MEMORANDUM OF THE ASSOCIATION OF THE CUSTOMS BAR IN OPPOSITION TO PROVISIONS OF H.R. 9900, WHICH WOULD LIMIT, CURTAIL, OR ELIMINATE ADEQUATE PUBLIC NOTICE TO INTERESTED PARTIES, PUBLIC HEARINGS, OR DEPRIVE INTERESTED PARTIES OF OPPORTUNITY FOR COMPLETE JUDICIAL REVIEW

SUMMARY OF COMMENTS AND RECOMMENDATIONS

Provisions of section 221 (c), 223, 248 (b) (2), and (c) (1) and (2), 306 change existing law by restricting or eliminating public hearings in connection with negotiations of trade agreements, peril point and escape clause investigations, and section 404 which would deny judicial review of Executive or administrative action which would be taken under title II of H.R. 9900, and would also deny judicial review retroactively of Executive or administrative acts taken under existing law.

The Association of the Customs Bar recommends that the aforesaid sections of H.R. 9900 be amended or deleted as necessary, to grant interested parties the right to participate in public hearings, or obtain full judicial review of Executive acts.

MEMORANDUM OF THE ASSOCIATION OF THE CUSTOMS BAR IN OPPOSITION TO LIMITATION, CURTAILMENT, OR REMOVAL OF ADEQUATE PUBLIC NOTICE TO INTERESTED PARTIES WITH OPPORTUNITY TO BE HEARD AND FULL AND COMPLETE JUDICIAL REVIEW

H.R. 9900 proposes delegation by the Congress to the President of broad, sweeping powers to reduce or eliminate duties on imports into the United States. The bill sharply modifies the requirements of present law for public hearings and full opportunity for interested parties to present their views prior to action. Said bill, furthermore, includes an even more drastic change in past and present law by proposing in section 404 to make actions by the President thereunder or by administrative agencies in administering the law, final and conclusive and not subject to judicial review.

Finally, the bill would vest power in the President to modify or change trade agreements entered into under prior laws and includes sweeping provisions in section 248 (b)(2) and section 248(c) (1) and (2) that compliance with procedures or actions taken under previous laws shall be considered as having been taken under the provisions of H.R. 9900.

The power under the Constitution to lay and collect duties is clearly vested in the Congress under article 1, section 8, clause 3, reading as follows:

"Section 8. The Congress shall have Power to Lay and collect Taxes, Duties, Imposts and Excises * ** but all Duties, Imposts and Excises shall be uniform throughout the United States;"

Powers purported to be delegated to the President to reduce or remove duties are clearly, therefore, delegations by the Congress. Under well-established principles of law, any such delegation must be based on clearly defined yardsticks or limitations on the agent or agency named by the Congress. Clearly, also, under the historic separation of powers under our form of government, there must exist a method to prevent abuse or disregard of delegated powers. Historically, correction of such abuse or disregard has been provided through court review. The association believes that court review is essential and should be maintained.

Ample precedents exist for delegation of tariff powers by the Congress to the President. In the area of trade agreements with foreign countries, particularly, the Congress, as far back as 1934, delegated such authority to the President, which authority has been extended by successive acts, the latest of which will expire on June 30, 1962. Throughout all of such prior congressional acts, each delegation of power has been accompanied by clear, concise requirements of public notice, public hearing with opportunity of interested parties to appear and be heard, and full judicial review.

The importance of judicial review is illustrated by the many instances in which action by the President and/or administrative agencies named to assist him in exercising his delegated powers under trade agreement legislation have been brought before the courts. (See, e.g., annotations 19 ESC 13.51 and cases

cited below.1) Examples are found in recent cases, one brought by an American manufacturer contesting the reduction in duty by trade agreement action on certain tunafish (Star Kist Foods, Inc. v. United States, 47 CCPA 52, C.A.D. 728; 275 F. 2d 472), and the other an action brought by an importer protesting against a proclaimed increase in duty by trade agreement action on certain bicycles (United States v. Schmidt, Pritchard & Co. et al. (1960) 47 CCPA 152, C.A.D. 750, aff'g. 41 C.C.R. 108, C.D. 2029, cert. den. (1960) 364 U.S. 919). In the latter case the Court of Customs and Patent Appeals, in reviewing a decision by the U.S. Customs Court, unanimously held that the President had exceeded powers delegated to him under trade agreements legislation, and his action in attempting to proclaim an increase in duties was, therefore, illegal, null, and void.

