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61 A.B.A. J. 652 (1975)
Current Legal Literature

handle is hein.journals/abaj61 and id is 654 raw text is: Current Legal Literature by Arthur John Keeffe Consumers Union Loses Its Steel Appeal T HE federal courts and the Congress have given their blessings to the president to negotiate trade restraints with foreign companies. This approval doubtless gave a sigh of relief to for- eign and domestic steel producers and State Department officials (including Henry Kissinger) who had been named as defendants in a civil action brought by a consumers' organization alleging violation of the foreign trade and antitrust laws (Consumers Union of the United States v. Kissinger, 506 F. 2d 136 (D.C. Cir. 1974)). In a two-to-one decision, the Court of Appeals for the District of Columbia Circuit (Judge Carl McGowan writing for himself and Senior Judge John A. Daraher, with Judge Harold Leventhal in dissent), affirmed a district court ruling that the president may arrange voluntary restraint agreements with foreign steel producers without invad- ing powers reserved to the Congress. The plaintiff's antitrust complaint had been dismissed with prejudice in the district court of Judge Gerhard Gesell. The court of appeals decision vacated the lower court's suggestion that these restraints might violate United States antitrust laws. A few weeks after the court of appeals ruled, Congress enacted the Trade Act of 1974 (Public Law 93- 618), with a section providing that no person shall be held liable for damages or other sanctions under federal anti- trust statutes or state laws for their participation in the steel arrangement. The provision apparently immunizes the defendants from any liability under federal or state laws. The original complaint, which was filed in Judge Gesell's district court in May, 1972, alleged that high offi- cials of the executive branch, acting without authority, had obtained a marketing agreement with domestic and foreign steel producers in violation of the Sherman Act and had exceeded the authority of the executive. The plaintiff was Consumers Union, a non- profit consumer organization with three hundred and fifty thousand members. Its standing to sue, among other things, was based on the construction of its new home office with 170 tons of structural steel. Defendants in the action were Wil- liam P. Rogers, then secretary of state (Dr. Kissinger was later substituted); Julius L. Katz, the deputy assistant secretary of state for economic affairs; United States Steel Corporation; the American Iron and Steel Institute; the Japan Iron and Steel Exporters Associ- ation; Nippon Steel; Fried Drupp Huttenwerke, A.G., as well as other unnamed coconspirators in the govern- ment and among American, Euro- pean, and Japanese steel companies. Defendants were represented by a brigade of attorneys from the depart- ments of State and Justice as well as a dozen or more of the largest law firms of New York and Washington. Plaintiff's counsel were two lawyers from the Center for Law and Social Policy. The heart of Consumer Union's complaint was that the defendants had negotiated an agreement under which foreign steel producers agreed to limit and apportion their exports of steel and steel products to the United States market. Plaintiff's original complaint stated two clains: that the agreement was a restraint of trade in violation of the Sherman Act and that the presi- dent had exceeded his authority in negotiating and obtaining such an agreement. Plaintiff subsequently stipulated to the dismissal with prejudice of its anti- trust claim and filed an amended com- plaint limited to the question of presidential power. Six months later, in a memorandum opinion, Judge Gesell declared that the executive has no authority to exempt the volun- tary restraint arrangements on steel from the antitrust laws but that the Executive is not preempted and may enter into agreements or diplomatic arrangements with private foreign steel concerns so long as these undertakings do not violate legislation regulating foreign commerce, such as the Sher- man Act, and that there is no require- ment that all such undertakings be first processed under the Trade Ex- pansion Act of 1962. The defendants then, appealed (and the plaintiffs cross- appealed) to the Court of Appeals for the District of Columbia Circuit. The issue in the litigation was the legality of the voluntary restraint ar- rangements on steel, which were mutu- ally agreed on in December, 1968, by steel producers as a result of negotia- tions initiated by the secretary of state at the direction of the president. Under the arrangements, which expired last year, nine Japanese steel companies, the British Steel Corporation, and various European steel manufacturers agreed to reduce the amounts and types of steel they export to the United States and to divide among themselves the market share. Between 1959 and 1968, steel im- ports rose from 4.4 million to 18 million net tons annually, increasing more than 400 per cent over the period. Imports as a percentage of United States consumption rose during the same period from 6.1 per cent to 16.7 per cent. The rise in steel imports brought growing pressure from the domestic industry for barriers to steel imports. Foreign producers voluntar- ily consented to restrain their exports here primarily to avert the growing likelihood of tariffs or quotas, choosing what seemed from their point of view the lesser evil. The decisions of the court and the Congress leave open the door to vol- untary restraint agreements in the future. 652 American Bar Association Journal

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