Trump Clashes With China at U.S. High Court on Vitamin Exports

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(Bloomberg) -- President Donald Trump’s administration and China took their trade feud to an unlikely forum Tuesday, clashing at the U.S. Supreme Court Tuesday in a price-fixing case leveled against Chinese vitamin makers.

The Trump administration is partially backing U.S. vitamin purchasers in their bid to revive a $148 million award they won in an antitrust lawsuit.

China is helping defend a federal appeals court’s conclusion that it was bound by the Chinese government’s assertion that the companies were following that country’s laws. The appeals court threw out the award.

The showdown, after the Supreme Court took the unprecedented step of granting argument time to China’s Ministry of Commerce, comes as the two countries threaten to slap tariffs on each other. Trump said Tuesday that Secretary of State Steven Mnuchin will go to China within days to negotiate over trade disputes.

The fight stems from a 2005 lawsuit filed by two U.S. vitamin C purchasers, Animal Science Products Inc. and Ranis Co. They claim North China Pharmaceutical Group Corp. and its manufacturing unit, Hebei Welcome Pharmaceutical Co., were part of a group that used a Chinese membership organization to fix the prices and quantities of vitamin C exported to the U.S.

China’s lawyer, Carter Phillips, told the justices Tuesday that the Chinese companies were simply following their country’s export laws. "Chinese law required the defendants to do precisely what they did in this case," he said.

China contends that U.S. courts generally must defer to a foreign country’s interpretation of its own laws.

The Trump administration isn’t taking a position on the requirements of Chinese law. But the Justice Department says U.S. courts have broad latitude to consider various sources when interpreting foreign law and don’t necessarily have to accept the foreign government’s view.

The appeals court was "too rigid and too deferential to foreign sovereign submissions," Justice Department lawyer Brian Fletcher argued.

The hour-long Supreme Court session suggested the justices weren’t inclined to give Chinese officials the final say. Justice Elena Kagan said it wasn’t clear that courts anywhere would be that deferential.

"How can you say that the only thing that shows respect to foreign governments is to do something that we don’t know that any other foreign nation does?" she asked Phillips.

The case, which the court will decide by the end of June, is Animal Science v. Hebei Welcome Pharmaceutical, 16-1220.

©2018 Bloomberg L.P.

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