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tain emergency powers, but you believe they ought to be used only in true emergencies and the emergencies ought to be current. There, I think, we would agree.

Mr. BINGHAM. We have also suggested that some of the actions that are now taken under the theory that an emergency exists be provided for in legislation which is to deal with nonemergencies. As I understand the testimony, both of you indicate that it is not possible to do any of the things that we now do on the theory that emergencies exist, under some other theory by appropriate legislation.

Mr. KATZ. I have suggested two instances. One would require making the Export Administration Act permanent. Were the Export Administration Act permanent legislation, that problem would not arise. The second, on page 6 of my statement, has to do with controls on exports from U.S. subsidiaries abroad, which could be handled under the Export Administration Act as well, if that act were amended along the lines I suggested. Those are two areas.


Mr. BERGSTEN. Mr. Chairman, on the foreign assets control, the fact is that these are rather extreme steps that the U.S. Government takes. Freezing the assets of another country is not a step to be taken lightly. Barring all current transactions with another country is not a step to be taken lightly.

We do feel that such steps should only be taken when there is a real emergency. That is at the root of why we really prefer to keep an emergency statute a la 5 (b), than go to something else which you have termed as nonemergency legislation. These are very strong steps to be taken only in extreme circumstances, and that is why we think that it should require the declaration by the President of a national emergency.

Mr. BINGHAM. If I am not mistaken, you still maintain asset controls with respect to China, do you not?

Mr. BERGSTEN. I have reviewed the history of this carefully, and there are some big problems that emerge. One is the use of an existing emergency for an unrelated purpose, and we can all agree that this has been done in questionable ways.

The second is the extension over time of an "emergency," after it may not be such an emergency. We have proposed means to try to deal with that by the automatic termination on the anniversary, unless explicitly extended, with information, reporting requirements, and so forth.

As I have reviewed this history carefully, I come to three conclusions. It should be emergency legislation because these are extreme steps, and I would not want them taken, as a citizen, aside from being a policy official, in anything less than what would be carefully deliberated considerations of what is called a national emergency.

There are the two problems: There is the unrelated emergency use, and there is the extension of these controls over time beyond, perhaps, initial justification for them. Our proposal tried to deal with these issues.

Mr. KATZ. Mr. Chairman, let me say that there is another area where the Congress made a change, and that is in the Trade Act that we

referred to earlier. There is specific authority now for balance-ofpayment measures of the kind that were taken in 1971.

Such measures would not have to be taken pursuant to section 5(b) in the future. There are specific circumstances for the use of that authority spelled out in the Trade Act of 1974.


Mr. BINGHAM. Let me come back to what you just said. Asset control or freezing is an extreme measure and should be done only in emergency cases.

Let me again ask the question, What is the emergency that requires us to continue control over the Chinese assets, or the Cuban assets? Mr. BERGSTEN. I think there we do face a legacy of the past which is justified in two senses. One is that given the continued state of relations between the United States and major Communist powers, which includes North Korea, Vietnam, and Cambodia, as well as China, there certainly are something less than cordial relationships which do stem. directly from the original conditions in which that emergency declaration was made.

Second, and I think more pragmatically, and I think that you are raising a pragmatic question, and I would like to respond pragmatically, we are in a situation where we are trying to normalize relations with those countries. Hopefully, over time, we will do so with all of them. Some look more on the track right now than others. Part of those negotiations relate to our holding of those frozen assets. They give us some important bargaining power, and furthermore they provide an assurance to American citizens, whose assets in those countries were seized, that there will be some means by which the United States can defend their just rights.

Mr. BINGHAM. Again, you are talking about the merits of something, but you are not addressing yourself to the fundamental question of whether it is legitimate to base those actions on the presumed existence of an emergency. You cannot seriously say that there is an emergency element in our relations with Communist China, or with Cuba today, that warrants the extraordinary steps that you have said they are, absent an emergency. Perhaps they are justified. I am not saying that they are not. I am rather inclined to think they are, but I just don't think it is right for us to base those actions on a false premise.

Mr. BERGSTEN. I think that I consider that point important, Mr. Chairman. It does relate to the history as well as to the current situation. There are, as I said in my statement, similar points involved about whether asset control would be legal other than under an emergency proclamation. That, in turn, relates to the pragmatic situation that we find ourselves in as we try to use that legacy of the past to help normalize relations with the countries involved.

