Much talk today in the business community revolves around the United States national debt. Considering our mounting budgetary woes, one has to wonder where we stand in relation to other nations in terms of trade deficit. One of our principal trade partners, Japan, has been cast in a somewhat unfavorable light over recent years for its protective economic trade measures. The United States has negotiated with the Japanese government in an effort to open some of Japan's protected product markets. Even still, some American firms, such as Kodak, and even United States government trade officials have accused the Japanese of "unfair or anti-competitive trade practices."(1)
The United States, in most instances, will address "unfair trade practices" with diplomatic remedies. However, in situations where vital economic interests are at stake, the United States Congress has provided the Executive with a strong measure to combat such unfair practices. To further fair trade conditions for United States firms abroad, Congress passed Section 301 of the Trade Act of 1974(2) and amended and strengthened it in both 1979(3) and 1984.(4) Section 301 provides the President with discretionary authority to impose retaliatory measures against any foreign government act, policy, or practice that "burdens or restricts United States commerce" and either violates international obligations or is determined by the President to be "unjustifiable, unreasonable, or discriminatory."(5) Although United States trade statutes have granted authority similar to that of Section 301 in the past, the forerunners have not enjoyed the success of alleviating foreign trade restrictions that Section 301 demands.
In the realm of foreign affairs, the President is given great deference by the other two co-equal branches of the Federal government, the Judiciary and the Legislature.(6) The President has several different potential sources of power that are explicitly set out in the United States Constitution.(7) The President's powers include the Commander in Chief clause, the Take Care that the laws be faithfully executed clause, and the power to receive Ambassadors and other Public Ministers clause.(8) The power of the President to conduct foreign affairs seems to derive from the last above mentioned clause. The law in question, the Trade Act of 1974, was promulgated by the United States Congress with the thought that the Executive should control certain affairs grounded in economic policy.(9) If the President is given authority to act pursuant to this statute, a key question to be addressed is whether the enactment and use of this statute is a permissible delegation of legislative authority. When the power of the Legislature is extended to the Executive, a question of constitutional integrity arises. The query is usually couched in terms of nondelegation doctrine or separation of powers.
This article will primarily focus on the constitutional validity of Section 301 of the Trade Act of 1974 ("Section 301") in terms of the applicable separation of powers doctrine and nondelegation doctrine. Initially, the article describes the historical foundations of Section 301, its objectives, and its substantive elements. It then examines some international law concepts in relation to the Act. This is followed by analysis of whether Section 301 constitutes an improper delegation of power by the legislature under the principles of the nondelegation doctrine. The article then concludes that the use of Section 301 should be reshaped to fit within the constitutional constructs of the nondelegation doctrine.
Before delving into the primary issue of separation of power, it is first helpful to examine the history and development of the Trade Act of 1974. Congress initially gave the power to restrict imports from foreign nations to President George Washington in 1794.(10) This authority was given to the President by Congress once again in the Tariff Act of 1930 which allowed him to impose a retaliatory tariff schedule on the goods of a foreign country considered "reciprocally unequal and unreasonable."(11) The next law granting authority was Section 252(c) of the Trade Expansion Act of 1962, which gave the President the power to suspend the benefits of trade agreements with trade partners who developed restrictions that "directly or indirectly substantially burden United States commerce."(12)
Section 301 of the Trade Act of 1974 sets out a different test with slightly differing language.(13) Section 301 authorizes the President to take action when a foreign nation utilizes a trade restriction that is "unjustifiable, unreasonable, or discriminatory and burdens or restricts United States Commerce."(14) This Act was amended on two occasions to expand the President's authority.(15) First, the Trade Agreements Act of 1979 modified section 301 to give the President clear authority to pursue United States rights under any applicable trade agreements.(16) Second, the Trade and Tariff Act of 1984 established several new objectives including reducing barriers to international trade in services, removing impediments to exporting high technology products, and developing rules for the free flow of investments.(17) In addition, this Act enumerated impediments to foreign trade and expanded the President's authority to take remedial action.(18)
The acts, policies, or practices of foreign governments or instrumentalities are actionable under Section 301 if they are inconsistent with the provisions of a trade agreement or deny benefits to the United States under a trade agreement.(19) The Office of the United States Trade Representative ("USTR") generally has determined "Trade Agreement" to mean the General Agreement on Tariffs and Trade ("GATT") or any of the GATT codes negotiated during the Tokyo Round of Multilateral Trade Negotiations.(20) Thus, Section 301 offers the President an alternative to diplomacy to combat the effects of a foreign governmental action that burdens United States commerce.(21)
There are three policy objectives of the Act. The first objective is to "foster United States economic growth and employment" by expanding the value of United States exports.(22) This policy seems legitimate in light of the United States' profound trade deficit with several of its important partners.
The second objective of the Act is to provide a means for private citizens to seek United States Government help in resolving their own trade problems.(23) Only nation-states are signatories to the GATT; therefore, only nation-states can bring actions under the GATT.(24) Section 301 allows the United States Government to bring the claim in lieu of the aggrieved citizen and commence the action.(25) This procedure is seen in the context of international law as the "espousal" of claims by the nation to represent the interests of their citizens who have been wronged.(26)
The last objective of the Act is to allow the President to balance Congressional pressure to retaliate with delicate foreign policy interests.(27) This is the policy objective which may cause the Act to fail under the principles of the nondelegation doctrine.
