exchange rate of 118 to 1. The plaintiffs then asserted that under the quoted payment clauses the "effective legal rate" of exchange changed from 80 piasters to 118 piasters to the dollar as of October 1, 1967, and that the United States became obligated to convert contract dollars into piasters at the new and higher rate of 118 piasters for each contract dollar. The Armed Services Board of Contract Appeals denied the plaintiffs' claim in a decision dated October 27, 1971 (71-2 BCA 9149), and denied plaintiffs' motion for reconsideration of its decision on August 3, 1972. The plaintiffs then filed ten separate petitions in the Court of Claims challenging the Board's determinations.

The Court of Claims denied the plaintiffs' request for review and affirmed the Board's decision as the basis for its judgment in this case, stating:

Accepting plaintiffs' view, arguendo, that the clauses were designed to protect the contractors against any change in the legal rate of exchange, it is clear that no changes occurred in either of the two existing legal rates of exchange during contract performance. The official rate remained at 80 to 1 and the "Consolidation Premium," which plaintiffs are wont to describe as the "effective legal rate," remained at 118 to 1. Having contracted with the defendant at the official legal rate of 80 to 1, at a time when the "effective legal rate" of 118 to 1 was also prominently in existence, no persuasive claim can be made that the "effective legal rate" of 118 to 1 should now be adopted as reflecting the intendment of the parties at the time they entered into the contracts.

Generalized System of Preferences

On February 26, 1976, President Ford issued Executive Order 11906, amending the generalized system of preferences (GSP) by deleting five items from the list of eligible articles and updating the "competitive need" limitations on GSP.

Fed. Reg., Vol. 41, No. 56, Mar. 22, 1976, pp. 8758-8763.

The Chairman of the Trade Policy Staff Committee of the Office of the Special Representative for Trade Negotiations filed with the Federal Register on March 19, 1976, a paper setting forth the following information about the U.S. system of GSP: (1) The current list of beneficiary countries and territories; (2) a descriptive list of the articles currently eligible for GSP benefits; (3) the list of eligible

articles for which products of certain beneficiary developing countries will not receive duty-free treatment by virtue of the provisions of section 504 of the Trade Act of 1974 (88 Stat. 2070; 19 U.S.C. 2464).

The publication had no legal effect. Its purpose was to facilitate understanding of the changes that had been made in the GSP and to supplement the information contained in the basic implementing documents: E.O. 11888 of Nov. 26, 1975 (40 Fed. Reg. 55275, Nov. 26, 1975), as amended by E.O. 11906, supra. The Chairman's paper contained the following additional explanation:

Executive Order No. 11888, dated November 24, 1975, modified the Tariff Schedules of the United States to implement the Generalized System of Preferences (GSP) authorized by title V of the Trade Act of 1974. The Executive order designated beneficiary countries and eligible articles for the GSP. Products which are eligible articles and meet the conditions stipulated in title V of the Trade Act are duty free if imported into the United States directly from a beneficiary country on or after January 4, 1976.

Section 504(c) of the Trade Act provides that eligible articles will not receive dutyfree treatment, however, if the are (1) the product of a beneficiary country which in the preceding calendar year accounted for 50 percent or more of total U.S. imports of the article (unless the President has determined that the article was not produced in the United States on January 3, 1975) or (2) the product of a beneficiary country which supplied imports valued at $25 million or more in the preceding year. (This provision is referred to as the "competitive-need limitation" on GSP.) The list of beneficiary-country exceptions to eligibility for particular products resulting from the provisions of section 504(c) must be updated within 60 days after the end of each calendar year.

Fed. Reg., Vol. 41, No. 56, Mar. 22, 1976, pp. 11956-12006.

President Ford issued Executive Order 11934, dated August 30, 1976, deleting Laos from status as a beneficiary developing country under the generalized system of preferences (GSP) and adding Portugal to the list of GSP beneficiaries. The order also modified the limitations on preferential treatment for certain eligible articles from countries designated as beneficiaries, adjusted the original designation of eligible articles, and made technical identifying changes in the list of beneficiary developing countries.

