EMERGENCY CONTROLS ON INTERNATIONAL ECONOMIC TRANSACTIONS Markup of Trading With the Enemy Act Reform Legislation THURSDAY, JUNE 9, 1977 COMMITTEE ON INTERNATIONAL RELATIONS, SUBCOMMITTEE ON INTERNATIONAL ECONOMIC POLICY AND TRADE, Washington, D.C. The subcommittee met in open markup session at 2:25 p.m. in room 2255, Rayburn House Office Building, Hon. Jonathan B. Bingham (chairman of the subcommittee) presiding. Mr. BINGHAM. We will be in order. We will continue consideration of the proposed legislation dealing with the Trading With the Enemy Act. I would like to call first the executive branch to give us any further comments on the draft legislation before us. STATEMENT OF LEONARD E. SANTOS, ATTORNEY ADVISER, OFFICE OF THE GENERAL COUNSEL, DEPARTMENT OF THE TREASURY Mr. SANTOS. Thank you, Mr. Chairman. These comments are of a general nature. They do not address specifically some of the revisions. We will be happy to do that, following these comments. We had, after yesterday's session, a discussion of the new draft. I believe there was a unanimity of views on the subject that really this draft and the one that we received the first time yesterday raised many new issues that were not discussed at the time of the hearings, certainly not contemplated in our draft of the bill, and I think that we are troubled by not so much the subject of these new issues, but we do not know what the administration's position would be on some of them, but we are troubled, really, with the speed that they are being considered here for presentation to the full committee. We realize you are under a time guideline of sorts. We are not sure that that deadline requires that you present a bill in such a form. We think that, among the new issues that have been raised by your proposed draft are the issues of secondary boycotts, unilateral trade embargoes, conditional grandfathering, the so-called first amendment exceptions, the distinction between foreign and domestic powers, seizure of documents, legislative veto of regulations, to name the primary ones. We have worked diligently on a bill that we think responds, at least, in part, to the issues that were raised in the hearings and again, we would hope that you would look at that bill and determine whether it meets your concerns. We realize that other issues have been raised. Frankly, when we were drafting the bill, we did not realize that some of these issues would arise. That is the reason that they are not addressed in that bill. We think also that the draft bill that you presented yesterday, the June 8 draft, is, in some respects, difficult to follow. It is somewhat convoluted and we would hope, in any event, just as a matter of form that the language could be made more simple, more clearly understandable. You asked us about grandfathering specifically. It is pretty clear that the unilateral actions that have been taken under 5 (b) in the past, the embargoes of North Korea, Vietnam, and Cambodia. Those would probably not be permissible under the current formulation of 5(b) of the draft. Those embargoes would presumably have to be terminated. Also, the emergencies under which those embargoes are based may not be, in fact, relevant as they are used in your draft bill to the current use. I think, to answer your question, if those uses are not grandfathered in in the way that witnesses at the time of the hearing contemplated, a good faith reading of the law would require that some of those actions terminate. Those are the general comments that we have. If you would like me to consider any others Mr. BINGHAM. Go ahead with the specifics. Mr. SANTOS. Mr. Cavanaugh, I believe, asked whether or not there were powers-you also asked if there were not powers now not exercised under 5 (b), that we might wish to exercise pursuant to existing circumstances, existing embargoes. We have reviewed the powers conferred under this draft. Frankly we believe that all the powers conferred are exercised and that there are no additional powers that could be exercised that are not already exercised. We are troubled by a number of the phrases in this billthe phrase, for instance, on page 2 in section (1) at the top of the page that refers to the exercise with respect to a set of circumstances. Later on the reference to deal with the same set of circumstances. We think that that is vague. We really do not know what that means. I suppose the legislative history would explain it in some detail. Does a set of circumstances mean relations with a particular country, a particular incident arising out of the particular country followed by other incidents which require a new use of section 5(b)? That kind of problem arises. We have mentioned some others. Mr. BINGHAM. Wait a minute. I think it would be better if we stopped and had a discussion about each particular point. This is the grandfathering provision. You have said, as I understand it, that there is no need for subparagraph 2, that you would not be disturbed by the elimination of paragraph 2. You said earlier that you were concerned that the current embargo against North Korea, Vietnam, and Cuba could not be continued. It is not the intention in this draft to interfere with that. If there is a problem with this language, or if there is some other problem other than the matter of provisions of redeclaration under the National Emergencies Act, which I understood the administration had no objection to, then I think that we can work it out because we are aiming at the same objective. Mr. SANTOS. Mr. Chairman, our reading of this draft-again, it may be inaccurate-is even if the President is only required to announce that he wishes to continue an existing state of national emergency, that