Michigan Journal of International Law Volume 10 Issue 3 1989 Political Questions in International Trade: Judicial Review of Section 301? Erwin P. Eichmann Gary N. Horlick Follow this and additional works at: https://repository.law.umich.edu/mjil Part of the Courts Commons, International Trade Law Commons, Legislation Commons, and the President/Executive Department Commons Recommended Citation Erwin P. Eichmann & Gary N. Horlick, Political Questions in International Trade: Judicial Review of Section 301?, 10 MICH. J. INT'L L. 735 (1989). Available at: https://repository.law.umich.edu/mjil/vol10/iss3/1 This Article is brought to you for free and open access by the Michigan Journal of International Law at University of Michigan Law School Scholarship Repository. It has been accepted for inclusion in Michigan Journal of International Law by an authorized editor of University of Michigan Law School Scholarship Repository. For more information, please contact [email protected]. POLITICAL QUESTIONS IN INTERNATIONAL TRADE: JUDICIAL REVIEW OF SECTION 301? Erwin P. Eichmann and Gary N. Horlick Section 301 of the Trade Act of 1974 ("Section 301")' has become an increasingly potent and widely-used tool in the U.S. arsenal of trade policy measures. The past few years have seen a proliferation of Sec- tion 301 cases, affecting the trade of goods and services in Europe, Asia, and Latin America. Even so, in the debate over the Omnibus Trade and Competitiveness Act of 1988 ("Omnibus Trade Act"), Con- gress expressed impatience with the President's discretion in not un- dertaking more Section 301 retaliations. 2 But while much attention has focused on the politics and policy aspects of Section 301, little has been discussed of the legal issues underpinning it. Section 301 provides the President with broad authority to take trade action against unfair foreign conduct. This fact, and experience under Section 301, have promoted the perception that Congress effec- tively abdicated its constitutional power over foreign commerce to the President. But Congress certainly did not grant the President un- checked powers over foreign trade. Quite the contrary, a closer exami- nation of Section 301's statutory provisions reveals that Congress expressly limited the exercise of the President's authority to specific circumstances, particularly those which meet certain statutory defini- tions. Under Section 301, the President may grant relief only from "unfair" foreign trade practices. Since Congress has authorized action only to rectify these specific foreign trade practices, the President may be without authority if the foreign conduct falls outside of the statu- tory definitions. Because the President cannot undertake peacetime (i.e., nonemergency) trade action without Congressional authoriza- tion, the President would have to rely on other statutory grants of authority to impose any other action he may wish to take. This article will argue that U.S. courts may be able to review Executive Branch determinations of the "fairness" of foreign trade conduct as these de- 1. Trade Act of 1974, tit. III, § 301, Pub. L. No. 93-618 (current version at 19 U.S.C. § 2411 (1982)). 2. Bello & Holmer, The Heart of the 1988 Trade Act: A Legislative History of the Amend- ments to Section 301, 25 STAN. J. INT'L L. 1, 10 (1988). Michigan Journal of International Law (Vol. 10:735 terminations form the basis for Presidential authority under Section 301. A major obstacle to judicial review of Section 301, though, is the political question doctrine. Under this label, courts will not adjudicate "political" issues: those which are nonjusticiable or would embarrass the President in the conduct of foreign relations. This article will ana- lyze the justiciability of the unfairness definitions and conclude that while some of the criteria are easily justiciable, others may not be. However, even if some of the statutory criteria are nonjusticiable, a court may sever those questions that are nonjusticiable and continue its review. Secondly, the analysis will reveal that the need for finality of United States actions in foreign affairs causes the greatest political question difficulties, but does not undercut the entire basis of judicial reviewability. Another obstacle to judicial review is the state secrets doctrine. Under this doctrine, courts will not intrude into certain areas of na- tional defense. This article will argue that courts can follow Supreme Court precedent and use their discretion to separate state secrets from trade matters and adjudicate questions of unfair trade conduct. Section 301 carefully limits the President's discretion in setting trade policy. Thus, the statutory criteria of Section 301 fall within that category of questions that courts will