Fed. Reg., Vol. 41, No. 171, Sept. 1, 1976, p. 37084.

Petroleum and Petroleum Products

The Supreme Court, on June 17, 1976, in Federal Energy Administration v. Algonquin SNG, Inc., 426 U.S. 548 (1976), unanimously upheld the authority of the President to impose license fees on imported oil to limit the imports of oil for national security reasons. The decision reversed the ruling of the U.S. Court of Appeals for the District of Columbia, in Algonquin SNG, Inc. v. FEA, 518 F.2d 1051 (1975), that the President had authority to limit imports only through "direct" methods, that is, import quotas. See the 1975 Digest, p. 521.

Section 232 (b) of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862 (b)), provides that if the Secretary of the Treasury finds that an "article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security," the President is authorized to "take such action, and for such time, as he deems necessary to adjust the imports [of the article] and its derivatives so that . . . imports [of the article] will not threaten to impair the national security."

When President Ford raised license fees on imported oil after a finding by the Secretary of the Treasury that crude oil and its derivatives were being imported in such quantities as to threaten to impair the national security, a suit was brought by eight States and their Governors, 10 utility companies, and a Congressman, challenging the license fees as beyond the President's authority under § 232 (b). The District Court denied relief, the Court of Appeals reversed, but the Supreme Court found that § 232 (b) was a valid delegation to the President of power to impose license fees on imports.

The opinion, delivered by Mr. Justice Thurgood Marshall, held that § 232 (b) was not an improper delegation of power, since it established clear preconditions to Presidential action, including the finding by the Secretary of the Treasury regarding impairment of national security. It pointed out that, even if the preconditions are met, the President can act only to the extent he deems necessary to adjust the imports so that they will not threaten to impair the national security, and § 232 (c) sets forth specific factors to consider in exercising his authority. It stated further:

In authorizing the President to "take such action, and for such time, as he deems necessary to adjust the imports of [an] article and its derivatives," the language of § 232 (b) seems clearly to grant him a measure of discretion in determining the method to be used to adjust imports. We find no support in the language of the statute for respondents' contention that the authorization to the President to "adjust" imports should be read to encompass only quantitative methods-i.e., quotas as opposed to monetary methods-i.e., license fees-of effecting such adjustments.

The legislative history of § 232 (b) indicated, in the Court's opinion, that the President's authority extended to the imposition of monetary exactions, i.e., license fees and duties, and belied any suggestion that Congress, despite its use of broad language, intended to confine the President's authority to the imposition of quotas and to bar him from imposing a license fee system such as the one in question.

The Court's opinion warned that the holding was a limited one, and in no way compelled the further conclusion that any action the President might take, as long as it had even a remote impact on imports, was also authorized.

Steel

On January 16, 1976, the U.S. International Trade Commission (USICT) found injury to U.S. industry with respect to stainless and alloy tool steel, also referred to as specialty steel, and recommended quotas limiting stainless and alloy tool steel imports. On March 16, 1976, President Ford issued a determination under section 202 (b) of the Trade Act of 1974 (P.L. 93-618; 88 Stat. 1978; 19 U.S.C. 2252 (b) (1)), in which he announced his intention to seek the negotiation of orderly marketing agreements with the major suppliers of specialty steel to the United States. In so doing, he rejected the recommendation of the Commissioners that absolute quotas be imposed on U.S. steel for a five-year period. The President stated that he would seek agreements covering a three-year period, but should negotiations fail, he would impose quotas comparable to the overall levels recommended by the Commission. The United States thereafter sent formal invitations to the Council of Europe countries, Sweden, and Japan to enter into discussions with the United States aimed at working out orderly marketing arrangements.

