Issue 4 - Virginia Law Review

Trade Administration

At the core of public debates about trade policy making in the United States and the so-called “trade war” is a controversy over who should be responsible for making U.S. trade law: Congress or the President. What these important conversations miss is that underlying much of our trade policy in recent decades is a widespread executive-branch-lawmaking apparatus with monitoring, rulemaking, adjudicative, and enforcement features that operates in considerable shadow. Executive branch agencies are now the primary actors in trade lawmaking. This Article excavates that critical underbelly: what I call our “trade administrative state.” It maps the trade administrative state’s statutory and institutional ascent, which I maintain was the product of considerable experimentation in governance schemes developed in response to diverging market trends and normative priorities, the absence of judicial mechanisms to monitor its borders, and a deficiency of administrative law disciplines to respond to its fortification.

This unearthing reveals that the trade administrative state does not operate like the rest of the regulatory state either in form or in process, despite that its actors engage in several conventional regulatory functions. Rather, trade lawmaking is predominantly managed by a single agency, the Office of the United States Trade Representative, and, procedurally, it lacks the hallmarks traditionally associated with administrative law. The Article then evaluates this model in light of administrative law’s aspirations. It demonstrates how our present model of trade administration and its self-policing control mechanisms clash with commonly held scholarly and doctrinal understandings of executive governance.

This assessment of modern trade governance also prescribes certain lessons for how administrative law operates when it comes to certain specialized areas of administration. Surprisingly, despite the fact that trade administration challenges established positivist and process-oriented values, it does so in such a way that may enhance compliance with international law. At a moment when critics raise concern about the President’s disfavor of international trade law and institutions, this study reveals that certain norms may be entrenched in our trade administrative state to counteract those concerns.

Taken together, the Article makes three contributions: First, it identifies and illustrates the experimental history of trade administration. Second, I unpack the distinct features of trade lawmaking as managed by executive branch agencies and draw conclusions about its functions for the way we conceive of trade actors and trade action in our constitutional framework. Finally, the Article analyzes the implications of this revealed structure for administrative law both in process and in content and shows how trade law serves as an unexpected administrative constraint.

Introduction

Legal debates over allocations of power in trade lawmaking have focused on the shift in power from Congress to the President.¹1.See, e.g., Timothy Meyer & Ganesh Sitaraman, Trade and the Separation of Powers, 107 Calif. L. Rev. 583, 586–97 (2019); Kathleen Claussen, Separation of Trade Law Powers, 43 Yale J. Int’l L. 315, 316–20 (2018) [hereinafter Claussen, Separation of Trade Law Powers]; John Linarelli, International Trade Relations and the Separation of Powers under the United States Constitution, 13 Dick. J. Int’l L. 203, 204–05 (1995); Harold Hongju Koh, Congressional Controls on Presidential Trade Policymaking After I.N.S. v. Chadha, 18 N.Y.U. J. Int’l L. & Pol. 1191, 1191–92 (1986).Show More But beneath the surface of our separation of trade law powers is a vast trade-lawmaking administrative apparatus with understudied implications. It is the executive branch beyond the President that wields considerable control over trade law outcomes and policy actions. The true driving forces of U.S. trade lawmaking are sited inside the executive and are often out of sight. This Article seeks to precipitate a turn away from thinking about the imposition of congressional controls in trade lawmaking in favor of greater consideration for administrative controls. I argue that the modern trade-lawmaking process is not one shaped by the separation of powers as much as it is by agency administration.

This study considers the work of what I call the “trade administrative state”²2.As I explain further below, the “trade administrative state” refers to a vast landscape of executive branch agencies that write trade rules, monitor the implementation of those rules, adjudicate disputes over their content, and subsequently enforce them in three dimensions—horizontal, vertical, and diagonal. See Subsection II.A.1.Show More—and with some urgency. As recent events have brought the features of our trade administration once again to the fore,³3.See, e.g., Josh Zumbrun, Feliz Solomon & Jeffrey Lewis, U.S.-China Trade War Reshaped Global Commerce, Wall St. J. (Feb. 9, 2020), https://www.wsj.com/articles/u-s-china-trade-war-reshaped-global-commerce-11581244201 [https://perma.cc/CGZ2-3CGX]; Ana Swanson & Jeanna Smialek, U.S. Manufacturing Slumps as Trade War Damage Lingers, N.Y. Times (Jan. 3, 2020), https://www.nytimes.com/2020/01/03/business/manufacturing-trump-trade-war.html [https://perma.cc/3ZC2-2BT9]; Shawn Donnan, Trade Won’t Fade as a Big Disrupter in 2020, Bloomberg (Jan. 2, 2020), https://www.bloomberg.com/news/articles/‌2020-01-02/trade-war-latest-trump-2020-china-tariffs-election-polls [https://perma.cc/7ZQW-FXCZ].Show More commentators have argued for better balance between the President and Congress as a means of correction.⁴4.See, e.g., Philip Wallach, James Wallner & Clark Packard, Is Congress Willing To Assert Responsibility for Trade?, Bulwark (Feb. 3, 2020), https://thebulwark.com/is-congress-willing-to-assert-responsibility-for-trade/ [https://perma.cc/254H-AL5M]; Daniel Griswold, Only Congress Can End the China Trade War Quagmire, Hill (Sept. 11, 2019), https://thehill.com/opinion/international/460920-only-congress-can-end-the-china-trade-war-quagmire [https://perma.cc/D2WK-QQJM]; Jennifer A. Hillman, How To Stop Trump’s Trade War Madness, N.Y. Times (Aug. 11, 2019), https://www.nytimes.com/2019/08/11/–opinion/trump-china-trade.html [https://perma.cc/N4XX-583F]; Clark Packard, Congress Should Take Back Its Authority Over Tariffs, Foreign Pol’y (May 4, 2019) [hereinafter Packard, Congress Should Take Back Its Authority Over Tariffs], https://foreignpolicy.com/2019/05/04/congress-should-take-back-its-authority-over-tariffs-trump/ [https://perma.cc/BME2-XV9C].Show More While those assessments underscore important conversations about the democratic separation of powers generally, they tend to discount the normative and practical entrenchment of trade lawmaking among executive branch agencies.⁵5.To be sure, a considerable literature on the political economy of trade policy has identified this important shift. See, e.g., Douglas A. Irwin, U.S. Trade Policy in Historical Perspective, 6–7 (Nat’l Bureau of Econ. Rsch., Working Paper No. 26,256, 2019) (referring to additional work in the field). Legal scholarship relating to domestic trade institutions, on the other hand, has been more limited, especially in recent years. This Article builds off the foundation of the former to build a conversation in the latter.Show More The delegations from Congress to the President are just the tip of the iceberg with respect to our trade topography. U.S. trade lawmaking is embedded in a much larger administrative structure—parts of which are hidden from Congress, despite its constitutional primacy, and from even the White House. But the story is not just one of structure. Administration is also largely about process. Executive agencies play the most important role in trade lawmaking, and they do so according to sui generis processes subject to little supervision.

This Article provides a thorough descriptive review of modern U.S. trade administration and then evaluates whether our form of trade administration is appropriate or preferred. In so doing, one key feature surfaces: the managerial role played by a single agency created in 1962 called the Office of the United States Trade Representative (“USTR”).⁶6.Trade Expansion Act of 1962, Pub. L. No. 87-794, § 101 et seq., 76 Stat. 872 (codified as amended at 19 U.S.C. § 1801 et seq.).Show More Today, USTR supervises most of our modern trade-lawmaking enterprise, acting as a super-agency similar to the Office of Management and Budget (“OMB”).⁷7.See Eloise Pasachoff, The President’s Budget as a Source of Agency Policy Control, 125 Yale L.J. 2182, 2194–99 (2016) (describing the role of OMB); Gillian E. Metzger & Kevin M. Stack, Internal Administrative Law, 115 Mich. L. Rev. 1239, 1243 (2017) (discussing the OMB’s super-styled role without using the term); see also David C. Vladeck, O.M.B.: A Dangerous Superagency, N.Y. Times (Sept. 6, 1989), https://www.nytimes.com/‌1989/09/06/opinion/omb-a-dangerous-superagency.html [https://perma.cc/9PVV-XYFM] (warning that OMB “exercises cradle-to-grave control over all regulatory initiatives”).Show More USTR oversees other agency rulemaking and, strikingly, can compel action from other parts of the government.

It was not always this way. The present arrangement is only the latest iteration in a history of experimental trade governance. At the nation’s founding, the regulation of foreign commerce consisted primarily of the issuance of tariff schedules and the negotiation of commercial treaties.⁸8.See infra Section I.A.Show More Congress relied on the President to adjust tariffs in respect of carefully circumscribed situations and counted on the Bureau of Customs to apply the tariff rates on goods at the border.⁹9.Id.Show More These activities involved little discretion by the executive branch. A progressively aggressive delegation of authorities to the President and a movement toward reciprocal arrangements with trading partner countries empowered the executive branch to take on greater authority from the 1890s through the 1930s.¹⁰10.See infra Section I.C.Show More By the middle of the twentieth century, trade lawmaking had become an exercise of an extensive legal machinery—not just in content but also in institutional form. While Congress continued to guide its substance, the diminished congressional role eventually heralded a new mode of governance with distinct features that have since characterized the way U.S. trade law is made.

This Article presents the details of this structural change. It demonstrates how the trade administrative state today is deeply entrenched and remarkably complex. To practice in this area is to develop a niche specialization in a distinctive administrative universe. Thus, one purpose of this Article is to review the undervalued legal system of foreign trade regulation: to chronicle the statutory and institutional rise of this multifarious system and to situate it empirically at the core of modern trade law.

This functional appraisal illuminates another layer of trade administration: its characteristic administrative law traits—or rather, the lack of administrative disciplines that apply. At first glance, one might think the positive story of trade lawmaking just mirrors that of either regular administrative lawmaking or of foreign affairs lawmaking. Some observers may see this as a sort of extension of the work of the OMB.¹¹11.OIRA Pages, The White House, https://www.whitehouse.gov/omb/information-regulatory-affairs/ [https://perma.cc/5G4J-SYYV] (last visited Jan. 29, 2021); see also Nestor M. Davidson & Ethan J. Leib, Regleprudence—at OIRA and Beyond, 103 Geo. L.J. 259, 268–70 (2015) (examining Office of Information and Regulatory Affairs (“OIRA”) practice as a form of executive lawmaking).Show More But in ways unlike other areas of executive branch lawmaking, trade-lawmaking agencies are sites of administrative innovation. They make law not through the standard administrative law playbook but regularly rework it from the ground up. Only some features of trade lawmaking are subject to the Administrative Procedure Act (APA).¹²12.See 5 U.S.C. §§ 500–04, 551–59, 561–84, 591–96, 701–06. I return to the question of whether trade falls within the APA’s foreign-affairs exception infra at note 219 and accompanying text.Show More A great deal of trade agency action is not subject to either conventional notice-and-comment procedures or judicial review.¹³13.See infra Section III.A.Show More In many trade-related congressional delegations to agencies, the form and content of administrative process, if any is specified, is left to the agency’s discretion. These notable omissions raise questions both for administrative law’s reach as well as for trade law’s accountability, transparency, and legitimacy. The result is a form of administrative governance that is characterized more by experimentation and haphazardness than by accountability and rule-of-law values.

Most surprising about this account is that USTR intervenes in the domestic rulemaking process where it finds that rules proposed by other agencies are not compliant with international trade law. Thus, one overlooked feature of the trade administrative state is that it has elements that both reject administrative law features and inject international law primacy into the administrative process. At a moment when critics raise concern about the future of international trade law and institutions, this study reveals that certain norms are entrenched in our trade administrative state to counteract those concerns.

The stakes of trade administration have only continued to grow. Congress has delegated vast authorities of different types to these agencies such that the choice between a “free trade” policy or a more “protectionist” policy is left almost entirely to the executive.¹⁴14.For an overview of the delegations made by Congress to the executive with respect to both free trade and protectionism, see generally Kathleen Claussen, Trade’s Security Exceptionalism, 72 Stan. L. Rev. 1097, 1109–26 (2020) [hereinafter Claussen, Trade’s Security Exceptionalism].Show More Take, for example, the Trump administration’s so-called “trade war.” Under the current model, the process for imposing tariffs on products is an administrative process. Agencies carry out investigations, make determinations, and either act on the President’s direction or provide their findings to the President for his ultimate decision. Those agencies also implement the tariffs and adjudicate which products and industries will be exempted from those tariffs. Critically, and unexpectedly, the trade war has illustrated that when these agencies engage in trade lawmaking, they are subject to a different set of rules and regulations and processes than many agencies that act exclusively domestically.¹⁵15.This is not to suggest that all domestic agencies subscribe to a singular process, but rather to capture how the typical agency controls are not as salient as they would be in the traditional domestic administrative law textbook depiction.Show More Our recent extensive tariff exercise has helped bring to light this discrepancy in practice and may provide a guide to how stakeholders can advocate for change or an end to the warring tariffs. Thus, shifting the lens of our focus to trade administration helps us to deconstruct the trade war and contextualize it within broader notions of regulatory authority.

The study’s descriptive content motivates its positive and normative conclusions. From a policy perspective, modern trade administration has both benefits and drawbacks. The costs of trade administration—such as its lack of transparency and democratic inputs—may be outweighed by its international-law-enhancing functions. But the costs and benefits are not mutually exclusive. The absence of traditional administrative law mandates may provide necessary expertise, flexibility, and compliance with international law, but they can also be abused in the way that administrative law’s proponents have feared. This dilemma raises the question whether it is possible to create a principled approach to trade lawmaking that fosters compliance and coherence, but that also addresses the fundamental participatory and democratic principles that administrative law endorses.¹⁶16.Again, this question is one with which the political economy literature has wrestled, but which legal scholarship has not confronted in detail in some time. The picture of trade administration has evolved since those prior accounts as discussed further below. See infra Section II.A.Show More

I argue that a different way forward is possible, even if handicapped by a certain degree of path dependence and entrenchment, and that more ought to be done to consider administrative principles in trade law. We can strengthen administrative law values in trade law without losing the important coordinating and rule-enforcing features of the present system. When done well, an administrative law approach to trade could lessen the pressure on congressional-executive politics and take advantage of agency expertise while also creating an opportunity for administrative review. Judicial review is an important check on agency rulemaking that could be enhanced without considerable overhaul of the present system. Administrative law structures can hold agencies accountable for providing appropriate justifications and abiding by statutory requirements.

Finally, a critical examination of trade administration is of pressing importance as Congress, courts, and legal scholars debate new forms of trade governance and institutional frameworks for trade law and lawmaking.¹⁷17.See, e.g., Am. Inst. for Int’l Steel v. United States, 806 Fed. App’x 982, 990–91 (Fed. Cir. 2020); Invenergy Renewables LLC v. United States, 422 F. Supp. 3d 1255, 1281–83 (Ct. Int’l Trade 2019); Transpacific Steel LLC v. United States, 415 F. Supp. 3d 1267, 1272–76 (Ct. Int’l Trade 2019); Rep. DelBene Introduces Bill To Prohibit the Use of IEEPA To Impose Tariffs, Inside U.S. Trade (June 28, 2019), https://insidetrade.com/trade/rep-delbene-introduces-bill-prohibit-use-ieepa-impose-tariffs [https://perma.cc/TU7F-8CPT]; Rep. Murphy Introduces Bill To Give Congress a Say in National Security Tariffs, Inside U.S. Trade (June 25, 2019), https://insidetrade.com/trade/rep-murphy-introduces-bill-give-congress-say-national-security-tariffs [https://perma.cc/UB69-KWG7]; GOP Bill Would Require Congressional Approval of IEEPA Declarations, Inside U.S. Trade (June 20, 2019), https://insidetrade.com/trade/gop-bill-would-require-congressional-approval-ieepa-declarations [https://perma.cc/7YFK-663U]; Isabelle Hoagland, Sens. Lankford, Coons Divided on USMCA Timing, United on Need for Tariff Legislation, Inside U.S. Trade (June 13, 2019), https://insidetrade.com/daily-news/sens-lankford-coons-divided-usmca-timing-united-need-tariff-legislation [https://perma.cc/BC79-KDJH]; New Kaine-Carper Bill Would Give Congress Broader Trade Authorities, Influence, Inside U.S. Trade (Mar. 27, 2019), https://insidetrade.com/trade/new-kaine-carper-bill-would-give-congress-broader-trade-authorities-influence [https://perma.cc/XFV2-AAD2]; Lawmakers Introduce Bill To Delay Potential Auto Tariffs, Inside U.S. Trade (Mar. 14, 2019), https://insidetrade.com/daily-news/lawmakers-introduce-bill-delay-potential-auto-tariffs [https://perma.cc/XF6P-QG2Z].Show More This evaluation allows policy makers to assess the practical operation and costs and benefits of changing or abandoning the existing model, which may be especially important in periods of political transition.

The Article proceeds in four parts. Part I describes the anterior three eras of trade-lawmaking governance in historical perspective and theorizes the foundations of the trade administrative state. It analyzes the evolution both structurally and functionally by identifying key statutes and institutional moves made by all three branches. As this Part demonstrates, a confluence of factors led to the increased responsibility for a variety of agencies in trade lawmaking.

Part II introduces the idea of modern trade administration and maps out major institutional design choices. The bulk of this Part presents newly gathered legislative and executive materials to establish the breadth of agency and sub-agency involvement in trade lawmaking and its hierarchical, expansive, and multifaceted structure of today’s foreign commercial regulatory framework. I document the ways in which the executive branch trade apparatus has flourished to the point of making USTR a manager, rather than an agent as is traditionally believed, when it comes to U.S. trade law. This Part captures the hallmarks of managerial trade administration that set USTR apart from other agencies. Taken individually, each of USTR’s many roles is not especially noteworthy, but taken together, they make USTR distinctive in under-explored ways.

Part III turns to normative issues, analyzing doctrinal, practical, and policy benefits and drawbacks. I argue that this managerial model exacerbates concerns about interest group capture in some ways by removing such engagements from judicial review and the public eye. But it also has the unexpected benefit of enhancing U.S. commitments to international trade law. Thus, on the one hand, such an approach to trade governance improves U.S. adherence to international law and streamlines a considerable array of cross-border economic policy, but, on the other, it does so at the expense of traditional positivist and process-oriented values.

