Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. CHAPTER 8 National Lawmaking Powers and the Regulation of U.S. Trade

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 2 Separation of Powers Drafters of U.S. Constitution places power to regulate international commerce in hands of federal government. The Executive-Legislative Debate. Legislative Power vs. Executive (Presidential) Powers 

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 3 Separation of powers and checks and balances leaves the President having to work with Congress. What if they aren’t cooperating? Consequences? What is the alternative? Role of business in this process? Political Context

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 4 Regulation of US Trade: Sharing of Power Congress to regulate commerce with foreign nations and among states (Art.1, sec. 8). Power to pass laws, declare war, collect taxes, advise and consent to treaties. President (Art. 2). Treaty power, inherent executive powers, act as commander in chief, powers delegated by congress.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 5 Power to Negotiate Treaties. Power to appoint ambassadors. Is the Commander in Chief. Inherent Executive Powers. –See the Youngstown Sheet & Tube v. Sawyer case. Powers delegated by Congress. What about the “war on terror”? What about the “Military Commissions Act of 2006”? President’s Powers and Limitations

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 6 Domestic Law Effect of U.S. Treaties Self-executing. Non-self-executing or executory. Equal Dignity Rule. –An act of Congress can override an inconsistent prior treaty. –A treaty will override an inconsistent prior act of Congress. –Statutes and treaties are of equal dignity. Treaties of Friendship, Commerce and Navigation (FCN) (see the MacNamara case  ).

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 7 McNamara v. Korean Air Lines Does the FCN Treaty between Korea and the U.S. which states that each country will be able to employ “…specialists of their choice” protect Korean Airlines from a discrimination action? Holding: Reversed and remanded for trial to determine whether discriminatory treatment was intentional.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 8 Executive Agreements International agreements between the President and a foreign country, entered into without resort to the treaty process. –Binding, and have the effect of law. –There are two types: sole executive agreements (see the Dole v. Carter case  ) and congressional- executive agreements.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 9 Facts: President Carter made an agreement to return regalia to Hungary. Issue: Did the President exceed his Constitutionally granted authority by entering into a treaty with Hungary without the advice and consent of the Senate? Sole Executive Agreement: Dole v. Carter

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 10 Holding: No. This was not a treaty but an executive agreement made pursuant to the President’s Constitutional inherent executive authority. Sole Executive Agreement: Dole v. Carter

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 11 U.S. Trade and Tariff Legislation Smoot-Hawley Tariff Act of –Raised tariffs so high, there was international retaliation. Some say it exacerbated the Great Depression. The Reciprocal Trade Agreements Act of –Introduced Most Favored Nation status (now known as Normal Trade Relations). –See the Star-Kist Foods, Inc. v. United States case.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 12 More Recent U.S. Trade Legislation Trade Expansion Act of –Created office of the U.S. Trade Representative. Trade Reform Act of –Replaced most of 1962 law, giving more power to the President. Trade Agreements of Trade and Tariff Act of Omnibus Trade and Competitiveness Act of –NAFTA.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 13 Trade Agreements GATT (1974 and 1994). North American Free Trade Agreement-NAFTA (1992). China Bilateral Market Access Agreement. Central American Free Trade Agreement – CAFTA (2006). Middle Eastern Free Trade Initiative (2004 – present).

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 14 Trade Promotion Authority Trade Negotiation Objectives. Emergency powers. Expanded Powers. –Trading with the Enemy Act. –International Emergency Economic Powers Act (IEEPA) basis of economic sanctions. See the United States v. Lindh case based on executive orders from Presidents Clinton and Bush. 

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 15 U.S. v. Lindh Issue: Did the Executive Orders under IEEPA that prohibited transactions with terrorists groups including Al Qaeda apply to the American who was caught in Afghanistan with the Taliban fighters after 9/11? Holding: The Court upheld the validity of the order and the application to Lindh. He then pleaded guilty and was sentenced to 20 years.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 16 Federal-State Relations Following clauses in the U.S. Constitution impact international trade: –The “Supremacy” clause (federal preemption). –The “Import-Export” clause. –The “Commerce” clause.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 17 Myanmar, Human Rights and Preemption 1996 MA. Sought to ban business with Myanmar by law. 1997, Federal Executive order placing restrictions on investing in Myanmar. Crosby v. National Foreign Trade Council : U.S. Supreme Court struck down Mass. law on basis of preemption (2000).

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 18 Commerce Clause and Taxation Japan Line Ltd. v. County of Los Angeles ruled that an ad valorem property tax applied to cargo containers used exclusively in foreign commerce violates the Commerce Clause because it results in multiple taxation of instrumentalities of foreign commerce.

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 19 Commerce Clause and Multiple Taxation State income tax of multinational corporations. What about state restrictions on exports and imports?

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 20 Dept. Of Commerce (includes control of exports as well as International Trade Administration or ITA, Bureau of Industry and Security). Dept. of Homeland Security. Dept. Of Treasury. USTR. Federal Agencies Affecting Trade

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 21 International Trade Commission or ITC- bipartisan, investigate trade disputes. Secretary of State. U.S. Court of International Trade . Federal Agencies Affecting Trade

Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. 22 U.S. Court of International Trade Trade and tariff law cases Actions against the U.S. involving revenue from imports, tariffs, embargoes or quantitative restriction (except for health and safety) and enforcement of customs laws.