Friday, October 12, 2018

Withdrawing from NAFTA: Legislative v. Presidential Constitutional Powers

Whether it’s NAFTA or a new United States-Mexico-Canada Agreement, the fast track scheme makes clear what roles the President and Congress play in getting into those congressional-executive trade agreements.

But the statutes that set up the fast track framework don’t say much about the branches’ respective roles in getting out. As I outlined here, the best reading is that the framework doesn’t give unilateral withdrawal authority to the President and instead requires that he act in consultation with Congress.

That conclusion is supported by an understanding of the constitutional allocation of authority over trade between Congress and the President. While both have a role to play, Congress takes the lead. The President’s powers over foreign affairs are limited by express or implied congressional intent.

Circling back to the statutes, congressional intent to retain a consultative role in withdrawal or termination from trade agreements is either express or implied in the fast track scheme, foreclosing unilateral presidential withdrawal.

Foreign Commerce v. Foreign Affairs

The Supreme Court has long recognized that the President is the “voice” of the United States, based on the power to act as commander-in-chief, to appoint ambassadors, and to make treaties. In the landmark case of United States v. Curtiss-Wright Export Corporation, the Court said that, in the arena of foreign affairs, the President alone has the power to speak or listen as a representative of the nation,” and Congress itself is powerless to invade [this realm].”

This “sole organ” or “one voice” doctrine is not unlimited, however. In a more recent case, Zivitofsky ex rel. Zivitofsky v. Kerry, the Court in 2015 emphasized that Congress also had an important role in foreign affairs: “In a world that is ever more compressed and interdependent, it is essential the congressional role in foreign affairs be understood and respected. For it is Congress that makes laws, and in countless ways its laws will and should shape the Nation's course. The Executive is not free from the ordinary controls and checks of Congress merely because foreign affairs are at issue.”

In another case, Medellín v. Texas, the Court in 2008 set aside a presidential memorandum purporting to implement a decision by the International Court of Justice. The ICJ decision was based on a non-self-executing treaty, which means that treaty obligations have to be implemented into U.S. law by Congress. The Supreme Court held that Congress, not the President, had the authority to implement those obligations.

The Commerce Clause of the Constitution, Article 1, Section 8, clause 3, gives Congress the power “to regulate Commerce with foreign Nations.” The Supreme Court has extended the “one voice” doctrine to support broad powers of Congress, not the President, in regulating foreign commerce. In Michelin Tire Corporation v. Wages, the Court reasoned that “[t]he need for federal uniformity is no less paramount in ascertaining the negative implications of Congress’ power to ‘regulate Commerce with foreign Nations’ under the Commerce Clause.”

Overlap in Congressional and Executive Powers: The Youngstown Framework

Of course, there is no bright line indicating where the legislative power to regulate foreign commerce ends and the presidential power over foreign affairs begins. The Supreme Court has recognized a “tie-breaker” test to decide where the President can step in to areas otherwise allocated to congressional lawmaking authority.

In Youngstown Sheet & Tube Co. v. Sawyer, Justice Jackson’s often-cited concurrence recognized three potential areas of Presidential action: (1) where the President acts in accordance with the express or implied will of Congress; (2) where the President acts in an area where Congress has not spoken; and (3) where the President acts incompatibly with the express or implied will of Congres.

Unilateral presidential withdrawal from NAFTA is almost certainly not in category (1). It might be in category (3), based on arguments outlined here.

But if a court doesn’t think the fast track framework implies a specific congressional desire to foreclose unilateral presidential withdrawal, then the matter would fall into category (2), action by the President where Congress has been silent.

But a category (2) analysis doesn’t help the President either. The Supreme Court in Medellín considered and rejected the argument that the President might rely on his independent foreign affairs powers to implement the ICJ decision even where Congress had not executed it. The Court held that such independent presidential action may derive only from “‘a systematic, unbroken, executive practice, long pursued to the knowledge of the Congress and never before questioned.’”  The Court cited by way of example its approval of the practice of executive claims settlement, a 200-year-old practice that had received congressional acceptance throughout its history.

A Brief History of Trade Dealing (and That Awkward Business of Withdrawal)

Far from having a 200-year pedigree, unilateral presidential withdrawal from trade agreements is unprecedented. The following history is adapted from a fuller discussion in Withdrawing from NAFTA, which is forthcoming in Georgetown Law Journal.

Early trade policy was simply tariff policy: Congress passed statutes setting tariffs on key imports. Beginning in 1890, things became more complex, as Congress included provisions in its tariff acts that gave the President authority, either expressly or by operation, to adjust certain tariffs through negotiations with trade partners in order to obtain better treatment of U.S. exports.

