Inter Maritime Forwarding Co. v. United States

WilsoN, Judge:

The merchandise in the case at bar consists of woven fabric of wool, weighing over 4 ounces per square yard, imported from England, and subject to classification under paragraph 1109 (a) of the Tariff Act of 1930. The cloth in question was entered for consumption at the port of New York after 3:07 p.m. eastern standard time, July 25,1957, and before August 13,1957. The merchandise was assessed with duty at a “nonquota” rate of 37*4 cents per pound, plus 45 per centum ad valorem, under said paragraph 1109 (a), supra. The importer claims that the merchandise is subject to duty under the involved paragraph, as modified by the General Agreement on Tariffs and Trade, T.D. 51802, at only 37% cents per pound, plus 25 per centum ad valorem.

Under paragraph 1109 (a) of the Tariff Act of 1930’, as unmodified, woven fabrics, weighing more than 4 ounces per square yard, wholly or in chief value of wool, were dutiable at 50 cents per pound, plus an ad valorem rate of duty depending upon the value per pound of the fabric. The other paragraphs of the tariff act here involved are paragraphs 1108 and 1109(a), as modified by the General Agreement on Tariffs and Trade, T.D. 51802, part I, schedule XX, as made effec*82tive by Presidential Proclamation No. 2761A, dated December 16, 1947, which read as follows:

As indicated above, by virtue of said trade agreement and proclamation, a right was reserved to the United States to increase the ad valorem rate on such fabrics under a quota provision.

The facts in the case at bar which give rise to the present controversy are as follows:

On September 28, 1956, the President of the United States, by proclamation No. 3160 (T.D. 54212), invoked the “reservation” contained in the “Note,” svtpm, for the remaining 3 months of that year and also invoked it for each calendar year thereafter, until otherwise proclaimed. The provisions of said proclamation No. 3160, so far as pertinent, read as follows:

7. Whereas I find that upon invocation of the said reservation set forth in the second recital of this proclamation, effective October 1, 1956, it will be appropriate to carry out the trade agreement specified in the first recital of this proclamation that the ad valorem part of the rate be 45 per centum ad valorem in the case of any of the fabrics described in the said item 1108 or 1109(a) in Part I of Schedule XX to the General Agreement on Tariffs and Trade set forth in the second recital of this proclamation, * * * :
(a) during the period from October 1, 1956, to December 31, 1956, both inclusive, if such fabrics are entered, or withdrawn from warehouse, for con*83sumption after the total aggregate quantity of 3,500,000 pounds of such fabrics has been so entered or withdrawn; which quantity I find to be not less than 1% per centum of the average annual production in the United States during the three immediately preceding calendar years of fabrics similar to such fabrics; and
(b) following December 31, 1956, until otherwise proclaimed by the President, if such fabrics are entered, or withdrawn from warehouse, for consumption in any calendar year after that total aggregate quantity by weight of such fabrics which shall have been notified by the President to the Secretary of the Treasury, and published in the Federal Register, has been so entered or withdrawn during such calendar year; which quantity the President shall have found to be not less than 5 per centum of the average annual production in the United States during the three immediately preceding calendar years of fabrics similar to such fabrics; * * *
*******
Now, therefore, I, Dwight D. Eisenhower, President of the United States of America, acting under and by virtue of the authority vested in me by the Constitution and the Statutes, including the said section 350 of the Tariff Act of 1930, as amended, do proclaim as follows:
1. In order to carry out the said trade agreements specified in the first and third recitals of this proclamation, until otherwise proclaimed by the President, the ad valorem part of the rate which shall be applied to the said fabrics described in the seventh recital of this proclamation, entered, or withdrawn from warehouse, for consumption in excess of the quantity specified in clause (a) of that recital, or in excess of a quantity notified to the Secretary of the Treasury pursuant to clause (b) of that recital, shall be 45 per centum ad valorem.
*******