Finally, Part IV considers lessons for why the trade administrative state and its legal limits matter for ongoing structural and doctrinal debates. I refer to this as trade law’s “unfinished business.”

Two caveats are in order. First, this Article tries to capture the most important pieces of trade lawmaking. There are some areas where the managerial model has less salience, but the Article seeks to confront why and how that fragmentation in trade governance surfaced. Second, given its breadth and opacity, no single essay could fully canvass trade administration. I intend to set out a preliminary review and to note areas that cannot be addressed in this space.

* Associate Professor, University of Miami School of Law, and Senior Fellow, Georgetown University Law Center Institute of International Economic Law. I am grateful for helpful comments from and conversations with Curt Bradley, Elena Chachko, Steve Charnovitz, Harlan Cohen, Charlton Copeland, Evan Criddle, Michael Froomkin, Jean Galbraith, James Gathii, Monica Hakimi, Oona Hathaway, Larry Helfer, Duncan Hollis, Gary Horlick, Sharon Jacobs, Irene Oritseweyinmi Joe, Anne Joseph O’Connell, Lili Levi, Tim Meyer, Jide Nzelibe, Eloise Pasachoff, Shalev Roisman, Michael Sant’Ambrogio, Andres Sawicki, Gabriel Scheffler, Steve Schnably, Lisa Schultz Bressman, Peter Shane, Ganesh Sitaraman, Kevin Stack, Elizabeth Trujillo, Pierre-Hugues Verdier, Marcia Weldon, Bill Widen, Ingrid Wuerth, David Zaring, and participants in the Duke Journal of International and Comparative Law Symposium, Georgetown University Law Center IIEL Workshop, University of Colorado School of Law Faculty Workshop, Vanderbilt Law Faculty Workshop, the World Trade Institute Summer Lunchtime Workshop, and the Junior Administrative Law Scholars Workshop hosted by Yale Law School. Special thanks to my former government colleagues who offered their time and expertise, sharing views on unwritten aspects of the internal workings of today’s U.S. trade-lawmaking system, and to UM Law Librarians Bianca Anderson and Pam Lucken for their extensive assistance hunting down legislative and executive documents. Finally, I am grateful to the Virginia Law Review editorial team, especially Christopher Baldacci, Katherine Graves, and Jordan Walsh. ↑
See, e.g., Timothy Meyer & Ganesh Sitaraman, Trade and the Separation of Powers, 107 Calif. L. Rev. 583, 586–97 (2019); Kathleen Claussen, Separation of Trade Law Powers, 43 Yale J. Int’l L. 315, 316–20 (2018) [hereinafter Claussen, Separation of Trade Law Powers]; John Linarelli, International Trade Relations and the Separation of Powers under the United States Constitution, 13 Dick. J. Int’l L. 203, 204–05 (1995); Harold Hongju Koh, Congressional Controls on Presidential Trade Policymaking After I.N.S. v. Chadha, 18 N.Y.U. J. Int’l L. & Pol. 1191, 1191–92 (1986). ↑
As I explain further below, the “trade administrative state” refers to a vast landscape of executive branch agencies that write trade rules, monitor the implementation of those rules, adjudicate disputes over their content, and subsequently enforce them in three dimensions—horizontal, vertical, and diagonal. See Subsection II.A.1. ↑
See, e.g., Josh Zumbrun, Feliz Solomon & Jeffrey Lewis, U.S.-China Trade War Reshaped Global Commerce, Wall St. J. (Feb. 9, 2020), https://www.wsj.com/articles/u-s-china-trade-war-reshaped-global-commerce-11581244201 [https://perma.cc/CGZ2-3CGX]; Ana Swanson & Jeanna Smialek, U.S. Manufacturing Slumps as Trade War Damage Lingers, N.Y. Times (Jan. 3, 2020), https://www.nytimes.com/2020/01/03/business/manufacturing-trump-trade-war.html [https://perma.cc/3ZC2-2BT9]; Shawn Donnan, Trade Won’t Fade as a Big Disrupter in 2020, Bloomberg (Jan. 2, 2020), https://www.bloomberg.com/news/articles/‌2020-01-02/trade-war-latest-trump-2020-china-tariffs-election-polls [https://perma.cc/7ZQW-FXCZ]. ↑
See, e.g., Philip Wallach, James Wallner & Clark Packard, Is Congress Willing To Assert Responsibility for Trade?, Bulwark (Feb. 3, 2020), https://thebulwark.com/is-congress-willing-to-assert-responsibility-for-trade/ [https://perma.cc/254H-AL5M]; Daniel Griswold, Only Congress Can End the China Trade War Quagmire, Hill (Sept. 11, 2019), https://thehill.com/opinion/international/460920-only-congress-can-end-the-china-trade-war-quagmire [https://perma.cc/D2WK-QQJM]; Jennifer A. Hillman, How To Stop Trump’s Trade War Madness, N.Y. Times (Aug. 11, 2019), https://www.nytimes.com/2019/08/11/–opinion/trump-china-trade.html [https://perma.cc/N4XX-583F]; Clark Packard, Congress Should Take Back Its Authority Over Tariffs, Foreign Pol’y (May 4, 2019) [hereinafter Packard, Congress Should Take Back Its Authority Over Tariffs], https://foreignpolicy.com/2019/05/04/congress-should-take-back-its-authority-over-tariffs-trump/ [https://perma.cc/BME2-XV9C]. ↑
To be sure, a considerable literature on the political economy of trade policy has identified this important shift. See, e.g., Douglas A. Irwin, U.S. Trade Policy in Historical Perspective, 6–7 (Nat’l Bureau of Econ. Rsch., Working Paper No. 26,256, 2019) (referring to additional work in the field). Legal scholarship relating to domestic trade institutions, on the other hand, has been more limited, especially in recent years. This Article builds off the foundation of the former to build a conversation in the latter. ↑
Trade Expansion Act of 1962, Pub. L. No. 87-794, § 101 et seq., 76 Stat. 872 (codified as amended at 19 U.S.C. § 1801 et seq.). ↑
See Eloise Pasachoff, The President’s Budget as a Source of Agency Policy Control, 125 Yale L.J. 2182, 2194–99 (2016) (describing the role of OMB); Gillian E. Metzger & Kevin M. Stack, Internal Administrative Law, 115 Mich. L. Rev. 1239, 1243 (2017) (discussing the OMB’s super-styled role without using the term); see also David C. Vladeck, O.M.B.: A Dangerous Superagency, N.Y. Times (Sept. 6, 1989), https://www.nytimes.com/‌1989/09/06/opinion/omb-a-dangerous-superagency.html [https://perma.cc/9PVV-XYFM] (warning that OMB “exercises cradle-to-grave control over all regulatory initiatives”). ↑
See infra Section I.A. ↑
Id. ↑
See infra Section I.C. ↑
OIRA Pages, The White House, https://www.whitehouse.gov/omb/information-regulatory-affairs/ [https://perma.cc/5G4J-SYYV] (last visited Jan. 29, 2021); see also Nestor M. Davidson & Ethan J. Leib, Regleprudence—at OIRA and Beyond, 103 Geo. L.J. 259, 268–70 (2015) (examining Office of Information and Regulatory Affairs (“OIRA”) practice as a form of executive lawmaking). ↑
See 5 U.S.C. §§ 500–04, 551–59, 561–84, 591–96, 701–06. I return to the question of whether trade falls within the APA’s foreign-affairs exception infra at note 219 and accompanying text. ↑
See infra Section III.A. ↑
For an overview of the delegations made by Congress to the executive with respect to both free trade and protectionism, see generally Kathleen Claussen, Trade’s Security Exceptionalism, 72 Stan. L. Rev. 1097, 1109–26 (2020) [hereinafter Claussen, Trade’s Security Exceptionalism]. ↑
This is not to suggest that all domestic agencies subscribe to a singular process, but rather to capture how the typical agency controls are not as salient as they would be in the traditional domestic administrative law textbook depiction. ↑
Again, this question is one with which the political economy literature has wrestled, but which legal scholarship has not confronted in detail in some time. The picture of trade administration has evolved since those prior accounts as discussed further below. See infra Section II.A. ↑
See, e.g., Am. Inst. for Int’l Steel v. United States, 806 Fed. App’x 982, 990–91 (Fed. Cir. 2020); Invenergy Renewables LLC v. United States, 422 F. Supp. 3d 1255, 1281–83 (Ct. Int’l Trade 2019); Transpacific Steel LLC v. United States, 415 F. Supp. 3d 1267, 1272–76 (Ct. Int’l Trade 2019); Rep. DelBene Introduces Bill To Prohibit the Use of IEEPA To Impose Tariffs, Inside U.S. Trade (June 28, 2019), https://insidetrade.com/trade/rep-delbene-introduces-bill-prohibit-use-ieepa-impose-tariffs [https://perma.cc/TU7F-8CPT]; Rep. Murphy Introduces Bill To Give Congress a Say in National Security Tariffs, Inside U.S. Trade (June 25, 2019), https://insidetrade.com/trade/rep-murphy-introduces-bill-give-congress-say-national-security-tariffs [https://perma.cc/UB69-KWG7]; GOP Bill Would Require Congressional Approval of IEEPA Declarations, Inside U.S. Trade (June 20, 2019), https://insidetrade.com/trade/gop-bill-would-require-congressional-approval-ieepa-declarations [https://perma.cc/7YFK-663U]; Isabelle Hoagland, Sens. Lankford, Coons Divided on USMCA Timing, United on Need for Tariff Legislation, Inside U.S. Trade (June 13, 2019), https://insidetrade.com/daily-news/sens-lankford-coons-divided-usmca-timing-united-need-tariff-legislation [https://perma.cc/BC79-KDJH]; New Kaine-Carper Bill Would Give Congress Broader Trade Authorities, Influence, Inside U.S. Trade (Mar. 27, 2019), https://insidetrade.com/trade/new-kaine-carper-bill-would-give-congress-broader-trade-authorities-influence [https://perma.cc/XFV2-AAD2]; Lawmakers Introduce Bill To Delay Potential Auto Tariffs, Inside U.S. Trade (Mar. 14, 2019), https://insidetrade.com/daily-news/lawmakers-introduce-bill-delay-potential-auto-tariffs [https://perma.cc/XF6P-QG2Z]. ↑
See, e.g., Meyer & Sitaraman, supra note 1, at 597–612 (discussing how delegations shifted authority from Congress to the President); Jide O. Nzelibe, The Illusion of the Free-Trade Constitution, 19 N.Y.U. J. Legis. & Pub. Pol’y 1, 2–3 (2016); Koh, supra note 1, at 1192–93 (“[T]he President has historically asserted dominance over international trade . . . .”). ↑
Compare Nzelibe, supra note 18, at 8 (“legislative altruism”), with Meyer & Sitaraman, supra note 1, at 609 (“abdication”). ↑
To be sure, some would say it does. See, e.g., I.M. Destler, American Trade Politics 33 (4th ed. 2005). They point to the fact that Congress is the only constitutionally empowered branch. U.S. Const. art. I, § 8, cl. 3. But those same scholars do not deny that Congress has the opportunity to delegate its authority as necessary. Destler, supra note 20, at 32. ↑
Cf. Meyer & Sitaraman, supra note 1, at 586–612 (describing only two paradigms). My analysis does not take issue with the two paradigms that Meyer and Sitaraman set out; rather, it intends to complement that important project and take up the explicit and implicit structural modes within those governing paradigms. ↑
U.S. Const. art. I, § 8, cl. 1, 3. ↑
See Cory Adkins & David Singh Grewal, Two Views of International Trade in the Constitutional Order, 94 Tex. L. Rev. 1495, 1516 (2016) (referring to authorizations made to Washington, Adams, and Jefferson to embargo ships). At that time and for many years trade was related to war. The United States fought wars over trade and fought wars through trade. Trade was inextricably linked to the existence of the nation. Id. at 1517. ↑
In July 1789, the second Act of Congress established a system of tariffs on imported “goods and merchandises” while the third Act established tariffs on the tonnage of ships. Already in Congress’ earliest days, there was a debate about the proper objectives of a tariff, but most salient was the need for revenue. Act of July 4, 1789, ch. 2, 1 Stat. 24; Act of July 20, 1789, ch. 3, 1 Stat. 27. ↑
Act of July 31, 1789, ch. 5, 1 Stat. 29. ↑
Act of Aug. 7, 1789, ch. 9, 1 Stat. 53. ↑
Act of Aug. 4, 1790, ch. 35, §§ 62–64, 1 Stat. 145. ↑
Act of May 27, 1796, ch. 31, 1 Stat. 474. ↑
Act of July 16, 1798, ch. 77, 1 Stat. 605. ↑
Act of Sept. 2, 1789, ch. 12, 1 Stat. 65. ↑
John F. Coyle, The Treaty of Friendship, Commerce and Navigation in the Modern Era, 51 Colum. J. Transnat’l L. 302, 307 (2013). Although these FCN treaties were popular into the twentieth century, their impact on foreign commerce diminished. In fact, most FCN treaty provisions were incorporated into other areas of U.S. law. Id. at 341–43 (describing the ways the treaty provisions “fade[d] into near-irrelevance”). ↑
See, e.g., Treaty of Amity and Commerce Between His Majesty the King of Prussia, and the United States of America, Prussia-U.S., art. 4, Sept. 10, 1785, 8 Stat. 84. ↑
See Jean Galbraith, International Law and the Domestic Separation of Powers, 99 Va. L. Rev. 987, 1013–14 (2013). ↑
See, e.g., Message Transmitting a Report of the Secretary of State on the Spoliations Committed on the Commerce of the United States (Mar. 5, 1794), in 1 American State Papers: Foreign Relations 423, 423–24 (Walter Lowrie & Matthew St. Clair Clarke eds., 1833) (describing with concern the attacks on U.S. merchants and the need for greater authority to combat such attacks). ↑
Bruce Ackerman & David Golove, Is NAFTA Constitutional?, 108 Harv. L. Rev. 799, 820–29 (1995) (“Early statutes imposed this duty on the President, typically requiring him to issue a proclamation giving each complying country a clean bill of health. We call these ‘proclamation statutes,’ and they have been very common.”). ↑
Act of Feb. 9, 1799, ch. 2, § 4, 1 Stat. 613. ↑
Act of Dec. 19, 1806, ch. 1, § 3, 2 Stat. 411. ↑
Act of June 4, 1794, ch. 41, 1 Stat. 372 (authorizing the President to lay an embargo on ships as necessary “whenever . . . the public safety shall so require”); Act of Feb. 9, 1799, ch. 2, § 4, 1 Stat. 613 (making it lawful for the President to draw back restrictions on trade that Congress enacted “if he shall deem it expedient and consistent with the interest of the United States” or “whenever, in his opinion, the interest of the United States shall require”); Act of Dec. 19, 1806, ch. 1, § 3, 2 Stat. 411; Act of April 22, 1808, ch. 52, 2 Stat. 490 (authorizing the President to suspend a trade embargo for certain vessels “on such bond and security being given as the public interest . . . require”). ↑
Act of Mar. 3, 1815, ch. 77, 3 Stat. 224 (emphasis added). ↑
For a more robust discussion of the President’s tariff-related fact-finding in the context of fact-finding more generally, see Shalev Roisman, Presidential Factfinding, 72 Vand. L. Rev. 825, 849 (2019). ↑
Act of Mar. 3, 1817, ch. 39, 3 Stat. 361–62; Act of Jan. 7, 1824, ch. 4, § 4, 4 Stat. 2; Act of May 24, 1828, ch 111, § 1, 4 Stat. 308; Act of May 31, 1830, ch. 219, § 2, 4 Stat. 425; Act of June 26, 1884, ch. 121, § 14, 23 Stat. 53. ↑
See, e.g., Act of Mar. 6, 1866, ch. 12, 14 Stat. 3 (allowing suspension of the prohibition “whenever the Secretary of the Treasury shall officially determine” that importation of certain cattle would not spread infectious disease). ↑
See S. Rep. No. 73-871, at 1–2 (1934) (“The committee has inserted the words ‘as a fact’ following the words in subsection (a) ‘the President, whenever he finds.’ This is to make clear that Congress under the proposed bill is establishing a policy and directing the Executive to act in accordance with the congressional policy only when he finds as a fact that existing duties or other import restrictions are unduly burdening and restricting the foreign trade of the United States. In the same provision, to the words ‘existing duties or other import restrictions’ the words ‘of the United States or any foreign country’ have been added to clarify the meaning.”). ↑
See Alfred E. Eckes, Opening America’s Market: U.S. Foreign Trade Policy Since 1776, at 70–74 (1995). ↑
Id. (noting that Secretary of State Blaine revives the idea and urges President Harrison to request authority). ↑
Act of Oct. 1, 1890, ch. 1244, 26 Stat. 567. ↑
Section 3 of the Act provided that certain commodities would be admitted free of duties, but that the President could impose specified rates against nations charging “unequal and unreasonable” duties on U.S. commodities. Id. § 3; see also Field v. Clark, 143 U.S. 649, 680–91 (1892) (holding that Section 3 was not an unconstitutional delegation of legislative and treaty-making authority to the President); Douglas A. Irwin, Clashing Over Commerce: A History of U.S. Trade Policy 304 (2017) [hereinafter Irwin, Clashing Over Commerce]; H.R. Rep. No. 73-1000, at 9 (1934) (recognizing the President’s power under Section 3 and noting the Field decision); Francis B. Sayre, The Constitutionality of the Trade Agreements Act, 39 Colum. L. Rev. 751, 761–62 (1939) (discussing presidential action in protectionist trade policy generally); Oona A. Hathaway, Presidential Power over International Law: Restoring the Balance, 119 Yale L.J. 140, 173–74 (2009) (noting this started a transformation in U.S. international lawmaking). ↑
143 U.S. at 694; see also id. at 699–700 (Lamar, J., dissenting) (commenting that this Act ought to be distinguished as it is clearly lawmaking). Interestingly, and somewhat ironically, the Court has developed major principles of administrative law through trade-related cases such as Field and others taken up below. In the twenty-first century, trade-related administrative law has been significantly curtailed. ↑
Wilson-Gorman Tariff Act of 1894, ch. 349, § 71, 28 Stat. 509, 569; see also Harold U. Faulkner, The Decline of Laissez Faire, 1897–1917, 59–60 (1977) (discussing the politics of tariffs in the years after the Wilson-Gorman Act); Eckes, supra note 44, at 70 & 70 n.39 (discussing congressional opposition to executive reciprocity agreements in 1884). ↑
The Dingley Tariff Act of 1897 authorized the President again to negotiate reciprocal tariff agreements with an eye to lowering tariffs with trading partners. Dingley Tariff Act of 1897, ch. 11, § 3, 30 Stat. 151, 203. The 1922 Fordney McCumber Tariff Act again empowered the President to adjust tariff rates under the condition that the Tariff Commission so advised. Fordney-McCumber Act of 1922, ch. 356, § 315, 42 Stat. 858, 941–46. ↑
In President Taft’s inauguration in 1909, he called for Congress to give him still greater authority, but also noted that any such action was a congressional prerogative. William Howard Taft, Inaugural Address (Mar. 4, 1909), in 1 Presidential Addresses and State Papers of William Howard Taft: From March 4, 1909 to March 4, 1910, at 53, 55 (1910) (“It is imperatively necessary, therefore, that a tariff bill be drawn . . . and as promptly passed as due consideration will permit. . . . I venture this as a suggestion only, for the course to be taken by Congress, upon the call of the Executive, is wholly within its discretion.”). Warren G. Harding, Inaugural Address (Mar. 4, 1921), in Inaugural Addresses of the Presidents of the United States: From George Washington 1789 to George Bush 1989 237, 243–44 (1989). ↑
H.R. Rep. No. 73-1000, at 10 (1934). ↑
Id. ↑
Payne-Aldrich Tariff Act of 1909, ch. 6, § 2, 36 Stat. 11, 82–83. ↑
See U.S. Int’l Trade Comm’n, The Economic Effects of Significant U.S. Import Restraints 65 (6th ed. 2009) (“Prior to the 1930 act, tariff changes were viewed as entirely the domain of Congress.”); see also Hal Shapiro & Lael Brainard, Trade Promotion Authority Formerly Known As Fast Track: Building Common Ground on Trade Demands More Than a Name Change, 35 Geo. Wash. Int’l L. Rev. 1, 6 (2003) (“Prior to the twentieth century U.S. regulation of foreign commerce was almost exclusively a congressional prerogative . . . .”); Ian F. Fergusson, Cong. Rsch. Serv., RL33743, Trade Promotion Authority (TPA) and the Role of Congress in Trade Policy 2–3 (2015). (“For roughly the first 150 years of the United States, Congress exercised its authority over foreign trade by setting tariff rates on all imported products.”). ↑
As the Supreme Court confirmed in Field v. Clark: “There are many things upon which wise and useful legislation must depend which cannot be known to the law-making power, and, must, therefore, be a subject of inquiry and determination outside of the halls of legislation.” 143 U.S. 649, 694 (1892). ↑
Revenue Act of 1916, Pub. L. No. 64-271, ch. 463, § 700, 39 Stat. 756, 795. ↑
On several different occasions since 1865, tariff boards were set up by Congress or in some instances by executive order for specific studies, but none would be permanent. For example, a tariff commission was established in 1882 with nine members. It was appointed to report to Congress on recommended tariff rate changes. Report of the Tariff Commission, H.R. Misc. Doc. No. 47-6, pt. 1., at 1, 5, 7 (1882). Upon doing so, it ceased to function. The Trade Act of 1971: A Fundamental Change in United States Foreign Trade Policy, 80 Yale L.J. 1418, 1424 n.31 (1971); Act of May 15, 1882, Pub. L. No. 47-145, ch. 145, 22 Stat. 64; see also U.S. Tariff Comm’n, The Tariff and Its History 97–100 (1934) (describing nine non-permanent bodies created between 1865 and 1922 to study tariff-related issues). Likewise, in 1911, a three-member Tariff Board was established pursuant to congressional funding thereof to look into the tariff schedule for wool and woolens. Act of Mar. 4, 1911, Pub. L. No. 61-525, ch. 285, 36 Stat. 1363. Other non-permanent agencies were created in 1865, 1866, 1888, 1909, and 1912. See generally J. Bernhardt, The Tariff Commission: Its History, Activities and Organization 3–14 (1922) (providing an overview of the activities of seven government bodies tasked with studying tariff-related issues between 1865 and 1912). ↑
Irwin, Clashing Over Commerce, supra note 47, at 356–57. ↑
Id. at 356–57, 362–64. ↑
Anti-Dumping Act of 1921, Pub. L. No. 67-10, ch. 14, § 201-202, 42 Stat. 9, 11–12. ↑
James Pomeroy Hendrick, The United States Antidumping Act, 58 Am. J. Int’l L. 914, 932 (1964) (noting just 73 findings of dumping between 1921 and 1964). From 1934 to 1954 there were only seven findings of dumping. Douglas A. Irwin, The Rise of US Anti-dumping Activity in Historical Perspective, 28 World Econ. 651, 659 (2005). In 1954, this responsibility was transferred to the ITC. Irwin, supra, at 659. ↑
CBP Timeline, U.S. Customs & Border Prot., https://www.cbp.gov/about/history/‌timeline-static-view [https://perma.cc/W7BP-7LEF] (last visited Mar. 8, 2021). ↑
See Act of May 15, 1862, Pub. L. No. 37-72, 12 Stat. 387, 387 (establishing USDA to “procure . . . and distribute . . . valuable seeds and plants”). ↑
See Eckes, supra note 44, at 99. ↑
J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 410–11 (1928). In that case, an importer contested the imposition of a duty of six cents per pound on barium dioxide, two cents more than in the 1922 statute, after a 1924 proclamation by President Calvin Coolidge. The Supreme Court ruled that the delegation of authority was constitutional because the President was carrying out the will of Congress in changing the duty. Id. at 400, 411. ↑
The use of a principal-agent framework as an analytical tool for understanding congressional-executive relations in foreign affairs is not entirely novel in practice or scholarship. Ed Swaine has described that there was a time when:

