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of applying, say, U.S. minimum wage laws to foreign subsidiaries of U.S. companies. We do tax earnings of U.S. corporations, but only as they are repatriated, and we give credit, for the most part, for taxes paid abroad.

But in the area we are talking about here, we purport to prohibit activities of foreign corporations, lawful-and often encouraged-in those countries where the activities are to be carried on by virtue of an ownership or management link to the United States.

In my statement, I go through a number of episodes where that happened, particularly with respect to Canada and with respect also to France. Maybe you want to come back to that. For the moment, for the sake of saving time, I just want to leave two thoughts with you on this aspect of section 5 (b).

It is, of course, a foreign policy statute, but it is not just foreign policy to Cuba, China, and Korea; it is also foreign policy with respect to Canada and France and England and other friends. In fact, the closer the interchange, as such is with Canada, the closer the number of citizens, for example, whom we have on boards or in management positions of foreign companies, the greater the frictions.

Second, I think it is fair to say that the Trading With the Enemy Act controls are, in large part-not exclusively, but in large partsymbolic. That is, we certainly do not expect to overthrow the Government of North Korea. We did not ever, I think, expect to overthrow Mao Tse Tung. We do not want to overthrow Fidel Castro. Perhaps we once did, but not now. I do not think we ever really expected to bring Castro down through economic sanctions.

It is a symbolic action; it has some value. It is the worst name you can call somebody without bloodshed, without war. But as we move toward the symbolic use of these controls, it seems to me we ought to be concerned less about possible evasion; furthermore, we ought to resolve doubts in favor of refraining to assert jurisdiction over foreign operations or corporations linked to the United States.

MISUSE OF SECTION 5(b)

Let me turn next to what I have called misuse of the Trading With the Enemy Act. Perhaps using that term prejudges the issue. Your committee will have to judge whether you think it is proper use or misuse. But what I am really talking about is the reliance on section 5(b) for actions when other statutory authority was lacking or defective. I have referred to section 5(b) as a political weapon, economic warfare, if you will, in the context of a cold war of shifting intensity. But there are three points I want to mention-and others detailed by the committee in its committee print of last November-where section 5(b) has been used as an economic measure without connotation of enemy involvement. And a fourth point-repeated several times-section 5(b) has been used, I believe improperly, as a reserve authority for the export control program when that program's basic authority expired. I have four episodes I want to just briefly mention.

BANK HOLIDAY OF 1933

The first one is President Franklin D. Roosevelt's reliance on the Trading With the Enemy Act. As his first official act, he issued a proclamation closing the banks on March 6, which was the Monday

of his first term, 1933. I have been reading some of the history books about that first week. It seems Roosevelt was prepared to close the banks without any authority and was persuaded by the Cabinet that it is better to rely on some authority than no authority at all. And so he relied on the Trading With the Enemy Act. And he did that, even before the Trading With the Enemy Act read as broadly as it does now. Of course, there was very little having to do with "enemy" and, indeed, not much having to do with "foreign" in the step of closing the banks.

I think the proclamation was contrived. In fairness, it only lasted a few days, because Congress then passed a statute expressly ratifying and confirming everything President Roosevelt had done. But I still think it was wrong. I am not suggesting there was no emergency. We had 13 million people out of work. The banks apparently, literally were running out of money, and it may be that the experience may suggest some kind of standby authority, some kind of emergency authority, though not particularly in the international area. But relating such action to the war powers or to an enemy seems to me unfortunate, for a couple of reasons.

First, I think it breeds disrespect and cynicism about law, precisely among the persons who should be most careful about obedience to law; that is, the President and his senior advisers.

Second, I think our courts have a history-it is really almost a conditioned reflex-of staying away from challenges of governmental action when you mention the word "foreign affairs" or "War Powers" or "national security." If that is so, I think one ought to use that kind of authority with great reserve.

JANUARY 1, 1968: RESTRAINTS ON DIRECT FOREIGN INVESTMENT

A second episode I want to mention is President Johnson's implementation of his balance-of-payments program in January 1, 1968, when he placed restraints on direct foreign investments by U.S. companies, requiring repatriation of earnings and setting up what became an elaborate bureaucratic set-up of the foreign direct investments programs. It was a whole regulatory program really made up out of whole cloth.