On May 24,1957, the President notified the Secretary of the Treasury that when the 1957 imports of the specified woven fabrics of wool reached 14,000,000 pounds, the ad valorem rate under paragraph 1109(a) would be increased from 25 per centum to 45 per centum (T.D. 54370). This notice was published in the Federal Eegister under date of May 28, 1957 (vol. 22 F.R., page 3717). Thereafter, on December 3,1957, the Commissioner of Customs notified the collector of customs at the port of New York (exhibit 4) that imports of said woven fabrics of wool weighing 14,000,000 pounds had been reached on July 25, 1957, at 3:07 p.m. eastern standard time. As heretofore stated, the involved merchandise was entered during the calendar year 1957, after July 25, and was assessed under paragraph 1109(a) of the Tariff Act of 1930 at the ad valorem rate of 45 per centum, plus the specific rate of 37% cents per pound.

Pursuant to the Trade Agreements Act of 1934, adding section 350 to the Tariff Act of 1930, certain powers were conferred upon the President in carrying out trade agreements. Section 350(a) of the Tariff Act of 1930, as amended, provides:

(a) For tbe purpose of expanding foreign markets for the products of the United States * * * the President, whenever he finds as a fact that any existing duties or other import restrictions of the United States or any foreign country *84are unduly burdening and restricting tbe foreign trade of tbe United States * * * is authorized from time to time—
(1) To enter into foreign-trade agreements with foreign governments or instrumentalities thereof; and
(2) To proclaim such modifications of existing duties and other import restrictions, or such additional import restrictions, or such continuance, and for such minimum periods, of existing customs or excise treatment of any article covered by foreign-trade agreements, as are required or appropriate to carry out any foreign-trade agreement that the President has entered into hereunder. * * * The President may at any time terminate any such proclamation in whole or in part.
* * * * * * *
(e) As used in this section, the term “duties and other import restrictions” includes (1) rate and form of import duties and classification of articles, and (2) limitations, prohibitions, charges, and exactions other than duties, imposed on importation or imposed for the regulation of imports.

Our appellate court has recently held that the Trade Agreements Act of 1934, under which the General Agreement on Tariffs and Trade was negotiated and promulgated, was a proper delegation of congressional power to the President. Star-Kist Foods, Inc. v. United States (Bruno Scheidt, Inc., Party in Interest), 47 C.C.P.A. (Customs) 52, C.A.D. 728, decided December 15, 1959.

The plaintiff, in the case at bar, specifically contends that a rate quota based on domestic production does not fall within any of the categories authorized under the provisions of section 350, sufra, in that a rate quota is not (a) a restriction, (b) a modification of existing duties, (c) a modification of existing limitations, or other powers authorized under the statute. However, our courts have recognized that quota restrictions have been authorized by the trade agreements act. In the case of Greene Cattle Company, Inc. v. United States, 36 C.C.P.A. (Customs) 52, C.A.D. 397, the court, at page 57, stated:

The Reciprocal Trade Agreements Act, supra, gives the President authority to conclude trade agreements with foreign countries and to “proclaim such modifications of existing duties and other import restrictions, or such additional import restrictions, or such continuance, and for such minimum periods, of existing customs or excise treatment of any article covered by foreign trade agreements, as are required or appropriate to carry out any foreign trade agreement that the President has entered into hereunder.” [Italics by the court.]
Subdivision (e) of see. 350, supra, provides that “the term ‘duties and other import restrictions’ includes (1) rate and form of import duties and classification of articles, and (2) limitations, prohibitions, charges, and exactions other than duties, imposed on importation or imposed for the regulation of imports.” [Italics by the court.]
The trial court held that “A quota is certainly a limitation on importation and is therefore authorized by the Reciprocal Trade Agreements Act.” With this we agree.

'While ifc is true that the statute (section 350, supra) does not specifically list “reservations” among the negotiating actions which may be *85proclaimed by tbe President, there is nothing in the trade agreements legislation, so far as we are able to determine, which would indicate that a modification of duty or change in rate may not be negotiated in such a way that it is conditional or subject to a “reservation.” The end result of invoking the reservation here in question was a modification of the rate of duty applicable to the pertinent merchandise, authority for which was given under the negotiated provisions of the trade agreements act, and it is immaterial whether the concessions so given under the trade agreements act are “conditional” or “reserved,” so long as the policy objectives of the statute are fulfilled.

