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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