Understanding the Export Trading Company Act and Using (Or Avoiding) Its Antitrust Exemptions

Abstract

On October 8, 1982, President Reagan signed into law the Export Trading Company Act of 1982 (the ETC Act).1 The new law is intended to increase U.S. exports of goods and services by authorizing banks to invest in export trading companies, by exempting many joint export activities from U.S. antitrust laws, and by instructing the Department of Commerce to take active role in encouraging U.S. businesses, in particular small and medium-sized companies, to increase their exports.2 President Reagan and supporters of the legislation in Congress have claimed that the Act will spur billions of dollars of new exports and create hundreds of thousands of new jobs in export industries by 1985. Critics claim that the Act will not work at all.3 There have been, and undoubtedly will continue to be, numerous seminars and public discussions of the legislation, but only practical experience will produce definite answers.4 The ETC Act is made up of four separate and independent titles combined into a single statute. Each of the four titles applies to different types of activities by different types of businesses, and none refers to or depends on any other title. Although (as its name suggests) the Act does encourage the formation and operation of export trading companies (ETCs) only two of its four titles specifically encourage the formation of ETCs as the preferred means to expand exports, while the other two, the antitrust titles, apply equally to all exports, whether or not made by ETCs. Title I of the Act contains eleven congressional findings that detail the need to promote exports and a declaration that the purpose of the ETC Act is to accomplish that result.5 It directs the Department of Commerce to establish an