EMERGENCY CONTROLS ON INTERNATIONAL ECONOMIC TRANSACTIONS Markup of Trading With the Enemy Reform Legislation MONDAY, JUNE 13, 1977 HOUSE OF REPRESENTATIVES, COMMITTEE ON INTERNATIONAL RELATIONS, SUBCOMMITTEE ON INTERNATIONAL ECONOMIC POLICY AND TRADE, Washington, D.C. The subcommittee met in open markup session at 2:30 p.m. in room H-236, the Capitol, Hon. Jonathan B. Bingham (chairman of the subcommittee) presiding. Mr. BINGHAM. The subcommittee will come to order. For the benefit of some of the members who have not been able to be present at the previous sessions of the subcommittee on this bill, let me attempt to summarize the working draft that we have been working on. SUMMARY OF STAFF DRAFT First of all, title 1 limits the existing Trading with the Enemy Act to situations where there is a declared war, that is for the future. With regard to those situations where these authorities are currently being exercised under the old Trading With the Enemy Act and I might mention that the principal ones are Vietnam, Cuba, and North Korea, and the freezing of assets of a number of Communist countries, including China as well as a number of Eastern European countries-the tentative judgment of the subcommittee has been that these, in effect, should be grandfathered, subject only to a requirement that as of September of next year, which is the time at which the other emergencies that are covered by the National Emergencies Act expire, the President would simply have to indicate that certain powers which he has been exercising under the Trading With the Enemy Act are to be continued in the national interest. This is the latest of several versions that we have discussed. We have recognized that it might be embarrassing for the President to have to declare new national emergencies with respect to Cuba and Vietnam. At the same time, if we were to take action here, in effect, terminating those embargoes, we know that this bill, which we hope will not be particularly controversial, would become instantly controversial. So we have arrived at this proposed compromise, which I hope will be satisfactory to the administration. We would not require the President to declare that the emergency of 1950, under which those powers are now being exercised, continues; we would simply require him to state, beginning in September 1978 and annually thereafter, that such powers are continued in the national interest. There are also certain other minor changes in the Trading With the Enemy Act. On page 3 of the draft bill, the criminal penalties are increased in accordance with the administration's recommendation, and in accord with the Export Administration Act. Title 2 provides for the future, for international emergency powers other than those arising during a declared war. You will see that the President has substantial authority to declare an emergency where there is, according to the language at the top of page 4 Unusual and extraordinary threat which has its source in whole or in substantial part outside the United States, to the national security, foreign policy, or economy of the United States. If the President so declares a national emergency, he then has the powers specified under section 203. Those powers are substantially the same as what he now has under the Trading With the Enemy Act with certain important exceptions. They would not include the power to vest property or take title to property. They would not include the power of bullion and currency. Mr. MAJAK. It would not apply to purely domestic credit and banking transactions. Mr. BINGHAM. There are, then, certain reporting requirements. There is another exception. The President would not have the power to seize records, but he would have the power to require that the records be produced. That is on page 6. There are certain protections provided on page 7. The authority does not include the authority to regulate or prohibit directly or indirectly any postal, telegraphic, telephonic, or other personal communication, which does not involve a transfer of anything of value; the collection and dissemination of news by the news media; or uncompensated transfers of anything of value with certain exceptions, at the President's discretion. We had some differences between the representatives of the administration in regard to those protections. They feel that they are not necessary, or perhaps in the case of uncompensated transfers, they might be inconvenient. The subcommittee, so far, feels that there should be explicit protections of those items, particularly of (1) and (2), and probably (3) also. Section 204 provides for consultation and reports. Section 205 deals with regulations and definitions. Here we do run contrary to the view of the executive branch. We provide for congressional review of those regulations, the reason being that in the past definitions have been used that were very broad. For example, President Roosevelt defined banks to include virtually private financial institutions. We don't expect these regulations to be issued constantly. I have not been one of those who has favored the congressional review of all regulations by any means, but these seem to be important enough so that they should be subject to congressional review. Of course, the administration maintains its opposition to the concurrent resolution veto. The penalties are the same in title 1. Title 3 covers certain amendments to the Export Administration Act, which are necessary. In the past the President has relied on powers " of the Trading With the Enemy Act to apply the controls of the Export Administration Act to subsidiaries of the United States operating outside the U.S. territory. If those are to be continued under the Export Administration Act, and the Trading