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 not— and 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 of— the 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

President on the basis of a finding of continued need, without requiring a new finding of emergency or new declaration.

I would not make such extension of authority unlimited in time. And I would hope it could be tied to some kind of control by the Congress, whether subject to disapproval or subject to approval after a certain period; whether by concurrent or joint resolution, one could work out some kind of control.

REGULAR REVIEW OF DECLARED NATIONAL EMERGENCY

Third, a variation of the previous proposal, which has been used since 1966 with respect to travel controls, would say it is the actual measures taken pursuant to the national emergency that would come up for review at regular intervals without a need for a new declaration of emergency. The thought would be to compel the Government-and I would say here including the President himself, not just the third delegate down the line-to think through at regular intervals whether extension of measures such as those taken under the Trading With the Enemy Act were still justified. I would not want to rule out small modifications such as those that were made with respect to China in the period of 1969 to 1971 and have been made recently with respect to Cuba. But no new measure, certainly no measure not linked to the state of emergency would be permitted without a new declaration of

emergency.

DECLARATION OF EMERGENCY IS A SERIOUS ACTION

Fourth, I think an amended statute should make clear that a state of emergency in the United States is not an abstract concept. It is not like a state of siege in Latin American countries. One should not be able to proclaim a state of emergency on one subject and then take measures on a wholly unrelated subject that may well not be of emergency character at all, because it is convenient to act first and tell the Congress and public later. And I think it should be made clear, clearer than it is in present law, that a declaration of emergency is not to be made lightly.

EMERGENCY CONTROLS SHOULD NOT BE EXTRATERRITORIAL

Fifth, finally, I think if an amended statute, whatever its name, comes out of these hearings, the powers that it confers should be limited in their territorial scope to the United States or its citizens acting in their individual, as compared to managerial, capacity, and to operations plainly designed to avoid the controls applicable in the United States.

I do not, as is sometimes contended, say that our expansive assertions of jurisdiction are contrary to existing international law. But I believe we lose more in receptivity to U.S.-based investment and in respect to the United States generally than we can possibly gain by the kind of extraterritoriality that we have practiced on and off in the past in implementation of the Trading With the Enemy Act.

Mr. Chairman, perhaps I talked longer than I should have, but it is extraordinary how seldom the questions you raise with these hearings

have been raised by the Congress. I hope I am able to make some contribution.

Thank you very much.

[Professor Lowenfeld's prepared statement follows:]

PREPARED STATEMENT OF ANDREAS F. LOWENFELD, PROFESSOR OF LAW, New York UNIVERSITY SCHOOL OF LAW

SECTION 5 (b) OF TRADING WITH THE ENEMY ACT: SHOULD IT BE CONTINUED, MODIFIED, OR REPEALED?

Mr. Chairman and members of the Committee: It is a pleasure for me to appear before this Committee and to be of such help as I can in your inquiry into section 5(b) of the Trading With the Enemy Act. I am honored to have been invited to appear before your Committee, and I appear in response to that invitation, and not in representation of any client, organization, or interest. My sole purpose here is to share with you some of my thoughts and experience concerning this extraordinary statute.

I first became aware of the Trading With the Enemy Act as a private practitioner, when I worked with counsel for the Netherlands in trying to untangle some of the conflicting claims to alleged enemy property vested or blocked during World War II; later as a member of the Office of Legal Adviser of the United States Department of State, I had frequent occasion to work on section 5(b) and to observe the consequences of its use for our foreign economic policy and our foreign relations in general. More recently, in connection with a series of books on International Economic Law, I have just published a book on Trade Controls for Political Ends,1 which explores section 5(b) of the Trading With the Enemy Act in the context of a general examination of political trade controls, including the export control program of the United States, the Arab League boycott of Israel, and the United Nations sanctions against Rhodesia.

I thought it would be most useful if I divided my presentation into four parts: (I) an overview of the controls on international economic activity employed by the United States, focusing on how and where the Trading With the Enemy Act fits into the overall picture; (II) a discussion of some of the problems that have arisen from application of section 5(b) in our dealings with countries friendly to us; (III) A review of some of the uses of section 5(b) for purposes unrelated to the purposes of the statute or the emergencies bringing it into effect; and (IV) A discussion of possible alternatives in dealing with section 5(b). I-THE TWEA IN THE CONTEXT OF U.S. REGULATION OF INTERNATIONAL ECONOMIC ACTIVITY

In attempting to explain the regulatory aspects of the United States international economic policy, the risks of overrefinement and oversimplification are about equally great. For present purposes, I believe the latter course is preferable, since our aim is to put the Trading With the Enemy Act in context, and not to cover every aspect of United States law or policy. In particular, I want to concentrate here on governmental controls of private economic activities, leaving out the statutes and rules applicable to foreign aid (military and economic), to the Export-Import Bank, to the Commodity Credit Corporation, and to United States participation in multinational lending and regulatory agencies.

A. The Tripartite Regulatory Scheme

Basically, United States law divides international economic activity into three categories: imports; exports; and "all other," including financial transactions, foreign investment, and travel. Imports have been regulated since the birth of the Republic, exports only since World War II, and "all other" activities have by and large not been regulated, except intermittently, as we shall see. under the Trading With the Enemy Act.

Import Controls

Until 1934, tariffs, quotas and other conditions of entry of foreign goods were actually fixed by the Congress; since then, modifications in applicable duties have been largely delegated to the executive branch in the context of the reciprocal trade agreements program. But the delegation has been fairly precise,

1 New York: Matthew Bender & Co., 1976.