United States v. Yoshida Intern., Inc.

• Court: U.S. Court of Customs and Patent Appeals (CCPA)
• Writing for the Court: E. Thomas Honey, Barnes, Richardson & Colburn, New York City, for Yoshida International, Inc
• Citation: United States v. Yoshida Int'l, Inc., 63 C.C.P.A. 15, 526 F.2d 560 (Cust. Ct. 1975)
• Decision Date: 06 November 1975
• Docket Number: Customs Appeal No. 75-6.
• Parties: The UNITED STATES, Appellant, v. YOSHIDA INTERNATIONAL, INC., Appellee.

526 F.2d 560

The UNITED STATES, Appellant, v. YOSHIDA INTERNATIONAL, INC., Appellee.

Customs Appeal No. 75-6.

United States Court of Customs and Patent Appeals.

November 6, 1975.

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Andrew P. Vance, Chief, Customs Section, Civil Division, Department of Justice, New York City, for the United States.

E. Thomas Honey, Barnes, Richardson & Colburn, New York City, for Yoshida International, Inc.

MARKEY, Chief Judge.

This is an appeal from a judgment of the Customs Court, 73 Cust.Ct. 1, C.D. 4550, 378 F.Supp. 1155 (1974), granting Yoshida's motion for summary judgment, and declaring an import duty surcharge invalid. Presidential Proclamation 4074, because it imposed the surcharge, was held to have been beyond the President's delegated powers. The court stated that a delegation of sufficient breadth to encompass the proclamation would have been unconstitutional. We reverse.

Facts

Yoshida's merchandise (zippers) was imported from Japan and entered the port of New York on August 17, 25, and 26, 1971. The government levied, in addition to the standard duty under TSUS item 745.72, an import duty surcharge of 10% in accordance with item 948.00, which was added to the TSUS by Presidential Proclamation 4074.¹ Yoshida challenges only the validity of Proclamation 4074.

Amicus

American Importers Association, Inc., filed a brief amicus curiae seeking, in the event of an affirmance, a declaration that the liquidations herein were null and void and the protests premature, the effect of which would be to remove barriers to a refund of amounts exacted by the surcharge. The government filed an opposing brief. The judgment below being reversed, the requests of amicus must be dismissed as moot.

President's Actions

During the summer of 1971, the United States was faced with an economic crisis. The nation suffered under an exceptionally severe and worsening balance of payments deficit. The gold reserve backing of the U. S. dollar had dropped from $17.8 billion in 1960 to less than $10.4 billion in June of 1971,² reflecting a growing lack of confidence in the U. S. dollar abroad. Foreign exchange rates were being controlled by some of our major trading partners in such a way as to overvalue the U. S. dollar. That action, by stimulating U. S. imports and restraining U. S. exports, contributed substantially to the balance of payments deficit.³ As one step in a program designed to meet the economic crisis,⁴ the President issued Proclamation 4074, which in relevant part stated:

WHEREAS, there has been a prolonged decline in the international monetary reserves of the United States, and our trade and international competitive position is seriously threatened and, as a result, our continued ability to assure our security could be impaired;

WHEREAS, the balance of payments position of the United States requires the imposition of a surcharge on dutiable imports;

* * * * * *

A. I hereby declare a national emergency during which I call upon the public and private sector to make the efforts necessary to strengthen the international economic position of the United States.

B. (1) I hereby terminate in part for such period as may be necessary and modify prior Presidential Proclamations which carry out trade agreements insofar as such proclamations are inconsistent with, or proclaim duties different from, those made effective pursuant to the terms of this Proclamation.

(2) Such proclamations are suspended only insofar as is required to assess a surcharge in the form of a supplemental duty amounting to 10 percent ad valorem. Such supplemental duty shall be imposed on all dutiable articles * * * provided, however, that if the imposition of an additional duty of 10 percent ad valorem would cause the total duty or charge payable to exceed the total duty or charge payable at the rate prescribed in column 2 of the Tariff Schedules of the United States, then the column 2 rate shall apply.

To implement the above language, Proclamation 4074 established the following item 948.00 of subpart C, part 2, of the TSUS Appendix:

   Item              Article                             Rates of duty
                                                                     1                   2
                  948.00   Articles, except as exempted under
                           headnote 5 of this subpart
                           which are not free of duty under
                           these schedules and which are
                           the subject of tariff concessions
                           granted by the United States in
                           trade agreements .................... 10% ad val...         No change
                                                                 (See headnote
                                                                  3 of this subpart.)
                

