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The law and politics of United States foreign policy export controls

Published online by Cambridge University Press:  02 January 2018

J. W. Bridge
J. W. Bridge*
Affiliation:
University of Exeter
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Extract

One of the few areas of the law in which there is a significant and serious dispute between the United States and its Western Allies concerns the nature and scope of national regulation of international trade. This long-standing and mutually damaging dispute first arose in connection with the extraterritorial enforcement of US antitrust laws through the effects doctrine as elaborated by US courts commencing with the Alcoa case in 1945. Since then the dispute has progressively widened and deepened: it has extended to such matters as international shipping and civil aviation, commodity markets and securities and it has been aggravated by the extraterritorial application of US investigatory and other pretrial procedure.

Type
Research Article
Information
Legal Studies , Volume 4 , Issue 1 , March 1984 , pp. 2 - 29
Copyright
Copyright © Society of Legal Scholars 1984

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References

1. An excellent up-to-date account of the dispute is D. E. Rosenthal and W. M. Knighton's National Laws and International Commerce: The Problem of Extraterritoriality (Chatham House Papers, No 17, 1982) which also cites the leading literature on the subject. Also see A. H. Herman Conflicts of National Laws with International Business Activity: Issues of Extraterritoriality (British-North American Committee, BN30, 1982).

2. United States v Aluminium Co of America 148 F.2d 416. (2d Cir 1945).

3. See Rosenthal and Knighton op cit chs 3 and 5.

4. A recent and potentially promising development in the field of antitrust is the Australia-United States Agreement Relating to Cooperation on Antitrust Matters of 1982, reproduced in 21 International Legal Materials 702 (1982).

5. Part IV, Chapter 1, Introductory Note, 90 (Tent Draft No 2, 1981).

6. 973 HC Official Report (5th series) col 1534 (1979), per the UK Secretary State for Trade (Mr John Nott).

7. For accounts of these statutes, including the UK Protection of Trading Interests Act 1980, see A. V. Lowe ‘Blocking Extraterritorial Jurisdiction: The British Protection of Trading Interests Act 1980’ 75 Am J Int L 257 (1981); P. C. F. Pettit and C. J. D. Styles ‘The International Response to the Extraterritorial Application of United States Antitrust Laws’ 37 Bus Law 697 (1981–82); D. L. Jones ‘Legislative Attempts to Protect Trading Interests’ 8 Commonwealth L Bull 353 (1982).

8. Loc. cit. in n 6 above, col 1533. Also see 260 HL Official Report (5th series) col 544 (1963–64) concerning the Shipping Contracts and Commercial Documents Act 1964.

9. See United States Diplomatic Note concerning the UK Protection of Trading Interests Bill, No 56, 9 November 1979, reproduced in 21 International Legal Materials 840(1982).

10. Rio Tinto Zinc Corporation v Westinghouse Electric Corporation [1978] AC 547 at 617.

11. See R. Y. Jennings ‘Extraterritorial Jurisdiction and the United States Antitrust Laws’ 33 Brit YB Int 146 at 175 (1957); Rosenthal and Knighton op cit at 52, 85, 86.

12. Rosenthal and Knighton op cit at 6.

13. See the statement on Foreign Policy Export Controls by Ernest B. Johnston, Jr, Deputy Assistant Secretary for Economic and Business Affairs, to a Subcommittee of the US Senate Foreign Relations Committee on 18 March 1982, reproduced in 21 International Legal Materials 853 (1982) and K. W. Abbott ‘Linking Trade to Political Goals: Foreign Policy Export Controls in the 1970s and 1980s, 65 Minnesota L Rev 739 (1981).

14. See R. B. Ferguson ‘British Companies and America's Pipeline Embargo’ Scots Law Times, 29 October 1982, 281.

15. See ‘European Communities: Comments on the US Regulations Concerning Trade with the USSR reproduced in 21 International Legal Materials 891 (1982).

16. There is even disagreement concerning the grounds on which the sanctions were removed. See The Sunday Times (London), 14 November 1982, p 1, col 1; The Times (London), 15 November 1982, p 1, col 5 and p 24, col 5. For a particular American viewpoint see W. Safire ‘The great pipeline cave-in’The Times (London), 17 November 1982, p 10, col 2.