With the Enemy Act is to be phased out, then the Export Administration Act has to be amended accordingly. Now we would like to agree on this bill and the variations thereof. Then immediately introduce the bill, listing those members who would like to cosponsor it. I will sponsor it. We are scheduled to have it before the full committee on Thursday and Friday. Before we break up and lose our quorum, I have another matter that I would like to bring up, on which I would like to be sure that we have a vote. However, it is another matter. First let me ask Mr. Majak if I have fairly summarized the bill. Mr. MAJAK. Mr. Chairman, you have fairly covered the bill, and I have nothing to add. Mr. BINGHAM. I think that I have also summarized the position of the administration, at least representatives of the administration. It has been made clear to us that they are not here speaking for the administration in the formal sense, but several agencies have been represented here and have given us their reaction. We have tried to heed them in major ways. The major problem would be the congressional veto, which we simply cannot resolve. We have also modified the provisions for grandfathering of existing embargoes, and so on, in a way that I would hope would be reasonably satisfactory to meet the objections of the representatives of the administration, which they previously raised. STATEMENT OF LEONARD E. SANTOS, ATTORNEY ADVISER, OFFICE OF THE GENERAL COUNSEL, DEPARTMENT OF THE TREASURY Mr. SANTOS. Mr. Chairman, thank you. I have seen this handout, which I gather is to be inserted on page 2, section 101. Mr. MAJAK. Mr. Chairman, this new section has not been handed out because it was drafted at Mr. Whalen's request. Mr. Whalen has not yet arrived, and we are not completely certain that he has even had an opportunity to see this language. That is the reason that it has not yet been circulated. Mr. BINGHAM. Supposing that you read that aloud? Mr. BINGHAM. Then, let us distribute those copies and explain where this fits in. Mr. MAJAK. On page 2, subparagraph (b), it deals with the grandfathering mechanism. The problem arises in making the existing usages subject to the terms of the National Emergencies Act. One of the terms of the National Emergencies Act is that all authorities being exercised will terminate in September 1978, unless a new emergency is declared for the purpose. The prospect of the President having to declare a new emergency with respect to some of these existing uses, such as Cuba, Vietnam, and others, if those uses are still in place by September 1978, does pose a diplomatic, or potential diplomatic problem. 買 Therefore, we have attempted, in this revised language, to provide for the continuation of those authorities without the necessity to declare or redeclare a national emergency, and to make the continued use of those authorities, after September 1978, subject to annual periods of review and reassessment, and continuation if the President so desires, which is a mechanism already in the National Emergencies Act. So the language that the subcommittee now has before it, dated June 11, is an effort to provide for the continuation of these existing authorities without the need specifically for a declaration or redeclaration of national emergency. Mr. BINGHAM. I might just add that at our last session we had a difference of opinion in our subcommittee. Mr. Whalen favored language such as you have on the new sheet, and Mr. Cavanaugh favored something a little bit more like the existing language. Mr. Cavanaugh has indicated that this language is acceptable to him-I think that it would be satisfactory to Mr. Whalen. It is certainly acceptable to me. I can see the disadvantage to require either the declaration of a national emergency in September of 1978, or a statement continuing the 1950 emergency, which would just perpetuate the phoney emergency quality that now exists in the Trading With the Enemy Act. Mr. FINDLEY. Does this sanction the phony character of the emergency? Mr. BINGHAM. It simply grandfathers in those powers which are now being exercised, but gets away from the fact that they rely in any way on the emergency declared in 1950. Mr. FINDLEY. I share the concern of Mr. Cavanaugh, at least as I understood it. It seems to me that September of 1978 is far enough in the future that the administration ought to be able finally to terminate this state of emergency. I cannot see any justification for the administration's reluctance to resume normal trade relationships with these countries. Congress is giving the administration an easy way by allowing it to stretch out the present relationship. Mr. BINGHAM. Let me say that in substance I agree with you. I would like to see both of those embargoes terminated, as far as Cuba and Vietnam are concerned, certainly. But it has been the consensus of the subcommittee up till now that this is not to be a vehicle in which to try to cross that bridge. This is essentially an act trying to clear up the mess that the Trading With the Enemy Act has left us in. We can always move on the front of Vietnam or Cuba. Hopefully, the administration will. However, to get this through in reasonably good form, we would like not to raise that particular controversy. That has been my view, and I hope that we would not attempt to have a confrontation on that particular subject. Mr. FINDLEY. Supposing there arises another situation that the administration would seek to blanket under emergency powers. Could it not use the existing declaration of a state of emergency to deal with that new situation? Then have the escape clause that is set forth in this amendment as a way to avoid the confrontation of the basic issues, as we avoided the confrontation in Cuba? |