Export Trading Company Act of 1982

The Export Trading Company Act of 1982 was enacted to encourage U.S. exports of goods and services. The act was intended to facilitate the formation of export trading companies and export trade associations and to expand the provision of export trade services. Export trading companies are persons or organizations, whether operated for profit or as a nonprofit organization, principally involved in exporting, or facilitating the exports of, goods or services produced in the United States. The export trade services mentioned in the act are wide-ranging: They include consulting, international market research, advertising, marketing, insurance, product research and design, legal assistance, transportation (including trade documentation and freight forwarding), communication and processing, warehousing, foreign exchange, and finance services provided to facilitate the export of goods or services produced in the United States. A newly established office within the Department of Commerce would promote the creation of export trade associations and export trading companies.

The act sought to reduce restrictions on trade finance offered by financial institutions. To give exporting firms protection for joint activities, a provision of the act authorized the U.S. Department of Commerce to issue a certificate that entitles a holder to a limited antitrust exemption. Once issued, the certificate exempts the specified conduct from criminal and civil suits under both federal and state antitrust laws.

The act made it easier for exporters to secure loans, especially in cases where the private credit market failed to provide adequate financing for export transactions. The official export credit agency of the United States, the Export-Import Bank, was authorized and directed to establish a program to provide guarantees for loans extended by financial institutions or other public or private creditors to exporters. These loans had to be secured by export accounts receivable or inventories of exportable goods. The guarantees would facilitate expansion of exports that would not occur otherwise. The intended recipients of the loan guarantees were among the tens of thousands of small, medium-size, and minority businesses that produce exportable goods and services but do not engage in exporting.

The expansion of exports sought under the act was intended to boost manufacturing activity—at the time, U.S. exports accounted for one out of every nine manufacturing jobs in the United States—and counter the putative adverse effects of a growing trade deficit on the value of the dollar and the inflationary impact of a depreciating currency. In 1982, when the act came into effect, U.S. exports of goods and services amounted to $302 billion; in 2005, more than two decades later, they had quadrupled in inflationadjusted terms to $1,195 billion. But the trade deficit has continued to rise inexorably, from $13 billion in 1982 to $633 billion in 2005 in real terms. During this period, the dollar has risen sharply against the yen, [Page 838]from 220 yen per dollar in January 1982 to 102 in January 2005. Manufacturing employment has declined steadily since reaching a peak of 19.5 million in 1979, falling to 14.2 million by the fourth quarter of 2005.

In a market-oriented economy, the government should play a minimal role in promoting exports. Trade policies designed to favor certain industries militate against the expansion of free trade sought by successive agreements of the World Trade Organization and in fact impose economic and political costs on the parties involved. Export promotion policies by the United States, for instance, will impose costs on the U.S. taxpayer and create tensions with trading partners. By encouraging production in certain sectors, these policies may also lead to a decline in world prices. In the case of agriculture, the increased production by farmers in developed countries will come at the expense of farmers in developing countries.

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