to proclaim an intermediate rate of duty seems to be clearly related only to the new grant of authority in title II of the bill.1 Inasmuch as title II does not contain authority to negotiate increases in rates of duty, it is not clear how a basis could be laid in a trade agreement entered into under title II for the proclamation of the aforementioned higher intermediate rate of duty.

1 The continuation of the existing proclaiming authority in section 350 is provided for separately in section 248(a)(1) of the bill. It will be noted that section 248 (a) (1) does not include a provision with respect to proclaiming intermediate rates of duty. Furthermore, section 248 (a) (1) expressly continues the authority contained in the present section 350 (a) (6) to terminate, in whole or in part, any proclamation of trade agreements entered into pursuant to section 350, a fact which further militates in favor of reading section 244(b) of the proposed legislation as relating only to proclamations issued to carry out trade agreements entered into under the proposed legislation.

From the foregoing, it seems clear that it was the executive branch's intent in proposing section 244 (b) to give the President authority— which he did not previously have to establish new intermediate rates as an incident to the power to terminate in part. It is significant, however, that the second sentence of proposed section 244 (b) was eliminated when the Ways and Means Committee reported H.R. 11970 as a clean bill which the Congress subsequently enacted. The fact that Congress considered granting the President new authority to establish new, intermediate rates as an incident to the power to terminate in part, and rejected it, indicated that Congress concluded that the President should not have power to choose rates which never existed in prior statutes or proclamations.

Additionally, it is to be observed that the Senate adopted an amendment to H.R. 11970, the Trade Expansion bill, which would have added a new section 353, as follows (108 Cong. Rec. 19875 (1962)):

Notwithstanding any other provision of law, the President may, when he finds it in the national interest, proclaim with respect to any article imported into the United States—

(1) the increase of any existing duty on such article to such rate as he finds necessary,

(2) the imposition of a duty on such article (if it is not otherwise subject to duty) at such rate as he finds necessary, and

(3) the imposition of such other import restrictions as he finds necessary.

It is obvious that had this provision been enacted into law, it would have authorized a surcharge such as provided for in Presidential Proclamation 4074. However, the provision was deleted by the HouseSenate Conference Committee. Conference Report No. 2518 (87th Cong., 2d Sess. (1962) (2 U.S. Code Cong. & Adm. News (1962), p. 3142)). Deletion of the provision not only demonstrates that Congress was unwilling to grant such expansive discretionary power to the President, but also indicates a probable recognition by Congress

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73 CUSTOMS COURT

that such an unrestrained grant of authority to increase existing duties and impose nonexisting duties may well have been an invalid delegation of legislative power vested solely in the Congress by the Constitution.R

Nor can this court agree with defendant's contention that prior Presidential proclamations serve as a precedent for the President's alleged authority to establish intermediate rates. Presidential Proclamation 2901, 64 Stat. A427 (1950), cited by the defendant, provided for a reduction during the period of one year in the quantity of potatoes subject to the reduced tariff quota in the General Agreement on Tariffs and Trade (GATT). By reducing the quantity of potatoes subject to the quota rate, the Presidential Proclamation did nothing more than expose the possibility of more imported potatoes to the higher statutory rate. Unlike the effort to establish new supplemental intermediate rates as proposed by Presidential Proclamation 4074, Presidential Proclamation 2901 changed neither the concession rate nor the statutory rate. No intermediate nor supplemental duty was established whatsoever.

Defendant cites Presidential Proclamation 2929, 65 Stat. c12 (1951), in further support of its assertion that the President has established new intermediate rates in his exercise of the "termination" authority. Examination of the history with respect thereto discloses that the Torquay Protocol, a new trade agreement between participating nations, provided for an increase on certain gloves from the 25 percent duty (the previous rate established by the GATT (T.D. 51802, schedule XX, pp. 162-3)) to a rate of 35 percent (T.D. 52739, p. 212). Presidential Proclamation 2929, in proclaiming the new trade agreement rates, specifically excepted in part I certain items and provided in part III that all prior proclamations "are hereby terminated to the extent" that the items therein specified are modified by the Torquay Protocol. See 65 Stat. c17-c18.