[D]iplomats were regarded as personal agents of a head of state, and could be viewed in terms of a conventional principal-agent relationship, but identifying the principal (conceivably, the head of state, a legislature, or the state itself), the agent . . . , and the nature and consequences of delegated authority became less straightforward.

Edward T. Swaine, Unsigning, 55 Stan. L. Rev. 2061, 2068 (2003). Daniel Abebe has proposed viewing Congress as principal and the President as its agent in foreign affairs generally. In contrast to my study, Abebe seeks to determine “the appropriate level of deference to the President” based on a balancing of internal and external constraints to “ensure that the President is a faithful agent” while also ensuring the President has enough “latitude to achieve congressional goals.” Daniel Abebe, The Global Determinants of U.S. Foreign Affairs Law, 49 Stan. J. Int’l L. 1, 53 (2013). ↑
See, e.g., Claussen, Trade’s Security Exceptionalism, supra note 14, at 1109. For example, Section 3(e) of the National Industrial Recovery Act gave the President the power to use import quotas or fees to regulate any imports found to “render ineffective or seriously to endanger the maintenance of any code or agreement.” Pub. L. No. 73-67, § 3, 48 Stat. 195, 197 (1933) (codified at 15 U.S.C. § 703, terminated by Exec. Order 7252). ↑
As early as 1923, Secretary of State Charles Evans Hughes sent a confidential circular to American diplomatic officers notifying them that the President had authorized the Secretary of State to negotiate commercial treaties with other countries by which to accord each other unconditional most-favored-nation treatment. 1 Papers Relating to the Foreign Relations of the United States, 1923, H.R. Doc. No. 68-397, at 131 (1938). ↑
U.S. Tariff Comm’n, Sixth Annual Report 2 (1922). ↑
Id. ↑
Presidential Press Conference (June 9, 1933), in 1 Complete Presidential Press Conferences of Franklin D. Roosevelt, 1933, 364, 368–70 (1972). ↑
Irwin, Clashing Over Commerce, supra note 47, at 425. ↑
Nzelibe, supra note 18, at 7 (“For many scholars, congressional delegation was the crucial constitutional innovation that ultimately overcame interest group capture.”) (noting also that political economy scholars are skeptical). As David Lake has commented, the important difference of the RTAA as compared to prior delegations was that it delegated multiple authorities simultaneously. David A. Lake, Power, Protection, and Free Trade: International Sources of U.S. Commercial Strategy, 1887–1939, at 205 (1988). ↑
Reciprocal Trade Agreements Act of 1934, Pub. L. No. 73-316, ch. 474, 48 Stat. 943 (codified as amended in scattered sections of 19 U.S.C.). ↑
Id. at 945. ↑
Harry C. Hawkins & Janet L. Norwood, The Legislative Basis of United States Commercial Policy, in Studies in United States Commercial Policy 69, 100 (William B. Kelly, Jr. ed., 1963). ↑
Id. at 101. See also Harry C. Hawkins, Administration of the Trade Agreements Act, 1944 Wis. L. Rev. 3, 8–9 (1944); Henry J. Tasca, The Reciprocal Trade Policy of the United States: A Study in Trade Philosophy 49–50 (1938). ↑
Some temporary advisory positions came and went. See, e.g., Exec. Order No. 6,651, 3 The Public Papers and Addresses of Franklin D. Roosevelt 158, 158–60 (Mar. 23, 1934) (creating a special trade advisor). ↑
See, e.g., Exec. Order No. 9,832, 3 C.F.R. Supp. 126, 127 (1947) (creating the Committee); Exec. Order No. 6,651, 3 The Public Papers and Addresses of Franklin D. Roosevelt 158, 158–60 (Mar. 23, 1934) (creating the Office of the Special Adviser to the President on Foreign Trade). ↑
For greater detail, see Daniel K. Tarullo, Law and Politics in Twentieth Century Tariff History, 34 UCLA L. Rev. 285, 286 (1986). ↑
Historically, “neither the Bureau of Customs nor any other agency was empowered to set or change tariff rates as such.” Id. ↑
Stephen D. Cohen, The Making of United States International Economic Policy: Principles, Problems, and Proposals for Reform 17 (5th ed. 2000). One can speculate if this was due to capture or for some other reason. Compare to the experience in interstate commerce or public utilities. ↑
Fordney-McCumber Act of 1922, Pub. L. No. 67-318, ch. 356, § 315, 42 Stat. 858, 941–43. ↑
Tarullo, supra note 81, at 319 (noting that it was structured to be scientific). ↑
Id. at 313. ↑
From 1922 to 1929, more than 600 petitions covering 375 commodities were filed with the Commission and only 47 investigations covering 55 commodities were completed. U.S. Tariff Comm’n, Thirteenth Annual Report 10 (1929). ↑
Lake, supra note 74, at 196. ↑
Tarullo, supra note 81, at 350–51. ↑
Id.; see also Extension of the Reciprocal Trade Agreements Act: Hearings on H.J. Res. 407 Before the H. Comm. on Ways & Means, 76th Cong. 491–500 (1940) (statement of A. Manuel Fox, Member, U.S. Tariff Comm’n) (describing the State Department’s role in overseeing the Tariff Commission and its procedures for cooperation with other agencies); Grace Beckett, The Reciprocal Trade Agreements Program 18 (1941) (describing the State Department’s role in initiating new trade agreements with countries). ↑
The State Department ran the Committee for Reciprocity Information, for one. U.S. Dep’t of State, 41 Dep’t of State Bull. No. 1,054, at 354–55 (Sept. 7, 1959). ↑
William A. Foster & Co. v. United States, 20 C.C.P.A. 15, 22 (1932). ↑
The idea of identifying managers in the law is not new either in the domestic or international context. I adopt the term here as a further extension and new application of the concept—one that I believe more aptly captures what is happening in trade. I do not subsequently adopt all the same consequences that prior commentators have identified in their spaces, but I draw on them for inspiration. For other iterations, see, e.g., Bijal Shah, Congress’s Agency Coordination, 103 Minn. L. Rev. 1961, 2058 (2019) (referring to the President as a manager of the executive branch); Abram Chayes & Antonia Handler Chayes, The New Sovereignty: Compliance with International Regulatory Agreements 3 (1995) (examining international law compliance through a managerial model); Judith Resnik, Managerial Judges, 96 Harv. L. Rev. 374, 378 (1982) (referring to judges as managers of their cases). ↑
Jeff Dunoff identified some of the same trends as they began. Jeffrey L. Dunoff, “Trade and”: Recent Developments in Trade Policy and Scholarship—And Their Surprising Political Implications, 17 Nw. J. Int’l L. & Bus. 759, 760 (1997). ↑
Agreement on the Application of Sanitary and Phytosanitary Measures, Apr. 14, 1994, 1867 U.N.T.S. 154, http://www.wto.org/english/docs_e/legal_e/15-sps.pdf [https://perma.cc/MG9R-CTQK]. ↑
Id. ↑
Dispute Settlement, WTO, https://www.wto.org/English/tratop_e–/dispu_e/dispu_e.htm [https://perma.cc/7U6A-4T76]. ↑
See, e.g., Simon Lester, The Role of the International Trade Regime in Global Governance, 16 UCLA J. Int’l L. & Foreign Affs. 209, 211–12, 221–38 (2011) (providing an overview of the expansion of trade agreements). ↑
This “problem” could be considered a feature more than a bug by those that use trade law to regulate and enforce international commitments in newfound areas. I have explored this double-edged sword in other work. See Kathleen Claussen, Our Trade Law System, 73 Vand. L. Rev. En Banc 195, 198–201 (2020). ↑
146 Cong. Rec. 6,805–06 (2000). ↑
Id. at 6,806. Most of USTR’s offices were established this way. Only three are mentioned in statute: two in “sense of Congress” statements and one referring to the responsibilities of the Assistant United States Trade Representative for Industry and Telecommunications (a role that no longer exists as such). 19 U.S.C. §§ 3724, 4208, 3812. For example, the Trade and Development Act of 2000 included a “sense of Congress” statement, making note of the importance of having an Assistant United States Trade Representative for African Affairs. Pub. L. No. 106-200, § 117, 114 Stat. 251, 267 (2000) (codified at 19 U.S.C. § 3724). More recently, Congress has created specific positions at the ambassador rank such as the Chief Agricultural Negotiator, Chief Innovation and Intellectual Property Negotiator, and Chief Transparency Officer. Id. at 293. ↑
Bipartisan Congressional Trade Priorities and Accountability Act of 2015, Pub. L. No. 114-26, § 102, 129 Stat. 320 (codified at 19 U.S.C. § 4201). USTR likewise indicates that it is monitoring agreements for compliance in topics as diverse as financial services and tomato paste. See, e.g., Off. of the U.S. Trade Representative, 2020 Trade Policy Agenda and 2019 Annual Report 8, 165 (2020) [hereinafter 2019 Annual Report], https://ustr.gov/‌sites/default/files/2020_Trade_Policy_Agenda_and_2019_Annual_Report.pdf [https://perma.cc/GKT7-4M3E]. ↑
Authorizing Customs and Border Protection and Immigration and Customs Enforcement: Hearing Before the Subcomm. on Border & Mar. Sec. of the H. Comm. on Homeland Sec., 113th Cong. 18 (2014) (statement of Kevin K. McAleenan, Acting Deputy Comm’r, U.S. Customs & Border Prot.). At least seventeen agencies, engaged in some exercise of trade policy making, regularly conduct U.S. trade and international economic functions under various statutory and administrative authorities. U.S. Gen. Acct. Off., GAO-00-76, Strategy Needed to Better Monitor and Enforce Trade Agreements 4 (2000) [hereinafter GAO-00-76]. ↑
For example, the Commerce Department facilitates the trade remedies program as set out in 19 U.S.C. chapter 4. See 19 U.S.C. § 1339. The Treasury also engages in major economic regulation through engagement in international affairs. See David Zaring, Administration by Treasury, 95 Minn. L. Rev. 187, 212–13 (2010). ↑
See generally Trade Facilitation and Trade Enforcement Act of 2015, Pub. L. No. 114-125, 130 Stat. 122 (2016) (scattered sections). ↑
See generally U.S. Dep’t of Agric., Trade Policies and Procedures, https://www.usda.gov/topics/trade/trade-policies-and-procedures (providing an overview of the various trade programs that the USDA has in place for “commodities and agricultural products”) [https://perma.cc/P9JQ-HKHX] (last visited Jan. 30, 2021). ↑
See Shayerah I. Akhtar, Cong. Rsch. Serv., IF11016, U.S. Trade Policy Functions: Who Does What? (2020). We could add more to this executive trade landscape such as the Export-Import Bank, which “finances and insures U.S. exports of goods and services”; the Small Business Administration, which administers grants in support of trade; or the agencies that support trade capacity building or that promote economic growth in developing countries, such as United States Agency for International Development, United States International Development Finance Corporation, and the Trade and Development Agency. See id. ↑
See Thomas R. Graham, The Reorganization of Trade Policymaking: Prospects and Problems, 13 Cornell Int’l L.J. 221, 228 & n.38 (1980). Even the Federal Emergency Management Agency took on new trade tasks during the COVID-19 pandemic. See Export Allocation Rule on Medical Supplies and Equipment for COVID-19, FEMA, https://www.fema.gov/fact-sheet/fema-implementation-allocation-order-exports-scarce-ppe-and-notice-exemptions [https://perma.cc/R5ER-YZ8S] (last visited Jan. 30, 2021). ↑
Cohen, supra note 83, at 46 (discussing the “crowding out” of the State Department). ↑
See About the USITC, U.S. Int’l Trade Comm’n, https://www.usitc.gov/press_room/‌about_usitc.htm [https://perma.cc/8EPB-7FY7] (last visited Jan. 30, 2021). ↑
Off. of the U.S. Trade Representative, Charter of the Advisory Committee for Trade Policy and Negotiations (2018), https://ustr.gov/sites/default/files/files/about/ACTPN%‌20Charter%202018-2022%20USTR.pdf [https://perma.cc/YR5J-X5FK]. ↑
Off. of the U.S. Trade Representative, Advisory Committees, https://ustr.gov/about-us/advisory-committees [https://perma.cc/24US-G53A] (last visited Jan. 30, 2021). ↑
Daniel K. Tarullo, Beyond Normalcy in the Regulation of International Trade, 100 Harv. L. Rev. 546, 595–96 (1987) (noting that lower-level committees composed chiefly of civil servants develop information). ↑
Id. ↑
See Kathleen Claussen, Trade Executive Agreements 10–14 (unpublished manuscript) (on file with the author) [hereinafter Claussen, Trade Executive Agreements] (describing a category of trade lawmaking—trade executive agreements—that is a mix of free trade agreements, solo executive agreements, and rules issued by agencies, has largely grown out of recent practice, and is thus understudied). ↑
Trade Expansion Act of 1962, Pub. L. No. 87-794, § 241, 76 Stat. 872, 878 (codified as amended at 19 U.S.C. § 1801). ↑
Graham, supra note 108, at 224–25 (describing the role of the trade representative in the early years of the position); H.R. Rep. No. 93-571, at 40 (1973) (“[T]he position was created to provide both better focus and centralized direction for treating trade negotiations and trade problems from an overall commercial point of view—and to downplay the strictly foreign policy orientation . . . of the Department of State.”). ↑
H.R. Rep. No. 93-571, at 40 (1973) (declaring that the USTR was created “with the implicit intention of providing the Congress with a focal point in the executive branch”). ↑
Exec. Order No. 11,075, 3 C.F.R. 692–96 (1963); Trade Expansion Act § 242. ↑
Trade Expansion Act § 241(a). ↑
Id. ↑
Id. § 241(b), 76 Stat. at 878. ↑
History of the United States Trade Representative, Off. of the U.S. Trade Representative, https://ustr.gov/about-us/history [https://perma.cc/3YYL-DX6B] (last visited Apr. 19, 2021). ↑
Id. ↑
Fred O. Boadu & Jie Shen, An Empirical Analysis of the Growth and Autonomy of the Office of the United States Trade Representative, 6 Currents: Int’l Trade L.J. 3, 9 (1997). ↑
Id. ↑
Id. ↑
See Exec. Off. of the President, Office of the United States Trade Representative: Fiscal Year Budget 2021, at 6 (2020), https://ustr.gov/sites/default/files/foia–/USTR%20FY%20‌2021%20Congressional%20Budget%20Submission.pdf [https://perma.cc/KGP6-LT4T]. ↑
In a recent symposium, I summarized the historical and legal foundations for fast-track. Kathleen Claussen, Trading Spaces: The Changing Role of the Executive in U.S. Trade Lawmaking, 24 Ind. J. Glob. Legal Stud. 345, 351–52, 351 n.18 (2017). ↑
Trade Act of 1974, Pub. L. No. 93-618, § 141, 88 Stat. 1978, 1999 (codified as amended at 19 U.S.C. § 2171). These moves reflected a congressional interest in enhancing executive authority while also maintaining control on the executive’s work in the trade space: “We have also endeavored to articulate an appropriate cooperative role for the Congress and the executive branch in an effort to come to grips with these very complex problems and issues in which delegation of congressional authority is needed.” H.R. Rep. No. 93-571, at 15 (1973); see also Claussen, Trading Spaces, supra note 129, at 350–54 (providing an overview of the balancing of the trade-policy roles and responsibilities that Congress and the executive branch hold); 15 C.F.R. § 2001.3 (2020) (establishing that the U.S. Trade Representative reports to and is responsible to both the executive branch and Congress). ↑
See, e.g., To Create a Department of International Trade and Investment: Hearing on S. 1990 Before the S. Comm. on Governmental Affs., 95th Cong. 1 (1978) (statement of Sen. William V. Roth, Member, Comm. on Governmental Affs.); Reorganizing the Government’s International Trade and Investment Functions: Hearing on S. 377, S. 891, S. 937, S. 1471, and S. 1493 Before the S. Comm. on Governmental Affs., 96th Cong. 2, 44, 47 (1979) (statements of Sen. Robert C. Byrd and Adlai E. Stevenson); Proposed Foreign Trade Reorganization: Hearings Before a Subcomm. of the H. Comm. on Gov’t Operations, 96th Cong. 2–4 (1979) (statement of Rep. Frank Horton); Federal Government International Trade Function Reorganization: Hearings Before the Subcomm. on Trade of H. Comm. on Ways & Means, 96th Cong. 114–16 (1979) (statement of William N. Walker, Vice Chairman, Com. Pol’y Comm., U.S. Council of the Int’l Chamber of Com.); International Trade and Investment Reorganization Act, H.R. 3859, 96th Cong. § 2(b) (1979). ↑
Reorganization Plan No. 3 of 1979, 44 Fed. Reg. 69,273 (proposed Sept. 25, 1979); see Graham, supra note 108, at 222 & n.5 (1980) (discussing inter-branch communications on reorganization). ↑
Reorganization Plan No. 3 of 1979, § 1(b), 44 Fed. Reg. 69,273 (proposed Sept. 25, 1979). ↑
Shayerah Ilias, Cong. Rsch. Serv., R42555, Trade Reorganization: Overview and Issues for Congress 11 (2012). ↑
Trade Agreements Act of 1979, Pub. L. No. 96-39, §§ 411, 413, 93 Stat. 144, 243–44 (codified as amended at 19 U.S.C. §§ 2541, 2543). ↑
Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100-418, § 1601(a)(1), 102 Stat. 1107, 1260 (codified as amended at 19 U.S.C. § 2171(c)). ↑
See id. § 1601(a)(2), 102 Stat. at 1261. ↑
See, e.g., id. § 1301(a), 102 Stat. at 1164 (granting the USTR authority to respond to the denial or violation of U.S. trade rights under any trade agreement, subject only to any “specific direction” from the President). ↑
See, e.g., Memorandum, 70 Fed. Reg. 43,251 (July 21, 2005) (delegating authority under Section 337 of the Tariff Act of 1930); Proclamation 6,942, 61 Fed. Reg. 54,719 (Oct. 17, 1996) (delegating authority related to the Generalized System of Preferences); Exec. Order No. 12,964, 60 Fed. Reg. 33,095 (June 21, 1995) (stating that the USTR shall perform the functions of the President under the Federal Advisory Committee Act); Exec. Order No. 12,661, 54 Fed. Reg. 779 (Dec. 27, 1988) (delegating the authority of the President to the USTR under the 1988 Act). This is especially true up until the early 2000s when USTR grew in influence and size. Many statutory delegations to USTR come from statutes enacted in the last 30 years. See, e.g., Uruguay Round Agreements Act, Pub. L. No. 103-465, § 122(b), 108 Stat. 4809, 4829 (Dec. 8, 1994) (codified at 19 U.S.C. § 3532) (specifying that the USTR has lead responsibility on matters related to the World Trade Organization). ↑
See, e.g., Exec. Order No. 12,964, 60 Fed. Reg. at 33,095 (creating a Commission on United States-Pacific Trade and Investment Policy); Exec. Order No. 12,870, 58 Fed. Reg. 51,753 (Sept. 30, 1993) (creating the Trade Promotion Coordinating Committee); Exec. Order No. 12,905, 59 Fed. Reg. 14,733 (Mar. 25, 1994) (creating the Trade and Environment Policy Advisory Committee within the Office of the United States Trade Representative). ↑
This arrangement was part of the point of creating the USTR in the first place: to take this power away from Congress where interest groups dominated. ↑
See, e.g., USTR Announces New Office to Monitor China Deal’s Implementation, Handle Disputes, Inside U.S. Trade (Feb. 14, 2020), https://insidetrade.com/trade/ustr-announces-new-office-monitor-china-deals-implementation-handle-disputes [https://perma.cc/AU6J-955Q]. ↑
Cf. 15 C.F.R. § 2001.2 (1975) (establishing the Office as consisting of the United States Trade Representative and two Deputy Trade Representatives). ↑
H.R. Rep. No. 93-571, at 40–41 (1973) (noting that there has not been enough coordination with Congress from 1962 to 1973 and expecting that the USTR would be “speaking for the United States and the Congress in the forthcoming multilateral trade negotiations”). ↑
For a sampling of relevant statutes, see Staff of H.R. Comm. on Ways & Means, 113th Cong., Compilation of U.S. Trade Statutes, at v–xi (Comm. Print 2013). ↑
Trade Act of 1974, Pub. L. No. 93-618, § 141(c), 88 Stat. 1978, 1999. ↑
Nor is USTR subject to the levels of litigation that other agencies are subject to as discussed in Parts III and IV, but it does hold hearings on some of its investigations. By comparison, CBP has issued 289 rules, 91 proposed rules, and 2,673 notices since it was created in 2003; the ITC issued 44 rules, 30 proposed rules, and 8,194 notices in the same period (1995–2019); the ITA issued 72 rules, 57 proposed rules, and 18,937 notices in the same period. ↑
Trade Act § 301 (codified as amended at 19 U.S.C. § 2411). ↑
19 U.S.C. § 2411. See also Erwin P. Eichmann & Gary N. Horlick, Political Questions in International Trade: Judicial Review of Section 301?, 10 Mich. J. Int’l L. 735, 742 (1989) (explaining both the mandatory and discretionary actions that the USTR must take for violations of trade agreements or harm to U.S. commerce). ↑
Trade Act § 301(b) (codified as amended at 19 U.S.C. § 2411(b)). This authority was shifted to USTR and away from the President in the 1988 Act. Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100-418, § 1301, 102 Stat. 1107, 1164 (codified as amended at 19 U.S.C. § 2411). ↑
Section 301 addresses the activities of U.S. firms abroad and interference by foreign governments to the detriment of U.S. firms. See Judith Hippler Bello & Alan F. Holmer, U.S. Trade Law and Policy Series #10: Significant Recent Developments in Section 301 Unfair Trade Cases, 21 Int’l Law. 211, 213–15 (1987). ↑
Whether USTR’s imposition of tariffs under Section 301 is subject to the APA despite the statute’s lack of a clear statement is under consideration at the CIT at the time of writing. HMTX Indus. LLC v. United States, No. 20-00177 (Ct. Int’l Trade filed Sept. 10, 2020). Section 301 sets out a process for USTR to reach its determination but whether that supersedes USTR’s obligations under the APA and whether the application of Section 301 falls within the APA’s foreign-affairs exception are live questions. ↑
To be sure, the statute does provide for a public hearing in certain circumstances. See, e.g., 19 U.S.C. §§ 2412(a)(4), 2414(b)(1)(A). But that is not always the case in USTR’s actions nor does the statute set out procedures for how the public hearing is conducted. The statute provides a type of functional notice and comment. ↑
This has occurred most recently in USTR’s exclusion process related to the Section 301 tariffs on products from China. See Gary Clyde Hufbauer & Zhiyao Lu, The USTR Tariff Exclusion Process: Five Things to Know About These Opaque Handouts, Peterson Inst. for Int’l Econ. (Dec. 19. 2019), https://www.piie.com/blogs/trade-and-investment-policy-watch/ustr-tariff-exclusion-process-five-things-know-about-these [https://perma.cc/33N8-QJUZ]. ↑
See, e.g., Isabelle Icso, White House Requests $6 Million Boost for USTR in FY2021 Budget Proposal, Inside U.S. Trade (Feb. 11, 2020, 2:47 PM), https://insidetrade.com/daily-news/white-house-requests-6-million-boost-ustr-fy2021-budget-proposal [https://perma.cc/5B3R-MFFT]. ↑
See, e.g., Bipartisan Congressional Trade Priorities and Accountability Act of 2015, Pub. L. No. 114-26, § 103, 129 Stat. 320, 333 (codified as amended 19 USC § 4202). ↑
See, e.g., U.S.-Japan Trade Agreement Text, Off. of the U.S. Trade Representative, https://ustr.gov/countries-regions/japan-korea-apec/japan/us-japan-trade-agreement-negotiations/us-japan-trade-agreement-text [https://perma.cc/2Q2E-ST6X ] (last visited Apr. 19, 2021) (“eliminat[ing] or reduc[ing] tariffs on certain agricultural and industrial products”). The term “trade executive agreement” is mine and the subject of a separate project, a manuscript of which is on file with the author. See Claussen, Trade Executive Agreements, supra note 115, at 3. ↑
This is a matter of debate. See Claussen, Trade Executive Agreements, supra note 115, at 10–12. ↑
See Claussen, Trade’s Security Exceptionalism, supra note 14, at 1149–51. ↑
For some past relevant commentary insofar as international economic negotiations are concerned, see David Zaring, Sovereignty Mismatch and the New Administrative Law, 91 Wash. U. L. Rev

.