President Ford's memorandum of Mar. 16, 1976, to the Special Representative for Trade Negotiations, reads in part as follows:

I have determined that import relief is to be provided to permit the industry to recover from its recent depressed operating levels and high unemployment rates. I have decided to seek orderly marketing agreements in order to work with the principal nations involved, resolving the immediate problems of our domestic industry in a manner which meets the special concerns of each of the nations affected, while injury to the domestic industry is remedied.

I am directing you to negotiate orderly marketing agreements with supplying countries. It is intended that these agreements limit imports, of those stainless and alloy tool steel items covered by such agreements, to recent levels while the domestic industry recovers from the high unemployment and depressed operating levels of 1975. If satisfactory orderly marketing agreements are not negotiated successfully, I will proclaim import quotas for a period of three years to take effect on or before June 14, 1976. The quotas would be set at overall levels (but not necessarily the product category or country levels) comparable to those recommended by the USITC.

This relief will be reduced or discontinued at such time as I determine, with the advice of the USITC and Secretaries of Labor and Commerce, that the industry is regaining healthy production and employment levels.

To assist the large number of workers who have been laid off, I have directed the Secretary of Labor to expedite processing of applications for trade adjustment assistance. The income benefits of such assistance for these unemployed workers should reduce the hardships suffered, particularly in cases where unemployment benefits have expired.

In addition to the above actions to be taken under Section 203 of the Trade Act of 1974, I am directing you, in the Multilateral Trade Negotiations, to negotiate solutions on a sectoral basis to the problems of cyclical distortions in steel trade, while liberalizing the conditions of this trade.

Fed. Reg., Vol. 41, No. 54, Mar. 18, 1976, p. 11269. For a statement issued by the Office of Special Representative for Trade Negotiations on Mar. 16, 1976, see Dept. of State Bulletin, Vol. LXXIV, No. 1922, Apr. 26, 1976, p. 555.

On June 11, 1976, President Ford issued Proclamation 4445, on temporary quantitative limitation on the importation into the United States of certain articles of stainless steel or alloy tool steel. He announced the conclusion on that date of an orderly marketing agreement between the United States and Japan limiting the export from Japan and the import into the United States of certain articles of such specialty steel (TIAS 8442; 27 UST).

The President stated that agreements not having been reached with other countries, he was providing import relief, pursuant to the Trade Act of 1974 (19 U.S.C. 2253 (a) (3) and (5), (e) (1) and (g) (2)), through the imposition of quantitative restriction on the import into the United States of certain articles of specialty steel. He determined further that the level of import relief being proclaimed permitted the importation into the United States of a quantity or value of articles not less than the average annual quantity or value of such articles imported in the 1971-1975 period. The proclamation was declared effective as to articles entered, or withdrawn from warehouse, for consumption on or after June 14, 1976, and before the close of June 13, 1979, unless earlier modified or terminated.

Fed. Reg., Vol. 41, No. 116, June 15, 1976, pp. 24101-24105.

Dairy Products

On March 26, 1976, President Ford issued Proclamation 4423, imposing import quota limitations on certain dairy products, including dried milk, pursuant to the provisions of section 22 of the Agricultural Adjustment Act, as amended (7 U.S.C. 624). The President declared that there was reason to believe that dry milk mixtures, containing not more than 5.5 percent butterfat by weight, mixed with other ingredients, were being imported, or were practically certain to be imported, into the United States under such conditions and in such quantities as to render or tend to render ineffective, or materially interfere with, the price support program conducted by the Department of Agriculture for milk, or to substantially reduce the amount of products processed in the United States from domestic milk. Effective March 31, 1976, he proclaimed Part 3 of the Appendix to the Tariff Schedules of the United States, item 950.19 amended to establish a quota of zero pounds for such mixtures. The zero quota was to continue in effect pending further action upon receipt of a report and recommendation of the U.S. International Trade Commission.

Fed. Reg., Vol. 41, No. 61, Mar. 29, 1976, p. 12875. For the President's letter to the Chairman of the U.S. International Trade Commission, Mar. 26, 1976, see Weekly Compilation of Presidential Documents, Vol. 12, No. 14, p. 508.