I guess all we are really saying that is different from you is, we would certainly like to provide a clean slate for the future while you want to make that retroactive in addition. What we are raising in response to that is what we would regard as some pragmatic concerns. I don't think that we have any fundamental differences

on what is to be done from here on out in terms of judicious implementations of these powers.

Mr. BINGHAM. I think that we have kind of gone round and round on this.

Gentlemen, thank you, and we will look forward to your comments on those specific proposals.

The hearing is adjourned.

[Whereupon, at 3:40 p.m. the subcommittee adjourned, subject to the call of the Chair.]







Washington, D.C.

The subcommittee met at 3 p.m. in room 2200, Rayburn House Office Building, Hon. Jonathan B. Bingham (chairman of the subcommittee), presiding.

Mr. BINGHAM. The subcommittee will be in order.

Today the Subcommittee on International Economic Policy and Trade concludes, at least for the time being, its hearings entitled "Emergency Controls on International Economic Transactions," on H.R. 1560 and H.R. 2382. The subcommittee has received no further requests to testify. I have asked the subcommittee staff to draft new legislation incorporating some of the recommendations we have received into a package of draft amendments to section 5(b) of the Trading With the Enemy Act and, where appropriate, the Export Administration Act.

I expect that the agencies involved will cooperate with the staff in developing the new draft. I would also like to encourage all members of the subcommittee to submit their suggestions to the staff as soon as possible. When the draft is ready, hopefully next week, I plan to introduce it and, unless there is need for further hearings, to proceed directly to markup the week of May 16. Under the National Emergencies Act we have to report the bill out of the full committee by mid-June. Statements for the record should be submitted by May 16.

Our final witnesses are Mr. Homer Moyer, Deputy General Counsel, Department of Commerce, and Mr. Irving Jaffe, Deputy Assistant Attorney General, Department of Justice.

I would like to welcome you to the subcommittee and to apologize for having to cancel at the last minute the hearing originally scheduled for April 27. That was unavoidable in view of the other matters going on here on the Hill that day. I appreciate your rearranging your schedules so you could be here today.

I will recognize Mr. Moyer first, then Mr. Jaffe, and then we will open it up for questions.



Legal and professional experience:

Acting General Counsel, Department of Commerce (since January 1977);
Deputy General Counsel, Department of Commerce (since April 1976);
Covington & Burling, Washington, D.C. (August 1973-April 1976);

Public Law Education Institute, Washington, D.C. (May 1971-June 1973)— primary author of "Justice and the Military ;" and

Office of the Judge Advocate General of the Navy, Washington, D.C. (March 1968-February 1971).


Yale Law School, LL.B., 1967;

Emory University, B.A., Economics.

Personal Data:

Age: 34 (born Nov. 20, 1942, Atlanta, Ga.). Married (1974).

Mr. MOYER. Mr. Chairman, thank you for the invitation to testify today on H.R. 1560, a bill "to repeal section 5(b) of the Trading With the Enemy Act of 1917." I am Homer E. Moyer, Jr., the Deputy General Counsel of the Department of Commerce.

Section 5(b) provides the President, or his designee, with specified powers over certain types of economic activity by any person, or with respect to any property, subject to U.S. jurisdiction during time of war or national emergency.

As you noted in your letter of invitation, section 5(b) was specifically exempted from the general termination of emergency powers and authorities recently accomplished by the National Emergencies Act-Public Law 94-412. The act also provides for congressional study and investigation of section 5 (b); it is pursuant to that mandate that this hearing is taking place.

Mr. Chairman, let me say at the outset that the Commerce Department welcomes and supports the practice of periodic congressional review of existing statutes. That process, in my view, is an entirely appropriate and important legislative activity.

Representatives of the State and Treasury Departments have already outlined to you what effect the repeal of section 5(b) would have on programs they administer. I should like to discuss, from the perspective of the Department of Commerce, the consequences that would attend repeal of section 5 (b).


The most important consequence involves the Export Administration Act, which, as you know, the Department of Commerce administers. This act, which is a temporary statute, provides authority for the imposition of a variety of controls on U.S. exports, principally for reasons relating to national security, foreign policy, and short supply. Four times in the last 5 years the Export Administration Act has expired, for periods of from several weeks to several months. Each time the authority of section 5(b) was invoked to continue the Nation's export controls until the Export Administration Act was legislatively extended. Without the standby authority of section 5(b), the Nation would have been left on each of those occasions without controls on the export and reexport of U.S. goods and technology.

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