59, 84 (2013) (discussing how there is no role for the process requirements of the APA where agencies negotiate rules with foreign counterparts). ↑
Id. at 83 (commenting that the threat of judicial review may have led to an expansion in detail in administrative agencies’ work). ↑
While administrative constraints need not be the only types of constraints on an agency, USTR also is subject to limited congressional or presidential oversight as I and others have noted in previous work. See, e.g., Koh, supra note 1, at 1204–06, 1213–14. ↑
Monitoring and Enforcement Actions, Off. of the U.S. Trade Representative, https://ustr.gov/issue-areas/enforcement/monitoring-and-enforcement-actions [https://perma.cc/6ASE-SD2H] (last visited Jan. 30, 2021). ↑
Trade Facilitation and Trade Enforcement Act of 2015, Pub. L. No. 114-125, § 604, 130 Stat. 122, 185–87 (codified at 19 U.S.C. § 2171(h)) (establishing the Interagency Center on Trade Implementation, Monitoring, and Enforcement). ↑
It does most of this work through the Trade Policy Staff Committee. See Interagency Role, Off. of the U.S. Trade Representative, https://ustr.gov/about-us/interagency-role [https://perma.cc/27SR-KXSC] (last visited Jan. 30, 2021) (noting that 20 agencies and offices participate under USTR’s oversight, reviewing hundreds of lawmaking documents each year); see also Akhtar, supra note 107 (“Cabinet-level review on trade issues is through the Trade Policy Committee (TPC).”). ↑
As noted by a U.S. General Accounting Office (today called the Government Accountability Office, GAO) study, USTR is mandated to “identify[] compliance problems, set[] priorities, gather[] and analyze[] information, develop[] and implement[] responses, and tak[e] actions.” GAO-00-76, supra note 103, at 15–16. ↑
You can see this increase in the number of attorneys rather than economists. Id. at 18. ↑
Much of this work is done behind the scenes but occasionally USTR’s work with other agencies in their rulemaking may come out in litigation as the other agencies note their international trade law constraints. See, e.g., Nat. Res. Def. Council, Inc. v. Dep’t of Agric., 613 F.3d 76, 85–86 (2d Cir. 2010) (in which the Animal and Plant Health Inspection Service of USDA contextualizes its rulemaking within international trade law); Miss. Poultry Ass’n v. Madigan, 992 F.2d 1365, 1362 (5th Cir. 1993), amended by, 9 F.3d 1113 (5th Cir. 1993), on reh’g, 31 F.3d 293 (5th Cir. 1994) (in which the Secretary of Agriculture’s interpretation of a standard was informed not just by the U.S. commitments under the World Trade Organization but also under free trade agreement rules); Nat’l Coal Against the Misuse of Pesticides v. Thomas, 809 F.2d 875, 877 (D.C. Cir. 1987) (describing changes in the Environmental Protection Agency’s rulemaking in light of international trade concerns). ↑
See, e.g., Foreign Supplier Verification Programs for Importers of Food for Humans and Animals, 79 Fed. Reg. 58,574 (Sept. 29, 2014) (to be codified at 21 C.F.R. pt. 1). ↑
See Interview with USTR official (Nov. 10, 2020). This is one of several interviews and conversations carried out with USTR officials during research for this Article. ↑
See Claussen, Trade’s Security Exceptionalism, supra note 14, at 1107. ↑
Other enforcers of different aspects of trade law include CBP, Commerce, the ITC, and the Court of International Trade (“CIT”). ↑
19 U.S.C. § 2171(e). ↑
19 U.S.C. § 2171(f). ↑
A 1934 congressional report described its intended delegation to the Executive as “Congress Determines the Policy—The President Executes.” H.R. Rep. No. 73-1000, at 14 (1934). Little today in trade policy follows that heading, which epitomizes how trade governance worked in prior eras. ↑
See, e.g., Irwin, Clashing Over Commerce, supra note 47, at 435 fig.9.1. ↑
Not even the GAO has a clear organizational chart to capture this engagement. It has tried. Compare GAO-00-76, supra note 103, at 48–50 tbl.3 (table indexing lead responsible agencies with reporting mechanisms) with U.S. Gov’t Accountability Off., GAO-06-167, USTR Would Benefit from Greater Use of Strategic Human Capital Management Principles 6 fig.1 (2000) (using a hierarchical chart to illustrate USTR organizational structure). ↑
See, e.g., Bureau of Int’l Labor Affs., U.S. Dep’t of Labor, 15-2378-NAT, US and Honduras Sign Landmark Labor Rights Agreement (Dec. 9, 2015), https://www.dol.gov/newsroom/releases/ilab/ilab20151209 [https://perma.cc/GKE7-RGLQ]. ↑
See, e.g., United States-Mexico-Canada Agreement Implementation Act, Pub. L. 116-113, §§ 202A(b), 711, 134 Stat. 11, 34, 81 (2020) (to be codified at 19 U.S.C. § 4532). ↑
Robert E. Hudec, Thinking About the New Section 301: Beyond Good and Evil, in Aggressive Unilateralism: America’s 301 Trade Policy and the World Trading System 113, 122 (Jagdish Bhagwati & Hugh T. Patrick eds., 1990) (asserting that one needs a diagram to trace all the authorities of Section 301 that makes up an “intricate maze” with “extremely wide loopholes”). Again, some commentators may find this to be precisely what was intended as Congress built this system. The political economy literature has covered that territory well. ↑
It is perhaps closest to a blend between the White House Office of Legal Counsel and the Office of Management and Budget—just trade-specific. ↑
Cf. Pasachoff, supra note 7, at 2207–08 (describing how OMB controls policy making through its budget process in ways somewhat similar to USTR’s controls over trade-related policy making). ↑
See, e.g., Harold H. Bruff, Presidential Management of Agency Rulemaking, 57 Geo. Wash. L. Rev. 533, 546–52 (1989); Charles F. Bingman, The President as Manager of the Federal Government, 35 Proc. Acad. Pol. Sci. 146, 147–49 (1985). ↑
Jean Galbraith, From Treaties to International Commitments: The Changing Landscape of Foreign Relations Law, 84 U. Chi. L. Rev. 1675, 1692 (2017). ↑
That is, USTR can choose to impose tariffs or it can negotiate free trade agreements. See Claussen, Trade’s Security Exceptionalism, supra note 14, at 1163. ↑
See, e.g., Press Release, Off. of the U.S. Trade Representative, United States and China Reach Phase One Trade Agreement (Dec. 13, 2019), https://ustr.gov/about-us/policy-offices/press-office/press-releases/2019/december/united-states-and-china-reach [https://perma.cc/UAE2-DSTR]. ↑
See infra Section II.C. ↑
See, e.g., Sylvan Lane, Five Key Players in Trump’s Trade Battles, Hill (Aug. 20, 2019, 6:00 AM), https://thehill.com/policy/finance/trade/458016-five-key-players-in-trumps-trade-battles [https://perma.cc/Z379-HTY9] (last visited Jan. 30, 2021). ↑
Discussing one of these options, see Graham, supra note 108, at 230 n.41; see also I.M. Destler, Making Foreign Economic Policy 213–14 (1980) (explaining why that option was not viable). ↑
See, e.g., Stuart E. Eizenstat, Unsettling a Delicate Balance, N.Y. Times, (June 19, 1983), https://www.nytimes.com/1983/06/19/business/business-forum-unsettling-a-delicate-balance.html [https://perma.cc/AK7Y-MDT2]. ↑
See, e.g., id. (discussing attempts to change during the Kennedy, Carter, and Reagan administrations); Press Release, The White House, President Obama Announces Proposal to Reform, Reorganize and Consolidate Government (Jan. 13, 2012), https://obamawhitehouse.archives.gov/the-press-office/2012/01/13/president-obama-announces-proposal-reform-reorganize-and-consolidate-gov [https://perma.cc/WZR6-WWD8]; see also Timothy Meyer & Ganesh Sitaraman, It’s Economic Strategy, Stupid, Am. Affs. J. (Feb. 20, 2019), https://americanaffairsjournal.org/2019/02/its-economic-strategy-stupid/ [https://perma.cc/HX6Z-ZRCP] (noting that the Obama administration proposed merging the Department of Commerce, Small Business Administration, USTR, Export-Import Bank, Overseas Private Investment Corporation, and U.S. Trade and Development Agency). ↑
Executive reorganizations are no longer legally facilitated, which has shifted pressure within the White House to find other ways to make structural changes and to deal with personalities. See Abbe R. Gluck, Anne Joseph O’Connell & Rosa Po, Unorthodox Lawmaking, Unorthodox Rulemaking, 115 Colum. L. Rev. 1789, 1818–22 (2015). ↑
There are also some smaller processes that do not envision a strong role for USTR like Section 232 of the Trade Expansion Act of 1962, especially if they were created simultaneously with or before USTR’s creation. Pub. L. 87-794, § 232, 76 Stat. 872, 877 (codified as amended at 19 U.S.C. § 1862). ↑
See 28 U.S.C. § 1581. ↑
See, e.g., 19 C.F.R. § 201.7 (2020). ↑
Trade Act of 1974, Pub. L. No. 93-618, § 341, 88 Stat. 1978, 2053–54. ↑
This empowerment was much slower than other empowerments of other commissions which is why it is unusual—most could regulate, but not so with ITC until 1974. Tarullo, supra note 113, at 581 & n.109. ↑
John M. Dobson, Two Centuries of Tariffs: The Background and Emergence of the U.S. International Trade Commission 119 (1976). ↑
Id. at 132. ↑
These concerns bear some resemblance to the problems we see in other EOP super-agencies. See, e.g., Pasachoff, supra note 7, at 2250–71. ↑
See, e.g., Patrice McDermott & Emily Manna, Secrecy, Democracy and the TPP: Trade Transparency Is What the Public Wants—and Needs, Hill (Sept. 12, 2016, 7:30 AM), https://thehill.com/blogs/congress-blog/economy-budget/295365-secrecy-democracy-and-the-tpp-trade-transparency-is-what [https://perma.cc/2PA3-N7DG]. ↑
Bipartisan Congressional Trade Priorities and Accountability Act of 2015, Pub. L. No. 114-26, § 104(f), 129 Stat. 320, 342 (codified as amended at 19 U.S.C. § 4203). Some members of Congress expressed concern that the role has been vacant during the Trump administration. See, e.g., Press Release, Rep. Debbie Dingell, Dingell, Pascrell Demand Increased Transparency at USTR (Mar. 29, 2018), https://debbiedingell.house.gov/news/‌documentsingle.aspx?DocumentID=1359 [https://perma.cc/RT2Y-YU5P]. ↑
Meyer & Sitaraman, supra note 1, at 635. ↑
Off. of the Inspector Gen., Dep’t of Com., OIG-20-003-M, Management Alert: Certain Communications by Department Officials Suggest Improper Influence in the Section 232 Exclusion Request Review Process (2019). ↑
See, e.g., David Shepardson, Trump Administration Won’t Turn Over Auto Import Probe Report, Defying Congress, Reuters (Jan. 21, 2020, 12:56 PM), https://www.reuters.com/article/us-usa-trade/trump-administration-wont-turn-over-auto-import-probe-report-defying-congress-idUSKBN1ZK2A1 [https://perma.cc/W86W-HYLV]. ↑
See David Zaring, Rulemaking and Adjudication in International Law, 46 Colum. J. Transnat’l L. 563, 565 (2008). ↑
I draw here from Jerry Mashaw’s foundational work on the subject. See Jerry L. Mashaw, Accountability and Institutional Design: Some Thoughts on the Grammar of Governance, in Public Accountability: Designs, Dilemmas and Experiences 115, 121 (Michael W. Dowdle ed., 2006). ↑
Edward Rubin, The Myth of Accountability and the Anti-Administrative Impulse, 103 Mich. L. Rev. 2073, 2135 (2005). ↑
See, e.g., Lisa Schultz Bressman & Michael P. Vandenbergh, Inside the Administrative State: A Critical Look at the Practice of Presidential Control, 105 Mich. L. Rev. 47, 52 (2006). This study provides additional support for the phenomena that Bressman and Vandenbergh describe in their important work. For one, there is much more happening in OIRA review than meets the eye. ↑
And it did. For some examples, see Claussen, Trade Executive Agreements, supra note 115. ↑
Missing from the literature is a comprehensive study of the congressional consultation power—its scope, meaning, and implication. Other scholars have likewise noted its prevalence. See, e.g., Lucas Issacharoff & Samuel Issacharoff, Constitutional Implications of the Cost of War, 83 U. Chi. L. Rev. 169, 185 & n.81 (2016) (discussing and citing sources on congressional oversight in war powers as requiring consultation). In the case of USTR, this responsibility primarily involves reporting to congressional committees. Different statutes also provide for members of Congress to be designated congressional advisors, accredited to advise USTR particularly with respect to negotiations. See, e.g., Trade Act of 1974, Pub. L. No. 93-618, § 161, 88 Stat. 1978, 2008. ↑
See Frederick Davis, The Regulation and Control of Foreign Trade, 66 Colum. L. Rev. 1428, 1459–60 (1966). ↑
A third difficulty that I will take up further below in the context of reform is the challenge of establishing standing. ↑
As Davis puts it, it is “[p]residential button-pushing.” Davis, supra note 212, at 1458. ↑
Administrative Procedure Act § 2, 5 U.S.C. § 551; see also Franklin v. Massachusetts, 505 U.S. 788, 796 (1992) (holding that the President was not an “agency” within the meaning of the APA). ↑
For a recent application, see Invenergy Renewables LLC v. United States, 422 F. Supp. 3d 1255, 1281–83 (Ct. Int’l Trade 2019). ↑
Interestingly, it is more often the statutes that pre-date the APA that were amended to refer to the APA than those that came after. But bear in mind again that only a fraction of USTR’s authority comes from statute. Where powers are subdelegated, presidents rarely specify process. Courts may find determinative a difference between authorities for direct action delegated to USTR by Congress, authorities subdelegated by the President, or authorities for making recommendations to the President delegated by Congress. For example, compare Trade Act of 1974, Pub. L. No. 93-618, § 301, 88 Stat. 1978, 2141–42 (subdelegated by President), and id. § 201, 88 Stat. at 2011–12 (delegated by Congress), with Tariff Act of 1930, Pub. L. No. 361, § 337, 46 Stat. 590, 703–04 (delegated by Congress). ↑
Under such generally applicable statutes as the Federal Records Act and the Freedom of Information Act, USTR is considered an “agency.” Off. of the U.S. Trade Representative, USTR Instruction 511.2, USTR Records Mgt. Program (2010) https://ustr.gov/sites/‌default/files/uploads/gsp/speeches/reports/IP/ACTA/about%20us/reading%20room/USTR%20Instruction%20511-2%20Records%20Management%20Program.pdf [https://perma.cc/NBY5-VRGZ] (internal guidance recognizing USTR as an “agency” subject to the Federal Records Act); Off. of the U.S. Trade Representative, FOIA Reference Guide, https://ustr.gov/about-us/reading-room/freedom-information-act-foia/foia-reference-guide [https://perma.cc/CEC8-CT29] (last visited Mar. 8, 2020) (indicating that USTR is an “agency” subject to FOIA requests). ↑
Invenergy is one of the very few cases that has confronted the question at all. In a preliminary injunction order and opinion in that case, Judge Katzmann concludes that administrative law in its traditional tenets applies broadly to trade law, although it remains to be seen how far this conclusion may stretch and what sorts of USTR rulemaking it sweeps in. 422 F. Supp. 3d 1255, 1288 (Ct. Int’l Trade 2019). As Ganesh Sitaraman has noted, the foreign-affairs exception is itself limited and agencies engaged in foreign-affairs work are still subject to the APA’s protections. Ganesh Sitaraman, Foreign Hard Look Review, 66 Admin. L. Rev. 489, 492–93 (2014). ↑
See Exec. Off. of the President, Memorandum of March 22, 2018: Actions by the United States Related to the Section 301 Investigation of China’s Laws, Policies, Practices, or Actions Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 13,099, 13,100 (Mar. 27, 2018). ↑
See Off. of the U.S. Trade Representative, Procedures to Consider Requests for Exclusion of Particular Products From the Determination of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 32,181, 32,182 (July 11, 2018) (outlining the process for requesting a product be excluded from proposed tariffs). ↑
Off. of the U.S. Trade Representative, China Section 301—Tariff Actions and Exclusion Process, https://ustr.gov/issue-areas/enforcement/section-301-investigations/tariff-actions [https://perma.cc/5Z3V-BEAA] (last visited Apr. 19, 2021) (listing numerous exclusions granted and extended). The Court of International Trade in a recent case decided that USTR’s withdrawal of an exclusion from tariffs imposed by the President under Section 201 of the Trade Act of 1974 was insufficient for administrative law norms. See Invenergy, 422 F. Supp. 3d at 1286–88. It left open the question of what process USTR ought to have used to implement the exclusions in the first place. ↑
Advanced search conducted in Westlaw using party name: “trade /5 representative,” removing FOIA cases, and limiting results to reported cases using a Westlaw filter. Sample cases found with this search include: Forest Stewardship v. USTR, 405 F. App’x 144, 146 (9th Cir. 2010) (“Essentially, the best the Appellants hope for is that a judgment will somehow encourage USTR to renegotiate the SLA with Canada, even though the court lacks the power to direct the executive branch’s conduct of foreign negotiations directly.”); U.S. Ass’n of Importers of Textiles & Apparel v. United States, 350 F. Supp. 2d 1342, 1344, 1350–51 (Ct. Int’l Trade 2004) (granting a preliminary injunction against an interagency committee with USTR only as one of several named defendants while noting only the “seriousness” of the question whether the APA’s rulemaking procedures applied to the committee), rev’d sub nom. U.S. Ass’n of Importers of Textiles & Apparel v. U.S. Dep’t of Com., 413 F.3d 1344, 1345–46, 1350 (Fed. Cir. 2005) (reversing on ripeness grounds and a failure to show likelihood of success on the merits); Silfab Solar, Inc. v. United States, 892 F.3d 1340, 1342 (Fed. Cir. 2018) (involving USTR, but only in relation to a presidential proclamation). ↑
See Daphna Renan, Pooling Powers, 115 Colum. L. Rev. 211, 259–61, 272–73 (2015) (describing legal and political theories that support this claim). ↑
See, e.g., Eamonn Butler, Public Choice—A Primer 88 (2012) (noting public choice theorists who formulated the theory that government bureaucrats have a strong interest in expanding the size and scope of the government sector). ↑
Even if USTR’s actions were to be considered reviewable, many consider it futile to challenge its decisions. Interviews with Trade Pracs. (Jan. 2020) (some even appear to fear retaliation from the government). Beyond the scope of this Article is a further discussion to be had about how trade lawmaking could influence what commentators mean by “rules.” This Article appropriates the term for its explanatory force, but its invocation may also have legal force and therefore may be used selectively by advocates in this context. ↑
See supra Part I. ↑
Press Release, Off. of the U.S. Trade Representative, USTR Statement on Successful Conclusion of Steel Negotiations with Mexico (Nov. 5, 2020), https://ustr.gov/about-us/policy-offices/press-office/press-releases/2020/november/ustr-statement-successful-conclusion-steel-negotiations-mexico [https://perma.cc/VC9W-Q4VK]. ↑
See Claussen, Trade Executive Agreements, supra note 115, at 33–34. ↑
