otherwise; established an office to administer U.S.-held foreign property; and set up procedures for claims to such property by nonenemy persons, among other provisions. The original 1917 Act ap peared not to authorize the control of domestic transactions and limited its use to wartime exigencies.

Over the years, through use and amendment of section 5(b), the basic authorizing provision, the scope of Presidential actions under the Trading With the Enemy Act was greatly expanded. First, the Act was expanded to control domestic as well as international transactions. Second, the authorities of the Act were used to apply to presidentially declared periods of "national emergency" as well as war declared by Congress. From 1933, when Congress retroac tively approved President Roosevelt's declaration of a national banking emergency by expanding the use of section 5(b) to include national emergencies, until 1977, when Congress amended section 5(b) by passage of title I of Pub. L. 95-223, the President was au thorized in time of war or national emergency to: -regulate or prohibit any transaction in foreign exchange, any banking transfer, and the importing or exporting of money or securities;

-prohibit the withdrawal from the United States of any property in which any foreign country or national has an interest; -vest, or take title to, any such property; and

-use such property in the interest and for the benefit of the United States.

The Trading With the Enemy Act did not provide a statement of findings and standards to guide the administration of section 5(b There was no provision in the Act for congressional participation or review or for Presidential reporting at specified periods for a tions undertaken under section 5(b). There was no fixed time period for terminating a state of emergency. Nor was there any practical constraint on limiting actions taken under emergency au thority to measures related to the emergency.

Application

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By 1977 a state of national emergency had been declared by the President on four occasions and left unrescinded. In 1933 President ha Roosevelt declared a national emergency to close the banks tempo a rarily and to issue emergency banking regulations. In 1950 Pres th dent Truman declared a national emergency in connection with the Korean conflict. President Nixon declared a national emergency it 1970 to deal with the Post Office strike and another in 1971 base on the balance-of-payment crisis. As one measure to remedy th crisis, President Nixon at the same time imposed an import sur charge without specifically referring to section 5(b), but later di take recourse to it as an additional authority when the action wa challenged in court.25

25 In mid-1974, the U.S. Customs Court found the President's action unconstitutional with? spect to all invoked authorities, but this decision was later reversed on appeal with respect section 5(b). U.S. v. Yoshida International, 526, F.2d 560 (C.C.P.A. 1975). The surcharge was ter minated after having been in force for somewhat over 4 months, long before the lower cour decision.

Based on these states of emergency, Presidents have used the powers of section 5(b) to deal with a number of varied events. In 1940 and 1941, President Roosevelt used section 5(b) to freeze the U.S.-held assets of the Axis powers and countries occupied by them to prevent their falling into the hands of the enemy powers. In August 1941, President Roosevelt, under section 5(b) authority, ordered the imposition of consumer credit controls by the Federal Reserve Board as an anti-inflationary measure. These executive uses by President Roosevelt were retroactively ratified by Congress.

The 1950 Korean emergency has been used in conjunction with section 5(b) powers for a wide range of controls among them the imposition of a total embargo on transactions with China and North Korea in December 1950 which was extended to North Vietnam in May 1964 and to Cambodia and South Vietnam in April 1975.26 In 1968, President Johnson, citing the authority of section. 5(b) and the continued existence of the 1950 emergency, imposed foreign direct investment controls on U.S. investors. These controls remained in effect until they were eliminated by legislation in 1974. During the period 1969 through 1976, Presidents have invoked the 1950 and 1971 emergencies to extend temporarily export control regulations.

Four sets of regulations controlling international transactions with specific countries, imposed under the former national emergency authority of section 5(b) and during the Korean national emergency, by now rescinded emergencies declared thereunder, are at present in effect pursuant to the one-year extension authority of Title I of Public Law 95-223. First, under the Foreign Assets Control Regulations, 27 all transactions between the United States and North Korea, Vietnam, and Cambodia are prohibited unless licensed by the Department of the Treasury. The regulations also block all assets of those countries held in the United States.

Second, the Cuban Assets Control Regulations, 28 based on section 5(b) as well as on foreign assistance legislation, impose a similar ban on virtually all transactions with Cuba.

Third, Transaction Control Regulations, 29 prohibiting any person within the United States 30 from engaging in any trade or trade financing transaction involving transfer of strategic commodities from a foreign country to a Communist country, are also based on section 5(b) of the Trading With the Enemy Act.

Fourth, the wartime anti-Axis Foreign Funds Control Regulations,31 issued under the authority of section 5(b), are still in effect. The regulations continue to block the assets of East Germany, Estonia, Latvia, and Lithuania pending the settlement of claims by U.S. citizens for compensation of property confiscated after the war by the governments of those countries.

26 In mid-1971, trade embargo on China was in practice lifted, and on January 31, 1980, the applicability of any restrictive measures imposed under section 5(b) was terminated with respect to China (45 F.R. 7224).

27 31 CFR Part 500.

28 31 CFR Part 515.

29 31 CFR Part 505.

30 Any "person within the United States" includes foreign subsidiaries of U.S. firms.

31 31 CFR Part 520.

Narcotics Control Trade Act

The Drug Enforcement, Education, and Control Act of 1986 9: contains a number of measures to respond to the serious problem of illegal drug smuggling into the United States and the growing threat of foreign sourced drug production. Among these measures are revisions to many basic customs laws to deter illegal drug im ports and to increase enforcement capabilities of the U.S. Customs Service against drug traffic.