17. 40 Stat 411 (1917); 50 USCA App §1.

18. Modelled on the UK Trading with the Enemy Act 1914, 4 & 5 Geo 5, c 87.

19. See A. F. Lowenfeld Trade Controls for Political Ends§1.22 (1977).

20. 63 Stat 7 (1949); 50 USCA, App §2021.

21. Pub L 96–72, 93 Stat 503 (1979); 50 USCA, App §2401.

22. 50 USCA App §2402 (2) (B).

23. Ibid §2403.

24. Ibid §2403(a) (2) and (3).

25. Ibid §2403(a) (1).

26. Ibid §2414.

27. Ibid §2410.

28. Ibid §2404.

29. Ibid §2405.

30. Ibid §2405(a).

31. 15 CRF, Parts 379, 385 and 399, Controls on Exports of Petroleum Transmission and Refining Equipment to the USSR, reproduced in 21 International Legal Materials 855(1982).

32. 15 CFR, Part 390; General Orders; Suspension of All Licensing for Exports to the USSR, reproduced ibid 858.

33. 15 CFR, Parts 376, 379 and 385, Amendment of Oil and Gas Controls to the USSR, reproduced ibid 864.

34. Reproduced ibid 1098.

35. 15 CFR, Part 379.8(a) (4), reproduced ibid 865.

36. 15 CFR, Part 385.2(c), reproduced ibid 866.

37. Secretary of State for Trade (Lord Cockfield) in a Statement on the Siberian Gas Pipeline, 434 HL Official Report (5th series) col 544 (1982).

38. Protection of Trading Interests (US Reexport Control) Order 1982 (SI 1982 No 885).

39. Loc cit in n 37 above.

40. John Brown Engineering Ltd; Order Temporarily Denying Export Privileges, Case No 635, 9 September 1982, reproduced in 21 International Legal Materials 1101 (1982). Similar orders were issued to two French, one Italian and two German companies, ibid 1099, 1100, 1102, 1103 and 1104.

41. See n 16 above.

42. Cf Restatement of the Foreign Relations Law of the United States (Revised)§401 (Tent Draft No 2, 1981).

43. D. Lasok and J. W. Bridge An Introduction to the Law and Institutions of the European Communities (3rd edn, 1982) p 262.

44. Art 1, Montevideo Convention on the Rights and Duties of States of 1933, reproduced in M. Hudson (Ed) International Legislation Vol 6, at 620.

45. PCIJ, Series A, No 10, at 19 (1927).

46. See I. Brownlie Principles of Public International Law (3rd edn, 1979) pp 300–305.

47. Lot cit in n 19 above, at 1.

48. Loc cit in n 45 above, at 18–19.

49. Ibid at 19.

50. ‘Application of the Trading with the Enemy Act to Foreign Corporations owned by Americans: Reflections on Fruehauf v Massardy’ 83 Haw L Rev 579, at 592 (1969–70).

51. Indeed the jurisdictional claims of the United States are only effective to the extent that other states are acquiescent.

52. Loc cit in n 49 above, emphasis added.

53. Ibid.

54. UN Charter, Art 2(1) and (7).

55. Adopted, without a vote, on 24 October 1970 by G. A. Res. 2625 (xxv), reproduced in Djonovich, D. J. United Nations Resolutions, Series I General Assembly Vol xiii, 1970,Google Scholarat 337 (1976).

56. Ibid at 339. Also see UN Charter of Economic Rights and Duties of States of 1974, adopted by G. A. Res. 3281 (xxix), reproduced in 14 International Legal Materials 251 (1975).

57. See I. Brownlie op cit at 307.

58. Contemporary opinion in the USA is reflected in Restatement of the Foreign Relations Low of the United States (Revised)§415, Comment and Reporters' Notes (Tent Draft No 2, 1981).

59. ‘Extraterritorial Jurisdiction and the United States Antitrust Laws’ 33 Brit YB Int L 146 at 153 (1957).

