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1 Court Questions President's Tariff Action 1 (1958)

handle is hein.trade/cqstfat0001 and id is 1 raw text is: f T 1/ 41, 1885 7 OCTOBER 1958 Court Questions President's Tariff Action The escape clause provisions of the Trade Agreements Act have had a 7-year statutory life free of judicial inter- pretation or interference. This charmed existence came to an abrupt end on October 6, when the Customs Court in New York de- clared that the President and the U. S. Tariff Commission had both acted extra-legally in the conduct of the escape clause case of 1955 raising rates on bicycle imports. The United States, which was the defendant in the suit, has decided to appeal the decision to the United States Court of Customs and Patent Appeals which could, of course, overrule the lower court's decision. However and whatever the result of the appeal, the President, primarily, and the Tariff Commission, sec- ondly, will be particularly circumspect in the handling of future escape clause cases. For doubts have been now raised by a competent court as to basic assumptions in the law. By declaring void a proclamation of the Presi- dent, that court has announced to the Congress, the Exec- utive Branch, the foreign trading fraternity and domestic producers that the President's discretion under the escape clause may be more limited than originally intended or commonly supposed. The legality of a number of other escape clause proc- lamations has thereby been clouded and it is anybody's guess what will happen to future cases. There is also the question whether Congress will want to amend the law so that, whatever the ultimate court decision, the legislative intent is clearly enunciated and the President's discretion either positively limited or exactly defined. The Customs Court's history-making decision invali- dated the Presidential proclamation in the 1955 bicycle escape case on two main grounds: (1) The Court unanimously found that the Presiden- tial directive hiking U. S. tariff rates on certain types of bicycle imports was based on an escape clause investiga- tion which was improperly conducted by the Tariff Com- mission because the latter exceeded the statutory deadline of nine months then called for in conducting the probe. The investigation, the Court held, consisted of a supple- mentary study held without abiding by the necessary procedural requirements which call for due public notice and public hearing. (In the Trade Agreements Extension Act of 1958 which was enacted into law on August 20, Congress nar- rowed from nine to six months the statutory deadline for completing escape clause investigations.) (2) The Court, in a majority opinion, also decided that the Presidential proclamation modified. the Tariff Commission recommendations and thereby failed to com- ply with what the Court has interpreted as a statutory limitation in the trade agreements law under which the President must either totally accept or reject Commission escape clause recommendations. Judges Charles D. Lawrence, Paul P. Rao and Morgan Ford of the U. S. Customs Court concurred on Point 1 while Judge Rao entered a dissenting opinion on Point 2. He held that the President's discretionary powers under the trade agreements statute permitted him to modify Commission escape recommendations. Plaintiffs in the bicycle court case were Schmidt Prit- chard & Co., and Mangano Cycles Co., importers, who brought their claim against the U. S. Government as defendant. Background of Bicycle Court Case The significance of the case was acknowledged by Judge Lawrence who observed in his opening statement that the cause of action thereunder presented a problem of far-reaching importance and that the case naturally has a direct impact not only upon our domestic economy, but upon international trade as well, to the extent that both are affected by the dutiable status of a commodity which is the subject of extensive importation, manufac- ture, and trade. The Tariff Commission investigation on bicycles and the subsequent Presidential proclamation, both of which the Customs Court has now ruled invalid, were based on an escape clause application initially filed with the Com- mission on June .14, 1954 by the 'Bicycle Manufacturers (Continued on pa e 2)

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