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the future. In his testimony he said that is an arbitrary figure; it could be 1 year, it could be 3 years. I would agree fully when he says that anything that is to last longer than 2 years would improperly be regarded as an emergency situation. I think the best figure to use is 1 year subject to explicit renewal.

I would add to that my feeling, even within that 1 year if that is the time frame, that the President be required in some reasonable way to keep the Congress informed on the need for the trade embargo or whatever control we are talking about, the cost effectiveness of that kind of measure, and in general whether that measure is continuing to serve the overall public interest. Because when you impose an extraordinary measure of control over the international economic transactions of the country, in trade or in other fields, you are imposing a very serious burden on the business community, on those who are engaged in these transactions. I think that in all fairness to everybody and in fairness. to our overall national interest, not just the needs of the private sector, that the President ought to keep the Congress informed in some way, maybe every 6 months for as long as the control is exercised, on the effectiveness of this extraordinary measure, why it is needed and how it serves the overall public interest.

Those I think would be the more detailed comments that I would add at this time to a very constructive, I think, array of proposals that Mr. Stanley has proposed.

DEFINITION OF NATIONAL EMERGENCY

Mr. BEDELL. Do I understand you to say that in your opinion either import controls or export controls should not be imposed unless it is agreed that a state of emergency exists, and do you mean by that an emergency in regard to that particular matter or do you mean a general national emergency? Do I understand you correctly?

Mr. STEINBERG. That is a good question. Here again we need a better definition of what we mean by emergency. For example, there are various forms of import control, as I am sure you are aware, that do not in any way involve a national emergency.

Mr. BEDELL. Do I understand that without this act

Mr. STEINBERG. No, the President still has the authority under the Trade Act to resort to import controls where there has been a finding of serious injury.

Mr. BEDELL. So he does not need this for that.

Mr. STEINBERG. No, he does not need this for that. Where we are talking about the national security, let's say.

Mr. BEDELL. Talking about something else. That is all I hear and I am not sure what that means.

Mr. STEINBERG. In my statement I refer to the national security clause of the Trade Act, a provision which has been in legislation for approximately 20 years, which provides that where imports are found to impair the national security, and there is some explanation in the act as to what we mean by national security, the President must— must-adjust the imports and that is the only thing the Congress requires the President to do where there is a finding of impairment of the mobilization base. In my judgment you have here a serious lack of congressional concern with the real problems, the real weaknesses of

that sector of the mobilization base, and lack of congressional oversight on how best to solve that particular problem.

Now to be more precise, there has been one instance in which imports have been controlled for national security purposes and that is petroleum. I don't want to go through the whole history of that except to make this one point. The President of the United States imposed import quotas on petroleum in 1959 after a finding of impairment of national security. These controls were not imposed in the context of a coherent petroleum policy or a coherent energy policy. There was sporadic congressional interest in the subject over the years. There was no systematic congressional review of the need for such controls, how best they serve the national interest and the national security interest. If there had been systematic congressional oversight, we may have avoided-we would have at least greatly alleviated, in my view-the present energy crisis because there would have been close congressional scrutiny over the weaknesses of our overall energy position. You see, when you resort to trade control and think that you are solving the problem, what you are really doing is diverting attention from the real needs and the real problems of that sector of our

economy.

Therefore, one of the main points I make, to get back to the particular context of this hearing, is the need for adequate accountability of the President to Congress on any measures that are taken of an extraordinary nature, whether they be an embargo or a special emergency control of the capital flow or whatever, and close, systematic congressional scrutiny over the use of such extraordinary measuresnot the kind of attention that arises merely from the particular interest of a committee chairman in that particular policy area, but systematic review, maybe even required in legislation-maybe that is the only way to get it done systematically-requiring that every 6 months or whatever there must be a hearing or some medium of congressional review of this extraordinary measure taken by the Executive. Congressman, then we will know what we are doing and why we are doing it and how long it ought to last and what it costs the country, and that would be a very sobering lesson, I think, to any President who will know that if he resorts to such action he is going to be held to account by the Congress of the United States.

Mr. BEDELL. Do you have any disagreement with that, Mr. Stanley? Mr. STANLEY. No, I think that is correct.