60. Cf D. L. Jones ‘Legislative Attempts to Protect Trading Interests’ 8 Commonwealth L Bull 353 at 357 (1982).

61. By virtue of the ‘protective principle’; see Brownlie op cit at 303–304.

62. 50 USCA App §2404.

63. Ibid §2405.

64. Ibid §2401 (4).

65. Ibid §2402 (2) (B).

66. ‘British Companies and America's Pipeline Embargo’Scots Law Times, 29 October 1982, 281 at 283.

67. R. Y. Jennings loc cit in n 59 above, at 175.

68. It is perhaps not without significance that there is no colour of support for the extraterritorial enforcement of foreign policy export controls to be found either in the Restatement or in its recent draft revision.

69. 15 CFR, Part 385. 2(c) (2), reproduced in 21 International Legal Materials at 866 (1982).

70. Ibid, Part 379.8(a) (4), reproduced ibid at 865.

71. See The Exchange of Greek and Turkish Populations PCIJ, SerB, No 10, at 19 (1928).

74. See Nottebohm Case ICJ Reports, 1955, 4.

73. Barcelona Traction Co Case ICJ Reports, 1970, 3 at 43.

74. See D. P. O'Connell International Law (2nd edn, 1970) pp 104 et seq.

75. Loc cit in n 73 above.

76. 973 HC Official Report (5th series) col 1537 (1979), per Secretary of State for Trade (Mr John Nott).

77. §418 (2) (Tent Draft No 2, 1981).

78. Ibid Comment c.

79. Ibid Comment b.

80. Ibid Comment d.

81. See, for example, M. Akehurst ‘Jurisdiction in International Law’ 46 Brit YB Int L 145 at 169, 188–189 (1972–73); and Peter Rees QC, MP (Minister of State, Department of Trade) ‘The British Position’, an unpublished address to a Chatham House Conference on Extraterritoriality on 21 October 1982, at 6–7 (copy in possession of writer).

82. Loc cit in n 73 above.

83. Cf. W. L. Craig op cit at 588–589.

84. Loc cit in n 77 above, Reporters' Note 1.

85. Ibid Comment c.

86. Ibid §418(4)(a).

87. See Rosenthal and Knighton op cit at 24–25, 57.

88. §216, Comment e. (Tent Draft No 2, 1981).

89. H. Walker ‘Provisions on Companies in United States Commercial Treaties’ 50 Am J Int L 373 at 385(1956).

90. Art XIV, para 5, 401 UNTS 75 at 92.

91. Art XXII, para 3, 206 UNTS 143 at 220.

94. Sumitomo Shoji America Inc v Avagliano (Decided 15 June 1982). The US Supreme Court Slip Opinion is reproduced in 21 International Legal Materials 790 (1982).

93. Ie, Title VII of the Civil Rights Act of 1964, 42 USC §2000e.

94. Art VIII, para 1, loc cit in n 91 above, at 200.

95. Loc cit in n 92 above, at 794.

96. Ibid.

97. Ibid at 795.

98. N 11, ibid.

99. See Restatement (Second) of the Foreign Relations Law of the United States, §27. Reporters' Note (1965).

100. Op cit at 61.

101. See American President Lines v China Mutual Trading Co 1953 AMC 1510 at 1526; Moens v Ahlers North German Lloyd 30 RW 360 (1966).

102. 15 CFR Part 379.8(a)(4)(iii), reproduced in 21 International Legal Materials at 865 (1982).

103. Cf Restatement of the Foreign Relations Law of the United States (Revised)§402 (Tent Draft No 2, 1981).

104. See 50 USCA App §2407. Indeed these foreign boycott provisions may be invoked in respect of a boycott which is much less direct and far reaching than that imposed by the US in respect of the Siberian Pipeline; see ‘European Communities: Comments on the US Regulations Concerning Trade with the USSR reproduced in 21 International Legal Materials 891 at 897–898 (1982).

105. Ibid M 894.

106. No 56, 9 November 1979, reproduced in 21 International Legal Materials 840 at 843 (1982).

107. Note No 196, 27 July 1978, reproduced in G. Marston (Ed) ‘United Kingdom Materials on International Law 1978’ 49 Brit YB Int L at 390 (1978).

