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Presidential Tariff Authority

Published online by Cambridge University Press:  14 January 2018

John K. Veroneau  and
Catherine H. Gibson
John K. Veroneau
Affiliation:
Partner in the International Trade Practice Group at Covington & Burling LLP.
Catherine H. Gibson
Affiliation:
Associate focused on international arbitration and trade-related issues at Covington & Burling LLP.
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Extract

As part of the “America First” agenda discussed in his inaugural address, President Donald J. Trump promised that “[e]very decision” on trade, among other areas, would be “made to benefit American workers and American families.” During its first months, the Trump Administration made a number of trade moves apparently in connection with this “America First” trade agenda, including initiating national security investigations into steel and aluminum imports under Section 232 of the Trade Expansion Act of 1962 and preparing an “omnibus” report on trade deficits. The Trump Administration also took steps to alter U.S. treaty relationships, by withdrawing from the Trans-Pacific Partnership Agreement, announcing the renegotiation of the North American Free Trade Agreement, and requesting a special session of a joint committee created under the United States-Korea Free Trade Agreement. In August 2017, President Trump continued this course—and indicated a willingness to take unilateral action against U.S. trading partners—by signing a presidential memorandum directing the United States Trade Representative to determine whether China's treatment of U.S. intellectual property warranted investigation under Section 301 et seq. of the Trade Act of 1974.

Type
Notes and Comments
Information
American Journal of International Law , Volume 111 , Issue 4 , October 2017 , pp. 957 - 969
Copyright
Copyright © 2018 by The American Society of International Law 

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References

1 Remarks of President Donald J. Trump – As Prepared for Delivery, Inaugural Address (Jan. 20, 2017), at https://www.whitehouse.gov/inaugural-address.

2 See Presidential Memorandum for the Secretary of Commerce, Steel Imports and Threats to National Security (Apr. 20, 2017), at https://www.whitehouse.gov/the-press-office/2017/04/20/presidential-memorandum-secretary-commerce; Presidential Memorandum for the Secretary of Commerce, Aluminum Imports and Threats to National Security (Apr. 27, 2017), at https://www.whitehouse.gov/the-press-office/2017/04/27/presidential-memorandum-secretary-commerce.

3 Executive Order No. 13786, Omnibus Report on Significant Trade Deficits, 82 Fed. Reg. 16721 (Mar. 31, 2017).

4 Presidential Memorandum Regarding Withdrawal of the United States from the Trans-Pacific Partnership Negotiations and Agreement (Jan. 23, 2017), at https://www.whitehouse.gov/the-press-office/2017/01/23/presidential-memorandum-regarding-withdrawal-united-states-trans-pacific.

5 Office of the United States Trade Representative Press Release, Trump Administration Announces Intent to Renegotiate the North American Free Trade Agreement (May 2017), at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/may/ustr-trump-administration-announces.

6 See Letter of July 12, 2017 from Amb. Robert E. Lighthizer to Dr. Joo Hyunghwan, available at https://ustr.gov/sites/default/files/files/Press/Releases/USTR%20KORUS.pdf.

7 Presidential Memorandum for the United States Trade Representative (Aug. 14, 2017), at https://www.whitehouse.gov/the-press-office/2017/08/14/presidential-memorandum-united-states-trade-representative.

8 Tariff Act of 1930, ch. 497, §338, 46 Stat. 704 (codified at 19 U.S.C. §1338).

9 Id., §1338(a)(1).

10 Id., §1338(a)(2).

11 Id., §1338(d). The language is similar under paragraph (e), which authorizes new or additional rates of duty to “offset such benefits” any third country may accrue from its unreasonable trade practices, as defined in paragraph (a). Id., §1338(e).

12 Id., §1338(b).

13 Id., §1338(d)–(e).

14 Id., §1338(g).

15 Section 337, for example, mandates that “[t]he Commission shall determine … whether or not there is a violation,” 19 U.S.C. §1337(c), and the Commission's decision has legal force “upon publication thereof in the Federal Register.” Id., §1337(j)(3). Thereafter, the president may by affirmation or acquiescence approve the Commission's decision, or he may disapprove of the Commission's actions to render them with “no force or effect.” Id., §1337(j)(2). Section 336 operates in a similar manner. Under Section 336, the Commission “shall investigate the differences in the costs of production of any domestic article and of any like or similar foreign article,” and it “shall report to the President … such increases or decreases in rates of duty … necessary to equalize such differences.” 19 U.S.C. §1336(a). The president is not vested with authority to make these factual determinations. To the contrary, Section 336 states that “[t]he President shall by proclamation approve the rates of duty and changes in classification specified in any report of the commission under this section, if in his judgment such rates of duty are … necessary … .” Id., §1336(c). Moreover, Section 352 circumscribes Section 336 by excluding from its ambit articles imported pursuant to certain U.S. trade agreements. See 19 U.S.C. §1352(a).

16 19 U.S.C. §1338(g).

