A presidential remedy under administrative control - why section 337(j) should be repealed.

• Author: Bressers, Nicolaas T.

INTRODUCTION I. THE LEGISLATIVE HISTORY OF SECTION 337(J) A. Tariff Act of 1922 B. Tariff Act Of 1930 C. Trade Act of 1974 II. LATER DEVELOPMENTS OF PRESIDENTIAL REVIEW POWER A. Certain Stainless Steel Pipe and Tube (1978) B. Certain Multi-Ply Headboxes (1981) C. Certain Molded-In Sandwich Panel Inserts (1982) D. Certain Alkaline Batteries (1984) E. Certain Dynamic Random Access Memories (1987) F. Summarizing the Review Power III. ASSIGNMENT OF THE REVIEW POWER TO THE UNITED STATES TRADE REPRESENTATIVE (2005) CONCLUSION INTRODUCTION

On July 26, 2005, President George W. Bush delegated the Review Power under Section 337(j) of the Tariff Act of 1930 to the Office of the United States Trade Representative (USTR). (1) This delegation is a major shift in unfair import trade practices that went largely unnoticed by legal scholars. Tracing its roots to the "elastic tariffs" of the Harding Administration, Section 337(j) has slowly evolved within America's trade legislation as a tool for the President to quickly and decidedly protect American interests from unfair import trade practices. When the statute took on its present form in 1974, Section 337(j) served an exceptional purpose within the unfair import practices realm by matching the unique insights and perspectives of the President in foreign policy matters with an equally stout remedy--"veto" power over United States International Trade Commission's (USITC) determinations. Furthermore, Section 337(j) was paired with Section 337(b)(2), which allows administrative agencies to provide persuasive input in USITC matters, to create two distinct tiers of influence in USITC matters. As such, by delegating the President's powers under Section 337(j) to the USTR, the President has essentially elevated one administrative opinion above the rest--resulting in an administrative level of input being improperly paired with a presidential level of power.

This comment investigates the details behind this delegation of power, by reviewing the legislative history of Section 337 in view of the USTR delegation. Specifically, this comment will first discuss the legislative history of Section 337 as it developed through the passage of various acts of Congress. Second, this paper will discuss the subsequent development of the Review Power within the federal court system as it was utilized by the Office of the President. Lastly, this paper will discuss the delegation of Section 337(j) to the USTR, concluding that the power goes against the Legislature's intent and that Section 337(j) should either be returned to the Office of the President, or repealed with the USTR's input being placed under Section 337(b)(2).

1. THE LEGISLATIVE HISTORY OF SECTION 337(J)

   The Commerce Clause of the United States Constitution unambiguously delegates the exclusive power to regulate international trade and commerce to the legislative branch of government. (2) As such, the President may only act in matters of international trade when Congress has specifically provided the President with the authority to do so, and even then, the President can only act within the guidelines provided by the legislative text. (3) This section will review the Acts that helped mold Section 337(j), such as the Tariff Act of 1922, (4) The Tariff Act of 1930, (5) and the Trade Act of 1974. (6)

   1. Tariff Act of 1922

      In his message on December 6, 1921, President Warren G. Harding tasked Congress with finding a way to provide "flexibility and elasticity so that [tariff] rates may be adjusted to meet unusual and changing conditions which can not accurately be anticipated." (7) Following the President's suggestion, the Senate Finance Committee added provisions to the Tariff Act of 1922 known as "elastic tariffs," which authorized the President: A) to modify tariff rates either upwards or downwards within pre-described limits; B) to change the basis for the assessment of ad volorem duties on selected items; C) to impose additional duties on the whole or any part of imports into the United States from any country that discriminates against the United States' overseas commerce; and D) to impose penalty duties or prohibit the importation of particular goods for the purpose of preventing unfair method of competitions in the importation of goods. (8) These "elastic tariffs" served as an accompaniment to the Harding administration's principle of scientific tariff protection; which sought to use tariffs to "equalize conditions of competition" between foreign countries and the United States. (9)

