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CHAPTER 8
NATIONAL LAWMAKING POWERS
AND THE REGULATION OF U.S. TRADE
CASES IN THIS CHAPTER
Dole v. Carter
Youngstown Sheet & Tube v. Sawyer
Star-Kist Foods, Inc. v. United States
Arizona v. United States
Japan Line, Ltd. v. County of Los Angeles
TEACHING SUMMARY
The U.S. Constitution and federal laws affect U.S.-based global trade in many ways. The
Constitution describes the role of the president and congress in regulating global relations as
well as their power to develop nationally-binding regulations. International agreements include
executive agreements and international treaties. Congress authorizes the president to negotiate
trade agreements which then are submitted to Congress for its approval. Numerous federal
agencies such as the International Trade Commission, the Department of Homeland Security
and the Unites States Trade Representative make regulations and engage in negotiations that
affect businesses in their domestic actions as well as in their actions in foreign countries.
Additional Background: Friendship, Commerce, and Navigation Treaties. It might seem
obvious that domestic employment discrimination law applies to foreign companies doing
business in the U.S., as domestic law generally applies to everyone within a jurisdiction. The
application of employment discrimination law to foreign companies, however, has been affected
by a series of treaties negotiated and signed by the U.S. throughout the world. After World War
II, the United States began negotiating a series of Friendship, Commerce, and Navigation (FCN)
treaties with its international trading partners. These treaties sought to prevent discriminatory
treatment against a foreign national doing business in one of the signatory countries and to
encourage business to invest overseas. At present, the U.S. has negotiated FCN treaties with
approximately 25 nations. In drafting such treaties, the U.S. has included provisions to prevent
U.S. companies operating abroad from being required to hire a quota of citizens (from the host
country) in management positions. This "was necessary for the limited purpose of securing to
foreign investors [and U.S. investors acting overseas] the freedom to place their own citizens in
key management positions, thus facilitating their operational success in the host country." These
“employer choice” provisions have provided a basis for foreign companies and their U.S.
subsidiaries to claim that they are exempt from the restrictions of Title VII and other U.S.
discrimination law.
Though the treaties are very similar and based on the same underlying concerns, their specific
wording varies. The Korean FCN Treaty specifies that "Nationals and companies of either Party
shall be permitted to engage, within the territories of the other Party, accountants and other
technical experts, executive personnel . . . and other specialists of their choice." The
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Chapter 8: National Lawmaking Powers and the Regulation of U.S. Trade
comparable provision, Article VIII, of the Japanese FCN Treaty is essentially identical, while the
Greek FCN Treaty guarantees foreign companies "employees of their choice among those
legally in the country and eligible to work."
1. Why did the president use a sole executive agreement resolving this issue with
Hungary instead of relying on the treaty power?
2. Was the president's action required to be authorized by the Congress?
3. What kinds of agreements are usually reserved for treaties, and what kinds are
handled through executive agreements?
Answer: Treaties are reserved for actions that involve significant U.S. commitments or
significant risks or ones that by custom or international law have usually been the
subject of treaties. None of those are involved here. Executive agreements often deal
with topics that can be addressed in a short time period and without complicated
analysis.
Youngstown Sheet & Tube v. Sawyer
1. On what grounds did Justice Black reject President Truman’s seizure order?
2. How did Justice Jackson characterize the sources of presidential power?
3. Considering that the United States was engaged in a brutal war in Korea, and that steel
was needed for the war effort, do you agree with the decision (three justices dissented)? If
the Court had permitted the seizure of a private business in this case, could that have led
to a “slippery slope” and ultimately future seizures on somewhat lesser grounds?
1. What was the constitutional authority for the agreement with Iceland?
2. What was the policy objective of Congress in enacting the Reciprocal Trade Agreements
Act noted by the court? How was the president to implement this policy?
3. Why was the congressional delegation of authority constitutional?
1. Where does the federal government derive its authority to regulate immigration?
4. Why did the court uphold the fourth part of the Arizona statute (2B)?
Answer: The state officers are allowed to check with the federal immigration authority on
the status of someone who may be subject to arrest. Federal law does not prohibit such
contact.
Japan Line, Ltd. v. County of Los Angeles
1. What rule does the Court espouse for the state taxation of cargo containers and other
instrumentalities of foreign commerce?
Answer: The rule forbids multiple taxation: taxes may be apportioned among taxing
jurisdictions, but then no jurisdiction can tax the instrumentality in full.
2. How does this case affect taxation by foreign countries?
Answer: Although the U.S. can ensure compliance with and enforce this rule in the U.S., it
cannot do so with regard to foreign nations. Thus, foreign countries are free to proceed as
they see fit.
3. What effect would multiple taxation have on international commerce?
Answer: It would eliminate federal uniformity, as foreign commerce into different states
may be taxed at different rates. Countries seeking to retaliate against a state (for its
taxation) would probably enact retaliatory measures not against a single state, but against
the nations as a whole.