In other forthcoming work, I present original empirical research on more than 1,220 agreements of similar nature. Hundreds of trade executive agreements suffer from the same questionable legality—but the present state of the law permits no challenge to their conclusion and implementation. See Claussen, Trade Executive Agreements, supra note 115, at 7. ↑
Hawkins & Norwood, supra note 77, at 86. ↑
Id. ↑
As it did with the United States-Mexico-Canada Agreement. See Kimberly Ann Elliott, Trump and Pelosi Both Claim Victory on the USMCA. Who Really Won?, World Pol. Rev. (Jan. 7, 2020), https://www.worldpoliticsreview.com/articles/28451/trump-and-pelosi-both-claim-victory-on-the-new-nafta-who-really-won [https://perma.cc/EH8P-3NRD]. ↑
For an example of easy manipulation, see the situation with the Section 232 tariff exclusion process noted above. Lydia DePillis, How Trump’s Trade War Is Making Lobbyists Rich and Slamming Small Businesses, ProPublica (Jan. 6, 2020, 5:00 AM), https://www.propublica.org/article/how-trump-trade-war-is-making-lobbyists-rich-and-slamming-small-businesses [https://perma.cc/T786-DY5S]. I have not taken up here questions of accessibility which are among the non-transparent aspects of USTR’s work, but which may benefit certain actors. ↑
Some have said that the statutory language today still permits action against “virtually any trade practice the USTR wishes to attack.” Alan O. Sykes, Constructive Unilateral Threats in International Commercial Relations: The Limited Case for Section 301, 23 Law & Pol’y Int’l Bus. 263, 306 (1992). ↑
Notably, while Congress could legislate to restrict this type of movement or to re-assign these authorities, it rarely does so. ↑
See, e.g., Exec. Order No. 13,141, 64 Fed. Reg. 63,169 (Nov. 18, 1999) (setting policy to do environmental reviews); Exec. Order No. 13,786, 82 Fed. Reg. 16,721 (Apr. 5, 2017) (calling for a report on deficits); Exec. Order No. 13,601, 77 Fed. Reg. 12,981 (Mar. 5, 2012) (creating the Interagency Trade Enforcement Center); Exec. Order No. 13,785, 82 Fed. Reg. 16,719 (Apr. 5, 2017) (establishing enhanced collection of anti-dumping and countervailing duties); Exec. Order No. 13,796, 82 Fed. Reg. 20,819 (May 4, 2017) (dictating how every trade agreement should uphold certain principles). ↑
See Tarullo, supra note 81, at 317–18 n.114. ↑
This “single responsible authority” concept has been hailed as an improvement. Stanley D. Metzger, Trade Agreements and the Kennedy Round 92 (1964). For the same point in the OIRA context, see Michael A. Livermore, Cost-Benefit Analysis and Agency Independence, 81 U. Chi. L. Rev. 609, 613 (2014); Cass R. Sunstein, The Office of Information and Regulatory Affairs: Myths and Realities, 126 Harv. L. Rev. 1838, 1841–42 (2013). These positive accounts have led some scholars to call for an expansion or extension of OIRA-type agencies. See Jennifer Nou, Agency Coordinators Outside of the Executive Branch, 128 Harv. L. Rev. F. 64, 65 (2015). ↑
The foreign relations literature is rife with one-voice doctrine analyses. See, e.g., Sarah H. Cleveland, Crosby and the “One-Voice” Myth in U.S. Foreign Relations, 46 Vill. L. Rev. 975, 979 (2001) (describing “[t]he ‘one-voice’ doctrine” as “a familiar mantra of U.S. foreign relations jurisprudence”). As I point out below, having USTR at the center helps, but it is insufficient to ensure that the United States speaks with just one voice in its foreign engagements—in some ways, it has the opposite effect. A more horizontal trade landscape means more agencies are engaged in diagonal rulemaking. ↑
J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 407 (1928). ↑
Caroline Freund & Christine McDaniel, How Long Does It Take To Conclude a Trade Agreement with the US?, Peterson Inst. for Int’l Econ. (July 21, 2016), https://www.piie.com/blogs/trade-investment-policy-watch/how-long-does-it-take-conclude-trade-agreement-us [https://perma.cc/VAP2-GJKJ]. ↑
For an elaboration and list of these agreements, see Claussen, supra note 115. For one illustration: the USDA, together with USTR, negotiated details around trade in sheep offals with China—directly and without congressional review. See U.S. Dep’t of Agric., Economic and Trade Agreement Between the United States of America and the People’s Republic of China Fact Sheet: Agriculture and Seafood Related Provisions 4 (2020), https://ustr.gov/sites/default/files/files/agreements/phase%20one%20agreement/Phase_One_Agreement-Ag_Summary_Long_Fact_Sheet.pdf [https://perma.cc/TCK9-G9ND]; see also Lighthizer: China Deal Will Be an Executive Agreement, Not Submitted to Congress, Inside U.S. Trade (Feb. 27, 2019, 11:15 AM), https://insidetrade.com/trade/lighthizer-china-deal-will-be-executive-agreement-not-submitted-congress [https://perma.cc/KSQ8-XES3] (noting lack of congressional review). ↑
USTR compiles these in an annex to its annual report. See 2019 Annual Report, supra note 102, Annex II. ↑
The Section 232 investigations by the Commerce Department are one example. The statute provides no role for USTR and indeed the steel and aluminum Section 232 investigations began before Ambassador Lighthizer was confirmed by the Senate. See Jacob M. Schlesinger & Natalie Andrews, Senate Confirms Robert Lighthizer as Trump’s U.S. Trade Representative, Wall St. J. (May 11, 2017), https://www.wsj.com/articles/senate-confirms-robert-lighthizer-as-trumps-u-s-trade-representative-1494529048 [https://perma.cc/TD6Q-KC6R]; Bureau of Indus. & Sec. Off. of Tech. Evaluation, U.S. Dep’t of Com., The Effect of Imports of Steel on the National Security 18 (2018), https://www.bis.doc.gov/index.php/documents/steel/2224-the-effect-of-imports-of-steel-on-the-national-security-with-redactions-20180111/file [https://perma.cc/AEC6-MA3H] (noting the 232 investigations began in April 2017). ↑
Interview with Trade Prac., Washington, D.C. (Nov. 21, 2019). These differences can be seen in the jurisprudence of the Court of International Trade. Id. ↑
U.S.-China Trade: Hearing Before the H. Comm. on Ways & Means, 116th Cong. (2020) (testimony of Robert Lighthizer, Ambassador, U.S. Trade Rep.) [hereinafter Lighthizer Testimony] (repeating that the Section 232 national security tariffs were not in “[his] lane”). ↑
See Hawkins & Norwood, supra note 77, at 93–95 (discussing the Hull-Peek controversy in 1934 in which Peek, a special advisor on foreign trade, negotiated an agreement with Germany for cotton but Secretary Hull urged the President to disapprove); see also Ellery C. Stowell, Editorial Comment: Secretary Hull’s Trade Agreements, 29 Am. J. Int’l L. 280, 283 (1935) (discussing allocation of power between State and Commerce). ↑
See, e.g., Sabrina Rodriguez, Lighthizer, Mnuchin and Liu Play Telephone, Politico (Nov. 26, 2019, 10:00 AM), https://www.politico.com/newsletters/morning-trade/2019/‌11/26/lighthizer-mnuchin-and-liu-play-telephone-783072 [https://perma.cc/TM2G-MA9T]; Damian Paletta, Top Trump Trade Officials Still at Odds After Profane Shouting Match in Beijing, Wash. Post (May 16, 2018, 6:42 PM), https://www.washingtonpost.com/news/‌business/wp/2018/05/16/top-trump-trade-officials-still-at-odds-after-profane-shouting-match-in-beijing/ [https://perma.cc/F5ZJ-DC63]; Logan Pauley, Consistent Inconsistency Crippling Trump’s China Trade Ambitions, Hill (May 31, 2018, 8:30 PM), https://thehill.com/opinion/finance/390085-consistent-inconsistency-crippling-trumps-china-trade-ambitions [https://perma.cc/7YNX-8A9S]. ↑
Claussen, Separation of Trade Law Powers, supra note 1, at 326 (describing how this occurs in trade). ↑
Eizenstat, supra note 190 (noting that the administration’s reorganization proposal “would weaken and even further fragment trade policy” putting USTR in a “bulky Commerce Department bureaucracy,” and that the USTR’s “most important asset” is direct access to the President). ↑
USTR cannot be “both a trade advocate and an interagency coordinator.” Id. ↑
Additional work is needed to unpack where the expertise should be and where and how coherence may be valuable in trade institutional design. Administrative law scholars have long studied issues related to capture and expertise. See, e.g., Jody Freeman & Adrian Vermeule, Massachusetts v. EPA: From Politics to Expertise, 2007 Sup. Ct. Rev. 51, 94 (2008) (explaining that the Supreme Court has considered whether an administrative actor utilized their expertise in deciding whether to apply Skidmore deference); Steven P. Croley, Regulation and Public Interests: The Possibility of Good Regulatory Government 3–4 (2008) (arguing administrative procedures help to insulate agencies against capture). But see Wendy E. Wagner, Administrative Law, Filter Failure, and Information Capture, 59 Duke L.J. 1321, 1325 (2010) (arguing that transparency requirements in the rulemaking process without proper filtration of information have facilitated what she calls “information capture”—where well-resourced parties inundate regulators with information as a means of influencing them). Little of this work has extended these explorations to traditional trade domains. ↑
This is a flip side of administrative scholars’ critique of OMB and OIRA as selective. See, e.g., Nicholas Bagley & Richard L. Revesz, Centralized Oversight of the Regulatory State, 106 Colum. L. Rev. 1260, 1266–69 (2006) (criticizing OIRA for its overly narrow focus on regulatory costs); Bressman & Vandenbergh, supra note 209, at 92–96 (critiquing OIRA’s lack of transparency, selectivity, and narrow focus on costs based on interviews with agency officials who have participated in OIRA review). USTR’s review is legalized in contrast. ↑
As Tom Merrill has noted, “to allow the EOP to displace the myriad agencies by becoming the ‘decider’ would weaken legal constraints on administrative action, and deprive affected interests and individuals from having an effective voice in the implementation of regulatory policy.” Thomas W. Merrill, Presidential Administration and the Traditions of Administrative Law, 115 Colum. L. Rev. 1953, 1979–80 (2015). ↑
See, e.g., Zaring, supra note 104, at 212–16 (describing the role of the Treasury Department in international economic lawmaking shaping policies as needed in coordination with international organization). ↑
On the longstanding transmission belt idea in administrative law, see Richard B. Stewart, The Reformation of American Administrative Law, 88 Harv. L. Rev. 1667, 1675 (1975). ↑
See generally Meyer & Sitaraman, supra note 1, at 598–601. ↑
See Ganesh Sitaraman & Ingrid Wuerth, The Normalization of Foreign Relations Law, 128 Harv. L. Rev. 1897, 1919–24 (2015). ↑
See Lighthizer Testimony, supra note 249, at 18–19; Brief of Defendants-Appellees at 16–17, Am. Inst. for Int’l Steel v. United States, 806 Fed. App’x 982 (Fed. Cir. 2020) (No. 19-1727). ↑
Invenergy Renewables LLC v. United States, 422 F. Supp. 3d 1255, 1288–89 (Ct. Int’l Trade 2019). ↑
Doug Palmer, Secrecy Needed in Trade Talks: USTR Kirk, Reuters (May 13, 2012, 1:56 PM), https://www.reuters.com/article/us-usa-trade-kirk-idUSBRE84C0AQ20120513 [https://perma.cc/TZ9G-CU4J]. ↑
Lighthizer Testimony, supra note 249, at 18–19. ↑
The Case-Zablocki Act (Case Act for short) requires executive branch agencies to report their international agreements to Congress through the State Department. 1 U.S.C. § 112b. ↑
See Cleveland, supra note 242, at 979. ↑
See, e.g., Brief of Defendants-Appellees at 20, Am. Inst. for Int’l Steel v. United States, 806 Fed. App’x 982 (Fed. Cir. 2020) (No. 19-1727). ↑
See, e.g., Am. Inst. for Int’l Steel v. United States, 806 F. App’x 982, 988–89 (Fed. Cir. 2020). ↑
Graham, supra note 108, at 235. ↑
See Sitaraman & Wuerth, supra note 261, at 1901. ↑
Tim Meyer has discussed the dangers of disjunctions in our trade law. See Timothy Meyer, Misaligned Lawmaking, 73 Vand. L. Rev. 151, 154–55 (2020). ↑
See Sitaraman, supra note 219, at 492. ↑
See, e.g., Hathaway, supra note 47, 239–68 (2009) (broadly re-balancing in foreign affairs including trade). Important recent contributions in the latter category include: Timothy Meyer, Local Liability in International Economic Law, 95 N.C. L. Rev. 261, 269 (2017) (“[D]irect liability for subnational governments should replace strict vicarious liability and immunity in international economic law.”); Alexia Brunet Marks, The Right to Regulate (Cooperatively), 38 U. Pa. J. Int’l L. 1, 8 (2016) (“[W]hen it comes to food safety, the harms caused by regulatory pluralism outweigh the benefits.”); Gregory Shaffer, Alternatives for Regulatory Governance Under TTIP: Building from the Past, 22 Colum. J. Eur. L. 403, 403–04 (2016) (proposing six alternative paradigms to evaluate negotiations over the Transatlantic Trade and Investment Partnership). ↑
See, e.g., Henry Olsen, Opinion, The President Has Too Much Power Over on Tariffs. Congress Should Reclaim That Authority., Wash. Post (June 14, 2019, 3:17 PM), https://www.washingtonpost.com/opinions/2019/06/14/president-has-too-much-power-over-tariffs-congress-should-reclaim-that-authority/ [https://perma.cc/88DQ-BD6Y]; Glenn Altschuler, How Congress Can Take Back Control Over Tariffs, Hill (June 2, 2019, 12:30 PM), https://thehill.com/opinion/finance/446513-how-congress-can-take-back-control-over-tariffs [https://perma.cc/3SYX-B75Z]; Packard, Congress Should Take Back Its Authority Over Tariffs, supra note 4. ↑
See, e.g., Julian Davis Mortenson, Article II Vests Executive Power, Not the Royal Prerogative, 119 Colum. L. Rev. 1169, 1230 (2019) (arguing that “executive power” was originally understood as “a discrete subset of . . . substantive authorities”). ↑
See, e.g., Brief of Defendants-Appellees at 1, 5, Am. Inst. for Int’l Steel v. United States, 806 Fed. App’x 982 (Fed. Cir. 2020) (No. 19-1727). ↑
Compare Almond Bros. Lumber Co. v. United States, No. 10-37, 2010 WL 1409656, at *1–*3 (Ct. Int’l Trade Apr. 4, 2010) (concluding that the CIT lacked subject-matter jurisdiction to review the Softwood Lumber Agreement because plaintiffs did not present sufficient evidence that the agreement was negotiated under Section 301) with Invenergy Renewables LLC v. United States, 422 F. Supp. 3d 1255, 1263–70 (Ct. Int’l Trade 2019) (concluding that the CIT had jurisdiction under Section 201 to review USTR’s withdrawal of its prior exclusion of a product from safeguard duties). ↑
See, e.g., 19 U.S.C. § 2251 (“[T]he President . . . shall take all appropriate and feasible action . . . which the President determines will facilitate efforts by the domestic industry to make a positive adjustment to import competition and provide greater economic and social benefits than costs.”). ↑
Interviews with Trade Pracs. (Jan. 2020) (commenting that they do not believe USTR’s actions qualify for APA review). But see infra text accompanying note 288. ↑
Exec. Order No. 12,866, 58 Fed. Reg. 51,735 (Sept. 30, 1993). ↑
Cf. Evan J. Criddle, Fiduciary Administration: Rethinking Popular Representation in Agency Rulemaking, 88 Tex. L. Rev. 441, 453–56 (2010) (reviewing presidential administration and the roles of OMB and OIRA). ↑
See Claussen, supra note 115, at 3 (describing agency practice). ↑
See Cary Coglianese, Administrative Law: The United States and Beyond, in International Encyclopedia of Social & Behavioral Sciences 109 (James D. Wright ed., 2d ed. 2015). ↑
See, e.g., Made in the USA Found. v. United States, 242 F.3d 1300, 1319–20 (11th Cir 2001) (finding the question whether NAFTA was appropriately concluded as a congressional-executive agreement to be a “nonjusticiable political question”). ↑
See, e.g., Eric A. Posner & Adrian Vermeule, The Executive Unbound: After the Madisonian Republic 5 (2011) (arguing that while there is no guarantee that an unbound executive will “pursue the public interest,” there is also “no pragmatically feasible alternative” and that “politics and public opinion . . . block the most lurid forms of executive abuse”). ↑
Outdatedly, see William D. Araiza, Note, Notice-and-Comment Rights for Administrative Decisions Affecting International Trade: Heightened Need, No Response, 99 Yale L.J. 669 (1989); Davis, supra note 212; George Bronz, The Tariff Commission as a Regulatory Agency, 61 Colum. L. Rev. 463 (1961). ↑
In fiscal year 2018, 242 new cases were filed with CIT. U.S. Cts., U.S. Court of International Trade—Cases Filed, Terminated, and Pending During the 12-Month Periods Ending September 30, 2017 and 2018, https://www.uscourts.gov/sites/default–/files/data_tables/jb_g1_0930.2018.pdf [https://perma.cc/XMY9-KTGP]. ↑
Id. Exceptionally, in autumn 2020, more than 3600 complaints were filed at the CIT against USTR for its Section 301 activities. See Standard Procedure Order, In Re Section 301 Cases, No. 21-01 (U.S. Ct. Int’l Trade, 2021). ↑
Existing accounts are dated. Frederick Davis and Daniel Tarullo each penned their reviews of trade administrative concerns in 1966 and 1986 respectively. See Davis, supra note 212; Tarullo, supra note 81. That there is such a dearth is surprising given that some of the most important administrative law and nondelegation cases from the twentieth century are related to trade law (e.g., Field v. Clark, 143 U.S. 649 (1892); J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394 (1928)). ↑
Sitaraman, supra note 219, at 496–97. ↑
David Zaring makes this point, relying on earlier work by Jerry Mashaw. See Zaring, supra note 104, at 194. ↑
For a broader critique of this point, see Emily S. Bremer, The Exceptionalism Norm in Administrative Adjudication, 2019 Wis. L. Rev. 1351, 1352–53 (2019) (arguing that, in agency adjudications, “Congress and individual agencies have . . . create[d] unique adjudicatory proceedings designed to meet the individual needs of different administrative agencies and programs”). ↑
More work is needed to consider both how and whether it may be possible to change conventional ideas of administrative law to “accommodate” trade law and both how and whether trade law might adopt more conventional administrative law processes. ↑
See generally Patrick C. Reed, Expanding the Jurisdiction of the U.S. Court of International Trade: Proposals by the Customs and International Trade Bar Association, 26 Brook. J. Int’l L. 819 (2017) (discussing the limitations on the CIT’s jurisdiction); accord Devin S. Sikes, Why Congress Should Expand the Subject Matter Jurisdiction of the United States Court of International Trade, 6 S.C. J. Int’l L. & Bus. 253, 254 (2010) (“The federal statutes vesting the CIT with jurisdiction over international trade disputes do not account for the evolution of international trade into new areas.”). ↑
Galbraith, supra note 184, at 1693 (noting that the executive branch agencies’ loyalty is “divided”). ↑
For an overview of these proposals, see Kathleen Claussen, Trade War Battles: Congress Reconsiders Its Role, Lawfare (Aug. 5, 2018, 11:00 AM), https://www.lawfareblog.com–/trade-war-battles-congress-reconsiders-its-role [https://perma.cc/D5R2-T8HP]. ↑

