likelihood of success on the merits; 3) whether the public interest would be better served by issuance of a preliminary injunction; and 4) whether the balance of hardships favors plaintiffs. Zenith Radio Corp. v. United States, 710 F.2d 806, 809 (Fed.Cir.1983).

At the outset, the defendants argue that plaintiffs are not entitled to injunctive relief due to their delay in bringing this action. The defendants claim that the fact that plaintiffs waited six months after they believed their cause of action accrued before filing their complaint refutes their claim for injunctive relief. See, e.g., High Tech Med. Instrumentation, Inc. v. New Image Indus., Inc., 49 F.3d 1551, 1557 (Fed.Cir.1995) (finding 17-month delay militated against issuance of preliminary injunction in patent infringement case); T.J. Smith & Nephew Ltd. v. Consolidated Med. Equip., Inc., 821 F.2d 646, 648 (Fed.Cir.1987) (15-month delay plus grant of licenses by patentee sufficient to overcome presumption of irreparable harm). As plaintiffs knew that capacitors and resistors were included in the Agreement as early as December 13, 1996, and yet did not file their complaint until June 2, 1997, the defendants contend that this fact alone constitutes a basis for denying plaintiffs' request for a preliminary injunction.

Plaintiffs claim that they were seeking non-judicial remedies, such as meeting with the USTR and her staff, during the six month period between their discovery that capacitors and resistors were included within the Agreement and the filing of their complaint. See Compl. ¶ 9, at 3. As this six-month delay did not prejudice defendants, the court finds that plaintiffs' delay in filing their complaint, by itself, does not constitute a sufficient basis for denying plaintiffs injunctive relief.

A. The Threat of Immediate, Irreparable Harm

To prevail on a motion for preliminary injunction, plaintiffs have the burden of producing "probative evidence" to demonstrate a threat of immediate, irreparable harm. National Hand Tool Corp. v. United States, 14 CIT 61, 66 (1990).

Only a viable threat of serious harm which cannot be undone authorizes exercise of a court's equitable power to enjoin before the merits are fully determined. A preliminary injunction will not issue simply to prevent a mere possibility of injury, even where prospective injury is great. A presently existing, actual threat must be shown.

S.J. Stile...