CHAPTER 8
National Lawmaking Powers and
the Regulation of U.S. Trade
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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 
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Political Context
• 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?
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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.
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• President (Art. 2).
• Treaty power, inherent
executive powers, act as
commander in chief,
powers delegated by
congress.
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President’s Powers and Limitations
•
•
•
•
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”?
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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 ).
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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.
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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 congressionalexecutive agreements.
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Sole Executive Agreement:
Dole v. Carter
• 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?
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Sole Executive Agreement:
Dole v. Carter
• Holding: No. This was not a treaty but an
executive agreement made pursuant to the
President’s Constitutional inherent
executive authority.
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U.S. Trade and Tariff Legislation
• Smoot-Hawley Tariff Act of 1930.
– Raised tariffs so high, there was international
retaliation. Some say it exacerbated the Great
Depression.
• The Reciprocal Trade Agreements Act of 1934.
– Introduced Most Favored Nation status (now known as
Normal Trade Relations).
– See the Star-Kist Foods, Inc. v. United States case.
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More Recent U.S. Trade Legislation
• Trade Expansion Act of 1962.
– Created office of the U.S. Trade Representative.
• Trade Reform Act of 1974.
– Replaced most of 1962 law, giving more power to the President.
• Trade Agreements of 1979.
• Trade and Tariff Act of 1984.
• Omnibus Trade and Competitiveness Act of 1988.
– NAFTA.
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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).
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Trade Promotion Authority
• Trade Negotiation Objectives.
• Emergency powers.
• Expanded Powers.
– Trading with the Enemy Act.
– International Emergency Economic Powers Act (IEEPA)
1977- basis of economic sanctions. See the United
States v. Lindh case based on executive orders from
Presidents Clinton and Bush. 
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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.
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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.
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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).
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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.
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Commerce Clause and Multiple Taxation
• State income tax of multinational corporations.
• What about state restrictions on exports and
imports?
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Federal Agencies Affecting Trade
• 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.
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Federal Agencies Affecting Trade
• International Trade Commission or ITCbipartisan, investigate trade disputes.
• Secretary of State.
• U.S. Court of International Trade .
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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.
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