Transatlantic Perspectives on the Political Question Doctrine

On September 24, 2019, the Supreme Court of the United Kingdom (UKSC) unanimously invalidated U.K. Prime Minister Boris Johnson’s attempt to suspend (or “prorogue”) Parliament. The UKSC’s decision, R (Miller) v. Prime Minister (Miller/Cherry), was a political thunderclap, contributing to the U.K.’s political turmoil over its exit from the European Union, or “Brexit.” But the legal crux of Miller/Cherry was justiciability: was the Prime Minister’s decision to prorogue parliament a non-justiciable political question? Despite this question’s centrality to the case, few commentators have analyzed the Miller/Cherry decision through the lens of the political question doctrine, an area of law held largely in common between the United States and the U.K. Likewise, scholarly analysis has failed to explore the striking contrast between Miller/Cherry and Rucho v. Common Cause, the U.S. Supreme Court’s most recent foray into the political question doctrine.

This Comment does both. Miller/Cherry adopted a narrow understanding of the political question doctrine and instead embraced a robust vision of judicial review which closely resembles that of famed mid-century law professor Herbert Wechsler. The U.S. Supreme Court’s recent decision in Rucho v. Common Cause, however, took the opposite approach. Where Miller/Cherry offered a full-throated Wechslerian defense of the judiciary’s obligation to police constitutional constraints, Rucho channeled Wechsler’s contemporary and frequent interlocutor Alexander Bickel. Holding that challenges to partisan gerrymandering are not justiciable, Rucho, following Bickel, emphasized institutional humility and the need for courts to act cautiously in light of the “counter-majoritarian difficulty.”

Miller/Cherry and Rucho thus continue the great debate between Wechsler and Bickel, offering contradictory answers to the same foundational questions. Read together, they present a fascinating and transatlantic juxtaposition, illuminating key questions about the political question doctrine, judicial review, and the proper role of the courts.

