Export Trading Company (ETC)
An Export Trading Company is a commercial institution (often a bank) that facilitates and financially supports those firms that are engaged in international trade. The Export Trading Company (ETC) may provide billing, warehousing, shipping, and insurance services to exporting firms. An Export Trading Company also provides information related to the market, and helps exporters to find buyers in international market.
A Little More about Export Trading Companies
The US Government passed the Bank Export Services Act of 1982 which authorizes commercial banks to own Export Trading Companies and engage in export.
There are several benefits to using a ETC:
- Local Knowledge – An Export Trading Company (ETC) support exporters in many ways such as providing necessary information about local laws, regulations and tax structure etc. They also maintain relationships with marketers, producers and distributors.
- Cost Efficiency – ETCs have can provide billing, warehouse, and shipping services to exporters. The ETC will charge a service fee, but it is less costly than hiring foreign expertise.
- Currency Exchange – The ETC advises on currency strategies in order to minimize currency exchange risk. For example, the ETC may suggest the company to use put or call option, or it may recommend using future or forward contract in foreign countries.
One downside of employing and ETC is, if the company allows the ETC to handle all important operations such as logistics and billing etc., the company may have no control over the company’s activities in foreign country.The scope of Export Trading Companies (ETC) was declined sharply due to Chinese e-Commerce companies such as Alibaba that now perform all those tasks that ETCs were supposed to perform.
References for Export Trading Company
Academic Research on Export Trading Company
- ● Export trading company legislation: US response to Japanese foreign market penetration, Rossman, M. L. (1984). Journal of Small Business Management (pre-1986), 22(000004), 62.
- ● Export trading companies: a marketing vehicle for small textile and apparel firms?, Hester, S. B. (1985). Journal of Small Business Management (pre-1986), 23(000004), 20.
- ● Export intermediaries: Small business perceptions of services and performance, De Noble, A. F., Castaldi, R. M., & Moliver, D. M. (1989). Journal of Small Business Management, 27(2), 33.
- ● Small business plus export trading companies: New formula for export success?, Becker, T. H., & Porter, J. L. (1983). Journal of Small Business Management (pre-1986), 21(000004), 8.
- ● Japanese sogo shosha and the US export trading companies, Amine, L. S., Cavusgil, S. T., & Weinstein, R. I. (1986). Journal of the Academy of Marketing Science, 14(3), 21-32. This paper examines the impact of the recent US legislation on Japanese general trading companies, with emphasis placed on the sogo shosha in Japan, and the ECT Act in the United States. It further examines the evolving forms of the sogo shosha and ETCs, and show how they compete directly in some areas of international trade.
- ● US Export Trading Company: A Model of Export Promotion in the 80’s, Cao, A. D. (2015). (pp. 85-90). Springer, Cham. This paper focuses on the absence of an adequate legal framework which is needed to promote the expansion of a viable US export organization. The author wishes to show the possibility of creating an American version of the ETC using the framework from the Japanese Sogo Shosha and the European export trading companies (ETC). The paper further proposes the development of the American ETC in the form of a “quasi-public” institution to prevent anti-trust complications.
- ● The Failure of the Export Trading Company Program, Waller, S. W. (1992). NCJ Int’l L. & Com. Reg., 17, 239.
- ● Effects of government export policies on Turkish export trading companies, Atilla Dicle, I., & Dicle, U. (1992). International Marketing Review, 9(3). This paper explores the effects of some major changes in the official government export policies in Turkey. Special emphasis is placed on export incentives, management strategies and performance of export trading companies.
- ● Understanding the Export Trading Company Act and Using (or Avoiding) Its Antitrust Exemptions, Bruce, J. F., & Peirce, J. C. (1982). Bus. Law., 38, 975. The Export Trading Company Act, signed on October 8, 1982, is intended to encourage joint exporting activities by U. S. producers of goods and services. The Act limits the antitrust liability of U. S. firms for conduct whose effects are felt only abroad; provides a certification program whereby exporters can obtain an exemption from federal and state antitrust laws; and allows limited bank ownership of export trading companies. This article discusses the antitrust aspects of the Act, including its legislative history and prior case law.
- ● The Export Trading Company Act: Reducing Antitrust Uncertainty in Export Trade, Zarin, D. (1982). Geo. Wash. J. Int’l L. & Econ., 17, 297.
- ● An economic profile of export trading companies, Nye, W. W. (1993). The Antitrust Bulletin, 38(2), 309-325.
- ● The Effect of the Export Trading Company Act of 1982 on US Export Trade, Lacy, J. V. (1987). Stan. J. Int’l L., 23, 177.