      When discussing the need for Presidential intervention, the Senate Committee on Finance reported that the flexibility provided by the elastic tariffs would contribute to tariff stability and "prevent[] the accumulation of cases which ultimately force the upheaval of a general tariff revision." (10) Furthermore, the Committee indicated that Section 316 should be interpreted broadly enough to "prevent every type and form of unfair practice and is therefore, a more adequate protection to American industry than any antidumping statute the country has ever had." (11) This sentiment was also championed by the bill's sponsor, Senator Smoot, who hailed Section 316 was "an anti-dumping law with teeth in it--one which will reach all forms of unfair competition in importation." (12)

      One piece of legislation added to the Tariff Act of 1922 by the Senate Finance Committee was Section 316(a), which established:

      That unfair methods of competition and unfair acts in the importation of articles into the United States, or in their sale by the owner, importer, consignee, or agent of either, the effect or tendency of which is to destroy or substantially injure an industry, efficiently and economically operated, in the United States, or to prevent the establishment of such an industry, or to restrain or monopolize trade and commerce in the United States, are hereby declared unlawful, and when found by the President to exist shall be dealt with (emphasis added). (13)

      As stated in the statutory text, Section 316 of the Tariff Act of 1922 empowered the President with the ability to determine whether unfair methods of competition exist,. When such conditions are found to the President's satisfaction, the Act enabled the President to "deal with" those instances by implementing a number of available remedies. (14)

      To enforce this broadly defined protection for American businesses, Section 316 empowered the President with two remedy options. First, the President was able to "determine the rate of additional duty, not exceeding 50 nor less than 10 per centum of the value of such articles ... which will offset such [unlawful] method or act." (15) Second, Section 316 permitted the President to exclude violating products from entry into the United States when he was "satisfied ... extreme cases of unfair methods or acts [existed]." (16) While the Senate Committee Report promoted the flexibility provided by Section 316, (17) the idea of giving the President power to exclude items from import, even when limited to "extreme" cases, was still considered controversial at the time. (18)

      In addition to vesting power in the President, the Tariff Act of 1922 also tasked the United States Tariff Commission (a precursor of the present day USITC) with "assisting] the President in making any decisions under [Section 316]." (19) As such, the Tariff Commission fulfilled a supporting role, being given the necessary powers to investigate alleged violations, but yielding to the President for a final decision. (20)

      Upon receiving the Tariff Commission's recommendations under Section 316, the President is able to accept the recommendations, reject the recommendations, or create his own findings based upon the collected evidence. (21) One unique element of the system under Section 316 was that while the President's decision was not subject to judicial review, the accused party was given an opportunity to appeal the Tariff Commission's recommendation to the Court of Customs Appeals before the recommendation was submitted to the President. (22)

   2. Tariff Act Of 1930

      The Tariff Act of 1930 marked the next major statutory step for the Review Power established by Section 316. Specifically, the Tariff Act of 1930 repealed the Tariff Act of 1922 and replaced Section 316 with Section 337. (23) Under the Tariff Act of 1930, Section 337 retained many of the same provisions as the older Section 316 and continued to vest the decision-making power for matters regarding unfair trade in the office of the President. (24) Section 337 also retained the same operative language as Section 316, (25) declaring unlawful all "methods of competition and unfair acts in the importation of articles into the United States" that tend to "injure an industry, efficiently and economically operated, in the United States, or to prevent the establishment of such an industry, or to restrain or monopolize trade and commerce in the United States." (26)

      While the Tariff Act of 1922 was, itself, considered a change from earlier free-trade theory to a more protectionist trade theory, (27) the Tariff Act of 1930 advanced the protectionist theory even further. (28) Particularly, the Tariff Act of 1930 eliminated the President's ability to impose additional duties on violating items, leaving only one remedy--exclusion--for Section 337 violations. (29) To justify this change in policy, the Senate Committee on Finance reported "the imposition of penalty duties to offset [Section 337] violations is entirely inadequate to prevent further violations. The effective remedy is to exclude from entry the articles concerned in the violation." (30)

      The Tariff Commission's responsibilities remained unchanged under the Tariff Act of 1930. Similar to the duties prescribed in the Tariff Act of 1922, the Tariff Commission was tasked with "assisting] the President in making any decisions under [Section 337]." (31) However, the ability for the accused party...