Introduction

On September 24, 2019, the Supreme Court of the United Kingdom (UKSC) issued its decision in R (Miller) v. Prime Minister (Miller/Cherry),¹1.R (Miller) v. Prime Minister (Miller/Cherry) [2019] UKSC 41 (appeals taken from Eng. & Scot.). The case goes by many names in its nascent scholarly treatment, including the delightful, if presumptuously historical, “Case of Prorogations.” E.g., Paul Daly, Talking About the Case of Prorogations,Admin. L. Matters (Sept. 27, 2019), https://www.administrativelawmatters.com/blog/2019/09/27/talking-about-the-case-of-prorogations/ [https://perma.cc/8U7K-JXL3]. In order to avoid confusion with the lower court decision also captioned R(Miller) v. Prime Minister, I will refer to the case as “Miller/Cherry”both in text and in citations.Show More and British politics turned on its head. In an understated oral announcement²2.For the video of the announcement, see Supreme Court: Suspending Parliament Was Unlawful, Judges Rule,BBC News (Sept. 24, 2019), https://www.bbc.com/news/uk-politics-49810261 [https://perma.cc/5UPG-EV35].Show More and an unadorned written opinion, a unanimous Court held that Prime Minister Boris Johnson’s five-week suspension of Parliament—in Parliamentary jargon, “prorogation”³3.For more specifics on prorogation, see infra notes 22–24 and accompanying text.Show More—was unlawful and therefore void. The decision overturned the Prime Minister’s latest gambit in his duel with a recalcitrant House of Commons over “Brexit,” the U.K.’s planned exit from the European Union. Miller/Cherry was immediately controversial, prompting calls for the Prime Minister to resign,⁴4.E.g., Karla Adam & William Booth, U.K. Supreme Court Rules Prime Minister Boris Johnson Suspended Parliament Illegally, Wash. Post (Sept. 24, 2019, 2:00 PM), https://www.washingtonpost.com/world/europe/britains-supreme-court-set-to-rule-on-boris-johnsons-decision-to-suspend-parliament/2019/09/24/af719d70-dd9e-11e9-be7f-4cc85017c36f_story.html [https://perma.cc/U8EH-B29V].Show More jubilant declarations that the rule of law had been vindicated,⁵5.See Owen Bowcott, Ben Quinn & Severin Carrell, Johnson’s Suspension of Parliament Unlawful, Supreme Court Rules, Guardian (Sept. 24, 2019), https://www.theguardian.com/law/2019/sep/24/boris-johnsons-suspension-of-parliament-unlawful-supreme-court-rules-prorogue [https://perma.cc/9ED9-B9V2].Show More and accusations that the Court had perpetrated a “constitutional coup.”⁶6.E.g.,Jonathan Ames & Chris Smyth, Supreme Court Ruling: Senior Judges Could Face US-Style Grillings, Times (Sept. 26, 2019), https://www.thetimes.co.uk/article/supreme-court-ruling-senior-judges-could-face-us-style-grillings-mh22znd5j [https://perma.cc/G6TV-ASYF] (quoting prominent pro-Brexit MP Jacob Rees-Mogg).Show More

Although many British commentators have analyzed and criticized Miller/Cherry since its decision,⁷7.Perhaps most notable was a vehement and extensive criticism published only four days after the decision by John Finnis, a professor at Oxford and the former doctoral advisor to U.S. Supreme Court Justice Neil Gorsuch. SeeJohn Finnis, Pol’y Exchange, The Unconstitutionality of the Supreme Court’s Prorogation Judgment (Sept. 28, 2019), https://policyexchange.org.uk/wp-content/uploads/2019/10/The-unconstitutionality-of-the-Supreme-Courts-prorogation-judgment.pdf [https://perma.cc/9RS4-FGFU]. Other critics of varying degrees of vehemence abound in Anglophone academic circles. E.g., Martin Loughlin, Pol’y Exchange, The Case of Prorogation (Oct. 15, 2019), https://policyexchange.org.uk/publication/the-case-of-prorogation/ [https://perma.cc/9E8D-FXC9]; Steven Spadijer, Miller No 2: Orthodoxy as Heresy, Heresy as Orthodoxy, UK Const. L. Ass’n: Blog (Oct. 7, 2019), https://ukconstitutionallaw.org/2019/10/07/steven-spadijer-miller-no-2-orthodoxy-as-hersey-hersey-as-orthodoxy/ [https://perma.cc/DQ2T-W2RY]; Paul Yowell, Is Miller (No 2) the UK’s Bush v Gore?, UK Const. L. Ass’n: Blog (Oct. 7, 2019), https://ukconstitutionallaw.org/2019/10/07/paul-yowell-is-miller-no-2-the-uks-bush-v-gore/ [https://perma.cc/A8GJ-ZZWN].The decision has also had its defenders. E.g., Nick Barber, Constitutional Hardball and Justified Development of the Law, Jud. Power Project (Sept. 29, 2019), https://judicialpowerproject.org.uk/nick-barber-constitutional-hardball-and-justified-development-of-the-law/ [https://perma.cc/Z3FH-2NV2]; Alison Young, Deftly Guarding the Constitution, Jud. Power Project (Sept. 29, 2019), https://judicialpowerproject.org.uk/alison-young-deftly-guarding-the-constitution/ [https://perma.cc/R6JP-Z4J3] (arguing that Miller/Cherry “demonstrates a delicate balance between law and politics, affirming the Supreme Court’s role as the guardian of the UK’s constitution”). For a more extensive list of pieces commenting on Miller/Cherry, see Paul Craig, The Supreme Court, Prorogation and Constitutional Principle, Pub. L. (forthcoming) (manuscript at 1–2 nn.4–8), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3477487 [https://perma.cc/Y6ZR-PBXD].Show More the case has not received sustained or detailed attention on this side of the Atlantic.⁸8.One exception is Sam Shirazi, The U.K.’s Marbury v. Madison: The Prorogation Case and How Courts Can Protect Democracy, 2019 U. Ill. L. Rev. Online 108. Shirazi compares and contrasts Miller/Cherry with Marbury v. Madison and more generally focuses on the salutary role of judicial review in constitutional systems. Id. Shirazi spends little time discussing Miller/Cherry in the context of the political question doctrine, see id. at 113, and only fleetingly connects it to Rucho v. Common Cause, see id. at 118 n.79. See also Gerard N. Magliocca, Judicial Review Comes to Britain, Balkinization (Sept. 24, 2019), https://balkin.blogspot.com/2019/09/judicial-review-comes-to-britain.html [https://perma.cc/5HUQ-8ZBB] (providing brief summary of Miller/Cherry by an American law professor).Show More This lack of American attention is regrettable. Miller/Cherry holds important lessons for the American lawyer, especially through its striking contrast with recent decisions of the U.S. Supreme Court.

Although nominally about the Prime Minister’s prorogation of Parliament, Miller/Cherry was really about justiciability: could (or should) the Court decide the case in the first place? The UKSC’s answer to this question not only took sides in a long-standing debate about the proper role for courts in reviewing government action—it also did so in a way directly contrary to the U.S. Supreme Court’s decision three months prior in Rucho v. Common Cause. Whereas Miller/Cherry endorsed a robust judicial role and a correspondingly narrow political question doctrine—a perspective associated with famed mid-century academic Herbert Wechsler—Rucho emphasized constraint on judicial discretion and expressed a concern for institutional legitimacy, two hallmarks of the approach of Professor Alexander Bickel.

Although decided on different sides of the Atlantic, these two cases are fundamentally about the same issue.⁹9.There are undoubtedly differences between the broader legal regimes of Britain and the United States which affect how courts in each country think about justiciability. For instance, Britain’s lack of a written constitution means that British courts, unlike American courts, generally would not look to constitutional text as a constraint on judicial discretion. Cf.infranotes 104–08 and accompanying text (discussing this American tendency). This Comment does not—and does not need to—argue that the justiciability inquiry in the two nations is identical. Rather, because the political question doctrine’s basic argumentative contours are shared between the two nations, see infra Section I.B, Miller/Cherry and Ruchocan fruitfully be read together.Show More Far from merely being a curious case from a foreign jurisdiction, Miller/Cherry lays bare the tensions inherent in the political question doctrine and in judicial review more broadly. Especially through its juxtaposition with Rucho v. Common Cause, Miller/Cherry provides an important perspective on judicial review and the judicial office in a time of heightened attention to the proper role of the courts.

* J.D., University of Virginia School of Law, 2020; M.A. (History), University of Virginia, 2020. My thanks to Charles Barzun, Justin Aimonetti, Clay Phillips, and especially Hanaa Khan for offering helpful thoughts on previous drafts of this Comment; to Ray Gans, Andrew Kintner, and everyone else at the Virginia Law Review who helped edit and publish it; and to my fiancée Madeline Roth for her constant and loving support. ↑
R (Miller) v. Prime Minister (Miller/Cherry) [2019] UKSC 41 (appeals taken from Eng. & Scot.). The case goes by many names in its nascent scholarly treatment, including
the delightful, if presumptuously historical, “Case of Prorogations.” E.g., Paul Daly,
Talking About the Case of Prorogations, Admin. L. Matters (Sept. 27, 2019), https://www.administrativelawmatters.com/blog/2019/09/27/talking-about-the-case-of-prorogations/ [https://perma.cc/8U7K-JXL3]. In order to avoid confusion with the lower court decision also captioned R(Miller) v. Prime Minister, I will refer to the case as “Miller/Cherry” both in text and in citations. ↑
For the video of the announcement, see Supreme Court: Suspending Parliament Was Unlawful, Judges Rule, BBC News (Sept. 24, 2019), https://www.bbc.com/news/uk-politics-49810261 [https://perma.cc/5UPG-EV35]. ↑
For more specifics on prorogation, see infra notes 22–24 and accompanying text. ↑
E.g., Karla Adam & William Booth, U.K. Supreme Court Rules Prime Minister Boris Johnson Suspended Parliament Illegally, Wash. Post (Sept. 24, 2019, 2:00 PM), https://www.washingtonpost.com/world/europe/britains-supreme-court-set-to-rule-on-boris-johnsons-decision-to-suspend-parliament/2019/09/24/af719d70-dd9e-11e9-be7f-4cc85017c36f_story.html [https://perma.cc/U8EH-B29V]. ↑
See Owen Bowcott, Ben Quinn & Severin Carrell, Johnson’s Suspension of Parliament Unlawful, Supreme Court Rules, Guardian (Sept. 24, 2019), https://www.theguardian.com/law/2019/sep/24/boris-johnsons-suspension-of-parliament-unlawful-supreme-court-rules-prorogue [https://perma.cc/9ED9-B9V2]. ↑
E.g., Jonathan Ames & Chris Smyth, Supreme Court Ruling: Senior Judges Could Face US-Style Grillings, Times (Sept. 26, 2019), https://www.thetimes.co.uk/article/supreme-court-ruling-senior-judges-could-face-us-style-grillings-mh22znd5j [https://perma.cc/G6TV-ASYF] (quoting prominent pro-Brexit MP Jacob Rees-Mogg). ↑
Perhaps most notable was a vehement and extensive criticism published only four days after the decision by John Finnis, a professor at Oxford and the former doctoral advisor to U.S. Supreme Court Justice Neil Gorsuch. See John Finnis, Pol’y Exchange, The Unconstitutionality of the Supreme Court’s Prorogation Judgment (Sept. 28, 2019), https://policyexchange.org.uk/wp-content/uploads/2019/10/The-unconstitutionality-of-the-Supreme-Courts-prorogation-judgment.pdf [https://perma.cc/9RS4-FGFU]. Other critics of varying degrees of vehemence abound in Anglophone academic circles. E.g., Martin Loughlin, Pol’y Exchange, The Case of Prorogation (Oct. 15, 2019), https://policyexchange.org.uk/publication/the-case-of-prorogation/ [https://perma.cc/9E8D-FXC9]; Steven Spadijer, Miller No 2: Orthodoxy as Heresy, Heresy as Orthodoxy, UK Const. L. Ass’n: Blog (Oct. 7, 2019), https://ukconstitutionallaw.org/2019/10/07/steven-
spadijer-miller-no-2-orthodoxy-as-hersey-hersey-as-orthodoxy/ [https://perma.cc/DQ2T-W2RY]; Paul Yowell, Is Miller (No 2) the UK’s Bush v Gore?, UK Const. L. Ass’n: Blog (Oct. 7, 2019), https://ukconstitutionallaw.org/2019/10/07/paul-yowell-is-miller-no-2-the-uks-bush-v-gore/ [https://perma.cc/A8GJ-ZZWN].

The decision has also had its defenders. E.g., Nick Barber, Constitutional Hardball and Justified Development of the Law, Jud. Power Project (Sept. 29, 2019), https://judicialpowerproject.org.uk/nick-barber-constitutional-hardball-and-justified-development-of-the-law/ [https://perma.cc/Z3FH-2NV2]; Alison Young, Deftly Guarding the Constitution, Jud. Power Project (Sept. 29, 2019), https://judicialpowerproject.org.uk/alison-young-deftly-guarding-the-constitution/ [https://perma.cc/R6JP-Z4J3] (arguing that Miller/Cherry “demonstrates a delicate balance between law and politics, affirming the Supreme Court’s role as the guardian of the UK’s constitution”). For a more extensive list of pieces commenting on Miller/Cherry, see Paul Craig, The Supreme Court, Prorogation
and Constitutional Principle, Pub. L. (forthcoming) (manuscript at 1–2 nn.4–8), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3477487 [https://perma.cc/Y6ZR-PBXD]. ↑
One exception is Sam Shirazi, The U.K.’s Marbury v. Madison: The Prorogation Case and How Courts Can Protect Democracy, 2019 U. Ill. L. Rev. Online 108. Shirazi compares and contrasts Miller/Cherry with Marbury v. Madison and more generally focuses on the salutary role of judicial review in constitutional systems. Id. Shirazi spends little time discussing Miller/Cherry in the context of the political question doctrine, see id. at 113, and only fleetingly connects it to Rucho v. Common Cause, see id. at 118 n.79. See also Gerard N. Magliocca, Judicial Review Comes to Britain, Balkinization (Sept. 24, 2019), https://balkin.blogspot.com/2019/09/judicial-review-comes-to-britain.html [https://perma.cc/5HUQ-8ZBB] (providing brief summary of Miller/Cherry by an American law professor). ↑
There are undoubtedly differences between the broader legal regimes of Britain and the United States which affect how courts in each country think about justiciability. For instance, Britain’s lack of a written constitution means that British courts, unlike American courts, generally would not look to constitutional text as a constraint on judicial discretion. Cf. infra notes 104–08 and accompanying text (discussing this American tendency). This Comment does not—and does not need to—argue that the justiciability inquiry in the two nations is identical. Rather, because the political question doctrine’s basic argumentative contours are shared between the two nations, see infra Section I.B, Miller/Cherry and Rucho can fruitfully be read together. ↑

Designing Business Forms to Pursue Social Goals

The long-standing debate about the purpose and role of business firms has recently regained momentum. Business firms face growing pressure to pursue social goals and benefit corporation statutes proliferate across many U.S. states. This trend is largely based on the idea that firms increase long-term shareholder value when they contribute (or appear to contribute) to society. Contrary to this trend, this Article argues that the pressing issue is whether policies to create social impact actually generate value for third-party beneficiaries—rather than for shareholders. Because it is difficult to measure social impact with precision, the design of legal forms for firms that pursue social missions should incorporate organizational structures that generate both the incentives and competence to pursue such missions effectively. Specifically, firms that have a commitment to transacting with different types of disadvantaged groups demonstrate these attributes and should thus serve as the basis for designing legal forms.

While firms with such a commitment may be created using a variety of control and contractual mechanisms, the related transaction costs tend to be very high. This Article develops a social enterprise legal form that draws on the legal regime for community development financial institutions (CDFIs) and European legal forms for work-integration social enterprises (WISEs). This form would certify to investors, consumers, and governments that designated firms have a commitment as social enterprises. By obviating the need for costly social impact measurement, this form would facilitate the provision of subsidy-donations to social enterprises from multiple groups, particularly investors (through below-market investment) and consumers (via premiums over market prices). Thus, this social enterprise form would be to altruistic investors and consumers what the nonprofit form is to donors.

Moreover, the proposal could facilitate the flow of investments by foundations in social enterprises (known as program-related investments, “PRIs”) because it would help foundations verify the social impact of their investees. In addition, by giving subsidy-providers greater assurance that social enterprises pursue social missions effectively, the proposed legal form could facilitate public markets for social enterprises.

Introduction

In recent years, there have been efforts to encourage firms to pursue social goals. In a striking statement to public corporations, Larry Fink, Blackrock’s CEO, wrote: “Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”¹1.Letter from Larry Fink, Chairman & Chief Exec. Officer, Blackrock, to CEOs (2018), https://www.blackrock.com/corporate/investor-relations/2018-larry-fink-ceo-letter [https://perma.cc/7QRQ-9DG6]. For a similar statement by Martin Lipton, the renowned legal advisor for public corporations, see Martin Lipton et al., The New Paradigm: A Roadmap for an Implicit Corporate Governance Partnership Between Corporations and Investors To Achieve Sustainable Long-Term Investment and Growth, Harv. L. Sch. F. on Corp. Governance (Jan. 11, 2017), https://corpgov.law.harvard.edu/2017/01/11/corporate-governance-the-new-paradigm/ [https://perma.cc/B5AJ-EWNW].Show More The imperative that firms pursue social goals, however, is very vague. What range of permissible non-pecuniary goals should companies be encouraged to pursue?²2.See generally Oliver Hart & Luigi Zingales, Companies Should Maximize Shareholder Welfare Not Market Value, 2 J.L. Fin. & Acct. 247 (2017) (arguing that company and asset managers should pursue policies consistent with the non-pecuniary preferences of their investors).Show More This question reflects a much re-hashed debate regarding the role and purpose of corporations. Many studies view this topic as a matter of corporate governance. That is, the key question is whether policies that seek to create social impact—often referred to as “CSR” (for corporate social responsibility)—maximize shareholder value in the long term. If the answer is yes, then it is a win-win situation for all because such policies are assumed to benefit society.