It appears pertinent to observe that the wool quota reservation in question was written into the 1947 trade agreement as a part of the concessions granted on paragraphs 1108 and 1109(a) of the tariff act. Accordingly, the wool reservation was an integral part of the duty modifications negotiated with respect to said paragraphs 1108 and 1109(a). We are of opinion and hold that the President did have authority to invoke and proclaim the reservation contained in paragraph 1108 of the Tariff Act of 1930, as modified, on woven wool fabrics, when he deemed it appropriate to so carry out the negotiated provisions of the 1947 trade agreement.

The plaintiff further contends that, as used in section 350(a) (2), supra, the term “existing” applies not only to “duties and other import restrictions” but also to “limitations.” Essentially, in this regard, plaintiff maintains that the President is authorized to proclaim modifications only of existing limitations and that, accordingly, since the wool fabrics reservation was not in existence prior to the negotiation of the 1947 trade agreement, the President had no right or power to invoke the reservation in question. However, as heretofore pointed out, the reservation was an integral part of the then-existing duties in paragraphs 1108 and 1109 (a) of the tariff act. There is nothing in the statute itself which specifies the form in which a modification of existing duties may be exercised. The reservation clause incorporated into the duty modifications negotiated with respect to paragraphs 1108 and 1109(a) was a proper exercise of the powers conferred upon the President in negotiating trade agreements. In our opinion, the fact that the wool fabrics reservation did not “exist” prior to the enactment of the 1947 trade agreement does not invalidate the exercise of the power granted the President under the reservation. The net effect of the trade agreement negotiation, of which the reservation was an integral part, was to cause a modification, however conditional, of the then-existing duty treatment of the merchandise covered by *86paragraphs 1108 and 1109(a) of the tariff act, which modification is clearly authorized under the provisions of the statute.

The plaintiff further contends that, assuming the validity of the wool fabrics reservation, a proclamation is the only authorized notice procedure the President can employ in increasing the duty from 25 per centum to 45 per centum under the reservation. It is maintained, in this connection, that no proclamation was ever made by the President, acting on behalf of the Government under section 350 of the tariff act, as amended, swpra, finding that the 1957 imports of woven wool fabrics exceeded 5 per centum of the average annual production of similar domestic fabrics in the 3 preceding years; that no factual quantitative data to support such findings were ever set forth in a proclamation; that no proclamation was ever made by the President, under said section 350, stating that a quota rate shall apply only to a quantity of 14,000,000 pounds imported in 1957; and, further, that no proclamation was ever made setting forth the date when the quota rate for 1957 terminated, or setting forth the period of time when the quota rate shall continue during 1957.

Counsel for the plaintiff, stressing the language in section 350, supra, giving the President the power “to proclaim * * * such continuance, and for such minim,wn periods, of existing customs or excise treatment of any article covered by foreign-trade agreements * * *” [italics ours], specifically contends that, as opposed to the requirements set forth in section 350, supra, proclamation No. 3160 of September 1956, makes no reference to the period of time that the 1957 quota shall be effective, and, further, that it does not specify the 1957 import quantities upon which the “existing” treatment shall apply. It is pointed out that the only period of time established herein, in connection with 1957 imports of woven wool fabrics, is contained in the letter from the Commissioner of Customs, dated December 3, 1957, stating that the rate quota quantity was reached on July 25, 1957 (exhibit 4). Counsel maintains that said notification is not a “proclamation,” as required by section 350, supra. These contentions will be hereinafter referred to.