108. Op cit at 310.

109. Cf A. V. Lowe op cit at 262–264.

110. Cf W. L. Craig op cit at 580.

111. Op cit at 280.

114. See Murray V Schooner Charming Betsy 6 US (2 Cranch) 64 at 118 (1804). A more recent authority is Lauritzen v Larren 345 US 571 at 578 (1953).

113. See Restatement of the Foreign Relations Law of the United States (Revised)§135 (2) and Comment d. (Tent Draft No 1, 1980).

114. Ibid Comment c.

115. Ibid §134.

116. See Restatement (Second) of the Foreign Relations Law of the United States§2 (1965).

117. See US Diplomatic Note No 56 of 9 November 1979, loc cit in n 106 above, at 844.

118. See Restatement of the Foreign Relations Law of the United States (Revised), Part IV, Chapter 1, Introductory Note, 95 (Tent Draft No 2, 1981).

119. Loc cit in n 113 above, §135 (3) and Comment e.

120. 50 USCA App, §§2402 (2) (B) and 2405(a).

121. As suggested by R. B. Ferguson op cit at 282.

122. Loc cit in n 116 above, §§1 and 3 (3).

123. 50 USCA App, §2414.

124. Ibid §2412.

125. See ‘Statement on Extension of US Sanctions, June 18, 1982’ 18 Weekly Compilation of Presidential Documents 820 (1982), reproduced in 21 International Legal Materials 864 (1982).

126. Notably K. Brewster Jr Antitrust and American Business Abroad (1958) pp 445–446.

127. Loc cit in n 116 above, §40.

128. Eg Timberlane Lumber Co v Bank of America 549 F 2d 597 (9 Cir 1976); Mannington Mills Inc v Congoleum Corp 595 F 2d 1287 (3 Cir 1979).

129. See n 124 above.

130. 50 USCA App §2405(b) (3).

131. Ibid §2405(d).

134. Ibid §2405(g).

133. See 15 CFR, Parts 376, 379 and 385, Regulatory Changes, reproduced in 21 International Legal Materials 864 (1982). The enabling Act includes certain political controls over the exercise of the authority it confers; see 50 USCA App §2503(e). On 29 September 1982 the US House of Representatives voted in favour of a Bill to repeal the Pipeline sanctions; see The Economist, Vol 285, No 7257, 2 October 1982, at 70.

134. In respect of US Antitrust laws it has been stated that the ‘balancing of interests test’ has yet to be used so as to deny the exercise of US jurisdiction; see P. C. F. Pettit and C. J. D. Styles ‘The International Response to the Extraterritorial Application of United States Antitrust Laws’ 37 Bus Law 697 at 715 (1981–82).

135. ‘Extraterritorial Jurisdiction at a Crossroads: An Intersection Between Public and Private International Law’ 76 Am J Int L 280 at 299–300 (1982).

136. See Restatement of the Foreign Relations Law of the United States (Revised)§403 (4)(b) (Tent Draft No 2, 1981).

137. See J. E. Nowak, R. D. Rotunda and J. N. Young Handbook on Constitutional Law (1978) pp 437–450.

138. F. I. Michelman ‘Property, Utility and Fairness: Commentaries on the Ethical Foundations of Just Compensation Law’ 80 Harv L Rev 1165 (1967).

139. L. H. Tribe American Constitutional Law (1978) p 460.

140. This was one of the major reasons why Her Majesty's Government took action under the Protection of Trading Interests Act 1980; see 434 HL Official Report (5th series) col 546, per Secretary of State for Trade (Lord Cockfield).

141. L. H. Tribe op cit at 459, n 11 and 514–522.

142. See Pennsylvania Coal Co v Mahon 260 US 393 at 413–414 (1922). Also see Goldblatt v Town of Hempstead 369 US 590 at 594 (1962).

143. Nashville, Chattanooga & St Louis Railway v Walters 294 US 405 at 429 (1935).

144. Art 1, section 9 (3).

145. See L. H. Tribe op cit at 481.

146. 3 US (3 Dall) 286(1798).

147. Ibid at 390.

148. 50 USCA App §2410(a) and (b).

