The Export Trading Company Act: Structural and Attitudinal Barriers to Implementation

Abstract

Dr. Alex F. De Noble is an assistant professor of management at San Diego State University, USA; Dr. Robert J. Amann is an assistant professor of management at Florida International University, USA; and Dr. Donald Moliver director of international business studies at Monmouth College, New Jersey, USA. The magnitude of United States trading deficits in recent years influenced Congress to pass the Export Trading Company Act in 1982. This legislation was designed to expedite greater involvement of domestic firms in international trade by encouraging the formation of export trading companies through related anti-trust and banking regulations. Five years after its passage, however, the Act has not led to the performance levels envisaged by its proponents. This paper discusses the key reasons for the lack lustre performance of domestic firms in international trade, in general; identifies the key factors peculiar to smaller firms which contribute to the reluctance of such firms to engage in international trade and use export trading companies for launching exporting programmes; and offers some suggestions for overcoming these problems. Essentially, this paper argues that the primary responsibility for failing to penetrate foreign markets more effectively lies with the small to medium-sized business sector of the economy and the export trading companies.