By the powers delegated to him in H.R. 9900, the President could apparently transfer a product from one tariff paragraph to another, and such action would not be subject to judicial review, even though existing trade agreements could be involved. Under existing law, trade agreement concessions so made are illegal, and were so declared by the courts, see cases cited below."

The provisions of section 404 of H.R. 9900, would bar future correction of unwarranted action by the President or administrative agencies in exercising delegated powers under trade agreement legislation. The clearly expressed intention of the Congress and the judicial construction by the courts that all interested parties have a right to challenge illegal action and obtain redress therefor, would thus be seriously endangered, if not completely removed.

Retroactive elimination of judicial review of prior Executive acts is contemplated under section 248 which incorporates by reference previous actions of the President and administrative agencies in administering trade agreement laws made under authority of Congress.

The following language of 248(b) (2) and (c) (1) and (2) is clearly intended to deprive importers or domestic manufacturers of the right to maintain their present position under existing law to judicially, or otherwise challenge, the executive department's findings or decisions, implementing or proclaiming customs concessions under trade agreements:

"SEC. 248. Repeals.

"The following are repealed:

*

"(b) Sections 2 through 4 of the Act entitled 'An Act to amend the Tariff Act of 1930', approved June 12, 1934, as amended (19 U.S.C. 1352, 1353, and 1354). Notwithstanding such appeal

"(2) compliance prior to July 1, 1952, with any of the procedures of section 4 of that Act shall be considered compliance with any comparable procedures of section 221 of this Act.3

"(c) The Trade Agreements Extension Act of 1951, as amended (19 U.S.C. 1360-1367). Notwithstanding such repeal—

"(1) action taken by the President prior to July 1, 1962, under section 5 of that Act shall be considered as having been taken by the President under section 231 of this Act;

"(2) any proclamation issued by the President under section 7 of that Act in effect on July 30, 1962 shall be considered as having been issued by the President under section 351 of this Act," ***

Section 248, without complete judicial review, leaves the citizen helpless to protest against existing proclamations or decisions made by the executive and administrative departments.

1 The constitutionality of the trade agreements law was reviewed in the Star Kist Foods, Inc. case, supra. Earlier decisions dealing with constitutional issues were: Fletcher v. United States (1937), 25 CCPA 195, 92 F. 2d 713; Wislar v. United States (1938), 26 CCPA 138, 97 F. 2d 152, cert. den. 305 U.S. 628.

The President's authority to negotiate a preferential trade agreement with Cuba was reviewed in Von Damm v. United States (1937), 25 CCPA 97, 90 F. 2d 263, cert. den. 302 U.S. 722.

2 United States v. Canadian National Railways (1942), 29 CCPA 272, C.A.D. 202: Atlanta Trading Corp. v. United States (1954), 42 CCPA 90. C.A.D. 577: United States v. Curley-Bates Co. (1958), 46 CCPA 14, C.A.D. 688; E. Dillingham, Inc., et ano. v. United States (1961), C.A.D. 762, 48 CCPA -.

3 The U.S. Court of Customs and Patent Appeals took jurisdiction of a question raised by an importer where the President had not furnished reasonable public notice of an intention to negotiate a trade agreement. Aris Gloves, Inc. v. U.S. (1958), 46 CCPA, 41 C.A.D. 693.

Not only does H.R. 9900 seek to eliminate judicial review but also attempts to abolish the right of the citizen to be heard in public hearings conducted by administrative or legislative agencies charged with the execution and administration of the law.

Under section 7 of existing law, public hearings are required to be held by the Tariff Commission in the conduct of escape clause investigations. Sections 305 and 306 of H.R. 9900 do not provide for the continuance of such public hearings.

Also the existing right of interested parties to be heard in connection with peril-point investigations under existing law is modified in H.R. 9900 so as to make such hearings merely permissive rather than mandatory. The language of section 221 (c) of the bill should be amended to require the Tariff Commission to conduct such hearings.

Similar language should also be incorporated into section 223 of the bill to require that public hearings be held prior to entering into trade agreement negotiations.

For the foregoing reasons, the following amendments to the bill, H.R. 9900, are respectfully suggested:

1. Section 221(c), page 7, line 10-Change the word "may" to "shall" so that the provision will read as follows:

"(c) In the course of preparing such advice, the Tariff Commission shall hold hearings, giving reasonable public notice thereof, to afford opportunity for interested persons to be present, to produce evidence, and to be heard."

