751 F.2d 1239 (Fed. Cir. 1985), 84-1060, American Ass'n of Exporters and Importers-Textile and Apparel Group v. United States

Docket Nº:Appeal No. 84-1060.
Citation:751 F.2d 1239
Party Name:AMERICAN ASSOCIATION OF EXPORTERS AND IMPORTERS-TEXTILE AND APPAREL GROUP, Appellant, and Hilaturas Lerma, S.A., Intervenor, v. The UNITED STATES, et al., Appellees, and American Fiber/Textile Apparel Coalition, Intervenor.
Case Date:January 04, 1985
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

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751 F.2d 1239 (Fed. Cir. 1985)




Hilaturas Lerma, S.A., Intervenor,


The UNITED STATES, et al., Appellees,


American Fiber/Textile Apparel Coalition, Intervenor.

Appeal No. 84-1060.

United States Court of Appeals, Federal Circuit

January 4, 1985

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        Martin J. Lewin, Daniels, Houlihan & Palmeter, P.C., Washington, D.C., argued for appellant. With him on the brief was Michael P. Daniels, Washington, D.C.

        David M. Cohen, Dept. of Justice, Washington, D.C., argued for appellees. With him on the brief were Richard K. Willard, Acting Asst. Atty. Gen., Washington, D.C., and Velta A. Melnbrencis, New York City.

        Donald Harrison, Miller & Chevalier, Washington, D.C., argued for intervenor AFTAC. With him on the brief was Kenneth B. Reisenfeld, Washington, D.C.

        Stuart M. Rosen, Washington, D.C., and Jeffrey P. Bialos, Weil, Gotshal & Manges, New York City and Washington, D.C., were on the brief, for amicus curiae.

        Before DAVIS, BENNETT and NEWMAN, Circuit Judges.

        DAVIS, Circuit Judge.

        This is an appeal by the American Association of Exporters and Importers-Textile and Apparel Group (AAEI-TAG), 1 from a judgment of the United States Court of International Trade (CIT), Gregory W. Carman, Judge, granting the Government's motion to dismiss the complaint for failure to state a claim on which relief can be granted. 2 AAEI-TAG seeks, inter alia, a declaratory judgment that actions taken by the Government pursuant to certain international agreements regulating trade in textile products are void for alleged statutory, administrative and constitutional defects. The Government presses its argument, rejected by Judge Carman, that the CIT lacked jurisdiction over AAEI-TAG's claim. 3 We affirm the decision of the court below as to jurisdiction and standing, as well as the merits.

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        A. The Regulatory Scheme.

        At the root of the scheme by which the United States regulates international trade in textiles is section 204 of the Agriculture Act of 1956, as amended, 70 Stat. 188, 200, codified at 7 U.S.C. Sec. 1854 (1982). In relevant portion, that statute states:

The President may, whenever he determines such action appropriate, negotiate with representatives of foreign governments in an effort to obtain agreements limiting the export from such countries and the importation into the United States of any agricultural commodity or product manufactured therefrom or textiles or textile products, and the President is authorized to issue regulations governing the entry or withdrawal from warehouse of any such commodity, product, textiles, or textile products to carry out such agreements.

        Section 204 also authorizes the President to issue regulations governing trade in textiles with nations not covered by any agreement, so as to protect the textile trade program which the agreements establish.

        The stem of the Government's system for regulating the textile trade is the Arrangement Regarding International Trade in Textiles (commonly, the "Multifiber Arrangement" or "MFA"), December 20, 1973, 25 U.S.T. 1001, T.I.A.S. No. 7840. The purpose of the MFA, as announced in its Preamble, is to negate "the tendency for an unsatisfactory situation to exist in world trade in textile products ... to the detriment of countries participating in trade in textile products, whether as importers or exporters, or both." Specifically, the MFA includes provisions for "special practical co-operation ... with the aim of eliminating difficulties that exist in this field." Id., art. 1 p 1. There are provisions for gradual elimination of restrictions in the textile trade. Id., art. 2. Parties to the MFA may impose quotas, however, in conjunction with a request for consultations with other parties, upon a determination that imports "are causing market disruption as defined in Annex A." Id., art. 3, p 2.

