In response to the sale by Toshiba Machine Company of Japan and Kongsberg Trading Company of Norway of advanced milling machinery to the Soviet Union, the Congress passed the Multilateral Export Control Enhancement Amendments Act. Section 2443 of that Act requires the President to impose, for a period of three years, a ban on U.S. Government contracting with and procurement from the two companies named above and their parent companies. That section also requires the President to prohibit the importation of all products produced by Toshiba Machine Company and Kongsberg Trading Company for a period of three years. The sanctions required by section 2443 were imposed by President Reagan on December 27, 1988 26 and will remain in effect until December 28, 1991.

Auto Parts

FAIR TRADE IN AUTO PArts Act of 1988

The Fair Trade in Auto Parts Act of 1988, sections 2121-2125 of the Omnibus Trade and Competitiveness Act of 1988,27 requires the Secretary of Commerce to establish an initiative to increase the sale of U.S.-made auto parts and accessories to Japanese markets, including to U.S. subsidiaries of Japanese firms. The Secretary also is required to establish a Special Advisory Committee to advise and assist the Secretary in carrying out the initiative to increase U.S. auto parts sales in Japanese markets. The authorities granted under sections 2121-2125 expire on December 31, 1993.

In response to low sales of U.S. auto parts and accessories to Japanese auto firms based both in Japan and in the United States, Congress adopted the Fair Trade in Auto Parts Act of 1988. This action followed negotiations in 1986-87 between the U.S. and Japanese governments aimed at improving U.S. access to the Japanese auto parts markets. The provision was intended to provide for a longer-term effort to increase data collection, information exchange, and generally improved U.S. market access in the Japanese auto parts sector.28

26 Executive Order 12661, dated December 27, 1988; "Implementing the Omnibus Trade and Competitiveness Act of 1988 and Related International Trade Matters."

27 Public Law 100-418; approved August 23, 1988; 15 U.S.C. 4701.

28 Market Oriented Sector Specific Talks on Transportation Machinery, initiated on August 26, 1986 and concluded on August 18, 1987.

Chapter 5: AUTHORITIES RELATING TO POLITICAL OR ECONOMIC SECURITY

International Emergency Economic Powers Act

In 1977, Congress passed the International Emergency Economic Powers Act (IEEPA).1 The Act grants the President authority to regulate a comprehensive range of financial and commercial transactions in which foreign parties are involved but allows the Presi dent to exercise this authority only in order "to deal with an unusual and extraordinary threat, which has its source in whole or in part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares & national emergency . . . with respect to such threat." Background

until

Public Law 95-223, of which IEEPA constitutes Title II, redefined the President's authorities to regulate international economic transactions in times of national emergency as well as war, then provided by section 5(b) of the Trading with the Enemy Act (TWEA) (50 App. U.S.C. 5(b)), by eliminating TWEA's applicability to national emergencies 2 and instead providing such authorities in a separate statute of somewhat narrower scope and subject to con gressional review.

The authorities granted to the President under IEEPA broadly parallel those contained in section 5(b) of the TWEA but are some what fewer and more circumscribed. While under the TWEA the existence of any declared national emergency, whether or not con nected with the circumstances requiring emergency action, was used as the basis for such action, the IEEPA allows emergency measures against an external threat only if a national emergency has been declared with respect to the same threat. Furthermore certain authorities contained in the TWEA and still applicable in times of war are not included in the IEEPA, such as the powers vest foreign property, to regulate purely domestic transactions, to regulate gold or bullion, or to seize records. Nevertheless, the Presi dent's authorities under the IEEPA still remain extensive. The President may "by means of instructions, licenses, or otherwise

to

investigate, regulate, prevent, or prohibit" virtually any for eign economic transaction, from import or export of goods and cur rency to transfer of exchange or credit. The only international transactions exempted from this authority are personal communi cations not involving a transfer of anything of value and, except in

'Title II, Public Law 95-223, December 28, 1977, 91 Stat. 1626, 50 U.S.C. 1701-1706.

2 Title I of Public Law 95-223 also provides for the continuation in force, through annua Presidential extensions, of certain measures implemented on the basis of national emergencies declared under the TWEA. For further detail, see section on the Trading With the Enemy At

certain circumstances, charitable donations of necessities of life to relieve human suffering.

