The advantages of exporting are clear. Increased exports greatly benefit a countrys economy, because they create jobs, stimulate economic growth, bring in tax revenues, and enable domestic industries to compete in international markets. Firms that export can grow more quickly, because they may make use of idle capacity, reduce dependence on domestic markets, increase product lifecycles, and simply make more money. Previously, the vast U.S. domestic advertise usually provided American businesses ample opportunities to grow and remain profitable. Now, domestic advertise saturation and increased international competition are grasping their toll, leaving U.S. companies with tighter margins and little room for growth. This forces many businesses to look to international markets for new opportunities. The U.S. government has recognized the significance of increased exports for the overall health of our economy and has created a sizable infrastructure of export assistance programs to help U.S. companies to export successfully. One of the highlights of these efforts is the Export Trading Company Act of 1982 ("ETC Act"). The ETC Act was modeled after the large and powerful Japanese trading intermediaries called Shogo Shosha. These intermediaries helped Japan become one of the top exporting countries in the world, achieving a 58 billion dollar trade surplus with the United States. While using the Japanese trading companies as a model, the ETC Act was designed to eliminate two major impediments that prevented small and mid-size businesses from successfully developing foreign markets. By creating exceptions in U.S. antitrust and banking laws, the ETC Act created significant opportunities for small and medium-sized businesses to cooperate in their efforts to exploit international markets.

Antitrust Immunity

Small and mid-size exporters do not have the resources to create separate export departments and commonly needed to cooperate with competitors by pooling resources or generating joint ventures. Before the passage of the ETC Act, these cooperative activities created serious antitrust risks, since the U.S. antitrust laws prohibit competitors from sharing data and discussing prices. The threat of antitrust litigation, being one of the costliest, commonly prevented U.S. companies from developing joint export programs backed by adequate resources.

The ETC Act eliminated this uncertainty by introducing a certificate of review script. The program, administered by the Commerce and Justice departments, offers exporters immunity from federal and state government antitrust prosecution for export activities specified in the Certificate. Although, the Certificate does not prevent private parties from bringing antitrust suits against a certificate holder, it provides significant procedural advantages, including a shorter statute of limitations. The certificate holder enjoys a presumption of legality and may collect attorneys fees from an unsuccessful antitrust plaintiff. If the private antitrust plaintiff prevails in its suit against the certificate holder, it can obtain only actual damages, and not the treble damages (three times actual damages) available in most antitrust cases. The Commerce Department calls the certificate of review an "insurance policy" against dubious and frivolous suits.

Bank Holding Company Participation The U.S. banking system, one of the most sophisticated in the world, has developed considerable expertise and a wealth of resources on international trade. To enable U.S. exporters to benefit from this information base and expertise, Title II of the ETC Act authorizes bank holding companies ("BHCs") to build equity investments in Export Trading Companies ("ETCompanies"). To ensure adequate separation between BHCs export trade and deposit-acquiring functions, the ETC Act allows BHCs to invest in ETCompanies that meet the statutory definition and comply with additional regulations issued by the Federal Reserve Board. Equity ownership by BHCs not only provides seed capital or infusion of cash to enable ETCompanies to get off the ground, but offers other significant advantages. As mentioned earlier, BHCs may act as an invaluable source of international trade expertise. Additionally, many BHCs have branches in various countries and might assist ETCompanies in locating foreign distributors and purchasers. The Role of Trade Associations

Trade associations may play a significant role in the formation of ETCompanies. The broad membership of associations provides an workable mechanism for creation of large trading houses. Each of these members--export accomadation companies, bank holding companies, law firms, accounting, and consulting firms--might contribute their specialized acquired skill and expertise to form an ETCompany that will resist cutthroat international competition and succeed in foreign markets.

A number of trade associations have already taken advantage of the ETC Act to secure antitrust immunity for their members. In 2003, Virginia Apple Growers Association obtained certificates of review for its members, who formed VAGA joint venture for exporting U.S. grown apples to foreign markets. During the first year of operation, VAGA generated export sales of over $600,000. Other organizations are beginning to notice the advantages of the ETC Act and form consortia to actively explore how their members could benefit from the Act.

Because American businesses have largely remained unaware of the advantages of the ETC Act, they have not fully utilized its potential. However, favorable exchange rates, growing interest in exporting, and the increasing awareness of the benefits of the ETC Act are likely to foster formation of many more export trading businesses that successfully export U.S. goods and services to foreign markets.