ISSUES RAISED BY GATT

Much of the discussion of GATT relates to its detailed legal and economic aspects. Before considering these matters, however, mention should be made of certain broad purposes of GATT which it is not believed will be widely challenged.

Since 1948 there has been a great expansion in the value and volume of our trade with the world. The value of world trade as a whole during each of the last three years has been more than double that of the best pre-war year and, of even more significance, the volume of world trade has been roughly 25 percent higher during each of these years than at any time in history. It is impossible to isolate the contribution of any one of several factors causing this expansion. Moreover, even if it were possible to determine what GATT's share in the growth of trade has been this would not tell the whole story. A large part of GATT's achievement is not in positive measurable benefits but in what it has prevented.

Prevention of Trade Warfare

Certainly there is a striking contrast between the commercial policies throughout the world following World War II as compared with World War I. Following World War I there was nothing comparable to GATT to hold protectionist forces in check, and increasing tariffs and other forms of trade restrictions were so universal as to create virtually a chronic state of trade warfare. It is true that since World War II there have been many trade restrictions, largely to meet balance-ofpayments difficulties growing out of wartime dislocations. But any wave of protectionism such as swept the world after the Footnotes for this section begin on page 83

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first world war has been conspicuously absent since World War II. Even the restrictions growing out of wartime dislocations have been the subject of constant international consultation under rules laid down in GATT, and are now on the wane. As stated by C. D. Howe, Canadian Minister of Trade and Commerce: "... While we all know that GATT is an imperfect document... I am convinced that without the General Agreement the dislocations resulting from the second world war would have been much more persistent

If GATT should be terminated, and if no provision were made to hold tariff rates and other restrictions at the level established by the Agreement, the general situation in international relations might well become similar to that following World War I.3

GATT's Relation to National Security

It must also be kept in mind that GATT is more than an instrument of international commercial policy. It has important implications from the standpoint of our foreign policy as a whole. Our total foreign policy is built on a network of alliances. It has been specifically recognized that these alliances cannot be purely military. A military alliance requires a strong economic base because modern total war depends in large part on coordinated economic strength. It requires that political and military harmony shall not be marred or disrupted by economic discord. Trade cooperation strengthens and unifies the free world. Trade restrictionism and disputes weaken and divide. GATT is the main intergovernmental instrument of free world commercial cooperation. In the field of commercial relations GATT is a counterpart of our military alliances.

The Randall Commission Staff Papers cover this point as follows:

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"... Having assumed the role of world leadership, the United States has found itself concerned with much more than its immediate trade relations with each of the coun

tries with which it deals directly. Its concern has now become that of developing a workable system of international trade which will bolster the strength of the free world as a whole and which will minimize economic and political stress among free world nations."

Legal and Economic Issues

The review of GATT by the CONTRACTING PARTIES in Geneva, which began in the latter part of 1954, will result in

some changes in the Agreement, perhaps substantial ones. The recommendations of the Commission on Foreign Economic Policy (Randall Commission) regarding the GATT, which were accepted by the President, call for the submission to Congress of the revised organizational provisions. Congress will almost certainly take the occasion to examine the agreement as a whole, however, even though action may be required only on that part relating to the Organization's powers.

There has been opposition to GATT in this country, and Congress itself has been at some pains to register doubt concerning it. The stage is therefore set for a definitive congressional determination of this Government's position in relation to GATT.

Legal Issues

The United States has been participating in GATT on the legal basis that it is an executive agreement negotiated by the President with the prior authorization of Congress in the Trade Agreements Act of 1934, as amended. Congressional approval of GATT has not been sought in the past because such action was considered unnecessary."

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GATT has been criticized on legal grounds as follows:

That the Trade Agreements Act is an unconstitutional delegation of legislative power;

That the Trade Agreements Act contemplated only the

negotiation of bilateral agreements, not a multilateral agreement such as GATT;

That some of the authority granted by Congress to the
President has been unconstitutionally "redelegated" by
him to the GATT Organization.

Constitutionality of the Trade
Agreements Act

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Under our Constitution the Congress cannot delegate any of its legislative power to another branch of the Government." This is in accordance with the separation of powers principle, by which governmental power is distributed by the Constitution among the three branches of the Government-legislative, executive, and judicial. None of the three may abdicate or transfer any of the power expressly granted to it by the su preme law of the land.

The Trade Agreements Act involves the general powers to tax, and to regulate, foreign commerce, and the specific power to make and set tariff rates.12 The Congress cannot delegate the law-making function with respect to any of these matters to the Executive. The Supreme Court has held, however, that the Congress has performed this law-making function whenever it lays down, by legislative act, a policy embodying an intelligible principle." This principle, or guiding rule, governs the discretionary power of the President in administering the Act. His discretion is limited to what is proper in applying the principle.

Although the constitutionality of the Trade Agreements Act itself has not been tested in the courts, there appears to be ample legal authority for the view that the Congress has met constitutional requirements by laying down an "intelligible principle" for the guidance of the Executive." In the Trade Agreements Act the main principle laid down is that reductions in the United States tariff shall correspond to action taken by other countries for the benefit of United States exports, i.e., the "reciprocity" principle."

The constitutional validity of the Trade Agreements Act has been re-examined each time the Act has come before Congress for renewal, and since 1934, the Act has been renewed nine times. Congress has in this way, therefore, repeatedly acted in accordance with the view that the Act is constitutionally valid.10

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Validity of a Multilateral Agreement

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The validity of GATT has been attacked on the ground that ". . . a trade agreement, as originally contemplated under the Act of 1934, was bilateral in form. The United States and one other country agreed to reduce certain of their tariffs."

and that

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... the State Department claims it is acting under the authority of the Trade Agreements Act and its several extensions despite the fact that Congress, in a number of bills in recent years, has added a caveat which states, 'the enactment of this Act shall not be construed to determine or indicate the approval or disapproval by the Congress of the Executive Agreement known as the General Agreement on Tariffs and Trade'.""""

The grounds on which this position is based are not clear. The Trade Agreements Act does not limit the President to the negotiation of bilateral agreements. The Act authorizes him "to enter into foreign trade agreements with foreign governments or instrumentalities thereof".10 Nothing has been found in the legislative history of the Act to indicate that Congress intended to confine the authority to the negotiation of bilateral agreements. Nor does logic suggest any such limitation. The purpose of the Act was to expand foreign markets for products of the United States. If a multilateral agreement, consistent with all the provisions and limitations in the law, were found by the President to be the best means of accomplishing the Congres sional purpose, the presumption clearly would be that a multilateral agreement would be permissable.