Prior to the Executive taking action under Section 301, a private party must prove four key elements: (1) subject matter jurisdiction, (2) proper standing, (3) injury as defined under Section 301 resulting from foreign trade practice, and (4) a substantive violation of Section 301.(28) Of these elements, the only one examined here will be the injury requirement. The injury must "burden" or "restrict" United States commerce.(29) In addition, the petitioner need not suffer a direct injury. Rather, the petitioner must show sufficient interest in the foreign trade restriction; trifling concerns will not be addressed.(30) Lastly, the President's action will be triggered only if the foreign action is (1) violative of international trade agreements, (2) unjustifiable, (3) unreasonable, or (4) discriminatory.(31)
There is an inherent conflict between Section 301 and the General Agreement on Tariffs and Trade. The three fundamental principles on which GATT is based are: (1) "conditions of trade, including the level of tariffs and other restrictions, should be discussed and agreed on within a multilateral framework"; (2) "trade should be conducted on a basis of non-discrimination"; and (3) "government restraints on the movement of goods should be kept to a minimum, and if changed, should be reduced, not increased."(32) The first of the principles is in direct conflict with Section 301's primary use: the unilateral sanction against a trade partner perceived to be acting in an unfair manner. GATT's goal of ensuring the use of multilateral talks to address trade grievances was disregarded by Congress when it passed the Section 301 unilateral sanctioning mechanism. Moreover, the third principle of GATT is violated by Section 301 as well. GATT provides that "government restraints on the movement of goods should be kept to a minimum" which would be clearly inconsistent with Congress' passing of Section 301.(33) Section 301 provides authorization for the Executive to unilaterally "restrain the movement of goods" and impede the general goal of free market trade as espoused in GATT.(34)
The counter-argument to be made by Congress may well entail the second principle of GATT. Section 301 acts as a deterrent to unfair trade practice and discrimination in trade which GATT prominently mentions as a basic principle.(35) The inconsistency of GATT and section 301 is not the only area of infirmity of the law. Problems of inconsistency with international law, primarily with GATT, can still arise in the future if Congress does not reshape the law to conform to our obligations abroad.
The primary question concerning Section 301 is the Act's lack of constitutionality within the parameters of the nondelegation doctrine. To "delegate" as defined by Webster's Dictionary in its verb form means "to entrust (authority, power etc.) to a person acting as one's agent or representative."(36) In the constitutional setting, the meaning of delegate is essentially the same; to delegate authority among the co-equal branches of the Federal government is to achieve efficiency of administration. Using the most skilled branch in a particular area to address matters within its ken will yield the greatest level of efficiency.
The notion of separation of powers between three co-equal branches of the federal government was set forth before the actual writing of the Constitution.(37) James Madison, the major author of the Constitution, believed that the system of checks and balances of power would lead to a continuous conflict between each branch of government and thus produce gradual change in American society.(38) During the time the founders were formulating their theories on free government, they could not have anticipated modern society as it exists today. For example, the Constitution does not provide for the specific creation of air traffic control regulations because airplanes did not exist in the time of the founders. However, one may argue that the Constitution has provided for such laws through the use of the "Necessary and Proper Clause" whereby Congress can "make all laws which shall be necessary and proper for carrying into Execution the foregoing powers."(39) If Congress were restricted by the Constitution to only enacting laws that are specifically mentioned in the Constitution, the orderly administration of government business would be hamstringed. Chief Justice John Marshall stated "to have prescribed the means by which government should, in all future time, execute its powers, would have been to change, entirely, the character of the instrument, and give it the properties of a legal code."(40)
The United States Congress has been afforded the luxury of delegating authority. Within the separation-of-powers doctrine, the distribution of foreign affairs power is the most controversial issue which arises between the legislature and executive. The power of the President to make treaties and executive agreements without consulting Congress and affect United States interests is especially relevant to Section 301.(41) The Constitution provides "He (the President) shall have power, by and with the advice and consent of the Senate, to make treaties, provided two-thirds of the Senators present concur."(42) However, in the course of the last two hundred years of constitutional history, several alternative methods have developed for the President to make agreements abroad.(43) Executive agreements can be made in the following manners under the Constitution:
(1) they can be submitted for congressional approval after execution by the President; (2) Congress can pass a statute that gives advance authorization to the President to enter into certain inter- national agreements for the United States; (3) a treaty may delegate advance authority to accept an executive agreement designed to implement a treaty; or (4) the President can enter into some executive agreements based on his own inherent authority under the Constitution.(44)
Section 301 of the Trade Act of 1974 most closely fits into the second category set forth above. Though Section 301 is a unilateral punitive act created by the legislature, the delegation of power to the Executive manifests the identical situation as would an executive agreement; the Executive is given power with little guidance. Congress has passed Section 301 which gives advance authorization to obligate the United States to action concerning foreign nations. A cursory glance at the law might lead one to believe that no violation of separation-of-powers doctrine has occurred, but an in depth look yields another result.