In the opinion of this court, Presidential Proclamation 2929 clearly was predicated on the authority to proclaim trade agreement rates as provided by section 350 (a)(1) (B) of the Tariff Act of 1930, as amended (19 U.S.C. 1351(a)(1) (B)). This conclusion is confirmed by the decision of the appellate court in United States v. Aris Gloves, Inc., 48 CCPA 126, C.A.D. 777 (1961). In determining therein that public notice of intention to negotiate the trade agreement (Torquay

• Senator Byrd, Chairman of the Senate Finance Committee, reviewing in the Senate the actions of the conferees with respect to H.R. 11970, indicated that several factors led to the rejection of section 353 in conference (108 Cong. Rec. 22182 (1962)):

***Section 353 was a sword which could cut two ways: First, one problem was that there was no procedure prescribed for ascertaining the facts and, second, the other problem was that the Congress did not retain the same opportunity for review as the other sections of the bill provide. [Emphasis added.]

Protocol) rates relating to gloves had been properly given, as required by statute, the court must necessarily have recognized that the new rate was a modification agreed upon as a part of the Torquay Protocol and given domestic effect by the proclamation of the new trade agreement rates. Since a statutory requirement of notice is not required in a unilateral act of termination, a decision of the appellate court, would have been needless had the new rates in question been established under the termination authority. Hence, while Presidential Proclamation 2929 was used as the vehicle by which prior rates relating to certain gloves were "terminated in part," the exercise of the termination authority was merely ancillary to the primary purpose and effect of the proclamation—which was to give domestic legal effect to the new rates established by the Torquay Protocol and thus cause these new rates to apply to those gloves, the prior rates of which had been terminated in part.

Accordingly, it is the opinion of this court that Presidential Proclamation 4074 cannot be sustained by the termination authority and that the Proclamation, in fact, arrogated unto the President a power beyond the scope of any authority delegated to him by the Congress. The assessment of the surcharge constituted an affirmative unilateral act on the part of the Executive which cannot be viewed nor rationalized in any way other than an unauthorized imposition of a new and additional duty. Indeed, to invest the President with the powers contended by the defendant would render the proceedings and guidelines enumerated in other tariff legislation meaningless. See United States v. Schmidt Pritchard & Co., 47 CCPA 152, C.A.D. 750 (1960), cert. denied, 364 U.S. 919 (1960).

II

With respect to defendant's contention that the Trading with the Enemy Act (50 U.S.C. App.) serves as further authority for the validity of Presidential Proclamation 4074, the plaintiff submits that no consideration should be given thereto inasmuch as the Proclamation does not specifically refer to this Act as a part of its statutory authority.

To sustain the plaintiff's contention would be to place an unwarranted limitation upon judicial review. Presidential Proclamation 4074 does not seek to designate the Tariff Act of 1930, as amended, and the Trade Expansion Act of 1962 as the sole sources of authority. On the contrary, the Proclamation refers to the President as "acting under the authority vested in me by the Constitution and the statutes, including, but not limited to, the Tariff Act, and the TEA [Trade Expansion Act] ***" This court, accordingly, has considered the argument presented by the defendant with respect to the authority that may..

have been delegated to the President by the provisions of the Trading with the Enemy Act. Toledo, P. & W. R. R. v. Stover, 60 F. Supp. 587 (S.D. Ill. 1945).

It has been long recognized that war, itself, effects a suspension of commercial intercourse between belligerent nations. However, changes. in economic conditions as well as changes in the evolving philisophy of man have dictated that legislative modifications be enacted in lieu of the inflexible rule of law terminating all commercial intercourse between warring nations existing at common law and in the law of nations. In so doing, controls have been provided through legislative enactment with respect to authorized foreign trade and intercourse which prior thereto would have been prohibited.

The present Trading with the Enemy Act may be said to have its roots in the Act of Congress of July 13, 1861, 12 Stat. 255, 257.7 Pursuant thereto the President through the Secretary of the Treasury, was authorized in his discretion to "license and permit commercial intercourse" with all or any part of the States in insurrection.

The system of licensing, thus first authorized during the Civil War, again became an integral part of the Trading with the Enemy Act of 1917. The provisions thereof prohibited any trade with the enemy "except with the license of the President." 40 Stat. 412, section 3(a).

