Export Trading Companies
Export Trading Companies
In the fall of 1982 the U.S. government enacted the Export Trading Company Act, legislation that removed some of the antitrust obstacles to the creation of export trading companies in the United States. It was hoped that these ETCs, which are a form of indirect selling that a manufacturer can utilize, would lead to greater exports of U.S. goods and services. ETCs are similar to EMCs, but they tend to provide a
broader range of services and often take title to goods, whereas EMCs tend to act as agents. However, the two are very similar. There are four major types of ETCs: newly formed ETCs that received antitrust certification, ETCs organized by state and local governments, ETCs created by commercial banks, and ETCs initially organized by U.S. companies to handle their own exports.
The first category involves business enterprises that would like to cooperate for foreign sales but have difficulty cooperating for domestic sales because of antitrust concerns. The government set strict guidelines on how firms would qualify for exemption from antitrust considerations: Cooperation must not lessen competition in the United States.
One example of ETCs organized by state and local governments is the Port Authority of New York and New Jersey. Their ETC, known as XPORT, is courting smaller firms with high-technology products that have an export potential.
Most of the large money center banks have applied for permission to establish ETCs. These applications must be approved by the Federal Reserve Board before the bank can start export operations. Many of the banks are concentrating on customers in their geographical market and in parts of the world where they already have a good banking network.
Some major corporations, such as Control Data, have also set up ETCs. Initially, they were designed to handle the firm's own business, but they are now expanding to include products produced by other companies as well. In the case of Control Data, its ETC first was established to handle countertrade agreements for sales of products to Eastern European countries as well as developing countries. Then the ETC of Control Data aggressively sought products of other companies. However, the ETC concept has not really taken hold in the United States. The ETC concept has worked well for undifferentiated products, such as agricultural products, but ETCs have not been successful for differentiated products that require significant individual attention.
In the fall of 1982 the U.S. government enacted the Export Trading Company Act, legislation that removed some of the antitrust obstacles to the creation of export trading companies in the United States. It was hoped that these ETCs, which are a form of indirect selling that a manufacturer can utilize, would lead to greater exports of U.S. goods and services. ETCs are similar to EMCs, but they tend to provide a
broader range of services and often take title to goods, whereas EMCs tend to act as agents. However, the two are very similar. There are four major types of ETCs: newly formed ETCs that received antitrust certification, ETCs organized by state and local governments, ETCs created by commercial banks, and ETCs initially organized by U.S. companies to handle their own exports.
The first category involves business enterprises that would like to cooperate for foreign sales but have difficulty cooperating for domestic sales because of antitrust concerns. The government set strict guidelines on how firms would qualify for exemption from antitrust considerations: Cooperation must not lessen competition in the United States.
One example of ETCs organized by state and local governments is the Port Authority of New York and New Jersey. Their ETC, known as XPORT, is courting smaller firms with high-technology products that have an export potential.
Most of the large money center banks have applied for permission to establish ETCs. These applications must be approved by the Federal Reserve Board before the bank can start export operations. Many of the banks are concentrating on customers in their geographical market and in parts of the world where they already have a good banking network.
Some major corporations, such as Control Data, have also set up ETCs. Initially, they were designed to handle the firm's own business, but they are now expanding to include products produced by other companies as well. In the case of Control Data, its ETC first was established to handle countertrade agreements for sales of products to Eastern European countries as well as developing countries. Then the ETC of Control Data aggressively sought products of other companies. However, the ETC concept has not really taken hold in the United States. The ETC concept has worked well for undifferentiated products, such as agricultural products, but ETCs have not been successful for differentiated products that require significant individual attention.
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