In his famous concurring opinion in the Steel Seizure Case, Justice Jackson outlined the general parameters for the President's powers in conjunction with those of Congress.(45) Justice Jackson states, "[W]hile the Constitution diffuses power the better to secure liberty, it also contemplates that practice will integrate the dispersed powers into a workable government."(46) The President's powers to act are not fixed but fluctuate, depending upon their disjunction or conjunction with those of Congress.(47) The Presidential powers are grouped into three primary categories: (1) when the President acts pursuant to an express or implied authorization of Congress, (2) when the President acts in absence of either a congressional grant or denial of authority, or (3) when the President takes measures incompatible with the expressed or implied will of Congress.(48) Since Congress has spoken by passing Section 301 of the Trade Act, the President's use of statutory authority to sanction foreign nations fall within the first category; thus, the President's power to act is at its maximum. Many commentators agree with the foregoing analysis but the reasoning on which it is based could arguably be flawed.(49)
Using standard statutory analysis, the first thing to examine would be the language of the law. The Trade and Tariff Act of 1984 states, as does its forerunner, the Trade Act of 1974, that the purpose of the law is to "foster the economic growth of . . . the United States by expanding competitive United States exports through the achievement of commercial opportunities in foreign markets substantially equivalent to those accorded by the United States."(50) The Trade Act of 1974 further states the President can take action when a foreign nation uses a trade restriction that is "unjustifiable, unreasonable, or discriminatory and burdens or restricts United States Commerce."(51) The problem with this grant is the broad, unbridled expression of authority afforded the President. Essentially, fostering economic growth with broad discretion gives the President carte blanche on our pecuniary foreign policy matters. The authority vested in the President in Section 301 should be limited to a strict interpretation of the terms of the law.
When examining the intent of the Framers of the law, it is apparent there is ambiguity in the law's stated purpose. The Senate Finance Committee, in its report on the Trade Act of 1974, stated that it intended Section 301 powers "to be exercised vigorously to insure fair trade and equitable conditions for U.S. commerce."(52) This "retaliation authority" was not intended to be a "dead letter," for foreign trading partners should know that we are willing to do business with them on a fair and free basis, but if they insist on maintaining unfair advantages, swift and certain retaliation against their commerce will occur.(53) This authority "should not be used frivolously or without justification."(54)
The legislative history illustrates the ambiguous purpose of Section 301; on the one hand, there is strong congressional call for vigorous presidential action, while on the other, there are intimations that the same strong language is only a threat to give United States negotiators additional leverage in bargaining for reductions of unfair trade practices by other nations.(55) Although the purpose of Section 301 is ambiguous, its application has been consistent. To date, presidents have been extremely hesitant to utilize Section 301 powers with much authority. The President may not use Section 301 because of the legislative history implying that the sanction terms are to be used as a threat to force foreign governments to conform and not as an offensive trade weapon.
It would be fair to say the legislative history of the Trade Act of 1974, especially the notes regarding Section 301's intended use indicate that Congress may have given the President a power, textually, that it did not intend to delegate. When examined in light of the legislative history, the text of the law may seem to be an overextension of power to the President. The phrase "take all appropriate and feasible action" constitutes language of broad authorization that can be considered an encroachment by the President into the legislative realm.(56)
It should also be noted that some commentators believe there is language in Section 301 suggesting when the President acts pursuant to statutory authority that he must first consult with Congress.(57) The existence of a potential limitation on the President's power is an indication of intent to withold some power from the President.
Taking a conservative approach with regard to the intent of Congress, one could conclude Congress did not intend to give the President free reign to affect the rights of the United States in agreements with foreign nations. In addition, it is fair to say Congress did not intend to give the President the unilateral right to personally affect individual corporations or businesses in general. Such retaliatory measures, if implemented by the President, would be tantamount to provocation for foreign governments to impose sanctions against the United States in certain areas of trade. Lastly, another potentially devastating consequence of United States trade sanctions could be foreign government retaliation in some form of eminent domain "taking" of United States business property abroad. Although it is not a likely initial course of action for an offended foreign government, the possibility of such an action does exist.(58)
Without deciding if there is a true separation of powers issue presented in the use of Section 301, the sanctioning mechanism will fail under another constitutional doctrine: the nondelegation doctrine. The delegation doctrine provides two primary restrictions on the lending of power between the co-equal branches of the Federal government. First, the legislature cannot completely delegate its power to another branch.(59) Second, even if a delegation is proper, the government instrumentality, in this case the USTR or the President, may not act outside the scope of the delegation.(60) A close and detailed examination of Section 301 of the Trade Act will prove fatal on both prongs of this test.