2. Section 223, page 8, line 9: Before the word "after" insert "including public hearings," so that the said section will read as follows:

"Before entering into negotiations for any trade agreement under this title, the President shall afford an opportunity, including public hearings, after reasonable public notice, for any interested person to present his views, including views on the reservation of any article from the negotiations."

3. Section 248 (b), page 17: Delete subsection (2), lines 12 to 15, inclusive, reading as follows:

"(2) compliance prior to July 1, 1962, with any of the procedures of section 4 of that Act shall be considered compliance with any comparable procedures of section 221 of this Act."

4. Section 248 (c), page 17: Delete the following matter beginning on line 17 to and including page 18, line 9:

"(1) action taken by the President prior to July 1, 1962, under section 5 of that Act shall be considered as having been taken by the President under section 231 of this Act; and

(2) any proclamation issued by the President under section 7 of that Act in effect on July 30, 1962, shall be considered as having been issued by the President under section 351 of this Act, except that, in the case of any proclamation issued more than three years prior to the effective date of this Act, the termination date for the purpose of section 351(c) of this Act shall be one year after the effective date of this Act."

5. Section 306, page 23, following line 18: Insert a new subdivision (c) to read as follows:

"(c) In the course of preparing such advice, the Tariff Commission shall hold hearings giving reasonable public notice thereof and afford opportunity for interested parties to be present, to produce evidence, and be heard."

6. Section 404: Delete the following words at page 58 on lines 17 and 18 in subsection (a):

"Determinations required to be made by the President under title II of this Act and".

And on lines 20 and 21:

"Or in making determinations with respect to extraordinary relief". Respectfully submitted.

MARCH 22, 1962.

THE ASSOCIATION OF THE CUSTOMS BAR. By ALBERT MACK BARNES, President.

STATEMENT OF THE NATIONAL ASSOCIATION OF MANUFACTURERS ON H.R. 9900

The National Association of Manufacturers welcomes this opportunity to express its views on the proposed Trade Expansion Act of 1962. At the start it should be explained that this association does not attempt to speak for its members on tariff matters.

The association's lack of a position on the subject of tariffs is a consequence of the size and diversity of its membership. The National Association of Manufacturers consists of approximately 17,000 member companies. These are in all branches of industry, in all sections of the country, and in all size classes. Their views and interests in regard to tariff matters are so divergent that it has not been possible to reach a consensus which could honestly be represented as the considered opinion of American manufacturers generally.

The National Association of Manufacturers does, however, urge that its members speak up on tariff policy both as individuals and through trade associations representing specific industries. We know that your committee has consulted such business witnesses, and we hope that you will carefully consider their recommendations.

In spit of the inability of the National Association of Manufacturers to speak on behalf of its members in regard to tariffs, it is our conviction that, even within this limitation, there are many significant things to be said in regard to H.R. 9900, which can be helpful to your committee in its deliberations.

We are frankly disturbed by the fact that, in this bill, Congress is asked to go several steps further in delegating to the President its constitutional power to set tariff rates. There is a further relaxation of the statutory limitations on the President's powers to negotiate trade agreements with any other country. With regard to the European Economic Community, he is given new kinds of powers, including the power to eliminate tariffs completely in certain broad categories. Although the bill provides that the Tariff Commission must be consulted and that in certain instances the President must explain his actions to Congress, in each case the final judgment is left to the President. We believe that Congress should seriously consider retaining in its own hand a greater degree of control over such decisions.

It is also disturbing to see that tariff actions by the President, as well as his determinations as to eligibility for assistance, "*** shall be final and conclusive and shall not be subject to review by any court." The National Association of Manufacturers believes that administrative orders or decisions should be based on a preponderance of evidence in accordance with the rules of evidence applicable in courts and should be subject to judicial review of the law and the facts. Beyond this, it is confusing to note that another section of the bill (sec. 363) provides that suits may be brought against the United States in matters arising out of the performance of the Government in carrying out the adjustment assistance provisions of the bill. The apparent conflict with the finality section needs clarification.

