act committed prior to the termination date, or rights or duties that matured or penalties that were incurred prior to such date;

Section 202 (d), which provides for termination of any national emergency on its anniversary unless the President publishes in the Federal Register and transmits to the Congress, within the 90-day period prior to each anniversary date, a notice stating that such emergency is to continue in effect;

Section 301, which directs the President to specify the provisions of law under which action is to be taken; and

Section 401, which provides for maintenance of a file and index of Executive orders, proclamations, rules, and regulations issued pursuant to declarations of national emergency or war; transmittal of significant orders of the President and rules and regulations to the Congress; and transmittal of expenditure reports to the Congress. Our comments on conforming to the remaining sections of the National Emergencies Act are as follows:

Section 101-we believe that the section 5 (b) powers and authorities from the existence of declarations of national emergencies now in effect should not be terminated unless or until a satisfactory replacement is in effect.

Section 201 (b) (2)—we believe that section 5 (b) should not be effective only in accordance with the National Emergencies Act until all of the issues in conforming section 5(b) to this act have been satisfactorily resolved.

Section 202 (a) (1), (b), and (c)—we note the September 14, 1976, statement of President Ford upon signing the National Emergencies Act that the provisions for congressional termination of an emergency by concurrent resolution are unconstitutional.

In summary, the Department of State opposes repeal of section 5(b) of the Trading With the Enemy Act in the absence of replacement legislation containing substantially the same authorities for use in time of war or during any other period of national emergency declared by the President but would not oppose conforming this activity to those portions of the National Emergencies Act dealing with executive procedures.

LEGISLATIVE VETO ON EMBARGOES

The chairman's letter of March 23 to the Department of State also asks for views on H.R. 2382, the Economic War Powers Act. The need for new legislation on embargoes is reduced by the Export Administration Act, which already governs export controls, and emergency legislation such as section 5(b) of the Trading With the Enemy Act, which already governs import controls. The proposal in H.R. 2382 that embargoes could be terminated by concurrent resolution raises a constitutional problem similar to the one I mentioned previously concerning termination of national emergencies by concurrent resolution.

REGULATION OF BANKING TRANSACTIONS

The chairman's March 23 letter also asks whether it would be appropriate for the President to use his asset control powers to regulate banking transactions in furtherance of foreign policy goals of the United States, such as human rights and nonproliferation.

We believe that it would be inadvisable for situations concerning such matters as human rights and nuclear nonproliferation to be regarded as emergencies triggering controls on private banking transactions unless they are part of broader crises directly affecting our primary national interests. Such controls would adversely affect the competitive position of U.S. banks and interfere in their market function, which is important for financing U.S. trade and for the smooth operation of the international financial system. We also believe that it would not be a useful way to implement our policies on human rights and nuclear proliferation.

On the other hand, there is clearly a need for emergency authority to intervene in banking transactions when a given situation does seriously affect the security of the United States. As long as section 5(b) is retained or a substitute is enacted with essentially the same authorities, no further legislation would be required to protect U.S. interests in emergencies.

Thank you, Mr. Chairman.

Mr. BINGHAM. Mr. Bergsten.

STATEMENT OF HON. C. FRED BERGSTEN, ASSISTANT SECRETARY FOR INTERNATIONAL AFFAIRS, DEPARTMENT OF THE TREASURY

C. Fred Bergsten, 36, of Annandale, Va., signed the oath of office as Assistant Secretary for International Affairs on March 31, 1977, following confirmation March 29 by the Senate. He was nominated by President Carter on February 7. Dr. Bergsten graduated magna cum laude in 1961 from Central Methodist College in Missouri. He received M.A., M.A.L.D., and Ph.D. degrees from the Fletcher School of Law and Diplomacy, where he majored in international economics and international relations.

Dr. Bergsten served President Carter as an advisor on international economics during the Presidential campaign, and was in charge of all aspects of international economic policy during the transition period. Shortly after President Carter's inauguration, Dr. Bergsten accompanied Vice President Mondale on his mission to the major European capitals and Tokyo.