Section 301 should meet resistance in passing the first prong of the test set forth above. Section 301 is a broad legislative grant of power with minimal restriction on the power of the President.(61) The Supreme Court approved a similarly, but distinguishable, broad delegation of trade power almost one hundred years ago in Field v. Clark when the delegation doctrine had more vitality than it does today.(62) In Field, the Supreme Court upheld Congress' delegation of power to the President to raise tariff schedules if a foreign nation imposed a duty on American products that the President considered "reciprocally unequal and unreasonable."(63) Even in this celebrated case the Supreme Court arguably lost sight of the true character of the authority the legislature gave to the Executive. In Field, the legislature was permitted to allow the President to raise tariff schedules, a function that had previously been strictly legislative.(64) The Supreme Court reasoned that the President was not exercising an exclusively legislative function, but was rather simply ascertaining certain facts that triggered congressionally approved sanctions.(65) The problem with Section 301, as opposed to the delegation in Field, is the sanctions being utilized by the President may not necessarily be "approved" by the United States Congress.(66) Again, it should be mentioned that the legislative history of Section 301 illustrates the law's ambiguous purpose.(67) Many of the Congressmen and Senators plainly admit that there are intimations that the strong language giving the President authority to sanction unilaterally is only a threat to give United States negotiators additional leverage in bargaining for reductions of unfair trade practices by other nations.(68)
Although many subsequent Supreme Court cases have followed the doctrine of Field, there is a movement to bring back the tenets of the delegation doctrine among some of the more conservative and influential Justices.(69) The second prong of the test is another potential area of challenge to the statute's validity under the delegation doctrine. As mentioned previously, the second prong states action by the President is prohibited if it exceeds the authority so delegated.(70) Section 301's authority is very broadly written but it can be summarized in brief. The President is afforded the authorization to "take all appropriate and feasible action within his power" to enforce the trade rights of the United States.(71) The phrase "within his power" is problematic due to the very expansive meaning it may carry. The entire panoply of presidential powers are thus at the Executive's disposal when acting pursuant to Section 301. It is assumed the President uses his foreign affairs power as elucidated in U.S. v. Curtiss-Wright Corp.(72) and Dames & Moore v. Regan.(73)
The United States Supreme Court in Curtiss-Wright Corp. found the President to have the onus to pass a law restricting the sale of arms due to the President's foreign affairs.(74) The Court reasoned the internal powers of the President came from the explicit powers enumerated in the Constitution and from implied powers that were associated therewith.(75) However, the President's foreign affairs powers did not originate in the Constitution but were derived from an external source.(76) The power vested in the President to deal in foreign affairs thus came from the Crown of England, which vested in the President when we achieved our independence.(77) The Court additionally based its decision on the premise the President is the best suited for dealing with foreign affairs due to its contact with other heads of state and various government agencies in the Executive branch designed to handle these issues.(78) The Constitution also provides a basis for the decision where it states "he [the Executive] shall receive Ambassadors and other Public Ministers."(79) Further, the Court concluded the President was "the sole organ of the federal government in the field of international relations."(80) Even assuming that the principle of the President entertaining our foreign affairs generally is not offensive or repugnant to the Constitution, the President's or the USTR's ability under the Trade Act of 1974 to potentially harm U.S. citizens economically by virtue of their decision is troubling.
Under the Supreme Court's decision in Dames & Moore v. Regan [hereinafter The Iranian Assets Case], the President was allowed to nullify and dissolve attachments of foreign assets within the United States and suspend claims pending in United States courts.(81) The President's basis of power was "The Chief Diplomat" power which is not specifically defined and tends to be malleable to the needs of the circumstances.(82) The Court in Curtiss-Wright Corp. said "he [the President], not Congress, has the better opportunity of knowing the conditions which prevail in foreign countries, and especially this is true in time of war."(83) The President further has "confidential sources of information and agents in the form of diplomatic, consular and other officials."(84) President Carter, under the exigency of the hostage crisis, used his power to dissolve the attachment of Iranian assets in return for the release of the hostages taken by the Iranian students in Iran.(85) The Court gave the President the benefit of the doubt and construed Congressional silence as tacit approval of his actions.(86) The Court again relied heavily on the foreign affairs dominion of the President as the basis of decision.(87) Within the construct of Justice Jackson's trilogy of contemplated Presidential action balanced against Congressional action or inaction, the act of dissolving the attachment of Iranian assets seemed to fall within zone one.(88) The Congressional statute, the International Emergency Economic Powers Act, gave the President full authority to act by his declaring a national emergency on November 14, 1979 and then blocking the removal and transfer of Iranian assets "subject to the jurisdiction of the United States."(89) When the President entered an Executive Agreement freeing the hostages, he dissolved the attachment, under the zone 1 power recognized by the Court.(90) As Justice Jackson stated in Youngstown Sheet & Tube Co. v. Sawyer ("The Steel Seizure Case"), action by the President done pursuant to specific congressional authorization is "supported by the strongest of presumptions and the widest latitude of judicial interpretation, and the burden of persuasion would rest heavily on any who might attack it."(91) The suspension of pending claims against the government of Iran was also a component of the Executive Agreement.(92) The Court relied on the twilight power of zone 2 to effectuate the suspension of the claims. As mentioned above, Congressional inaction may sometimes enable or invite measures using independent presidential authority which could be considered implicit acquiescence on the part of Congress.(93) The holding of this case is to be construed in a very narrow fashion as evidenced by the parting words in the majority opinion.(94)
The Iranian Assets Case arguably does not set a precedent allowing the President to randomly dissolve judicial attachments or affecting United States corporate assets abroad by unilateral sanction of foreign governments. The decision in The Iranian Assets Case, being so limited in scope, may not provide such a sound basis for decision for controversies to be decided in the future. In a potential action against the United States, a plaintiff may have success in arguing presidential action under Section 301 is unconstitutional for falling in Justice Jackson's twilight zone.(95) If it is argued that Section 301 gives the President authority not intended to pass to his office, there could be congressional silence assumed. If this can be established, a situation similar to that of The Steel Seizure Case would arise.(96) There, the Court refuted President Truman's assertion of a national emergency potentially affecting the much needed steel industry.(97) In contrast, the success of the United States in The Iranian Assets Case was based on the exigency of the circumstances. If a situation were to arise lacking clear emergency qualities, Section 301 may not pass constitutional muster.