IEEPA requires the President to consult with Congress, whenever possible before declaring a national emergency, and while it remains in force. Once a national emergency goes into effect, the President must submit to Congress a detailed report explaining and justifying his actions and listing the countries against which such actions are to be taken, and why.

Application

Since its enactment, the authority conferred by the IEEPA has been exercised on several occasions and for different purposes: to impose a variety of economic sanctions on a foreign country, and to continue in force the authority of the Export Administration Act. while its statutory extension had not yet been enacted by the time the previous authority expired.

3

In response to the seizure of the American Embassy and hostages in Teheran, President Carter, using the IEEPA authority, on November 14, 1979, declared a national emergency and ordered the blocking of all property of the Government of Iran and of the Central bank of Iran within the jurisdiction of the United States. The measure and its later amendments were implemented through Iranian Assets Control Regulations (31 CFR 535). Sanctions against Iran were broadened on April 7, 1980, and April 17, 1980,5 to constitute eventually an embargo on all commercial, financial, and transportation transactions with Iran, with minimal exceptions. These restrictions were revoked by President Carter on January 19, 1981, after the release of the Teheran hostages, but the national emergency has remained in effect and has been extended every year since. 6

4

On May 1, 1985, President Reagan, under his IEEPA powers, declared a national emergency because of "Nicaraguan Government's aggressive activities in Central America" and prohibited all imports of Nicaraguan goods and services, all exports to Nicaragua (other than those destined for the organized democratic resistance) and transactions related thereto, and all activities of Nicaraguan ships and aircraft at U.S. sea- and airports. The declaration of emergency and the imposed sanctions have been extended annually.

IEEPA was also used by President Reagan to declare a national emergency with respect to South Africa because of its "policy and practice of apartheid" and impose, using also several other authorities, effective on October 11, 1985, an embargo on certain trade (including specifically the importation of krugerrands) and financial transactions with the Government of South Africa.8 The embargo,

3 E.O. 12170, November 14, 1979, 44 F.R. 65729.

E.O. 12205, April 7, 1980, 45 F.R. 24099.

5E.O. 12211, April 27, 1980, 45 F.R. 26685.

6 Following Iranian attacks on U.S.-flag ships in the Iran-Iraq war, an embargo was reimposed on October 29, 1987 (E.O. 12613, 52 F.R. 41940), on imports of goods and services from Iran under the authority of section 505 of the International Security and Development Cooperation Act of 1985 (22 U.S.C. 2349aa-9) and implemented through Iranian Transactions Regulations (31 CFR 560). The embargo has been extended and is still in force.

E.O. 12513, May 1, 1985, 50 F.R. 18629. The embargo is implemented by Nicaraguan Trade Control Regulations (31 CFR 540).

8

E.O. 12532, September 9, 1985, 50 F.R. 36861; E.O. 12535, October 1, 1985, 50 F.R. 40325.

implemented through South African Transactions Regulations (31 CFR 545), was later greatly expanded and additional economic sanctions were imposed by the Comprehensive Anti-Apartheid Act of 1986,9 upon the enactment of which the President allowed the declaration of the South African emergency to expire.10

President Reagan similarly used the IEEPA authority, among several others, to imposed economic sanctions on Libya because of Libyan-supported terrorist attacks on the Rome and Vienna air ports. On January 7, 1986, he declared a national emergency and prohibited all trade (with minimal exceptions) and transportation transactions with Libya, extension of credit to the Libyan Government, and personal travel to or within Libya.11 On the following day, he ordered the blocking of all property and interests of the Libyan Government and its instrumentalities in the United States.12 These measures are implemented by Libyan Sanctions Regulations (31 CFR 550). The emergency with respect to Libya and the sanctions have been continued in force through annual extensions.

Again, on April 8, 1988, under the IEEPA authority, President Reagan declared a national emergency with respect to Panama and ordered the imposition of economic sanctions on that country 13 be cause of "the actions of Manuel Antonio Noriega and Manuel Solis Palma, to challenge the duly constituted authorities of the Govern ment of Panama." The order involved the blocking of all property and interests of the Government of Panama, including all its agencies and instrumentalities and controlled entities, that are or may come within the United States. The blocking applies specifically to payments of transfers of any kind or financial transactions for the benefit of the Noriega-Solis regime from the United States or by any physical or legal U.S. person located in Panama. The order is implemented through Panamanian Transactions Regulations (31 CFR 565).