The referenced headnote 3 reads as follows:

3. Limitation on additional duties — The additional 10 percent rate of duty specified in rate of duty column numbered 1 of item 948.00 shall in no event exceed that rate which, when added to the column numbered 1 rate imposed on the imported article under the appropriate item in schedules 1 through 7 of these schedules, would result in an aggregated rate in excess of the rate provided for such article in rate of duty column numbered 2.

The President's authority for proclaiming the surcharge was stated in Proclamation 4074 to be:

WHEREAS, pursuant to the authority vested in him by the Constitution and the statutes, including, but not limited to, the Tariff Act of 1930, as amended (hereinafter referred to as "the Tariff Act"), and the Trade Expansion Act of 1962 (hereinafter referred to as "the TEA"), the President entered into, and proclaimed tariff rates under, trade agreements with foreign countries;

WHEREAS, under the Tariff Act, the TEA and other provisions of law, the President may, at any time, modify or terminate, in whole or in part, any proclamation made under his authority; * * *.

Importers of products subject to the surcharge sought and obtained permission from the Cost of Living Council to pass the surcharge through to customers as a part of the price of the imported articles.⁵

Within less than five months following imposition of the surcharge, a multilateral agreement (The "Smithsonian Agreement" of December 18, 1971) among the major industrial nations was reached⁶ which, inter alia, gave promise of ending the overvaluation of the U. S. dollar in relation to other major currencies. On December 20, 1971, the import duty surcharge was terminated. (Presidential Proclamation 4098, 36 Fed.Reg. 24201 (1971).)

Customs Court

The main opinion below⁷ dealt extensively with the President's termination and emergency powers, finding that neither encompassed the tariff surcharge promulgated in Proclamation 4074.

The President's termination power, as expressed in the Tariff Act of 1930, as amended (Tariff Act) and the Trade Expansion Act of 1962 (TEA), was construed as follows:

We conclude that the authority granted by statute to "terminate, in whole or in part, any proclamation" does not include the power to determine and fix unilaterally a rate of duty which has not been previously legally established. On the contrary, the "termination" authority, as statutorily granted, merely provides the President with a mechanical procedure of supplanting or replacing existing rates with rates which have been established by prior proclamations or by statute. Relevant thereto is United States v. American Bitumuls & Asphalt Co., 44 CCPA 199, C.A.D. 661, 246 F.2d 270 (1957), cert. denied, 355 U.S. 883, 78 S.Ct. 150, 2 L.Ed.2d 113 (1957).

The power to "terminate, in whole or in part," existing proclaimed rates was characterized as twofold: the President may "nullify and bring to an end an entire proclamation" (whereupon the duty rate would revert to one previously established but not terminated), or he may "specify the extent to which a prior proclamation is terminated, thereby permitting a portion thereof to remain in effect." Thus, said the court, exercise of the termination power affects duty rates

* * * (1) to increase rates to the highest level, i. e., the statutory rate, or (2) to raise or lower rates to conform to rates which have been established by a prior proclamation. In either of these instances, the rates, to which conformance may be sought, have been previously established either by the Congress (statutory rate) or by a bilateral negotiation embodied in a trade agreement pursuant to statutory authority. In short, the power to fix a new and independent rate requires a greater grant of power than that delegated to the President by the termination authority.

The Government's reliance on the phrase "unless otherwise provided" in general headnote 4(d) of the tariff schedules⁸ was met with these words:

In our view that phrase is nothing more than an exception to the provision contained in headnote 4(d) fixing the order of rate reversion resulting from a termination proclamation. More specifically, the phrase "unless otherwise provided" gives the President discretionary authority when terminating a proclamation to specify a rate established in a specific previous proclamation other than the next intervening proclamation and thus avoid an automatic reversion to the next intervening proclaimed rate. In other words, the phrase "unless otherwise provided" contemplates only the exercise of Presidential discretion to preclude the order of reversion set forth in general headnote 4(d).

The President's emergency power, as expressed in the Trading With the Enemy Act (TWEA), section 5(b), to "regulate * * * importation * * * of * * * any property in which any foreign country or a national thereof has any interest," said the Customs Court,

* * * conveys to the President an authority consisting only of a specific mode of regulation, as distinguished from the full and all-inclusive power to regulate foreign commerce. The delegation of the specific regulatory

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