Additional support for finding Section 301 unconstitutional is the recent Supreme Court case, Touby v. United States.(98) In Touby, the Court held the delegation of power by Congress to the Attorney General was proper under the current doctrine.(99) In Touby, Congress passed the Comprehensive Drug Abuse Prevention and Control Act of 1970 ("Comprehensive Drug Act") which authorizes the Attorney General, upon compliance with specified procedures, to add new drugs to five "schedules" of controlled substances, the manufacture, possession, and distribution of which the Act regulates or prohibits.(100) It took a considerable amount of time for the Attorney General to follow the procedures set forth by the law so Congress amended the Comprehensive Drug Act in 1984 to permit the Attorney General a method which would expedite the procedure when doing so "is necessary to avoid an imminent hazard to public safety."(101)
The measures relevant here, Section 201(a) of the Comprehensive Drug Act, authorize the Attorney General to add or remove substances, or to move a substance from one schedule to another.(102) Drug traffickers were able to take advantage of the time gap by designing drugs that were similar in pharmacological effect to scheduled substances but differed slightly in chemical composition, so that existing schedules did not apply to them.(103) Temporary scheduling under Section 201(h) allows the Attorney General to bypass, for a limited time, several of the requirements for permanent scheduling, thus resulting in better enforcement of the law with greater efficiency.(104)
The Constitution provides that "[a]ll legislative powers herein granted shall be vested in a Congress of the United States."(105) From this language the Court has derived the nondelegation doctrine: that Congress may not constitutionally delegate its legislative power to another branch of government.(106) The nondelegation doctrine is rooted in the principle of separation of powers.(107) However, the courts have long recognized that the nondelegation doctrine does not prevent Congress from seeking assistance, within proper limits, from its coordinate branches.(108)
As long as Congress "lays down by legislative act an intelligible principle to which the person or body authorized to act is directed to conform, such legislative action is not a forbidden delegation of legislative power."(109) The Supreme Court has upheld several statutes as providing sufficient guidance in the past.(110) In light of these precedents, the petitioner here could not reasonably argue that the "imminent hazard to the public safety" standard is not an intelligible principle.(111)
The Court held Congress' delegation to be proper but mentioned specifically "the placing of multiple restrictions on his [the Attorney General's] discretion to define criminal conduct.(112) In the context of Section 301, the President has unlimited discretion to wield his power of unilateral sanction without the constraint of Congressionally imposed limitation.(113) Although the petitioner in Touby offered a losing argument, it may be valid to show unconstitutionality under a different set of facts and a different law.
The fact that Congress cannot delegate legislative power to the President is a principle universally recognized as vital to the integrity and maintenance of the system of government ordained by the Constitution.(114) When the President is permitted to decide what type of sanction and against whom and when it is to be levied, he has effectively transgressed the constitutional bounds of his powers.(115) The admonitions of Madison to ensure a separation of powers between the three co-equal branches of government quite possibly have been ignored by several of the Supreme Courts' decisions in this area.(116) The power of Section 301 vested in the President seems to be a potential controversy on the horizon for courts to decide. Within the constructs of the Constitution, there is a great amount of evidence to reach the correct conclusion of finding Section 301's delegation to be impermissible.
Section 301's constitutional infirmities notwithstanding, international comity can be considered another potential limitation on unilateral action by the President which would affect our international obligations. It is clear from the legislative history of Section 301 that Congress held reservations to vesting an unlimited, unfettered use of power to the Executive to affect the United States' international obligations.(117) The concept which provided the basis for the reservation by Congress was the general notion of the "comity of nations."(118) The Supreme Court has recognized the concept of comity in a number of different situations.(119) Comity is defined generally as "courtesy and respect for the laws of a foreign nation."(120)
If the President were to affect the international obligations of the United States by utilizing the power of unilateral sanction, the basic notion of comity of nations would be offended. Section 301, used offensively, could breach trade agreements United States negotiators have worked diligently to reach. In addition, the use of the unilateral sanction mechanism could have a chilling effect on future trade agreements and trade of goods and services in general. Such abuse of discretion should be avoided altogether by giving the President a more limited and structured device to further United States' trade goals.
The United States government will address "unfair trade practices" diplomatically on every occasion. The problem, as we have seen above, will arise when a trading partner does not comply with the terms of a trade agreement. When vital economic interests are at stake, the United States Congress has provided the Executive a strong measure to combat such unfair practices. Section 301 of the Trade Act of 1974 gives the President the power of unilateral sanction of a foreign government for unfair trade measures.
