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While the grain agreement differs from the arrangements in question in the Consumers Union case in that this arrangement is an intergovernmental agreement that gives rise to obligations of states under international law, it is similar in that it does not create any restraints on commerce enforceable under domestic law. Moreover, the agreement does not go as far as the arrangements in the Consumers Union case which established specific ceilings on steel imports. This agreement does not establish a ceiling on grain exports. Furthermore, it is striking that no party in Consumers Union challenged the President's constitutional authority to negotiate arrangements restricting steel imports. The argument turned entirely on the alleged preemptive effect of the elaborate statutory scheme, with its extensive procedural protections, established by the Trade Expansion Act of 1962.

In the case of the grain agreement, the action of the executive branch is consistent with the statutes relating to exports and carries out important congressional policies expressed in legislation. There is no evidence of any congressional intent to preempt the President's constitutional authority to conclude such an agreement.

The Agricultural Marketing Act of 1946

While it is not claimed that any existing legislation expressly authorizes or directs the President to enter into this type of agreement, the agreement is consistent with, and furthers the policy and directives of, the Agricultural Marketing Act of 1946. Section 201 of that Act (7 U.S.C. 1621) declares the congressional purpose, inter alia, “that new and wider markets for American agricultural products may be developed, both in the United States and in other countries, with a view to making it possible for the full production of American farms to be disposed of usefully, economically, profitably, and in an orderly manner.” Section 203 of that Act further authorizes and directs the Secretary of Agriculture:

(e) To foster and assist in the development of new or expanded markets (domestic and foreign) and new and expanded uses and in the moving of larger quantities of agricultural products through the private marketing system to consumers in the United States and abroad.

The principal effect of the grain agreement is to establish a Soviet commitment to purchase at least six million metric tons of American wheat and corn annually and to encourage purchases of at least eight million tons in years of normal grain supply. In recent years, Soviet purchases of grain in the United States have fluctuated greatly. Farmers have not been able to count on a steady market, and sudden large purchases have disrupted markets and generated heated controversy among consumers and farmers as well. Thus, while one cannot state categorically that Soviet purchases will be higher in the future than in the past, the American farmer will benefit for the first time from an assured and substantial market in the Soviet Union for several years ahead.

The agreement serves the interests of both farmer and consumer and carries out the policy of the Agricultural Marketing Act to move larger quantities of agricultural products through the private market system and to dispose of the “full production of American farms . . . in an orderly manner.” The Export Administration Act of 1969, as Amended

The Congress has granted the President very broad authority to control exports from the United States in the Export Administration Act of 1969, as amended, 50 U.S.C. App. 2401-2413. These controls are legally enforceable, and subject to sanction. With respect to agricultural commodities, Congress has made clear in Section 4(f) that export controls may be—but are not required to be established in cases of extreme short supply or when the President determines that such controls are required to further significantly the foreign policy of the United States and to fulfill

its international responsibilities, or to protect the national security.

As Congress has granted the President complete discretion to impose or not to impose export controls on general foreign policy grounds, it is well within the constitutional power of the President to agree, as in Article II of the agreement, not to exercise that discretion to control the export of a defined quantity of grain for a specific period of time under conditions where the United States grain supply does not fall below certain limits. This undertaking is consistent with the policies of the Export Administration Act as stated in Sections 3 and 4(f). Moreover, as this assurance was necessary to obtain the Soviet purchase commitment, it serves the purposes of the Agricultural Marketing Act.

A question has been asked whether the consultation provisions of Article VI of the agreement constitute de facto export controls without regard to the procedural requirements of the Export Administration Act. The grain agreement with the U.S.S.R. clearly meets the foreign policy criteria of the Export Administration Act. Thus, the President could haver could in the future-rely on the authority of that Act if he determines that export controls are in the national interest. However, the agreement itself does not limit the export of United States grain or establish any controls enforceable under United States law. It merely provides that if the parties wish to see the sale and purchase of more than eight million metric tons of wheat or corn in any year of the agreement, they will consult, prior to sale, in order to reach agreement on the possible quantities.

This provision gives the United States assurance against sudden, secretive and massive purchases that could disrupt our markets and damage foreign relations, without committing the United States Government to intervene in the grain trade in any manner. The President would then have the opportunity to consider whether any restraint is necessary and, if so, whether it would be better to establish controls enforceable under United States laws or to seek a cooperative solution not requiring legal action. There is no evidence of any congressional intent in the Export Administration Act to preclude the President from seeking the agreement of foreign governments to such consultations. Legal Authority to Implement the Agreement

The United States Government does not make any commitments in the agreement which would require implementing legislation. The principal undertaking of the United States Government is not to exercise, under certain conditions, the discretionary authority given to the President by law to establish export controls over wheat and corn purchased by the U.S.S.R. under the agreement. The President can discharge that commitment by virtue of his constitutional authority as Chief Executive.

To ensure that the Soviet Union meets its obligations under the agreement, the United States must necessarily rely primarily on the good faith of the Soviet Union and on the strong interest it shares with the United States in the successful operation of the agreement and in the development of cooperation between the two countries. However, the President has charged the Department of Agriculture with the responsibility to monitor Soviet purchases of United States grain, and that Department has a reporting system in place which is implemented in accordance with the provisions of Section 812 of the Agricultural Act of 1970, as amended, (1 U.S.C. 6120-3).