Title IX of the Act amended the Trade Act of 1974 (P.L. 93-618 by adding Title VIII, entitled the "Narcotics Control Trade Act," to create new authority for the President to take appropriate trade actions as of March 1 of each year against uncooperative major drug-producing or drug-transit countries. Section 806 of the Foreig Relations Authorization Act, Fiscal Years 1988 and 1989,33 and sec tion 4408 of the Anti-Drug Abuse Act of 1988 34 expanded the sanc tions available and the critieria for determining and certifying tha a country has cooperated fully with the United States. Similar cri teria apply under the Foreign Assistance Act of 1961 for denying foreign aid to uncooperative countries.

For every major drug-producing or drug-transit country, the President is required to deny to any or all of its products preferen tial tariff treatment under the Generalized System of Preferences the Caribbean Basin Initiative, or any other law; to raise or impos duties of up to 50 percent ad valorem on any or all of its products to suspend air carrier transportation to or from the United State and the country and to terminate any air service agreement wit the country; to withdraw U.S. personnel and resources from par ticipating in any arrangement with the country for customs pre clearance; or to take any combination of these actions considere necessary to achieve the objectives of the Act.

Such sanctions do not apply if the President determines and cer tifies to the Congress, at the time the annual report required by section 481(e) of the Foreign Assistance Act of 1961 is submitte that during the previous year the country has cooperated full with the United States or has taken adequate steps on its own in satisfying goals agreed to in a bilateral or multilateral narcotic agreement with the United States; (2) in preventing illegal drug from being sold illegally to U.S. Government personnel or their de pendents or from being transported into the United States; (3) ir preventing and punishing the laundering of drug-related profits monies; and (4) in preventing and punishing bribery and other public corruption which facilitate production, processing, or ship ment of illegal drugs.

A country that would not otherwise qualify for certification ma be exempted from sanctions if the President determines and cert fies to the Congress that the vital national interests of the Unite States require that sanctions not be applied. A country designate as a major drug-producing or drug-transit country in the previo

32 Public Law 99-570, approved October 27, 1986.

33 Public Law 100-204, approved December 22, 1987, 19 U.S.C. 2492.

34 Public Law 100-690, approved November 18, 1988.

year may not be determined to be cooperating fully unless it has in place a bilateral or multilateral narcotics agreement.

The Congress may disapprove the President's determination and sanctions be required through enactment of a joint resolution within 45 legislative days. Actions remain in effect until the President submits a certification of cooperation and Congress does not enact a joint resolution of disapproval within 45 legislative days.

In addition, section 803 prohibits the President from allocating any quota for imports of sugar to any country which has a government involved in illegal drug trade or which is failing to cooperate with the United States in narcotics enforcement activities.

Chapter 6: RECIPROCAL TRADE AGREEMENTS

Reciprocal Trade Agreement Authorities

Authority for the President to enter into reciprocal trade agree ments with foreign governments consists primarily of general au thorities under section 1102 of the Omnibus Trade and Compet tiveness Act of 1988 to enter into multilateral or bilateral trade agreements to reduce or eliminate tariff or nontariff barriers and other trade-distorting measures. Section 1102 replaces similar au thorities under section 102 of the Trade Act of 1974 2 that expired on January 3, 1988. Except for the authority to proclaim modifica tions in U.S. tariffs under multilateral agreements, trade agree ments entered into under section 1102 are subject to Congressional approval of implementing legislation under special expedited proce dures. The basic purpose of the section 1102 authorities is to pro vide the means to achieve U.S. negotiating objectives set forth under section 1101 of the 1988 Act and to enable U.S. participation in the Uruguay Round of Multilateral Trade Negotiations unde the auspices of the General Agreement on Tariffs and Trac (GATT) launched in September, 1986.

In addition, there are special trade agreement authorities that apply in limited circumstances or to deal with specific situations (1) trade agreements entered into under section 123 of the Trade Act of 1974, as amended by the 1988 Act, to grant new concessions as compensation for import relief actions or any judicial or admir istrative tariff reclassification; (2) withdrawal, suspension, or mod fication of trade agreement obligations under section 125 of the Trade Act of 1974;4 (3) trade agreements entered into under sectio 128 of the Trade Act of 1974,5 as added by section 308 of the Trad and Tariff Act of 1984, concerning tariff treatment of certain sem conductor items; (4) agreements with major state trading regime acceding to the GATT; (5) trade agreements and remedies unde sections 1371-1382 of the Omnibus Trade and Competitiveness Act of 19886 to obtain more open foreign market access in telecom munications trade; and (6) bilateral trade agreements with certa Communist countries providing for nondiscriminatory (most-fe vored-nation) treatment under certain conditions.

GENERAL TARIFF AUTHORITY

Since enactment of the Reciprocal Trade Agreements Act of 19 the Congress periodically has delegated authority to the Preside

1 Public Law 100-418, approved August 23, 1988, 19 U.S.C. 2902.

2 Public Law 93-618, approved January 3, 1975, 19 U.S.C. 2112.

3 Public Law 93-618, 19 U.S.C. 2133.

4 Public Law 93-618, 19 U.S.C. 2135.

5 Public Law 98-573, sec. 308.

6 Public Law 100-418, 19 U.S.C. 3101.