Again, the program may have been advisable, though one could argue it postponed measures relating to the realinement of currencies that perhaps should have been taken sooner than they eventually were. For this purpose, I want to point out only the measures were taken without debate by or authority from the Congress, and they had no rational connection with the purpose of the Trading With the Enemy Act. It is interesting that President Johnson's Executive order cites "the continued existence of the national emergency declared by Proclamation 2914 of December 16, 1950."

Most people reading this would say it is the usual boilerplate; what does it matter? But I recognized that proclamation; I am sure by now, members of this committee will too. That was the proclamation issued by President Truman when the Chinese crossed the Yalu River in December 1950, after MacArthur had gone into North Korea; it was hardly related to the crisis of the dollar following the devaluation of the pound sterling a couple of months before.

Moreover-and this again is one of the recurring weaknesses of action under section 5(b)-President Johnson's action was not a 60

day or 90-day emergency program pending congressional action. The program was kept in force for more than 6 years, tinkered with continually, and used for a variety of related or unrelated purposes. For example, there was a section that attempted to induce investment in developing countries that may or may not be a worthy cause, but it had nothing to do with the emergency program. That seems to me

wrong.

AUGUST 15, 1971: CLOSING THE U.S. GOLD WINDOW

Third, when President Nixon took his famous action of August 15, 1971, closing the gold window and ending convertibility of the dollar, as far as I can tell, he did those things without any authority, international or domestic, but not in violation—or at least not in clear violation-of any international or domestic authority. One can argue about compliance with the Articles of Agreement of the International Monetary Fund, but at least it is not apparent.

Then he proclaimed an import duty surcharge of 10 percentage points ad valorem on nearly all dutiable goods entering the United States. As I mentioned before, the tariff setting authority is the one area where the Congress has delegated authority to the President very carefully, with provision for hearings and notice and the range of modifications that he can make, and none of those delegations were designed for surprise weekend announcements or across-the-board surcharges.

Just because there was existence of the statutes-the Tariff Act of 1930 and the Trade Expansion Act-and, indeed, because the Constitution had committed the raising of revenue to the Congress, President Nixon did not think he could just proclaim the surcharge on the basis of the foreign affairs power, that vague power that is supposed to emanate from the Constitution, though you can never quite find it. Interestingly, he did not want to cite the Trading With the Enemy Act directly, at least in part because a principal target of the surcharge was Japan, and he was scheduled to meet Emperor Hirohito in Alaska a few weeks later on the Emperor's first trip abroad since the war. Mention of the Trading With the Enemy Act in connection with that surcharge, to say the least, would have been awkward as he met with the Emperor.

But the President's lawyers were worried that if he just mentioned the trade legislation in the proclamation raising the duties, the surcharge might not stand, and here was one area where you could anticipate legal challenge by an importer who did not want to pay the duty. So what the President's lawyers did was to get the President to declare a national emergency and then to state that he was acting under the authority of the Constitution and statutes "including but not limited to the Tariff Act of 1930 and the Trade Expansion Act."

When the judicial challenge came in Yoshida v. United States, but only then, did the lawyers in their answering papers say, well what we meant was the Trading With the Enemy Act. The Customs Court said, well, OK, you can trot out the act; we don't mind that. But the court went on to say that the Trading With the Enemy Act does not encompass the powers to impose duties, and it struck down the duty surcharge. When the case was appealed the Court of Customs and Patent Appeals agreed with the lower court that none of the provi

sions of the trade legislation covered the action. But nonetheless, it reversed. It said:

We find it unreasonable to suppose that Congress passed the Trading With the Enemy Act, delegating broad powers to the President for periodic use for national emergencies, while intending that the President, when faced with such an emergency must follow limiting procedures prescribed in other acts designed for continuing use during normal times

I think this committee may want to focus on that and see whether that describes what you think the Congress passed that statute for. As for me, I find the opinion to be a thin one which should notand I think will not-go down in history as one of the great efforts to define the scope of congressional delegation or the powers of the Presidency. It may be that the most important factor in that case, though as far as I know it is not mentioned in any of the papers, briefs or opinions, was that if the decision had gone the other way, the Government stood to lose more than half a billion dollars collected in just the 4 months the surcharge was in effect.