149. Harisiades v Shaughnessy 342 US 590 at 594 (1952).

150. Ibid.

151. 50 USCA App §2410(c).

152. Op cit, Preface, at viii.

153. H. J. Berman ‘The Export Administration Act: International Aspects’ Pro Am Soc Int L, April 1980, 82 at 84 (1981).

154. See A. F. Lowenfeld Trade Controls for Political Ends Ch 1, §1 (1977).

155. Quoted in K. W. Abbott ‘Linking Trade to Political Goals’ 65 Minnesota L Rev 739 at 795–796.

156. ‘Leadership in this case means action …’The Times (London), 14 October 1982, p 17, col 1.

157. Ibid.

158. Ibid.

159. Loc cit in n 155, above, at 798–799.

160. See in particular his ‘Trade, Technology, and Leverage: Economic Diplomacy’ 32 Foreign Policy 63 (1976). Also see L. J. Walinsky ‘Coherent Defense Strategy: The Case for Economic Denial’ 61 Foreign Affairs 272 (1982–83).

161. See A. F. Lowenfeld loc cit in n 154 above, ch 4.

162. See H. J. Berman loc cit in n 153 above, at 85; K. W. Abbott loc cit in n 155 above, at 799–821.

163. Figures quoted by H. J. Berman loc cit at 85–86.

164. Loc cit in n 155 above, at 821.

165. A good example is the denial of an export licence for a US computer which TASS would use for its coverage of the Moscow Olympics; see K. W. Abbott loc cit in n 155 above, at 794.

166. This has been acknowledged in the USA. See, for example, H. J. Berman and J. R. Carson ‘United States Export Controls - Past, Present, and Future’ 67 Columbia L Rev 791 (1967); J. F. Murphy and A. T. Downey ‘National Security, Foreign Policy and Individual Rights: The Quandary of United States Export Controls’ 30 Int Comp LQ 791 (1981); G. E. Garvey ‘The Foreign Trade Antitrust Improvements Act of 1981’ 14 Law Pol Int Bus 1 (1982).

167. Enserch Corporation and Day Corporation Ltd: A Report on the Proposed Merger Cmnd 8360, para 7.13 (1981).

168. See ‘Exporting American Sanctions’ The Economist, Vol 283, No 7243, 26 June 1982, at 20; 434 HL Official Report (5th series) col 545 per Lord Ponsonby, and col 546 per Secretary of State for Trade (Lord Cockfield); S. Bialer and J. Afferica ‘Reagan and Russia’ 61 Foreign Affairs 249 at 264 (1982–83).

169. D. E. Rosenthal ‘Remarks’ Proc Am Soc Int L, April 1980, 38 (1981).

170. See the UK Secretary of State for Trade's reference to ‘several decades of diplomatic representation’, 973 HC Official Report (5th·series) col 1542 (1979).

171. See 50 USCA App §2404(i), and comments by H. J. Berman loc cit in n 153 above, at 88, and Murphy and Downey loc cit in n 1966 above, at 809.

174. See the arguments advanced in the United States Diplomatic Note concerning the UK Protection of Trading Interests Bill, No 56, 9 November 1979, in 21 Internatonal Legal Materials 840 at 843 (1982).

173. Mr George Ball, quoted by the UK Secretary of State of Trade, 973 HC Official Report (5th series) col 1543 (1979).

174. Op cit at 54.

175. See statement by the US Attorney General (William French Smith) in an address to the 29th Congress of the Union Internationale des Avocats in New York on 31 August 1981, quoted by Pettit and Styles loc cit in n 134 above, at 715.

176. For an able analysis of the case law see H. G. Maier loc cit in n 135 above, at 303–316.

177. Lauritzen v Larsen 345 US 571 at 582 (1953).

178. Ibid.

179. The Bremen v Zapata Off-Shore Co 407 US 1 at 9 (1971).

180. Sherk v Alberto-Culvert 417 US 506 at 517, n 11 (1974).

181. See H. J. Berman loc cit in n 153 above, at 88, and Murphy and Downey loc cit in n 166 above, at 809.

182. Loc cit in n 135 above, at 310–311.

183. Reproduced in 21 International Legal Materials 702 (1982).