This Article takes a different approach by arguing that the pressing question should be: Does the pursuit of social missions by for-profit organizations actually benefit the intended beneficiaries? While the literature is not conclusive,³3.Compare Ronald W. Masulis & Syed Walid Reza, Agency Problems of Corporate Philanthropy, 28 Rev. Fin. Stud. 592, 619–21 (2015) (claiming that corporate donations advance CEO interests and reduce firm value), with Allen Ferrell, Hao Liang & Luc Renneboog, Socially Responsible Firms, 122 J. Fin. Econ. 585, 585–91, 596–605 (2016) (arguing that well-governed firms are more engaged in CSR, and there is a positive association between CSR and shareholder value).Show More it is easy to see how a reputation for being socially responsible can help companies sell more products, attract investments, or even get more lenient treatment from regulators. However, just having a good reputation does not mean that CSR policies achieve their putative purpose of helping stakeholders and society at large. Without a mechanism for ensuring that CSR actually benefits the stakeholders, companies can easily use it as a means of “greenwashing.”⁴4.“Greenwashing occurs when a corporation increases its sales or boosts its brand image through environmental rhetoric or advertising, but in reality does not make good on these environmental claims.” Miriam A. Cherry, The Law and Economics of Corporate Social Responsibility and Greenwashing, 14 U.C. Davis Bus. L.J. 281, 282 (2013).Show More Greenwashing may be particularly conducive to shareholder value because it promotes a strong reputation and higher sales without actually doing anything substantial for society.⁵5.This arguably explains why well-governed firms that are more accountable to their shareholders tend to engage in value-enhancing CSR. See generallyFerrell, Liang & Renneboog, supra note 3. For a similar argument in the context of regulation, see Steven L. Schwarcz, Misalignment: Corporate Risk-Taking and Public Duty, 92 Notre Dame L. Rev. 1, 3–4 (2016) (arguing that regulation designed to align managers’ and investors’ interests does not necessarily help address negative externalities).Show More But—while false signals of doing good may increase shareholder value—those who support companies for their good deeds would presumably be disappointed were the truth to come to light.

The problem is that it is extremely difficult to verify companies’ social impact. Existing measures of social impact tend to be vague, include metrics that are difficult to quantify, and even mix shareholder protection metrics with environmental or societal ones.⁶6.This is most obviously manifested in the ESG metrics because they include both (i) governance metrics, which are supposed to increase accountability to shareholders and (ii) social and environmental metrics, which are supposed to measure firms’ contributions to social and environmental objectives.Show More But if measurement is rarely available, how do we know that firms are pursuing social goals effectively?

The legal approach to addressing these questions has been to introduce legal hybrid forms—in particular, the benefit corporation.⁷7.See infra Part II.Show More These forms are supposed to communicate to investors, consumers, workers, and society at large that firms’ activities benefit society. To date, as many as thirty-six states, including Delaware, have adopted one or more such legal forms.⁸8.B Lab, State by State Status of Legislation, Benefit Corp., http://benefitcorp.net/policymakers/state-by-state-status? [https://perma.cc/X524-35UE] (last visited Mar. 18, 2020).Show More However, existing legal forms fail to clarify the actual impact of companies’ social goals.⁹9.See, e.g., John E. Tyler III, Evan Absher, Kathleen Garman & Anthony Luppino, Purposes, Priorities and Accountability Under Social Business Structures: Resolving Ambiguities and Enhancing Adoption, 19 Advances Entrepreneurship Firm Emergence & Growth 39, 39 (2017) (arguing that “social business models do not meaningfully prioritize or impose accountability to ‘social good’ over other purposes”).Show More Just like CSR, these forms could portray a misleading picture of companies’ social contributions. Many of the companies that adopt these legal forms have little or no discernible social impact.¹⁰10.See Ofer Eldar, The Role of Social Enterprise and Hybrid Organizations, 2017 Colum. Bus. L. Rev. 92, 99 (discussing Laureate University, a for-profit network of universities incorporated as a benefit corporation but that uses aggressive promotional tactics and has low graduation and loan repayment rates); see also Michael B. Dorff, James Hicks & Steven Davidoff Solomon, The Future or Fancy? An Empirical Study of Public Benefit Corporations 46 (Eur. Corp. Governance Inst., Working Paper No. 495, 2020), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3433772 [https://perma.cc/D9R8-VZWC]. Dorff et al. list standard firms, such as Ripple Foods, as having incorporated as benefit corporations, even though these firms do not have any clear social impact other than producing goods (such as dairy-free milk) that appeal to certain consumers.Show More And companies that appear to be highly successful in pursuing social missions already had such impact before they adopted the legal forms.¹¹11.Two such examples include the Greyston Bakery and Patagonia. See Eldar, supra note 10, at 189 n.270.Show More

Why have these forms seemingly failed to generate greater social impact? In this Article, I claim that they suffer from the same underlying problem as CSR policies. These forms are simply not structured in a way that makes companies more likely to pursue social goals effectively. Therefore, the legal forms cannot serve as useful signals to investors or consumers that the firms benefit society in the ways they purport to.

An effective legal form must meet two conditions. First, the form must give firms incentives to pursue social missions effectively. At the very least, the goal of maximizing shareholders’ profits should not interfere with the firm’s social mission. Ideally, the firm should have a financial stake in the accomplishment of the social mission. Second, the firm should have the competence to pursue such missions. Competence is particularly important because social goals, such as unemployment or access to capital, tend to be complex. Accomplishing complex social goals requires the firm to tailor its social programs to the specific attributes and needs of the beneficiaries.

The issues of incentives and competence are very similar to standard issues in corporate governance. Broadly stated, the main goal of corporate governance policy is to ensure that managers have both (i) the incentives to maximize shareholder value and (ii) the competence to make decisions on behalf of the corporation.¹²12.See Zohar Goshen & Richard Squire, Principal Costs: A New Theory for Corporate Law and Governance, 117 Colum. L. Rev. 767, 784 (2017) (identifying conflict costs and competence costs as the two main sources of costs that corporate governance is designed to address).Show More What complicates things when it comes to social responsibility is that a firm that purports to pursue CSR not only makes profits on behalf of the investors, but it also serves as a conduit for a subsidy or a donation. As I explain elsewhere, these subsidies or donations need not be direct transfers from the government or donors. In fact, they are usually latent in the sense that they reflect premium prices paid by consumers or below-market returns from investors.¹³13.Eldar, supra note 10, at 104–05.Show More

For policy makers, the main design issue is how to assure those who provide subsidy-donations that they will be used effectively. Thus, the principal goal of this Article is to develop a legal form with key structural elements that give managers the incentives and competence to accomplish this. This form can signal to stakeholders that firms professing to promote social impact actually do what they claim.

The policy I propose is modeled on the structural elements found in social enterprises that transact with their beneficiaries (e.g., as consumers or workers), which I have addressed in previous work.¹⁴14.See id.; see also Ofer Eldar, The Organization of Social Enterprises: Transacting Versus Giving 10–15 (July 27, 2018) (unpublished paper), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3217663 [https://perma.cc/S36D-3LWP].Show More The transactional relationship with its beneficiaries gives the firm a stake in helping them develop, and also enables the firm to observe beneficiaries’ abilities and needs. Thus, such firms have both the incentives and competence to serve certain social goals. The proposal builds on the regulatory regime for community development financial institutions (CDFIs), which certifies financial institutions as firms that serve low-income populations,¹⁵15.The CDFI regime is currently limited to low-income borrowers, but it could be extended to a wider class of beneficiaries, and extended beyond the U.S.Show More and combines this regime with certain elements found in benefit corporations.¹⁶16.Specifically, as in benefit corporations, a qualified majority voting is required to change the mission of the firm. See infra text accompanying note 111.Show More

In essence, the proposal is to introduce a new social enterprise (SE) legal form. Firms organized under the SE legal form would be required to obtain a government certification as a “Social Enterprise” if they commit, in their charters, to transacting with one or more carefully defined classes of beneficiaries. These beneficiaries may include, among others, workers, borrowers, and consumers. Beneficiaries will be divided into different classes in accordance with certain criteria of need (e.g., level of income). To maintain the certification, firms must commit to having a minimum percentage of their business associated with beneficiary transactions. Whereas current benefit corporation laws permit companies to choose a third-party standard that measures their social purpose,¹⁷17.The MBCL provides criteria for third-party standards, but companies have discretion to select how their performance will be measured. See infra Part II.Show More my proposed reform would require companies to adhere to one federal standard defined by a single federal certifier.

The main goal of this proposed policy is to facilitate the flow of subsidized capital and income to social enterprises. This legal form is necessary to attract subsidies from dispersed subsidy-providers, such as investors and consumers. Currently, investors and consumers mainly rely on costly contractual and ownership mechanisms to ensure that relevant firms transact with their beneficiaries. Under the proposed system, investors and consumers would have notice that the firm transacts with beneficiaries before they purchase shares or products. In this respect, the proposed law would be to altruistic investors and consumers essentially what the nonprofit form is to donors.¹⁸18.The nonprofit form assures donors that the managers of donative organizations have limited incentives to expropriate the subsidy-donations; hence, they are more likely to distribute donations to the intended beneficiaries. Henry B. Hansmann, The Role of Nonprofit Enterprise, 89 Yale L.J. 835, 838–39 (1980). Similarly, the proposed legal form would assure investors and consumers that the firm has incentives to use subsidies effectively.Show More Thus, the proposal is likely to unlock much-needed capital to scale social enterprises and increase social impact.

The ability of the SE legal form to source subsidies from a wider range of subsidy-providers could serve two additional complementary objectives. First, it could help facilitate the process for allocating subsidized investments (known as program-related investments or “PRIs”) from foundations. While most policy initiatives seek to attract institutional shareholder investment to channel capital for social goals, the best candidates for investing in social impact are foundations. The reason is that they have vast amounts of capital that they are supposed to employ to further philanthropic goals.¹⁹19.See, e.g., Matt Onek, Philanthropic Pioneers: Foundations and the Rise of Impact Investing, Stan. Soc. Innovation Rev. (Jan. 17, 2017) https://ssir.org/articles/entry/philanthropic_pioneers_foundations_and_the_rise_of_impact_investing# [https://perma.cc/MJ7A-52Q8].Show More Paradoxically, foundations often resist making PRIs in for-profit social enterprises because such investments could expose them to tax penalties if they cannot verify the social mission of their investees. Currently, such verification is cumbersome and subject to legal uncertainty. Thus, making certified firms eligible for PRIs would facilitate the process for allocating such investments.

Second, more ambitiously, the proposal has the potential to meet a long-awaited goal of social entrepreneurs: facilitating their access to capital markets. The inability of social enterprises to tap into capital markets substantially burdens their ability to grow and increase their social impact. Attempts to establish social exchanges for firms that combine profit and missions have largely been futile, primarily due to the difficulties of measuring social impact. A new legal form could help by providing adequate assurance to the investors who are expected to subsidize such impact.

One objection to this proposal might be that a legal hybrid form based solely on firms’ transactional relationships with their beneficiaries is overly reductive or too narrow. Should a legal hybrid form not capture the universe of social missions, such as the protection of the environment, diversity, and human rights? These objectives are indeed laudable, but it does not follow that legal forms can adequately address them. In the absence of credible certification mechanisms and clear metrics of social impact, legal forms for organizations with broad social purposes are not likely to signal that these firms pursue social missions effectively. Furthermore, the class of organizations that transact with disadvantaged persons is large and highly consequential.²⁰20.For example, they range from microfinance institutions to firms that provide eyeglasses in developing countries.Show More Concentrating on these firms could transform legal hybrid forms from a marginal phenomenon to a remarkable vehicle for promoting development.

This Article proceeds as follows: Part I describes how legal hybrid forms are supposed to serve as a commitment device to potential subsidy providers and explains why a new form is necessary to facilitate the formation of social enterprises. Part II critically evaluates the principal existing legal forms for companies with a social purpose and explains why they fail to serve as adequate commitment devices. Part III discusses the key elements of the CDFI regime and why other certification mechanisms do not work as well. Part IV proposes a design for a new legal form for social enterprises and discusses its principal elements in detail. Part V discusses the design of possible government subsidies for the proposed legal hybrid form.

* Duke University School of Law; Duke Innovation and Entrepreneurship Initiative. I thank Richard Brooks, Jamie Boyle, John Coyle, Elisabeth De Fontenay, Brian Galle, Henry Hansmann, Yair Listokin, Richard Schmalbeck, Steven Schwarcz, Michael Simkovic, Emily Strauss, Rory Van Loo, Andrew Verstein, and participants in seminars at Duke University School of Law and Boston University School of Law for helpful comments and suggestions. I am also grateful to Heather Cron, Zach Lankford, Renuka Medury, Kelsey Moore, Catherine Prater, and Hadar Tanne for excellent research assistance. Email: eldar@law.duke.edu. ↑
Letter from Larry Fink, Chairman & Chief Exec. Officer, Blackrock, to CEOs (2018), https://www.blackrock.com/corporate/investor-relations/2018-larry-fink-ceo-letter [https://perma.cc/7QRQ-9DG6]. For a similar statement by Martin Lipton, the renowned legal advisor for public corporations, see Martin Lipton et al., The New Paradigm: A Roadmap for an Implicit Corporate Governance Partnership Between Corporations and Investors To Achieve Sustainable Long-Term Investment and Growth, Harv. L. Sch. F. on Corp. Governance (Jan. 11, 2017), https://corpgov.law.harvard.edu/2017/01/11/corporate-governance-the-new-paradigm/ [https://perma.cc/B5AJ-EWNW]. ↑
See generally Oliver Hart & Luigi Zingales, Companies Should Maximize Shareholder Welfare Not Market Value, 2 J.L. Fin. & Acct. 247 (2017) (arguing that company and asset managers should pursue policies consistent with the non-pecuniary preferences of their investors). ↑
Compare Ronald W. Masulis & Syed Walid Reza, Agency Problems of Corporate Philanthropy, 28 Rev. Fin. Stud. 592, 619–21 (2015) (claiming that corporate donations advance CEO interests and reduce firm value), with Allen Ferrell, Hao Liang & Luc Renneboog, Socially Responsible Firms, 122 J. Fin. Econ. 585, 585–91, 596–605 (2016) (arguing that well-governed firms are more engaged in CSR, and there is a positive association between CSR and shareholder value). ↑
“Greenwashing occurs when a corporation increases its sales or boosts its brand image through environmental rhetoric or advertising, but in reality does not make good on these environmental claims.” Miriam A. Cherry, The Law and Economics of Corporate Social Responsibility and Greenwashing, 14 U.C. Davis Bus. L.J. 281, 282 (2013). ↑
This arguably explains why well-governed firms that are more accountable to their shareholders tend to engage in value-enhancing CSR. See generally Ferrell, Liang & Renneboog, supra note 3. For a similar argument in the context of regulation, see Steven L. Schwarcz, Misalignment: Corporate Risk-Taking and Public Duty, 92 Notre Dame L. Rev. 1, 3–4 (2016) (arguing that regulation designed to align managers’ and investors’ interests does not necessarily help address negative externalities). ↑
This is most obviously manifested in the ESG metrics because they include both (i) governance metrics, which are supposed to increase accountability to shareholders and (ii) social and environmental metrics, which are supposed to measure firms’ contributions to social and environmental objectives. ↑
See infra Part II. ↑
B Lab, State by State Status of Legislation, Benefit Corp., http://benefitcorp.net/policymakers/state-by-state-status? [https://perma.cc/X524-35UE] (last visited Mar. 18, 2020). ↑
See, e.g., John E. Tyler III, Evan Absher, Kathleen Garman & Anthony Luppino, Purposes, Priorities and Accountability Under Social Business Structures: Resolving Ambiguities and Enhancing Adoption, 19 Advances Entrepreneurship Firm Emergence & Growth 39, 39 (2017) (arguing that “social business models do not meaningfully prioritize or impose accountability to ‘social good’ over other purposes”). ↑
See Ofer Eldar, The Role of Social Enterprise and Hybrid Organizations, 2017 Colum. Bus. L. Rev. 92, 99 (discussing Laureate University, a for-profit network of universities incorporated as a benefit corporation but that uses aggressive promotional tactics and has low graduation and loan repayment rates); see also Michael B. Dorff, James Hicks & Steven Davidoff Solomon, The Future or Fancy? An Empirical Study of Public Benefit Corporations 46 (Eur. Corp. Governance Inst., Working Paper No. 495, 2020), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3433772 [https://perma.cc/D9R8-VZWC]. Dorff et al. list standard firms, such as Ripple Foods, as having incorporated as benefit corporations, even though these firms do not have any clear social impact other than producing goods (such as dairy-free milk) that appeal to certain consumers. ↑
Two such examples include the Greyston Bakery and Patagonia. See Eldar, supra note 10, at 189 n.270. ↑
See Zohar Goshen & Richard Squire, Principal Costs: A New Theory for Corporate Law and Governance, 117 Colum. L. Rev. 767, 784 (2017) (identifying conflict costs and competence costs as the two main sources of costs that corporate governance is designed to address). ↑
Eldar, supra note 10, at 104–05. ↑
See id.; see also Ofer Eldar, The Organization of Social Enterprises: Transacting Versus Giving 10–15 (July 27, 2018) (unpublished paper), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3217663 [https://perma.cc/S36D-3LWP]. ↑
The CDFI regime is currently limited to low-income borrowers, but it could be extended to a wider class of beneficiaries, and extended beyond the U.S. ↑
Specifically, as in benefit corporations, a qualified majority voting is required to change the mission of the firm. See infra text accompanying note 111. ↑
The MBCL provides criteria for third-party standards, but companies have discretion to select how their performance will be measured. See infra Part II. ↑
The nonprofit form assures donors that the managers of donative organizations have limited incentives to expropriate the subsidy-donations; hence, they are more likely to distribute donations to the intended beneficiaries. Henry B. Hansmann, The Role of Nonprofit Enterprise, 89 Yale L.J. 835, 838–39 (1980). Similarly, the proposed legal form would assure investors and consumers that the firm has incentives to use subsidies effectively. ↑
See, e.g., Matt Onek, Philanthropic Pioneers: Foundations and the Rise of Impact Investing, Stan. Soc. Innovation Rev. (Jan. 17, 2017) https://ssir.org/articles/entry/philanthropic_pioneers_foundations_and_the_rise_of_impact_investing# [https://perma.cc/MJ7A-52Q8]. ↑
For example, they range from microfinance institutions to firms that provide eyeglasses in developing countries. ↑

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