As Assistant Secretary for International Affairs, Dr. Bergsten has major responsibilities in the formulation and execution of a wide range of U.S. international economic and financial policies. He has particular responsibility for U.S. participation in the international development lending institutions, including the World Bank. In fulfilling these responsibilities, Dr. Bergsten has recently headed the U.S. delegations to the negotiations for replenishing the resources of the International Development Association, the soft-loan affiliate of the World Bank, and to a meeting of the Group of Ten major industrial nations on international monetary problems.

Dr. Bergsten was a Senior Fellow at the Brookings Institution from 1972 until joining the Carter/Mondale transition team and then the Department of the Treasury. He was a Visiting Fellow at the Council on Foreign Relations during 1971-1972 and 1967-1969: Assistant for International Economic Affairs to the Assistant to the President for National Security Affairs, Dr. Henry A. Kissinger, in 1969-1971; and an International Economist at the Department of State during 1963-1967.

An energetic and prolific writer, Dr. Bergsten is the author or co-author of eight books and more than sixty articles on a wide range of international economic and monetary subjects. His latest volume is "The Dilemmas of the Dollar: The Economics and Politics of U.S. International Monetary Policy," which was published by the Council on Foreign Relations in early 1976. His "American Multinationals and American Interests" will shortly be published by the Brookings Institution. Dr. Bergsten was also the chief author of "The Reform of International Institutions, a study for the Trilateral Commission, an organization

dedicated to bringing about greater cooperation and new initiatives in North America, Europe, and Japan.

Among his many honors, Dr. Bergsten was given a Distinguished Alumnus, Award by Central Methodist College in 1975 and was named one of Time Magazine's "200 Young American Leaders" in 1974. While at Brookings, he was a frequent witness before Congressional committees, testifying on such subjects as international monetary reform, overall U.S. foreign economic policy, commodities, trade, and international financial institutions.

Dr. Bergsten was born on April 23, 1941, in Brooklyn, New York. He is married to Virginia Wood Bergsten. They have a son, Mark David, age nine.

Mr. BERGSTEN. Thank you very much, Mr. Chairman.

Let me say that we at the Treasury and the administration as a whole greatly welcome the occasion for review of section 5 (b) authorities occasioned by the passage of legislation last year, and in your hearings now.

We have carefully reviewed our approach to the issue as well as the history of the use of 5 (b) in coming to the conclusions that we will present to you today. We have concluded on the basis of that review that section 5(b) should be retained. Hence we do oppose H.R. 1560. However, we do believe there are a number of shortcomings in the present act and we would propose four remedies for those shortcomings:

(1) A remedy that would avoid the use of section 5 (b) powers based on outdated and unrelated national emergency proclamations;

(2) A provision of certain limitations on the President's exercise of section 5(b) powers;

(3) Measures to insure the Congress and the public are kept fully informed of the activities carried out under the section; and

(4) Efforts to insure that the section's extra-territorial application is tempered by appropriate foreign relations considerations.

EFFECTS OF REPEAL OF SECTION 5(b)

In my statement I lay out in some detail the current implementation of section 5(b) authorities, and the history of that act. I will be willing to discuss any of this in detail subsequently in the hearings today, but orally I would simply like to turn to pages 8 and 9 of my statement, and summarize what we feel would be the effect of an outright repeal of section 5(b). As my statement explains, we would oppose a step of that type.

Basically, there would be four immediate practical effects of repeal: (1) The current trade and financial embargoes against Cuba, North Korea, Vietnam, and Cambodia would be terminated unless new enabling legislation to keep them in effect were enacted simultaneously. Such a unilateral termination of the embargoes would severely undermine the U.S. negotiating position with those countries, and our worldwide posture.

(2) The Transactions Control Regulations, which insure that subsidiaries of American companies in other countries do not deliver arms, munitions, or strategic goods to Communist nations except on terms permitted by NATO policies, would also lapse. However, it is true that regulations to effectuate this purpose could be implemented under new permanent legislation.

(3) The current freezing of Chinese, Vietnamese, and Cuban assets would terminate immediately. Loss of control of these assets would

deprive American claimants against these countries of the security afforded for their private claims by this collateral, which is now held against, hopefully, claim settlements with those countries.

(4) The controls over the remaining World War II blocked assets of East Germany, Czechoslovakia, and the Baltic States would also lapse.