        Annex A, thus referred to in article 3, declares that a determination that the potential for market disruption exists should "be based on the existence of serious damage to domestic producers or actual threat thereof." The Annex lists certain factors which bear on a determination of market disruption, and requires that these factors be considered. 4 Following a determination of market disruption and a call for consultations, the parties may agree on measures to rectify the market disruption; but, if they cannot agree, the importing country may take certain unilateral protective actions. Id., art. 3, p 5. This procedure is subject to review by the Textile Surveillance Body, an international organization created within the framework of the General Agreement on Tariffs and Trade (GATT). Id. art. 3, p 5(iii); art. 10, p 1.

        The MFA, in an effort to "eliminate real risks of market disruption (as defined in Annex A)," also encourages parties to enter into bilateral textile trade agreements the terms of which should be consistent with the MFA. Id., art. 4, p 2. Under this provision, the United States has entered into bilateral agreements with other parties to the MFA and with nonparties. Typical of the latter, and of special concern in the present case, is the Agreement Relating to Cotton, Wool and Manmade Fiber Textiles and Textile Products, Sept. 17, 1980, between the United States and the People's

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Republic of China (P.R.C.), 32 U.S.T. 2071, T.I.A.S. No. 9820. This agreement with the P.R.C. sets forth quantitative limits on exports of different categories of textiles and textile products to the United States; categories not specifically covered fall within a residuary provision. In particular, the agreement establishes a consultation mechanism tied to the market disruption standard of the MFA.

        In the United States, the President has delegated all of his authority under section 204 to administrative agencies, the most important of which (for the purposes of this case) is the Committee for the Implementation of Textile Agreements (CITA). See, Exec. Order No. 11,651, 37 Fed.Reg. 4699 (1972), as amended, reprinted following 7 U.S.C.A. Sec. 1854 (1984 Supp.). CITA has the authority under section 204 to (1) negotiate bilateral agreements, (2) to carry through the consultation mechanism described above, (3) to implement all resulting agreements, and (4) to order unilateral imposition of quotas in accordance with the provisions of the MFA and bilateral arrangements. AAEI-TAG challenges CITA's actions with regard to the second and fourth of these functions. 5

        B. AAEI-TAG's Complaint.

        The gist of AAEI-TAG's complaint is that CITA has requested consultations and unilaterally instituted quotas without a proper finding of "market disruption," as required by the MFA and the bilateral agreements. 6 AAEI-TAG claims that CITA has improperly requested consultations or undertaken unilateral actions on 75 occasions between 1980 and 1982. 7 Of particular concern to AAEI-TAG, as evidenced by the detailed treatment in its complaint, is the unilateral imposition of quotas on Chinese textile imports lower than those established by the U.S.-P.R.C. agreement. AAEI-TAG alleges that CITA's actions have irreparably harmed its members through additional costs, delays, embargoes, and disruption of orders subject to irrevocable letters of credit. CITA's actions are challenged on several grounds, the most important of which are that CITA: (1) acted arbitrarily and capriciously; (2) exceeded the scope of its statutory authority under section 204; and (3) violated the rulemaking provisions of the Administrative Procedure Act, 5 U.S.C. Sec. 553 (1982). AAEI-TAG also includes a constitutional due process argument.

        In support of its first argument, AAEI-TAG points to a Department of Commerce solicitation which sought assistance in collecting data on the United States apparel market. 8 The solicitation states:

There is a critical need for such data. At present, there is a lack of sufficient and timely apparel production, sales, consumption, and price data. This information is necessary to identify and substantiate market disruption....

        Presently, OTEXA [the Commerce Department office responsible for providing CITA with administrative support] uses current import data and production data that range from 12 to 24 months old.

        AAEI-TAG points to this "admission" by the Government, and asserts that CITA's actions are not based on a proper determination of market disruption as required by

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the MFA and bilateral agreements. The resulting requests for consultation and unilateral imposition of import restrictions are, according to AAEI-TAG, arbitrary and capricious.

        AAEI-TAG bases its argument as to statutory authority on its interpretation of section 204 which views that provision as having granted the President two separate powers. The first authorizes the President (through CITA) to negotiate with foreign governments in an effort to obtain agreements limiting textile imports into the United States. AAEI-TAG concedes that the President has full discretion in this area, since Congress called for such negotiations "whenever he [the President] deems appropriate." The second authorization in section 204 allows the President to issue regulations governing textile trade "to carry out any such agreement." The argument runs that Congress, by using the phrase "to carry out," intended to authorize only such regulations which properly implement the very agreements the President has negotiated. In a corollary argument, AAEI-TAG contends that Congress intended to incorporate the terms of the agreements into the statute, and that, by violating the strict terms of the agreement,...

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