Some statutes specifically allowed the President to enter into commercial treaties for tariff breaks. For example, the Dingley Tariff of 1897 authorized the President to make treaties lasting up to five years that would lower duties by up to twenty percent or completely eliminate tariffs on any products that the U.S. did not produce in quantity, such as products of tropical agriculture. The effect of provisions like this one was to induce foreign sovereigns, worried about potential tariff hikes, to negotiate and strike deals with the United States to avoid being punished.

Exiting Trade Deals Under the Old Tariff Laws

Most tariff statutes between 1890 and 1930 possessed some type of reciprocity or flexibility provision. This presented an obvious question when Congress passed the next tariff act and removed the previous Presidential authority: What was to become of the agreements entered into by the Executive pursuant to that old authority?

This question vexed Congress when it passed the Wilson-Gorman Act of 1894, which repealed the reciprocity provisions of the McKinley Act of 1890. Congress attempted to preserve the existing agreements, but the Executive insisted to trade partners that it no longer had the authority to honor them. In an 1894 letter from Secretary of State Walter Q. Gresham to the Brazilian foreign minister, Gresham said, “I think that the reciprocity arrangement between Brazil and the United States was terminated by the going into force of our existing tariff law, and I do not think the executive department can act upon any other theory. That is the view of the Secretary of the Treasury.”

In other tariff acts, Congress clearly expressed the view that it had the competence to terminate the agreements as a function of its tariff-making power. For example, in the Payne-Aldrich Tariff Act of 1909, Congress directed the President to withdraw from trade agreements entered into under the Dingley Tariff. Section 4 of the Payne-Aldrich Act said, “That the President shall have the power and it shall be his duty to give notice … to all foreign countries with which commercial agreements in conformity with the authority granted by … [the Dingley Act] have been or shall have been entered into, of the intention of the United States to terminate such agreement ….”

The New Deal on Trade

More power shifted to the President with the Reciprocal Trade Agreement Act of 1930. Seeking to free himself from the strictures of the most infamous tariff act in U.S. history, the Smoot-Hawley Act of 1930, President Franklin Delano Roosevelt and his Secretary of State, Cordell Hull, sought new reciprocity authority for the President.

There appeared to be no question in Roosevelt’s or Hull’s mind that such authority must come from Congress. The Administration proposed a three-page amendment to the Smoot-Hawley Act, allowing the President to reduce tariffs by up to fifty percent in connection with a reciprocal trade deal from a negotiating partner. These tariffs would not require any form of congressional approval, but negotiating authority was limited to three years. The President could end the agreement through proclamations eliminating any tariff concessions made in the deal.

To be sure, the RTAA was a significant expansion of Presidential authority compared with the old tariff acts. Nevertheless, it was Congress – not the President – that did the expanding.

Delegated Power in the Modern Congressional-Executive Agreement

By 1973, the tariff-making authority bestowed on the President by the RTAA was insufficient to make modern trade agreements. To deal with modern concerns over non-tariff trade barriers, something more than traditional “tariff proclamation” authority was needed.

Congress immediately recognized a constitutional dilemma: how to expand the powers of the President but not to “abrogate Congress’s constitutional powers over international trade or ignore those barriers’ impact on the people of the United States.”

Congress fashioned a solution in the Trade Act of 1974. On the one hand, Congress authorized the President for a specific period of time to negotiate trade agreements extending beyond tariff proclamations to include non-tariff barriers and other issues, such as subsidies.

But Congress emphasized that these powers were an express delegation of authority from Congress to the President, and therefore subject to numerous procedural requirements to ensure legislative oversight and input into the process. As the report of the House Ways and Means Committee stated, “it is important to stress that the achievement of these objectives entails a substantial delegation of congressional authority. Accordingly, the bill makes certain procedural reforms, both in terms of the development of an appropriate oversight role for the Congress and in terms of providing a focal point in the executive branch for carrying out the trade policies jointly agreed upon by the Congress and the President.”

While the Trade Act of 1974 does not detail the respective roles of the political branches in withdrawing from trade agreements (a problem the Congress would do well to address if it implements the new USMCA, as discussed here), the history of that Act clearly indicates that Congress continued to believe that presidential power over trade deals was delegated and conditioned by Congress.

Back to the Future of NAFTA

Based on this historical practice of highly conditioned presidential authority over both entry into and exit from trade deals, it cannot be argued that unilateral presidential withdrawal enjoys “‘a systematic, unbroken, executive practice, long pursued to the knowledge of the Congress and never before questioned.’”

To the contrary, unilateral presidential withdrawal is better understood to be either incompatible with the implied will of Congress or, at best, an exercise of presidential power where Congress has not spoken on the issue. In either case, a Youngstown analysis does not support unilateral presidential withdrawal from congressional-executive agreements like NAFTA.

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