Export Trading Company Act
Summary of Export Trading Company Act
A 1982 act of Congress designed to promote American exports by modifying the application of antitrust laws and reducing restrictions on export financing on certain export transactions. The legislation is divided into four parts. Title I directs the Department of Commerce to encourage the formation of export trading companies (ETCs) and to aid ETCs in finding customers abroad.
Title II (Bank Export Services Act) amends Federal banking laws to permit equity participation (up to 100 percent) by bank holding companies as well as Edge Act and Agreement Act corporations that are subsidiaries of bank holding companies and “bankers’ banks.”Banking entities are forbidden to invest more than 5 percent of consolidated capital and surplus in an ETC and to loan more than 10 percent of such capital and surplus to an ETC. Approval of the Federal Reserve Board is required for any proposed investment in an ETC by a banking entity; such approval can be withheld only for good reason.
In order to provide external financing to ETCs, the act directs the Exportimport Bank (read this and related legal terms for further details) to develop a loan guarantee program for ETCs; loans are to be secured by export receivables or inventories. Federally regulated banks are also permitted to expand issuance of bankers’ acceptances to finance export trade.
Title III permits the Department of Commerce, with Justice Department concurrence, to issue export trade certificates of review, giving antitrust preclearance on transactions involving the export of goods or services. To obtain the certificate, the applicant must not materially restrain the trade of American firms, either in domestic U.S. or export trade; not substantially affect prices in the United States; not use the export activity for which the certificate is sought as a vehicle for unfair competition against American firms; and not reasonably anticipate sale or resale in the United States of the exported products.
The act permits any “person”to apply for a certificate; “person”is defined to include any individual resident in the United States, any partnership or corporation formed under U.S. law, governmental entities, or combinations of the above.
Once issued, a certificate protects the holder from civil and criminal antitrust actions. Persons alleging injury as the result of the certified conduct may sue for injunctive relief and actual damages where the certificate holder exceeds the authority of the certificate. Also, the Justice Department mav enjoin activities threatening “clear and irreparable”harm to the national interest.
Private antitrust suits are discouraged in four ways: (1) the plaintiff may recover only actual damages, as compared with trade damages authorized in conventional antitrust suits; (2) private suits claiming abuse of the certificate immunity must be brought within two years of the discovery, and four years from the occurrence, of the offending act; (3) the certificate affords the holder prima facie evidence of compliance with law; and (4) a certificate holder who wins an antitrust suit against him is entitled to recover his costs, including reasonable legal fees.
Title IV amends the Sherman Act and the Federal Trade Commission Act to exclude their application to export transactions, except where such activities have an anticompetitive impact on trade in the United States or the export trade of an American resident.
(Main Author: William J. Miller)
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