The delegation of such a power without providing parameters for its use violates the tenets of the delegation doctrine. As mentioned above, the test is set forth in two parts. The second prong states action by the President is prohibited if it exceeds the authority so delegated.(121) Arguably, the President's power was delegated by Congress under the pretenses the power would be used for obtaining leverage by United States negotiators when acting in a diplomatic capacity.(122)
There is no doubt the Act gives the President too much authority thus violating the notion that separation of executive and legislative powers are vital to the integrity and maintenance of the system of government ordained by the Constitution.(123) The overabundance of discretion afforded the President under Section 301 is unparalleled in the country's history. Other statutes, as mentioned previously, have set forth "intelligible principles" which the President can follow and use as a boundary to restrain the use of his power within constitutional guidelines.(124) Section 301's broad delegation of authority does not comply with such an "intelligible standard."(125)
It would seem futile to contest the President's rights as the Chief Diplomat and foreign affairs leader of the country.(126) However, there must always be a separation of the co-equal branches and some limitation placed on each so as to achieve the balance and harmony the Framers sought.(127) Section 301's delegation of legislative power offends this great tradition and is thus repugnant to the Constitution which stands as the Supreme Law of the Land.(128)
To prove the unconstitutionality of Section 301 under delegation principles, the international ramifications which comity implicates must be recognized. Simply stated under comity principles, Section 301 would not be conducive to the relationships fostered between trading partners around the globe. Treaties in the future as well as regular course of business would be affected in a negative fashion by such unruly wielding of sanction power. In fact, GATT signatory countries have attacked this unilateral action as violating the national agreement guarantee of that important multilateral treaty.(129) Instigating our trade partners to retaliate with commensurate or greater economic sanctions does not appear to be the best policy. The United States should continue to use Section 301 as an instrument for obtaining trade negotiation leverage. As a threat, Section 301 will provide ample opportunity for diplomatic measures to succeed. Through proper use of this sanction mechanism, the United States will be able to compete economically once again.
1. Kayano Watanabe, "Film War Develops in Japan," Chicago Sun-Times, Aug. 1, 1995, at 5, col. 1.
2. Trade Act of 1974, Pub. L. 93-618, § 301, 88 Stat. 1978.
3. Trade Agreements Act of 1979, Pub. L. No. 96-39, § 301, 93 Stat. 144, 236.
4. Trade and Tariff Act of 1984, Pub. L. No. 98-573, § 304, 98 Stat. 3002-06 (codified at 19 U.S.C. §§ 2411-2416 (Supp. IV 1986) (amended in 1994)).
5. 19 U.S.C. § 2411(a). Acts, policies, and practices that are unreasonable include, but are not limited to, acts which deny fair and equitable opportunities for the establishment of an enterprise, constitute denial of workers right to association, and the right of employees to organize and bargain collectively, etc. Id.
6. 0 United States v. Curtiss-Wright Export Corp., et. al., 299 U.S. 304, 57 S. Ct. 216, 81 L. Ed. 255 (U.S.N.Y., Dec. 21, 1936) (No. 98).
7. U.S. Const. art. II, § 2.
8. U.S. Const. art. II, §§ 2, 3.
9. See 19 U.S.C. § 2411.
10. See 1 Stat. 372 (1794).
11. Tariff Act of 1930, ch. 497, tit. III, § 303, 46 Stat. 590, 687 (codified as amended at 19 U.S.C. § 1303 (1982) (repealed 1994)).
12. Trade Expansion Act of 1962, Pub. L. No. 87-794, § 252, 76 Stat. 872, 879-80 (repealed by § 301, 88 Stat. 1978. Within the President's scope of authority under the Act is the power to suspend, withdraw, or prevent the application of benefits of trade agreement concessions to carry out a trade agreement with a foreign trade partner.
13. § 301, 88 Stat. at 2041-43.
14. § 301(a) (2) (B), 88 Stat. at 2041-43.
15. K. Blake Thatcher, Section 301 of the Trade Act of 1974: Its Utility Against Alleged Unfair Trade Practices by the Japanese Government, 81 Nw. U. L. Rev. 492, 496 (1987).
16. § 301, 93 Stat. at 296.
17. §§ 301-307, 98 Stat. at 3000-13.
18. Id. at § 305(a), 19 U.S.C. § 2114(a) (1) (A). Other actions that encroach on free trade according to the Act are the toleration of anti-competitive acts by a foreign government, limited or no protection for intellectual property, and the permission of forced or compulsory labor.
19. § 301, 88 Stat. at 2041-43.
20. Judith Hippler Bello & Alan F. Holmer, Section 301 of the Trade Act of 1974: Requirements, Procedures and Developments," 7 Nw. J. Int'l L. & Bus. 633, 636 (1986).
21. Judith Hippler Bello & Alan F. Holmer, "Section 301, Recent Developments and Proposed Amendments," 35 Fed. B. News & J. 68 (1988).
22. See Thatcher, supra note 15, at 496.
23. Id.
24. General Agreement on Tariffs and Trade, arts. XXII-XXIII, opened for signature Oct. 30 1947, 61 Stat. pts. 5, 11, at 64-65, T.I.A.S. No. 1700.
25. See Thatcher, supra note 15, at 496.
26. Case of Certain Norwegian Loans (France v. Norway) 1957 I.C.J. 9 (1957) (France v. Mortgage Bank of Norway and Small Holding and Workers Housing Bank). In this action, French nationals owned bonds that were at issue due to change in currency backing. The French government "espoused" the national's claims and brought them to the International Court of Justice on their behalf. The case is commonly referred to as the Case of Certain Norwegian Loans.
27. See Thatcher, supra note 15, at 496.
28. 19 U.S.C. § 2412(a) (1) (Supp. IV 1986).
29. 19 U.S.C. § 2411(a).
30. 19 U.S.C. § 2411(b).
31. Id.
32. A. Lowenfeld, Public Controls on International Trade 11-21 (1983).
33. See Hudec, Retaliation Against "Unreasonable" Foreign Trade Practices: The New Section 301 and GATT Nullification and Impairment, 59 Minn. L. Rev. 461, 538-39 (1975).