17 Unilateral action by the president is not barred by 19 C.F.R. §159.42, which provides that “the discriminating duties and penalties provided for in section 338, Tariff Act of 1930, supra note 8, shall be imposed only in pursuance of specific instructions from the Commissioner of Customs.” Because the Commissioner of Customs serves at the president's behest, such specific instructions could also be issued at the president's request. Moreover, this provision has not been specifically identified by the Government Printing Office as implementing legislation, thus its effect on Section 338 is unclear.

18 6 Annual Report of the United States Tariff Commission, at 4, 52 (1921–1922).

19 Id. at 4–5 (quoting the Tariff Commission's report to Congress of December 4, 1918).

20 Id. at 5 (quoting the Tariff Commission's report to Congress of December 4, 1918).

21 Id.

22 Wallace McClure, German-American Commercial Relations, 19 AJIL 689, 690 (1925) (stating that Section 317 demonstrated Congress's adoption of the Tariff Commission's recommendation that “the country's post-war commercial policy should be one of equality of treatment” as opposed to most-favored-nation treatment that was merely conditional). The same author published a book describing the development of Section 317 in the context of larger American trade policy. See Wallace McClure, A New American Commercial Policy: As Evidenced by Section 317 of the Tariff Act of 1922 (1924).

23 6 Annual Report of the United States Tariff Commission, supra note 18, at 5 (quoting the Tariff Commission's report to Congress of December 4, 1918).

24 Id. at 1–2 (quoting the president's message to Congress on December 6, 1921).

25 Id. at 6.

26 Id.

27 11 Annual Report of the United States Tariff Commission, at 2 (1926–1927). See also 13 Annual Report of the United States Tariff Commission, at 46 (1928–1929) (stating that Section 317 “covers discriminations ‘in fact’ of all varieties, whether in customs duties or other charges, or in classifications, prohibitions, restrictions, or regulations of any kind”).

28 Executive Order No. 3746 (Oct. 7, 1922).

29 7 Annual Report of the United States Tariff Commission, at 53 (1922–1923).

30 Id.

31 Id.

32 Id. at 54.

33 Id. at 55.

34 13 Annual Report of the United States Tariff Commission, supra note 27, at 243.

35 Id.

36 Id. at 30.

37 Advisory Board's Memorandum on the Application from the Interstate Cotton Seed Crushers’ Association, May 12, 1923 & Supplemental Memorandum on the Application from the Interstate Cotton Seed Crushers’ Association, June 4, 1923, RG81 Records of the U.S. International Trade Commission, Records Relating to Investigations Under Sections 315, 316, 317 & 318 of the Tariff Act of 1922, Box No. 126.

38 Supplemental Memorandum on the Application from the Interstate Cotton Seed Crushers’ Association, June 4, 1923, RG81 Records of the U.S. International Trade Commission, Records Relating to Investigations under Sections 315, 316, 317 & 318 of the Tariff Act of 1922, Box No. 126.

39 Memorandum for the Advisory Board, April 21, 1923, RG81 Records of the U.S. International Trade Commission, Records Relating to Investigations Under Sections 315, 316, 317 & 318 of the Tariff Act of 1922, Box No. 126.

40 Letter from the Chairman of the Tariff Commission to A. Kipstein & Company dated November 21, 1922, RG81 Records of the U.S. International Trade Commission, Records Relating to Investigations Under Sections 315, 316, 317 & 318 of the Tariff Act of 1922, Box No. 126.

41 Press Notice – United States Tariff Commission, December 17, 1924, RG81 Records of the U.S. International Trade Commission, Records Relating to Investigations Under Sections 315, 316, 317 & 318 of the Tariff Act of 1922, Box No. 126.

42 Id.

43 7 Annual Report of the United States Tariff Commission, supra note 29, at 42.

44 Id.

45 Id.

46 8 Annual Report of the United States Tariff Commission, at 7 (1923–1924).

47 10 Annual Report of the United States Tariff Commission, at 34 (1925–1926); 11 Annual Report of the United States Tariff Commission, supra note 27, at 30; 13 Annual Report of the United States Tariff Commission, supra note 27, at 47.

48 10 Annual Report of the United States Tariff Commission, supra note 47, at 34.

49 8 Annual Report of the United States Tariff Commission, supra note 46, at 7.

50 Id.; 7 Annual Report of the United States Tariff Commission, supra note 29, at 43; 9 Annual Report of the United States Tariff Commission, at 10 (1924–1925); 10 Annual Report of the United States Tariff Commission, supra note 47, at 34.

51 8 Annual Report of the United States Tariff Commission, supra note 46, at 7.

52 Id.

53 13 Annual Report of the United States Tariff Commission, supra note 27, at 47.

54 72 Cong. Rec. 12325.

55 14 Annual Report of the United States Tariff Commission, at 2 (1929–1930) (“Section 338 takes the place of section 317 covering discriminations by foreign governments against the commerce of the United States. The only important modification of this section as reenacted is the extension of its application to articles imported in vessels of such foreign countries as discriminate against the commerce of the United States.”).