Mr. BEDELL. Mr. Cavanaugh.

EXTRATERRITORIALITY

Mr. CAVANAUGH. Mr. Stanley. I would like to hear your comment on section 7 which would exempt foreign subsidiaries. Given the extremely high degree of integration that multinationals have now achieved, wouldn't that be a loophole of tremendous proportions, and how can you deal with it? It seems to me that we cannot just simply exempt all foreign subsidiaries.

Mr. STANLEY. I recognize that it would vary from case to case as to how serious the potential erosion of the control was, and it would be very hard to generalize, but I do think we have seen the kinds of problems that we have had with France, with Canada, with Argentina,

with Brazil and so forth in our various efforts to apply the various embargos. I would like to see a principle that we try to avoid that, except where it is judged necessary to prevent the erosion of the control and in those limited cases, again to try to limit the exception and also to call on the President for consultation with the other governments.

I think, after all, we can control the movements of goods, services and money from our own borders, and these really are the essence of the international corporation. We can say that the parts, the components, the capital goods shall not go if the product, that is the end product, is to be transferred in certain ways.

However, what we have tried to do is to use the fact that there is a U.S. national who may live in Sweden and be employed by a Swedish corporation, to try to control the policy of that Swedish corporation. That, to me, really extends our jurisdiction squarely into somebody else's and is probably, in my judgment, going to cause more problems for the world than it is going to solve. I recognize there will have to be some exceptions; I just would like to make them as stringent as possible.

Mr. CAVANAUGH. Mr. Steinberg, do you have any comment in that regard?

Mr. STEINBERG. No. It is a very serious question, a very important question that you raise but I have no comment at this time.

Mr. CAVANAUGH. I have no other questions.

Mr. BEDELL. Does staff have any questions?

If there are no further questions, the subcommittee will be adjourned until the call of the Chair.

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[Whereupon, at 2:20 p.m., the subcommittee adjourned, subject to the call of the Chair.]

EMERGENCY CONTROLS ON INTERNATIONAL

ECONOMIC TRANSACTIONS

TUESDAY, APRIL 19, 1977

HOUSE OF REPRESENTATIVES,

COMMITTEE ON INTERNATIONAL RELATIONS,

SUBCOMMITTEE ON INTERNATIONAL

ECONOMIC POLICY AND TRADE,
Washington, D.C.

The subcommittee met at 2:20 p.m. in room 2172 Rayburn House Office Building, Hon. Jonathan B. Bingham (chairman of the subcommittee) presiding.

Mr. BINGHAM. The Subcommittee on International Economic Policy and Trade will be in order.

Today the subcommittee continues its hearings on "Emergency Controls on International Economic Transactions." The bills before us are H.R. 1560, a bill to repeal section 5 (b) of the Trading With the Enemy Act, and H.R. 2382, the Economic War Powers Act.

Before introducing today's witnesses, I would like to make a brief announcement about next week's hearings. On Tuesday, April 26, we will hear from Hon. Julius Katz, Assistant Secretary of State for Economic and Business Affairs, and Hon. Fred Bergsten, Assistant Secretary of the Treasury for International Affairs. The hearing will take place in room 2255 at 2:30 or as soon thereafter as we have completed our business at the full committee.

On Wednesday, April 27, our witnesses will be Mr. Homer Moyer, Acting General Counsel of the Department of Commerce, and Mr. Irving Jaffe, Deputy Assistant Attorney General. This hearing will be in room 2200 at 1:00 or following full committee markup.

It was at the request of the administration that section 5(b) of the Trading With the Enemy Act was exempted from repeal by the National Emergencies Act pending further study, and we are very much looking forward to hearing the results of the administration's study of the issue.

Our witnesses today are Mr. Peter Weiss, vice president of the Center for Constitutional Rights, and Mr. Peter Nelsen, president of the Agricultural Trade Council. I would like to welcome you to the subcommittee and suggest that you both deliver your statements first; after that we will open it up for questions from the subcommittee.

I would particularly like to note the fact that Mr. Weiss is an old friend and neighbor in my home community and I am happy to have both of you here.

Mr. Weiss, would you present your statement, please?

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