The import duty surcharge had a curious relationship to the final case I want to mention, which I am sure most of you are aware ofthe extension of export controls in the fall of last year. When President Nixon had removed the surcharge in December of 1971 in connection with the Smithsonian agreement on realinement of currencies, he did a very interesting thing. He terminated only paragraphs B and C of the August 15 proclamation, leaving in place the emergency declaration in paragraph A. And then when there was difficulty agreeing on extension of the Export Administration Act, that emergency, the 1971 emergency, as well as the Truman proclamation of 1950, were recited as the basis for keeping the export controls in effect.

EXTENSION OF EXPORT ADMINISTRATION ACT REGULATIONS

That happened once in 1972 for about 4 weeks, and then the Export Administration Act was extended retroactively to the date of the expiration. It happened twice in 1974, once in the 2-week period in the changeover between Presidents Nixon and Ford, and later for another 4-week period. And then when the strongest conflict over the Export Administration Act took place last summer-in particular, as you will recall, over the provisions directed to the Arab boycottresort to the Trading With the Enemy Act had almost become routine.

President Ford's Executive order of September 1976 is really a carbon copy of the other three orders, just with numbers and dates changed. When questions were raised about the legitimacy of this, guess what: the Justice Department issued an opinion citing the previous orders and the Yoshida case, that is the case involving the import duty surcharge.

I am not sure whether, as a technical matter, the extension of export controls in this way is justifiable. I think maybe it is easier to justify the strategic controls to Communist countries that has at least some relation to the other controls-than it is to justify the controls related to the Arab boycott.

But even if extension of export controls by resort to section 5(b) were upheld by the courts, it seems to me an action of doubtful

propriety. To restate in somewhat different form the point I made at the outset, it seems to me the reluctance of courts to strike down acts of the President taken in the name of national security is understandable. When I was a State Department lawyer-and Professor Metzger before me-we used to always make that argument when we did anything in the name of foreign affairs and national security. But I think the reluctance of the courts to intervene in such cases should put more and not less pressure on the executive branch and its lawyers, because it turns out that they are the final authority most of the time.

I think we have had too many "can-do" lawyers and too many clients that is to say, senior Government officials-who say I want a "can-do" lawyer. I think that may be all right if you have a court to tell you if you are wrong. But that comfort is largely lacking in this area, and I think all the more reason for (1) more specific delegations-that is your function; and, (2) more restraint on the part of Government counsel. I would hope that perhaps this subcommittee, when it writes its report, could make that point.

SUGGESTIONS FOR LEGISLATION

Finally, I think I would just briefly, make some suggestions about legislation. I have not prepared a draft statute. Perhaps with a little more time I would try my hand at it.

REPEAL OF SECTION 5 (b)

First, you could simply repeal section 5(b) of the Trading With the Enemy Act, as H.R. 1560 would do. The difficulty with that, it seems to me, is that it would bring down with it a number of programs, such as the embargo on trade with Cuba, that perhaps should not be terminated or terminated just now, or should not be terminated without some kind of quid pro quo. I do not know what our policy right now should be with respect to Cuba. I am sure this subcommittee is not interested on any views on that subject. All I say is, it would be an ackward act, in light of the report in the New York Times this morning, for example-perhaps even an inappropriate interference in negotiations being carried out by the executive branch-if the embargo were suddenly to end without any understanding, just because in prior administrations the executive branch had, from time to time, overstepped its bounds.

LIMIT NATIONAL EMERGENCIES

Second, another possibility would be to retain the delegation of emergency power, delegation of the declaration of emergency power, but to limit national emergencies to some stated time; 60, 120, 180 days, subject to express renewal.

I have some sympathy with that suggestion, which is similar to H.R. 2382. Coming again to the Cuban situation, however, I could imagine that the President might well not be anxious at a given point to proclaim anew a state of emergency even as he was negotiating for relaxation of tensions. Perhaps a modification of the proposal might be developed whereby an emergency might be extended by the

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