Chapter 8

National Lawmaking Powers and the Regulation of US Trade

 

I. US Trade Law and American Foreign Policy

B-West Imports, Inc. v. US, 75 F3d 633 (CAFC 1996)

          Facts: B-West imported civilian arms from China.  In 1994, Pres announced ban on import of arms from China as sanctions for human rights abuses.  B-West challenged in International Court of Trade on Due Process and Takings Clauses.

          Issue: Was Pres’s action constitutional?

          Holding: Yes.  President has wide latitude in foreign policy.  This was not a taking.

          NOTE: Quote from Legal Tender Cases

 

          A. Separation of Powers

                   1. Executive-Legislative Debate

                   2. Congress

                   3. President

          B. Treaty Power

                   1. Treaty powers and the Constitution

                   2. Treaties of Friendship, Commerce and Navigation

MacNamara v. KAL, 863 F.2d 1135 (3^rd Cir. 1988)

          Facts: KAL operated within US.  Treaty between US and Korea allowed company to retain “personnel of their choice.”  KAL reorganized, firing P (white, old, male, American) and replaced with younger Korean.  

          Issue: Can P sue for violation of discrimination laws?  On what theory?

          Holding: P can sue for intentional discrimination, but not for disparate impact.

          Reasoning: Court seems to believe that disparate impact theory is not fair when dealing with homogenous country like Korea.  If they exercise treaty right, it will have disparate impact.

          NOTE: In Sumitomo, SCT ruled that Japanese, wholly owned US subsidiary could be liable under Title VII.  Difference is that subsidiary was organized under US law and operated only in the US.

          C. Equal Dignity Rule

          D. Executive Agreements

                   1. Sole Executive Agreements and inherent presidential power

Dole v. Carter, 444 FSupp 1065 (D.Kan 1977)

Facts: Hungarians entrusted Holy Crown of St. Stephen to US soldiers at end of WWII.  In 1977, US and Hungary agreed to return of the crown.  This was not a treaty or action pursuant to treaty, but was rather an “executive agreement.”  Senator Dole challenged the action, arguing President needed to operate under treaty clause and get 2/3 approval of Senate.

          Issue: Can President enter into an executive agreement with another country without Senate approval?

          Holding: Yes.  Treaty clause is not the exclusive means for the president.

          NOTE: As of 1972, US was party to 5306 international agreements.  Only 947 were treaties, rest were other types of agreements.  US enters into about 200 agreements per year.

                   2. Congressional-Executive Agreeements

          E. Trade Agreements

                   1. Smoot-Hawley Tariff Act of 1930

                   2. Reciprocal Trade Agreements Act of 1934

Star-Kist Foods, Inc. v. US, 275 F2d 472 (Customs and Patents, 1959)

Facts:  Tariff on tuna from Iceland was 25%.  RTAA allowed the President to lower or raise any tariff, but by no more than 50% (ex. 25% rate could be cut to 12.5% or raised to 37.5%).  President, acting under RTAA 1934, lowered rate to 12.5%.  Star-Kist objected, arguing that rate needed to remain at 25%.

Issue: May Congress delegate power to modify tariff rates to the President?

Holding: Yes.  Congress expressed the policy objection clearly enough, and set a clear standard.

Reasoning: Court wants flexibility in ability of Congress and President to conduct foreign affairs.  If Constitution is not clear, leave it to political branches to determine allocation of authority.

                   3. More recent US trade legislation

                   4. GATT

                             a. Legal status

                             b. Pres’s authority for GATT multilateral negotiations

                   5. Trade promotion authority

                             a. Trade negotiating objectives

                             b. Expanded powers

Made in the USA Foundation v. US, 56 FSupp2d 1226 (NDAla 1999)

Facts: Congress granted Pres “fast track” negotiating authority re: NAFTA.  Once Pres reached agreement, then Congress agreed to vote up or down, without amendment.  Pres reached agreement, and it went to vote.  House voted 234-200 and Senate 61-38.  Made in the USA Foundation and US Steelworkers objected.

Issue: Was NAFTA reached in a constitutional manner?

Holding: Yes, foreign policy agreements other than treaties are allowed.

Reasoning: Court looked at Foreign Commerce Clause in detail, and found no reason to put limits on Congress’s power.  Also, Pres acted within his authority for conducting foreign affairs.

          F. President’s Emergency Powers

                   1. Trading with the Enemy Act

                   2. National Emergencies Act

                   3. International Emergency Economic Powers Act

                             a. Economic sanctions

                   4. USA Patriot Act

                             a. IEEPA and UN sanctions against Iraq

                   5. Court challenges to IIEPA

                             a. IIEPA and Iranian revolution

                             b. Case of the “American Taliban”

US v. Lindh, 212 FSupp2d 541 (EDVa 2002)

Facts: D was caught fighting for the Taliban in Afghanistan against US forces.  US brought a variety of charges.  D challenged four of the counts, which were for “Contributing Services to al Quaeda, Supplying Services to the Taliban,” and conspiracy to do each.  D argued that IEEPA only applies to commercial transactions, not to his voluntary service, and therefore presidential order went beyond authority granted.

Issue: Did presidential orders fall within enabling language of IEEPA?

Holding: Yes. IEEPA grant is very broad.

Reasoning:  IEEPA allows president to forbid “use” of “property” of a “foreign national.”  Attending Taliban and al Quaeda camps, transporting their weapons, and living in their facilities falls within that language.

                   6. US Sanctions on Trade with Cuba

                             a. Helms-Burton Act

                             b. Effectiveness of trade sanctions

          G. Federal State Relations

                   1. Supremacy clause

                   2. Burma, human rights, federal preemption

                             a. Economic sanctions against Burma

                   3. Import-Export Clause

                   4. Commerce Clause

                             a. Commerce clause and multiple taxation

Japan Line, Ltd. v. County of Los Angeles, 441 US 434 (1979)

Cal imposed ad valorem property tax on cargo containers owned by Japanese companies that temporarily were in Cal ports.  They were registered and taxed in Japan.  On average, they spent three weeks per year in Cal.  Japan Lines objected on grounds of multiple taxation.  Cal. SCT upheld the tax.

Issue:  Was the tax invalid under the Commerce Clause?

Holding: Yes.  This was a double taxation.

Reasoning: Double taxation is bad because it could place burden on foreign company not placed on domestic company.  Also, local tax interferes with federal uniformity.  Can also lead to retaliation by foreign country against US exporters to their country.  Treads on P’s authority to conduct foreign policy.

                   b. State income taxation of multinational corporations

                   c. State restrictions on exports

                   d. State restrictions on imports

H. Federal agencies affecting trade

          1. Commerce Dept

          2. Homeland Security

                   a. Border and Transportation Security

                   b. Impact of Homeland Security on American importers

                   and exporters

          3. USTR

          4. International Trade Commission

          5. US Court of International Trade