CONSTITUTIONALITY OF NONEMERGENCY FREEZING OF ASSETS

While not entirely clear, it appears that an attempt to preserve the blocked status of Chinese, Vietnamese, Cuban, and World War II assets by standard, nonemergency legislation, might founder in the courts on the constitutional grounds that the freezing of such assets required the existence of an "emergency."

Serious legal questions are presented by depriving foreign countries and nationals who are not technically "enemies" of the use of their property for indefinite periods in the absence of emergency authority.

In addition, there is an overriding reason for not recasting section 5(b) as standard legislation. The history of the act strongly suggests the continuing need to place flexible powers of this type at the President's disposal in an emergency situation. Such flexibility, however, which is necessary in such unforeseen and unpredictable situation would, we feel, be inappropriate to standard, nonemergency legislation. In sum, we believe that section 5 (b) should remain an emergency powers provision. Nonetheless, we also believe the 60-year history of the section has revealed the desirability of reforms in the way its nonwartime national emergency powers are exercised.

We fully support the need for such reform. Indeed, the authority of the section is so broad that this administration strongly believes that the powers should only be used on a truly emergency basis. Accordingly, the administration proposes several changes in the way the section is used.

CONTROLS SHOULD BE RELATED TO NATIONAL EMERGENCY

(1) The President should be required, by amendment of section 5(b), to proclaim a new national emergency to deal with any future crisis calling for a new application of section 5(b). This requirement will prevent Presidential reliance on outdated emergencies which do not relate to the current situation.

An instance of such reliance, which section 5(b) presently permits, may be found in the implementation of the foreign direct investment program in 1968. The Executive order imposing this program relied upon the continued existence of the national emergency declared by President Truman in December 1950. The stated purpose of the 1968 program was to control transfers of capital to foreign countries for balance-of-payment reasons. The 1950 emergency declaration related to the hostilities in Korea and the threat of Communist aggression. This divergence between the situation addressed by the 1950 emergency declaration and the purpose of the 1968 program illustrates the kind of situation which could be remedied through the amendment we support. Further, by requiring future Presidents to declare a new national emergency before invoking section 5 (b) powers, the amend

ment would accomplish the important objective of encouraging circumspect use of the section.

CONGRESSIONAL VETO

(2) The President's exercise of section 5(b) powers can be made subject to certain limitations. The legislation which emerges from these hearings will have a restraining influence, not only on this administration, but also on future Presidents.

We have struggled with proposals to accomplish restraint through congressional concurrence in the use of section 5(b). Constitutional considerations compel our objection to the termination of section 5(b) measures by concurrent resolution of Congress. The use of this concurrent resolution mechanism in H.R. 2382, the Economic War Powers Act, is among our principal reasons for objecting to that bill. The administration, instead, proposes that section 5(b) measures automatically expire on the anniversary of the supporting national emergency unless the President publishes in the Federal Register and transmits to the Congress a notice stating that such emergency measures are to continue in effect after such an anniversary.

Congress may, of course, terminate by legislative act any measures adopted under section 5(b). This approach, together with the requirement that a new national emergency be declared whenever a new section 5(b) power is used, will require the President to assess carefully and exercise sparingly any measures taken under section 5 (b). Should the President fail to extend those national emergency measures, his powers will expire. We believe this mechanism, which is also found in the National Emergencies Act, will sufficiently inhibit the President's use of section 5(b).

REGULAR PRESIDENTIAL REPORTS TO CONGRESS

(3) In accordance with accountability and reporting requirements contained in the National Emergencies Act, the President could be required to transmit a report to Congress every 6 months on the activities conducted pursuant to section 5(b). Such reporting will keep Congress informed and require the Executive to review regularly its use of section 5(b) powers with the certain knowledge that they will be subject to congressional and public scrutiny. This periodic review will provide the basis for a continuing dialog on the policies and uses of section 5(b) and enable the Congress and the public better to judge their wisdom.

EXTRATERRITORIALITY

(4) Finally, we have reviewed the history of the extraterritorial application of section 5 (b), particularly in nonwartime national emergencies. The effectiveness of controls imposed under section 5(b) may depend on extraterritorial applications.

However, we have noted numerous instances in which such extraterritorial application has produced friction in our relations with other countries. There is a question of whether the advantage of more effective leverage vis-a-vis the country that is the object of the con