review. The first section of this article describes the limits of the President's authority under Sec- tion 301. The second and third sections demonstrate that while polit- ical question, jurisdictional, and state secrets issues provide some serious questions, incantation of "foreign affairs" alone is not enough to prevent judicial review. I. THE NECESSITY FOR CONGRESSIONAL AUTHORIZATION OF EXECUTIVE TRADE ACTION The President does not have an unlimited, unbridled foreign affairs power.3 While the President may have a certain "very delicate, ple- nary and exclusive power" in the field of international relations, 4 Con- gress has explicit constitutional powers to "regulate Commerce with 3. L. HENKIN, FOREIGN AFFAIRS AND THE CONSTITUTION, 64-65 (1972). As Justice Jack- son wrote in his concurring opinion to Youngstown Sheet & Tube Co. v. Sawyer: The example of such unlimited executive power that must have most impressed the forefa- thers was the prerogative exercised by George II1, and the description of its evils in the Declaration of Independence leads me to doubt that they were creating their new Executive in his image. 343 U.S. 579, 641 (1952) (cited with approval in Dames & Moore v. Regan, 453 U.S. 654, 662, (1981)). 4. United States v. Curtiss-Wright Export Corp., 299 U.S. 304, 319-320 (1936). Summer 1989] Political Questions In International Trade foreign Nations" and to "lay and collect Taxes, Duties, Imports and Excises." 5 Most commentators have interpreted this constitutional balance so as to limit the Presidential power over peacetime interna- tional trade to that available under an explicit or implicit grant from Congress. The Supreme Court has examined the limits of Congressional and Executive powers in Youngstown Sheet and Tube v. Sawyer.6 In that case, the Court invalidated President Truman's siezure of domestic steel mills, even though Truman claimed that the continued operation of the mills was necessary for the Korean War effort. Writing for the court, Justice Black found that "[tihe President's power, if any, to is- sue the order must stem from either an act of Congress or the Consti- tution itself."' 7 Thus, under the reasoning of Black's majority opinion, the President can only undertake such trade retaliation as Congress or the Constitution has authorized. Elaborating on Black's limitation of the President's powers, Justice Jackson, in an oft-quoted concurrence to Youngstown, identified three types of Presidential action. In the first category, as in the majority opinion, "[w]hen the President acts pursuant to an express or implied authorization of Congress, his authority is at its maximum, for it in- cludes all that he possesses in his own right plus all that Congress can delegate." 8 Without Congressional authorization, Presidential action 5. U.S. CONST. art. I, § 8, cl. 1, 3. 6. 343 U.S. 579 (1952). 7. Id. at 585. The Court's rationale for overturning the President's order appears to overturn Justice Sutherland's dictum that gave the President an independent foreign relations power. Cur- tiss- Wright, supra note 4, at 319-20. Sutherland had based the President's foreign relations power on a transfer of sovereignty from the King of England to the President of the United States. Justice Black, by finding that the President's power may only come from Congress or the Consti- tution, implicitly overruled Sutherland's view of the President attaining power through the pas- sage of sovereignty. However, Black never explicitly mentions or cites Curtiss-Wright, even though it had been decided only sixteen years earlier. 8. Youngstown, supra note 3, at 635. See Dames & Moore v. Regan, 453 U.S. 654, 670-89 (1981), where Justice Rehnquist minutely analyzed the Congressional intent behind the Interna- tional Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. § 1702 (Supp. V 1987), and the Hostages Act in upholding the President's settlement of the Iran hostage crisis. The Court evi- dently would rather find Congressional authorization for the President's foreign affairs powers than analyze a clash of authorizations. See also Rehnquist and Stewart's comments during the oral argument of Dames & Moore. Rehnquist was concerned that an unlimited foreign affairs power would allow the President to negate provisions of the Bill of Rights. He asked, "What if the agreement provided that for one year no one should criticize the Ayatollah?" The attorney for Iran replied, "Then the United States would be obliged to attempt to accomplish that." Furthermore, as the Solicitor General's theory of Presidential power appeared to provide no limits, Justice Powell remarked, "[t]he Pres- ident could have exchanged you [Solicitor General Rex Lee] for one of the hostages - you or me." N.Y. Times, June 25, 1981, at D3, col. 1,