The plaintiff, in its brief, maintains that any Presidential proclamation which attempts to set up a quota must contain within itself all factors necessary to establish the quota, arguing, in this connection, that this is not true of the proclamation herein invoking the wool fabrics reservation. In support of this position, our attention is directed to the holding of the court in Greene Cattle Company, Inc. v. United States, 36 C.C.P.A. (Customs) 52, C.A.D. 397. The latter case, however, did not involve any question with reference to the completeness of a proclamation making operative quota provisions. The *87issue there was whether certain cattle, imported from Mexico during April 1942, were entitled to a reduced rate of duty. Under a trade agreement with Canada and the President’s proclamation issued thereunder, there was established a total quota limitation of 225,000 head of cattle, weighing 700 pounds each. In holding that the President, under the powers conferred upon him under section 350 of the Tariff Act of 1930, as amended, supra, had authority to allocate different percentages of that quota to Canada and other countries, the court held that the fact that, during the second quarter of 1942, there was not imported from Canada the total quantity permitted at the reduced rate did not give Mexico or any other country the right to import into the United States at the reduced rate more than the quantity provided for “other foreign countries” for a quarter year period of 1942 in the President’s proclamation. Significant, in our opinion, is the fact that the Canadian Trade Agreement there in question contained the formula to be applied in allocating the quota, if such allocation were to be requested. In the case at bar, the proclamation invoking the wool fabrics reservation also sets forth the formula to be used in computing the quota for each calendar year, and, since the quota was to be a percentage of domestic production in prior years, nothing was left to conjecture or speculation. The formula here for determining the quota was spelled out and, while not specifically authorized under the provisions of section 350, supra, was justified because it was “required or appropriate” to carry out the trade agreement herein involved. The only essential distinction, in our opinion, between the proclamation under consideration in the Greene Cattle case, supra, and the proclamation here in question is that, in the cited case, the pertinent proclamation contained a specified numerical basis for the quota, whereas the proclamation here under consideration contains a specified percentage formula for the quota. This, however, in our opinion, is a distinction without a difference.

The fact that, in the case at bar, the quota depends not upon the quantity of merchandise imported but that it depends rather upon the quantity of such merchandise produced in the United States in relation to the amount imported, is not, in our opinion, such a distinction as would invalidate the imposition of the quota here imposed. In United States v. Metropolitan Petroleum Corp., 42 C.C.P.A. (Customs) 38, C.A.D. 567, and United States v. American Bitumuls & Asphalt Co., 44 C.C.P.A. (Customs) 199, C.A.D. 661, the question involved the rate of tax assessable on importations of certain petroleum. A trade agreement had been concluded with Venezuela wherein the President agreed to reduce the tax, among other things, on imports of petroleum and petroleum products, including fuel oil derived from *88petroleum, which equaled 5 per centum of the total quantity of crude petroleum processed in refineries in continental United States during the preceding calendar year. The quota in the oil cases cited above, depended, as in the case at bar, upon the quantity of such merchandise produced in the United States in relation to the amount imported. While no question was there raised with respect to the legality of the quota provisions of the Venezuelan Trade Agreement, it was recognized, in those cases, that quota modifications were authorized under the trade agreements act, sufra.

We now proceed to a consideration of some of plaintiff’s contentions, more specifically that proclamation 3160, sufra, is not authority for imposing a quota or a rate quota on 1957 imports of woven wool fabrics. Concededly, in the first instance, the provisions of the General Agreement on Tariffs and Trade, T.D. 51802, specifically with reference to the rate of duty modifications in paragraphs 1108 and 1109(a), sufra, and the “Note” pertaining thereto, were made effective by Presidential Proclamation No. 2671A of December 16,1947. Subsequently, the President, on September 28, 1956, issued proclamation No. 3160, sufra. In our opinion, the latter proclamation put into operation the reservation contained in the “Note” with respect to the rates of duty under paragraphs 1108 and 1109 (a), sufra, and such increase in rate of duty as so provided was made effective for the period October 1, 1956, to December 31, 1956, and for each calendar year thereafter “until otherwise proclaimed.” Proclamation No. 3160 further provided that the increased rate of duty as to the merchandise covered thereby would be applicable to such merchandise in excess of a quantity “notified by the President to the Secretary of the Treasury,” and “published in the FedeRAL Register.” Notification by the President to the Secretary of the Treasury, setting forth the 1957 quota quantity applicable to products such as here involved, was given, as heretofore noted, on May 24, 1957 (T.D. 54370). Publication as to the quota limitation on imports for the year 1957 was made pursuant to the provisions of proclamation No. 3160 in the Federal Register of May 28, 1957 (22 F.R. 3717). This notification, in our opinion, was sufficient to inform all parties interested that the quota quantity for the calendar year 1957 was 14 million pounds.