Just as the TWEA authority several times earlier, the IEEPA authority also has been used on two occasions to continue in force the administration of export controls when extensions of the Export Administration Act of 1979 (EAA) have not been enacted in time to continue the export control authority in force by statutory exten sion. Upon the expiration of the EAA on October 15, 1983, Presi dent Reagan used the IEEPA authority to declare a national emer gency and to continue in force the existing regulations for the ad ministration of export controls. 14 After the EAA was temporarily extended by law 15 retroactively to October 15, 1983, and through February 29, 1984, the President revoked its extension under the IEEPA and rescinded the declaration of economic emergency. 16 Or February 29, 1984, the EAA was again extended by law 17 through

9 Pub. L. 99-440, October 2, 1986, 100 Stat. 1086, 22 U.S.C. 5001 et seq.

10 Weekly Compilation of Presidential Documents, v. 23, no. 36, September 14, 1987, p. 11 E.O. 12543, January 7, 1986, 51 F.R. 875.

12 E.O. 12544, January 8, 1986, 51 F.R. 1235.

13 E.O. 12635, April 8, 1988, 53 F.R. 12134.

14 E.O. 12444, October 14, 1983, 48 F.R. 48215.

15 Public Law 98-207, December 5, 1983, 97 Stat. 1391.

16 E.O. 12451, December 20, 1983, 48 F.R. 56563.

17 Public Law 98-222, February 29, 1984, 98 Stat. 36.

March 30, 1984, when the authority for administering the export control provisions again had to be extended by the President under the IEEPA authority upon the declaration of a national economic emergency.18 The extension and the declared emergency remained in force during the protracted, if unsuccessful, House-Senate attempts at resolving the disagreements on the reauthorization of the EAA during the 98th Congress, and in the 99th Congress until July 12, 1985, when the EAA was finally again extended by law 19 and the executive extension of export controls was revoked and the emergency rescinded. 20

Trading With the Enemy Act

The Trading With the Enemy Act 21 prohibits trade with any enemy or ally of an enemy during time of war. From enactment in 1917 until 1977, the scope of the authority granted to the President under this Act was expanded to provide the statutory basis for control of domestic as well as international financial transactions and was not restricted to trading with "the enemy." In response to the use of the Act's authority under section 5(b) during peacetime for domestic purposes that were often unrelated to a preexisting declared state of emergency, Congress amended the Act in 1977. In 1977 Congress removed from the Trading With the Enemy Act the authority of the President to control economic transactions during peacetime emergencies. 22 Similar authorities, though more limited in scope and subject to the accountability and reporting requirements of the National Emergencies Act, 23 were conferred upon the President by the International Emergency Economic Powers Act, enacted in 1977 as Title II of Public Law 95-223.24 Presidential authority during wartime to regulate and control foreign transactions and property interests were retained under the Trading With the Enemy Act. In addition, the 1977 legislation authorized the continuation of various foreign policy controls implemented under the Trading With the Enemy Act, such as trade embargoes and foreign assets control. The retention of such existing controls, however, was made subject to 1-year extensions conditioned upon a Presidential determination that the extension is in the national interest.

Background

The Trading With the Enemy Act was passed in 1917 "to define, regulate, and punish trading with the enemy." The Act was designed to provide a set of authorities for use by the President in time of war declared by Congress. In its original 19 sections, the Trading With the Enemy Act provided general prohibitions against trading with the enemy; authorized the President to regulate and prohibit international economic transactions by means of license or

18 E.O. 12470, March 30, 1984, 49 F.R. 13099.

19 Export Administration Act of 1979, Reauthorization; Public Law 99-64, July 12, 1985, 99 Stat. 120. 20 E.O. 12525, July 12, 1985, 50 F.R. 28757.

21 Public Law 65-91, approved October 6, 1917, ch. 106, 40 Stat. 411, So App. U.S.C. 1–44.

22 Public Law 95-223, title I, approved December 28, 1977.

23 The National Emergencies Act provided a statutory role for Congress in the declaration and termination of national emergencies. Public Law 94-412, approved September 14, 1976, 90 Stat. 1255, 50 U.S.C. 1601 et seq.

24 See discussion of International Emergency Economic Powers Act, supra.