In the event the United States should experience a serious shortage of grain as defined in the agreement, and if the President should determine that conditions do not permit the export of wheat and corn to the Soviet Union in the quantities established by the agreement, the United States would inform the Soviet Union. Presumably, the Soviet Union would cooperate to meet the concerns of the United States and no legal action would be necessary. In the unlikely event it should become necessary to apply controls to restrict the export of wheat and corn, the President could act on the basis of and in accordance with the Export Administration Act of 1969, as amended, 50 U.S.C. App. 2401-2413.

Article VI of the agreement provides for consultations at the initiative of either country in the event the Soviet Union should wish its trade organizations to purchase, or the United States should wish its traders to sell, more wheat and corn to the Soviet Union than 6-8 million tons annually specified in Article I. This provision does not necessarily imply that the United States Government would take any steps to control the grain trade. Indeed, if conditions are good, no restraint might be appropriate.

In the unlikely event that the Soviet Union should act in derogation of the agreement, the President would have the option to apply export controls under the Export Administration Act. It is improbable that such action would be necessary, however, as both the Soviet Union and American traders can be

expected to be responsive if the President should deem it necessary to suggest prudence.

The President has the option in this case to ask for voluntary action by United States citizens or foreign governments, and needs no specific legal authority to do so. The Court of Appeals in the Consumers Union case approved the President's appeal to foreign steel producers voluntarily to restrain sales in the United States even though the process of consultation resulted in specific, written undertakings by the producers. The Court expressly noted that nothing in that process

differentiates what the Executive has done here from what all Presidents, and to a lesser extent all high executive officers, do when they admonish an industry with the express or implicit warning that action, within either their existing powers or enlarged powers to be sought, will be taken if a desired course is not followed voluntarily. 506 F.2d 136 at 143 (1974).

In this case, if enforceable controls should be necessary, the President would act, not on the authority of the agreement, but on the basis of the authority already granted to him in the Export Administration Act.

Dept. of State File No. P76 0013–543.


On August 3, 1975, an Agreement on Trade Relations between the United States and the Socialist Republic of Romania, with three annexes, entered into force upon exchange of written notices of acceptance by the two Governments (TIAS 8159; 26 UST 2305). The Agreement, which had been signed on April 2, 1975, included provisions for most-favored-nation (nondiscriminatory) trade concessions to countries whose products were not currently receiving such treatment. The only countries not then receiving nondiscriminatory treatment in the market were the Communist countries, with the exception of Poland and Yugoslavia. Under Sections 151 and 405 of the Trade Act of 1974 (19 U.S.C. 2191, 2435), the Trade Agreement with Romania was subject to approval by both Houses of Congress.

The Agreement, in addition to providing most-favored-nation treatment, encourages expansion of trade and envisions that total bilateral trade in comparison with the period 1972-1974 would at least triple over the initial three-year period of the Agreement. It also provides safeguards in the form of consultations between the parties in the event that imports cause or threaten to cause market disruption, and permits either party to impose its own restrictions on imports to prevent or remedy domestic market disruption. Under its terms, private U.S. firms are permitted to open offices in Romania, to deal directly with buyers and users of their products in Romania, and to advertise and conclude contracts within the country. Romanian firms and economic organizations are accorded the same treatment in the United States. Other provisions include protection for industrial property rights, industrial processes, and copyrights; encouragement of third-country arbitration of commercial disputes under the rules of the International Chamber of Commerce; most-favored-nation treatment in financial transactions; and provisions relating to merchant shipping.

The Agreement has an initial term of three years, with provision for suspension or termination if either party is unable to carry out its obligations. Extensions for successive three-year periods are automatic in the absence of a written notification of termination by either party at least 30 days prior to expiration of such period.

On April 24, 1975, President Ford transmitted the text of the Agreement to both Houses of Congress, as an annex to Proclamation 4369 in which he extended nondiscriminatory treatment to the products of Romania, effective upon entry into force of the Agreement. He simultaneously transmitted to Congress Executive Order 11854, waiving the application of subsections (a) and (b) of Section 402 of the Trade Act of 1974 with respect to Romania, and a report, pursuant to Section 402(c)(1) of that Act, in which he stated:

I refer to the Declaration of the Presidents of the United States and of the Socialist Republic of Romania signed in Washington in 1973 wherein it was stated that "they will contribute to the solution of humanitarian problems on the basis of mutual confidence and good will.” I have been assured that if and when such problems arise they will be solved, on a reciprocal basis, in the spirit of that Declaration. Accordingly, I am convinced that the emigration practices of Romania will lead substantially to the achievement of the objectives of Section 402 of the Act. I have therefore determined that the waiver contained in said Executive order will substantially promote the objectives of Section 402 of the Act.

The President also issued on April 24, 1975, two Presidential determinations: one under Section 402 (c)(1XA) of the Act, determining that the waiver under his Executive order of that date would substantially promote the objectives of Section 402 of the Act; the other determining, pursuant to Section 405(a) of the Act,

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