Still another source of concern is the fact that funds for financial assistance to firms are to be provided through a revolving fund, thereby bypassing the need for annual appropriations. The rising trend in Federal spending is a major problem for the country, and we oppose additional outlets for back-door spending. The bill does not specify which agencies of the executive branch the President shall call upon to advise and assist him in conducting negotiations on tariffs. Presumably the State Department will play a large role. However, it is the hope of this association that the interests of American producers will be carefully considered in the negotiations, and we believe that the Department of Commerce is the logical agency to perform this function. Therefore, we recommend that Congress make known, either in the legislation or on the committee record, its intention that the Department of Commerce be consulted at all stages of the negotiation and if possible be represented at the bargaining table. Consideration should also be given to requesting assistance from experts in industry in such negotiations.

Our remaining comments in this statement will be classified in two general categories: first, a discussion of the relationship between the balance-of-payments problem and the proposed legislation and, second, or appraisal of the adjustment assistance provisions in title III of the bill.

TRADE LIBERALIZATION AND THE BALANCE-OF-PAYMENTS

In his message to Congress recommending this legislation, the President called attention to "The growing pressures on our balance-of-payments positions * * He went on to say that

To maintain our defense, assistance and other commitments abroad, while expanding the free flow of goods and capital, we must achieve a reasonable equilibrium in our international accounts by offsetting these dollar outlays with dollar sales.

Thoughtful observers will be gratified by the President's expression of concern regarding our balance-of-payments problem. It is indeed a problem with which our national leadership should be seriously concerned. International payments deficits of the magnitude we have experienced in recent years cannot continue indefinitely without destroying the international value of the American dollar and eventually bringing about catastrophic inflation at home. On the international plane, since the American dollar plays a key role, the ultimate effect would be to destroy the economic ties which exist among the nations of the free world and, eventually, their political solidarity.

There is no intention here of threatening you with these dire prospects as imminent dangers. We do have time to avoid these catastrophies but only if we plan in terms of measures which will correct the fundamental conditions which have brought about our large international deficits of recent years.

The decline in the reported balance-of-payments deficit between 1960 and 1961 cannot be regarded as assurance that we have made real progress in that direction. This apparent improvement was due to the combination of a recession at home, which held down our imports of goods and services, with a boom in Europe, which increased our receipts from exports. This is a combination of economic conditions which we cannot expect, and would not desire, to see continue.

Many of the proponents of the legislation you are considering have argued that it would contribute significantly toward solving the problem of the balanceof-payments. But, whatever other merits the bill may have, it is hard to see why it should be expected to have this effect. The proposal contemplates mutual reductions of tariff barriers by the United States and other countries, to be agreed upon in a process of negotiation. There is no reason to suppose that we would gain more in the way of access to foreign markets than we would concede in the form of access to our own markets. The precise effect on our international deficit is unpredictable, but there is no assurance that it is more likely to be plus than minus.

Supporters of the view that trade liberalization would strengthen the U.S. balance-of-payments position have argued that a neutral assumption would be that such a program would increase exports and imports by the same percentage. Since total commercial exports are somewhat in excess of total imports, they therefore conclude that our trade surplus would be increased. But this calculation seems to contain more in the way of mathematical exercise than of commonsense. It would be just as logical and neutral to assume that dollar amounts of increase would be the same for exports as for imports, thereby leaving our balance-of-payments position as it was before.

The argument has also been made that we may expect our imports from the EEC countries to increase less rapidly in the future than our exports to EEC countries. This is based on the belief that Western Europe is straining against its capacity limits, which means a limitation on its ability to provide goods for export and an increased demand for goods which can be imported from the United States. To the extent that this forecast is true, it will be true whether or not we enact trade-liberalization legislation. It therefore seems unrelated to the question at issue.

The purpose of these comments is to emphasize that, whether this kind of legislation is enacted or not, the balance-of-payments situations will remain as critical as ever. The real answer to the balance-of-payments problem is to improve the competitive position of American producers. This depends on economic conditions within this country and must be dealt with by economic discipline at home. It would be tragic if we were misled into believing that we could evade this troublesome problem by negotiating tariff reductions with other countries.

Trade liberalization, whatever other arguments there may be in its favor, does not, on balance, improve the competitive position of American producers. What it does is give greater scope to the operation of international competitive forces. Where our products have a competitive advantage they would be able to penetrate more markets; where our products are at a competitive disadvantage they would have more markets taken away from them. Thus enactment of this type of legislation would mean that we would have to be more, not less, concerned about the ability of American producers to compete with producers abroad.

1 Statement of Secretary of the Treasury Dillon before this committee, Mar. 15, 1962, Mimeo. p. 6. 2 Ibid.