It will be noted that in each of the foregoing legislative enactments the words "license" and "permit" were used to describe the form of regulation delegated to the President. From the congressional committee hearings, reports and debates on the Trading with the Enemy Act of 1917,10 as well as from the statement voiced by the Secretary of the Treasury,11 it appeared, however, that the statutory provisions

9

7 Section 5 of the 1861 Act provided:

[A]ll commercial intercourse by and between the same and the citizens thereof and the citizens of the rest of the United States shall cease and be unlawful so long as such condition of hostility shall continue; and all goods and chattels, wares and merchandise, coming from said State or section into the other parts of the United States, and all proceeding to such State or section, by land or water, shall, together with the vessel or vehicle conveying the same, or conveying persons to or from such State or section, be forfeited to the United States: Provided, however, That the President may, in his discretion, license and permit commercial intercourse with any such part of said State or section, the inhabitants of which are so declared in a state of insurrection, in such articles, and for such time, and by such persons, as he, in his discretion, may think most conducive to the public interest; and such intercourse, so far as by him licensed, shall be conducted and carried on only in pursuance of rules and regulations prescribed by the Secretary of the Treasury.

• Hearings on H.R. 4704, House Comm. on Interstate and Foreign Commerce, 65th Cong., 1st Sess., May 29, 31 and June 4, 1917; Hearings on H.R. 4960, Senate Subcomm. of Comm. on Commerce, 65th Cong., 1st Sess., July 23, 24, 25, 27, 30 and August 2, 1917.

H. Rep. No. 85, 65th Cong., 1st Sess., June 21, 1917; S. Rep. No. 111, 65th Cong., 1st Sess., August 23, 1917; H. Rep. No. 155, 65th Cong., 1st Sess., September 21, 1917. 10 55 Cong. Rec., 65th Cong., 1st Sess., pp. 4840-4879, 4907-4930, 4968-4989, 6949-6958, 7007-7025 (1917).

11 Letter from Secretary William G. McAdoo to Senator Ransdell, dated September 11, 1917, 55 Cong. Rec., 65th Cong., 1st Sess., p. 7013. See also comments of Senators Reed and Ransdell, 55 Cong. Rec., pp. 7012-7014.

afore referred to did not provide sufficient authority to the President to adequately control imports a power considered essential during a time of war. Therefore, the Congress, in enacting the Trading with the Enemy Act of 1917, added section 11 which gave broad and expansive powers to the President to control imports during World War I. 40 Stat. 422, section 11.12

The significance of the afore-quoted section, insofar as it relates to the immediate question presented to us for determination, is found in the fact that the extremely broad power given to the President thereunder to regulate imports terminated at the end of World War I and was never reenacted in subsequent amendments.13

In 1933 during the domestic crisis occasioned by the depression of that decade, the President's authority to act under section 5(b) was extended to "any other period of national emergency declared" by him, and he was given the power "by means of licenses or otherwise" to regulate "transfers of credit between or payments by banking institutions." 48 Stat. 1.

In 1941 the Act was amended in order to give the President more flexibility over alien property, 55 Stat. 839. Again, the mode of regulation authorized by the statute included a system of licenses.

In support of its contention the defendant places specific reliance on section 5(b) of the present Trading with the Enemy Act (50 U.S.C. App. 5(b)) providing:

(b) (1) During the time of war or during any other period of national emergency declared by the President, the President may, through any agency that he may designate, or otherwise, and under such rules and regulations as he may prescribe, by means of instructions, licenses, or otherwise

(A) investigate, regulate, or prohibit, any transactions in foreign exchange, transfers of credit or payments between, by, through, or to any banking institution, and the importing, exporting, hoarding, melting, or earmarking of gold or silver coin or bullion, currency or securities, and

(B) investigate, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power,

12 Section 11, above referred to, provided:

Whenever during the present war the President shall find that the public safety so requires and shall make proclamation thereof it shall be unlawful to import into the United States from any country named in such proclamation any article or articles mentioned in such proclamation except at such time or times, and under such regulations or orders, and subject to such limitations and exceptions as the President shall prescribe, until otherwise ordered by the President or by Congress: Provided, however, That no preference shall be given to the ports of one State over those of another. 13 The license powers accorded to the President terminated at the close of World War I and became effective again automatically at the outbreak of World War II. On the other hand, section 11 and the broad powers included therein, were of a temporary nature and were terminated at the close of World War I. See Markham v. Cabell, 326 U.S. 404 (1945).