34. Id.
35. Id.
36. Webster's New World Dictionary 387 (1966).
37. The Federalist No. 51 (James Madison).
38. Id.
39. U.S. Const. art. I, § 8, cl. 18. The foregoing powers referred to are the enumerated powers of Congress that are listed, but are not limited to, those in Article 8. The Necessary and Proper clause was interpreted to having this larger scope of power through the decision of Chief Justice Marshall in McCulloch v. Maryland, 17 U.S. 316, 4 L. Ed. 579, 4 Wheat. 316 (1819).
40. McCulloch v. Maryland, 17 U.S. 316, 4 L. Ed. 579, 4 Wheat. 316 (1819).
41. See Thatcher, supra note 15, at 496.
42. U.S. Const. art. 2, § 2, cl. 1. The power of the President to make treaties with foreign nations is set forth here textually. The collateral powers are sometimes implied through several of the President's other powers to conduct foreign affairs. See e.g., United States v. Curtiss-Wright Corp., 299 U.S. 304 (1935).
43. See Barry E. Carter et al., International Law (1995).
44. See Thatcher, supra note 15, at 496.
45. Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 634-38, 72 S. Ct. 863, 96 L. Ed. 1153 (1952) (Jackson, J., concurring).
46. Id.
47. Id.
48. Id.
49. See generally Thatcher supra note 15; Patricia I. Hansen, Defining Unreasonableness in International Trade: Section 301 of the Trade Act of 1974, 96 Yale L. Rev. 1122 (1987).
50. 19 U.S.C. § 2102.
51. See generally, § 301, 88 Stat. at 2041-43.
52. S. Rep. No. 1298, 93rd Cong., 2d Sess. 164, reprinted in U.S.C.C.A.N. 7186, 7302 (1974) [herinafter Senate Report].
53. Id.
54. Id. at 7303.
55. Office of Int'l Sector Policy, Dep't of Commerce, An Examination of the Adequacy of U.S. Trade Laws as They Affect the Competitiveness of High Technology Industries 37 (1983) (emphasis added).
56. See generally, 19 U.S.C. § 2411(a).
57. Shirley A. Coffield, "Using Section 301 of the Trade Act of 1974 as a Response to Foreign Government Trade Actions: When, Why, and How," 6 N.C.J. Int'l L. & Com. Reg. 381, 390 (1982).
58. See generally, Banco Nacional de Cuba v. Sabbatino, Receiver, 376 U.S. 398 (1964).
59. See e.g., Schecter Poultry Corp. v. United States, 295 U.S. 495, 55 S. Ct. 837, 79 L. Ed. 1570 (1935). The United States Congress passed the National Industrial Recovery Act which empowered the President to approve "codes of fair competition." The Court found the underlying act to be unconstitutional.
60. See e.g., American Textile Mfrs. Inst. v. Donovan, 452 U.S. 490, 101 S. Ct. 2178, 69 L. Ed. 185 (1981).
61. 19 U.S.C. § 2411(a).
62. Field v. Clark, 143 U.S. 649, 12 S. Ct. 495, 36 L. Ed. 294 (1892).
63. Id. at 693.
64. Id.
65. See Thatcher, supra note 15, at 496.
66. Senate Report supra note 52 at 7303. The Trade Act of 1974 delegates power to the President which allows a subordinate officer, the United State Trade Representative, to investigate improper foreign trade actions and recommend sanctions to the President. The Executive is allowed to use all of his powers in the course of utilizing the Act.
67. Id.
68. See Thatcher, supra note 15, at 496.
69. See e.g., Industrial Union Dep't v. American Petroleum Inst., 448 U.S. 607, 100 S. Ct. 2844, 65 L. Ed. 1010 (1980) (Rehnquist, J. concurring) (construing 29 U.S.C. § 652(8) (1976)). Justice Rehnquist, in a concurring opinion in the Benzene Case, may have partially revived the delegation doctrine. In earlier cases, the Court similarly had invalidated actions by administrative agencies as exceeding delegated powers. See e.g., Hampton v. Mow Sun Wong, 426 U.S. 88, 96 S. Ct. 1895, 48 L. Ed.2d 495 (1976), Greene v. McElroy, 360 U.S. 474, 79 S. Ct. 1400, 3 L. Ed. 1377 (1959).
70. American Textile Mfrs. Inst. v. Donovan, 452 U.S. 490 (1981).
71. 19 U.S.C. § 2411(a) (1) (B).
72. U.S. v. Curtiss-Wright Corp., 299 U.S. 304 (1936).
73. Dames & Moore v. Regan, 453 U.S. 654, 101 S. Ct. 2972, 69 L. Ed.2d 918 (1981).
74. Curtiss-Wright Corp., 299 U.S. at 304.
75. Id.
76. Id.
77. Id. It should be noted this argument offered by the Court neglects the Articles of Confederation years in which the states had foreign affairs power.