While counsel for the plaintiff has set forth a number of arguments in support of the various contentions advanced, in our opinion, they fail to overcome the fact that the aforesaid two proclamations, namely, proclamation 2671A and proclamation No. 3160, rendered effective the General Agreement on Tariffs and Trade, T.D. 51802, and the quota reservation contained therein with respect to the relevant paragraphs. Concededly, in order for the reservation to be operative, a procla*89mation had to be issued invoking it. This, however, was done by-proclamation No. 3160, swpra. Thereafter, the pertinent tariff quota automatically began to operate, as provided by the said proclamation, at the beginning of each calendar year, starting with the year 1957, and, pursuant to provisions contained in the proclamation itself, the higher rate of duty was to attach as soon as imports of the products in question reached the stated quantity of 5 per centum of domestic production of similar products. Accordingly, in our opinion, once the reservation was rendered operative by proclamation No. 3160, a determination as to what would be the quota quantity in terms of pounds and as to when the quota had been fulfilled were matters of mere statistical computation and required, in our opinion, no further proclamation by the President to make such determinations effective.

Apparently, plaintiff would have us hold that the reservation in question may be invoked only when imports are found to have exceeded the 5 per centum limitation of domestic production in a particular calendar year and such finding is supported by publication of pertinent factual data, and, when in view of such finding, a decision is made to exercise and make operative the reservation. Such a restriction, however, upon the President’s authority to act is not, in our opinion, warranted. In view of the reciprocal provisions of the trade agreements act, the Government had the right, without qualification, to increase the duty in any year on imports of subject products in excess of 5 per centum of the average annual domestic production for the preceding 3-year period, and, accordingly, proclamation No. 3160 was something more than merely an expression of an intention to impose a quota on 1957 imports and an expression of an intention to modify the existing 25 per centum duty on 1957 imports.

With respect to plaintiff’s contention that no quota was in effect until May 24,1957, when the President “determined” that there would be a 1957 quota for such goods and that the quota would be 14,000,000 pounds (T.D. 54370), we are of opinion that, if the interpretation for which the plaintiff contends were valid, the right granted by the relevant reservation under the trade agreements act could never be fully exercised. In this connection, we note that “General Note No. 4 of Schedule XX of the General Agreement on Tariffs and Trade,” T.D. 51802, which was in effect when the merchandise here under consideration was entered for consumption, reads as follows:

4. If any tariff quota provided for in this Schedule, other than those provided for in items 771, becomes effective after the beginning of a period specified as the quota year, the quantity of the quota produet entitled to enter under the quota during the unexpired portion of the quota year shall be the annual quota quantity less Yl2 thereof for each full calendar month that has expired in such period.

*90As pointed out by the defendant, in its brief, if we assume that the applicable quota figured out to 12 million pounds and. that this amount was entered during the month of January, then, if the decision to invoke the reservation could not be made until the quota amount had been met, “General Note No. 4,” supra, would require that 11 million more pounds (i.e., the 12-million-pound annual quota, less one-twelfth for the expired month of January) be allowed entry at the quota rate before the higher nonquota rate could be applied. In such case, the increased duty would be applicable and could be made effective only after imports amounting to 23 million pounds, or 9.6 per centum of domestic production had been entered. Clearly, such a result would be inconsistent with the intent of the negotiators of the trade agreements act. In our opinion, the fact that a stated quantity of imports must occur before a higher nonquota rate of duty .attaches, does not signify that such indicated volume must be entered before a decision to apply the higher rate of duty is made by the President or one acting in authority under the law. Consequently, we conclude that “General Note No. 4,” supra, does not affect the situation before us and that the action of the President in this case, in invoking the reservation and setting the quota rate applicable to goods such as here imported, was valid and within contemplation of the law. For the latter reason, we deem it unnecessary to consider the claim advanced by the plaintiff that, according to “General Note No. 4,” supra, there was still an “available” quota of 9,333,333 pounds of woven wool fabrics on May 1,1957, and that, at the time the merchandise under consideration was entered, namely, on August 13,1957, such available quota had not been exhausted.