56 18 Annual Report of the United States Tariff Commission, at 16 (1933–1934).

57 21 Annual Report of the United States, at 38 (1936–1937) (“In the past year, the Commission conducted one preliminary inquiry pursuant to application, but concluded that the institution of a formal investigation in the case was not warranted.”).

58 25 Annual Report of the United States Tariff Commission, at 43 (1940–1941).

59 15 Annual Report of the United States Tariff Commission, at 111 (1930–1931).

60 19 C.F.R. §201.1 (1961). The 1962 amendment of this language does not reveal the reason that this sentence was omitted. See 27 Fed. Reg. 12118.

61 20 Annual Report of the United States Tariff Commission, at 47 (1935–1936).

62 Williams, Benjamin H., The Coming of Economic Sanctions into American Practice , 37 AJIL 386, 389 (1943)CrossRefGoogle Scholar (stating that the reason for this action against Germany was that it “did not allocate a fair amount of foreign exchange for the purchase of goods from the United States”).

63 25 Annual Report of the United States Tariff Commission, supra note 52, at 44 (“Since 1922, when this retaliatory power was conferred on the President by the tariff act of that year, no action by this Government against foreign discrimination under this law has been carried as far as the imposition of penalty duties.”).

64 Williams, supra note 62, at 386, 389.

65 See Memorandum by the Chief of the Division of Western European Affairs (Boal) of a Conversation with the French Commercial Attaché (Garreau-Dombasle), Washington, 651.116.320 (Apr. 18, 1932).

66 See id.

67 See The Acting Secretary of State to the Ambassador in France (Edge), Washington, 651.116/308: Telegram (Apr. 23, 1932).

68 See The Secretary of State to the Chargé in France (Armour), Washington, 651.5531/57: Telegram (July 15, 1932).

69 See The Ambassador in France (Edge) to the Secretary of State, Paris, 651.116.355: Telegram (May 31, 1932).

70 See The Ambassador in France (Edge) to the Secretary of State, Paris, 811.512351 Double/126: Telegram (Apr. 24, 1932).

71 See The Acting Secretary of State to the Ambassador in Spain (Laughlin), Washington, 611.5231/742: Telegram (Oct. 10, 1932).

72 See The Ambassador in Spain (Laughlin) to the Secretary of State, Madrid, 611.5231/743: Telegram (Oct. 15, 1932).

73 See Memorandum by the Chief of the Division of Far Eastern Affairs, Washington, 611.9431/162 1/2 (Oct. 10, 1938).

74 See Memorandum by the Legal Adviser (Hackworth) to the Secretary of State, Washington, 611.9431.176 1/2 (May 26, 1939).

75 See id.

76 See Memorandum Prepared in the Department of State, 793.94/15697 (Dec. 29, 1939).

77 See The Secretary of State to the Consul at Shanghai (McConaughy), Washington, 560.AL/8-1249: Telegram (Aug. 12, 1949).

78 See id.

79 See id.

80 Hammond Lead Prods. v. United States, 306 F. Supp. 460, 472 (Cust. Ct. 1969).

81 Id.

82 H.R. Rep. No. 6767, pt. 7, at 2054 (1973).

83 Id.

84 Id.

85 MTN Studies, Agreements Being Negotiated at the Multilateral Trade Negotiations in Geneva-U.S., International Trade Commission Investigation No. 332-101, 96th Cong., 1st Sess., CP 96-27 (Aug. 1979).

86 Id. at 48.

87 U.S. International Trade Commission, Office of Inspector General's Final Report, Descriptive Evaluation of USITC's Affirmative Requirements, OIG-ER-15-02, at II.

88 Matthews, Craig, Non-Tariff Import Restrictions: Remedies Available in United States Law , 62 Mich. L. Rev. 1295, 1341–42 (1963)Google Scholar.

89 Laing, Edward A., Equal Access/Non-discrimination and Legitimate Discrimination in International Economic Law , 14 Wis. Int'l L.J. 246, 304–05 (1995)Google Scholar.

90 Caitlain Devereaux Lewis, Cong. Research Serv., Presidential Authority over Trade: Imposing Tariffs and Duties, R44707, at 3 (2016).

91 Charnovitz, Steve, Rethinking WTO Trade Sanctions , 95 AJIL 792, 797 (2001)Google Scholar.

92 Id. at 792, 807–08.

93 Panel Report, United States – Sections 301–310 of the Trade Act of 1974, paras. 7.131, 7.43, WT/DS152/R (Dec. 22, 1999).

94 Id., paras. 7.109–.126, 7.131–.136.

95 Id., para. 8.1.

96 See Dispute Settlement Rules: Understanding on Rules and Procedures Governing the Settlement of Disputes, Marrakesh Agreement Establishing the World Trade Organization, Art. 23, Annex 2, 1869 UNTS 401, 33 ILM 1226, 1241(1994).