78. Id.
79. U.S. Const. art. II, § 3.
80. Curtiss-Wright Corp., 299 U.S. at 319.
81. Dames & Moore, 453 U.S. at 654.
82. Curtiss-Wright Corp., 299 U.S. at 319.
83. See generally, Curtiss-Wright Corp., 299 U.S. at 304.
84. Id.
85. Dames & Moore, 453 U.S. at 669-674.
86. Id. at 671-673.
87. Id. at 673-674.
88. Youngstown Sheet & Tube Co., 343 U.S. at 635-638.
89. Dames & Moore, 453 U.S. at 673-674.
90. Id. at 671-673.
91. Youngstown Sheet & Tube Co., 343 U.S. at 635-636.
92. Dames & Moore, 453 U.S. at 675-679.
93. Youngstown Sheet & Tube Co., 343 U.S. at 637.
94. Dames & Moore, 453 U.S. at 654. The court states "Finally, we re-emphasize the narrowness of our decision. We do not decide that the President possesses plenary power to settle claims, even as against foreign governmental entities. [But] where, as here, the settlement of claims has been determined to be a necessary incident to the resolution of a major foreign policy dispute between our country and another. Id. at 688.
95. Youngstown Sheet & Tube Co., 343 U.S. at 637.
96. See generally Youngstown Sheet & Tube Co., 343 U.S. at 579.
97. Id.
98. Touby v. United States, 500 U.S. 160, 111 S. Ct. 1752, 114 L. Ed.2d 219 (1991).
99. Id. at 164-167.
100. Comprehensive Drug Abuse Prevention and Control Act of 1970, §§ 201(h) (6), 507, as amended, 21 U.S.C.A. §§ 811(h) (6), 877.
101. S.Rep. No. 225, 98 Cong., 2d Sess. 264 (1984), reprinted in 1984 U.S.C.C.A.N. at 3182.
102. 21 U.S.C. § 811(a).
103. Touby, 500 U.S. at 163.
104. Id.
105. U.S. Const. art. I, § 1.
106. Touby, 500 U.S. at 164-167.
107. Mistretta v. U.S., 488 U.S. 361, 371, 109 S. Ct. 647, 102 L. Ed. 2d 714 (1989).
108. Id.
109. See e.g., J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 48 S. Ct. 348, 72 L. Ed. 624 (1928) (emphasis added).
110. See e.g., Lichter v. United States, 334 U.S. 742, 68 S. Ct. 1294, 92 L. Ed. 1694 (1948) (authorizing the War Department to recover "excessive profits"); Yakus v. United States, 321 U.S. 414, 64 S. Ct. 660, 81 L. Ed. 834 (1944) (authorizing the Price Administrator to fix "fair and equitable" commodities prices); and National Broadcasting Co. v. United States, 319 U.S. 190, 63 S. Ct. 997, 87 L. Ed. 1344 (1943) (authorizing the Federal Communications Commission to regulate broadcasting licensing in the "public interest").
111. Touby, 500 U.S. at 160.
112. Id.
113. M. Bronckers, Selective Safeguard Measures In Multilateral Trade Relations 143 (1985) It should be noted, however, that the United States Trade Representative has interpreted language in Section 301 to mean that the President has the policy discretion to refuse to take any action.
114. Field v. Clark, 143 U.S. 649, 693 (1892).
115. See generally Mistretta, 488 U.S. at 361.
116. The Federalist No. 47 (James Madison) Madison claims there is much common ground in the way of separation of powers in Britain. Basing his analysis on French philospher Montesquieu's writings, he states the co-equal branches of government should have whole power over one another. "When the legislature and executive powers are united in the same person or body, there can be no liberty, because apprehensions may arise lest the same monarch or senate should enact tyrannical laws to execute them in a tyrannical manner." Id.
117. See Office of International Sector Policy supra note 55. Moreover, in virtually all cases in which the administration has considered trade retaliation, it also strongly emphasized the international obligations of the United States.
118. Hilton v. Guyot, 159 U.S. 113, 16 S. Ct. 139, 40 L. Ed. 95 (1895).
119. Id.
120. See Carter supra note 43. Courts deciding controversies involving foreign nations often base judgments on the notion of comity, which means the United States courts will defer to the sovereign rights of the other nation. In situations where the United States' interests are paramount, courts treat comity as discretionary and thus not controlling.
121. See generally, American Textile Mfrs. Inst., 452 U.S. at 490.
122. S.Rep. No. 1298, 93rd Cong., 2d Sess. 164, reprinted in 1974 U.S.C.C.A.N. 7186, 7302. The legislative history illustrates the ambiguous purpose of section 301; on the one hand, there is a strong congressional call for vigorous presidential action, while on the other, there are intimations that the same strong language is only a threat to give United States negotiators additional leverage in bargaining for reductions of unfair trade practices by other nations. Nevertheless, the language of the Act does authorize the President's unilateral use of the sanctioning mechanism against foreign nations.
123. Field v. Clark, 143 U.S. 649 (1892).
124. See e.g., Lichter v. United States, 334 U.S. 742 (1948); Yakus v. United States, 321 U.S. 414 (1944); and National Broadcasting Co. v. United States, 319 U.S. 190 (1943).
125. See e.g., Lichter, 334 U.S. at 742; Yakus, 321 U.S. at 414; and National Broadcasting Co., 319 U.S. at 190.
126. See generally Curtiss-Wright Corp., 299 U.S. at 394.
127. The Federalist No. 51 (James Madison).
128. U.S. Const. art. VI, § 2.
129. Antonio Mendoza, The Creeping Breach of International Law, 16 Loy. L.A. Int'l &
Comp. L.J. 107 (1993).
All contents copyright © 1997, New England School of Law, Boston, Massachusetts.
All Rights Reserved.