Numbered also .among the plaintiff’s contentions are several others, which we deem worthy of reference and consideration. Plaintiff attacks the validity of proclamation 3160, supra, because it does not specify “any ‘minimum period’ in 1947 when the 45% rate shall apply.” However, the “minimum period” clause in section 350, supra, applies only to ,a “continuance” of existing customs or excise treatment of any article covered by foreign trade agreements, a situation not prevailing or involved in the case at bar. Plaintiff further claims that the President was without authority to issue a proclamation invoking the wool fabrics reservation for more than 1 year at a time, because section 350, supra, might be amended and, therefore, the President “cannot assume in advance to change a duty every year unless he first determines each year that he is authorized to do so on the basis of the authority delegated then to him by Congress.” This contention is without merit. Aside from the fact that the basic authority of the President, under section 350, supra, with respect to proclamations, has not been changed since the Trade Agreements Act *91of 1934, eren if some change were made subsequent to the issuance of a proclamation under the aforesaid section, the new legislation would prevail, in the event of a conflict with the prior proclamation. In the absence of new legislation, there is nothing to prevent the President from proclaiming a duty rate applicable to imported merchandise each year, as was done in this case. Proclamation No. 3160 provides that the wool fabrics reservation should apply in each succeeding year “until otherwise proclaimed.” Further, plaintiff, citing the President’s authority under section 350, supra, to proclaim modifications of existing duties, indicates that a proclamation carrying into effect the wool fabrics reservation must be based on existing “conditions” in the industry, and that, therefore, a new proclamation would be required each year. Nowhere is the matter of “conditions” covered by the enabling section. There is no connection between “duties” and “conditions,” as contemplated by the statute, and plaintiff’s contention that invocation of the wool fabrics reservation must be based upon existing “conditions” is also without merit in our present determination.

The defendant, in this case, concedes that no production statistics by weight, as called for in the reservation setting up the pertinent quota, were maintained or directly available. While it is further conceded that the fixing of the quota on wool fabrics might have been more precise or accurate, had such statistics been maintained, we do not believe it is within our province to attack the final determination of the President as to what constitutes the applicable quota or the fulfillment thereof with respect to the goods here imported. The President was entrusted with the duty and had the power of adopting such measures to carry out the intent of the negotiators of the trade agreement “as are required or appropriate.” In the case at bar, the President determined that 14 million pounds represented a quantity of not less than 5 per centum of the average annual production in the United States during the 3 immediately preceding calendar years of fabrics similar to those imported, and, in accordance with the powers conferred upon him, determined that the 45 per centum rate would be applicable when said quantity had been reached. How he arrived at such determinations or the expediency of the measures taken by him, pursuant to the exercise of powers conferred under the law, which resulted in final action making applicable the nonquota or increased rate of ad valorem duty to the goods imported, ,are matters which, in our opinion, are not subject to judicial review.

For the reasons stated aforesaid, we are of opinion and hold that the quota reservation, as contained in the General Agreement on Tariffs and Trade, T.D. 51802, covering merchandise classifiable *92under paragraphs 1108 and 1109(a) of the tariff act, as amended, was authorized by section 850 of the Tariff Act of 1930, as amended; that said reservation was made effective by Presidential Proclamation No. 2761A, supra] that proclamation No. 3160, supra, was a valid exercise of the powers conferred upon the President and made operative the quota provisions contained in the aforesaid “Note” or reservation with respect to the rate of duty applicable to the imported merchandise; and that, accordingly, the involved merchandise is properly dutiable under the relevant paragraph of the tariff act, as amended, as assessed.

The protest herein is overruled. Judgment will issue accordingly.