state of national emergency should conform in its procedural aspects to this bill. In other words, it should be relevant to the powers which he exercises pursuant to that national state of emergency. It should not involve a unilateral trade embargo, et cetera, various conditions. Mr. BINGHAM. Now you are referring to provisions of section 202 or provisions which apply under title II, not title I. 202 is not incorporated-I mean, we can come to a discussion on whether we want to include section 202, but that is part of title II. That does not even apply to the Trading With the Enemy Act. Mr. SANTOS. That is an interesting development. If you are saying that the Trading With the Enemy Act, because it remains a wartime statute, is no longer relevant to the exercise of national emergency powers, is that it? Mr. BINGHAM. No. What I am saying is that it was the purpose of paragraph (b) on page 2 to grandfather in existing uses of 5(b). Mr. SANTOS. Therefore, those uses would not be affected? Mr. BINGHAM. That is correct. Mr. WHALEN. This amends 5 (b), not the new title. Mr. SANTOS. It does refer, in the latter part of that page, to "such authority being exercised in conjunction and in keeping with the National Emergencies Act," et cetera, so it is a little bit mixed, I think. Mr. BINGHAM. My recollection, again, is that the administration witnesses had no objection providing the termination by concurrent resolution was not included and we do not include that. Mr. SANTOS. We have no problem with the procedural requirements of the National Emergencies Act. However, we specifically stated that we felt that existing uses of 5(b) should not be subject to those requirements. I believe, certainly I recall, the Assistant Secretary saying he thought that there were problems with some of the uses of 5 (b) in the past, but we were prepared to have the National Emergencies Act applied prospectively and not to existing uses of 5(b) and I think the reason that we are concerned with that application is that it tends to raise the merits of the substance of the existing uses. Mr. BINGHAM. We do not want to do that, at least that is my view and I think it is the view of the members of the subcommittee. I think we are dealing with a technical problem here. It is language that may create some ambiguity. Mr. WHALEN. Could the legislative staff respond? Mr. MAJAK. Am I correct, that the essential point here is, again, the impact of the possible meaning of "declared" on page 2, that national emergencies would have to be declared, or redeclared? 89-711-77- -13 Mr. SANTOS. That was the question we discussed yesterday. My understanding is that the word would be "continued" pursuant to the language of the National Emergencies Act. The National Emergencies Act requires the President to transmit a notice stating that the national emergency is to continue, which is a little different from requiring a new declaration. You indicated you intended the word to be "continued." Mr. MOHRMAN. The reason it may have to be "declared" rather than "continued," as I understand it, is that an emergency has not been declared with respect to Cuba. The emergency you would have to continue would be the Korean War emergency. As I understand the way this would work Mr. SANTOS. That concerns us very much. If that is the intention, I think that would not be right. As I indicated yesterday, it is difficult, considering our present state of negotiations with Cuba and other countries that the President would want to declare a national emergency with respect to those countries. It is rather difficult to imagine that. I am not saying that he would not. I think that would certainly be something not envisioned by the witnesses who appeared here. Their perception was with respect to the 1950 emergency and the 1971 emergency, which are the only two emergencies currently being relied on for the use of 5(b), they would be grandfathered in. That term means that they would not be affected by whatever is being done with respect to 5 (b), emergency powers. Mr. BINGHAM. What is the state of facts? We have a question of fact now with respect to Cuba. Is there an emergency that could be continued by Presidential designation pursuant to subparagraph (d) of section 201 of the National Emergencies Act? I had always assumed that there must be. Mr. SANTOS. Again, as I said, it may be a semantic difference. I think, as you yourself said yesterday and we raised this issue yesterdaywe said that we-we said, would the word be "declared"; you said no, you intended to use the words of the National Emergencies Act. Mr. BINGHAM. I can see the problem. I personally would not argue that we should ask or expect the President to declare, for the first time, an emergency with respect to Cuba. Mr. SANTOS. As you can see, this raises the very issue that I raised earlier. We get into the merits of whether there is an emergency, whether that is the proper exercise of 5(b). That is why we are anxious to avoid it. I think the witnesses very clearly said that. Whether that is right or wrong Mr. BINGHAM. I understand that. The administration has previously stated it does not object to having section 201 (d) of the National Emergencies Act apply. Mr. SANTOS. That section is the section that requires Mr. BINGHAM. An annual notice stating that such emergency stays in effect. Mr. SANTOS. That is true. We do not mind that applied to whatever emergencies that are declared. Mr. BINGHAM. What is the state of fact with respect to Cuba? Mr. SANTOS. That gets us into the merits. We would like to avoid that issue. I think, frankly, in terms of getting this bill approved and passed at some stage, to the extent it does not get into substance but |