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Joint Export Activities to Reduce Costs and Risks Export Trade Certifi cates of Reviews (COR) are issued by the Department of Commerce (with the concurrence of the Department of Justice) and provide antitrust protection for certain specifi ed export activities. Companies holding certifi cates can work together in the appointment of exclusive agents or distributors, the setting of limitations on pricing, or the handling of competitive products. The benefi ts of COR include a reduction in transportation, warehousing, and marketing costs. It also allows fi rms to establish joint facilities, set common prices, divide markets and sales territories, bid on large contracts, and share space in overseas trade shows. Small and medium-size companies are able to spread costs and minimize risks in exporting without violating U.S. antitrust legislation. Congress viewed the uncertain application of U.S. laws to export activities as impediments to the growth and expansion of U.S. exports. The certifi cate provides antitrust preclearance for the specifi ed export activities. Regulations and Policies Affecting Exports 357 U.S. residents, partnerships, or corporations as well as state and local government entities can apply for COR. Over the past few years, a large number of trade associations have taken advantage of the program for their member fi rms. If the application meets certifi cation standards, the Commerce Department is required to issue the COR within ninety days of submission of the application. With COR, companies are immune from federal and state antitrust actions. In private antitrust actions, it alters the burden of proof to the advantage of the certifi cate holder (CH), shortens the statute of limitations covering the CHs conduct, provides for recovery of legal expenses (in cases where the CH prevails), and reduces liability. Since the introduction of the legislation, in 1982, COR was challenged in court only once, in1998, by Horizon International, over the certifi cate issued to another fi rm. The U.S. appeals court unanimously upheld the validity of the certifi cate. It is important to note that COR will not be granted if the export activity: (a) Reduces competition in the U.S. or results in the substantial restraint of export trade of any U.S. competitor (b) Unreasonably affects prices of the covered product or services in the United States (c) Is carried out with the expectation that the products or services will be reexported to the United States. Selected Holders of CORs The Association of Manufacturing Technology (AMT) of McLean, Virginia, represents the interests of American providers of manufacturing machinery and equipment. Founded in 1902, the organization has two goals: to promote technological advancements in the design, manufacture, and sale of members products and to act as an industry advocate on trade matters to governments and trade organizations throughout the world. AMT received its COR in 1987 with a view to enhancing the trade competitiveness of its members. Recently, its members were able to cooperate in order to win the contract to supply a large Chinese aircraft plant with the requisite machinery to modernize and win contracts to produce Western aircraft parts. Such cooperation would have been diffi cult without the COR. American Film Export Association (AFEA) of Los Angeles, California, is a trade association that provides members with marketing support services, handles government relations, and compiles statistical data. It received a COR in 1987 and has used this opportunity to expand export opportunities for its members. AFEA fosters the exchange of information among its exporting members on foreign market conditions including vital credit data on more than 500 fi lm and television buyers in more than fi fty countries. It also assists members in reducing delays in product delivery to overseas distributors, provides international model licensing agreements, and administers an arbitration tribunal, which resolves disputes regarding distribution. 358 Export Regulations and Tax Incentives TABLE 15.2 BIS Export Enforcement: Selected Cases Sentencing Date Defendant Criminal charges Case detail 7/27/12 Steven Greenoe Underlying criminal conviction for knowingly and willfully exporting and causing to be exported from the United States to England fi rearms designated as defense articles on the United States Munitions List, without having fi rst obtained from the Department of State a license or written authorization for such export. Export privileges denied until January 10, 2022. 5/12/12 Dennis Nielsen One count of making false statements in violation of 18 U.S.C. 1001. Export of computers and parts to Iran via the United Arab Emirates and Germany. 10/11/11 Jeng Shih, aka Jay Shih Conspired to export U.S.-origin computer equipment, items controlled on antiterrorism grounds and valued at approximately $830,000, to Iran, through the United Arab Emirates, without the required U.S. government authorization and took actions to evade the Regulations (Export Control Classifi cation Number [ECCN] 5A992) Settlement agreement: denial of export privileges for ten years, all of which are suspended provided the respondent complies with the conditions of the ten-year probationary period under the order. Florida Citrus Exports (FCE) operates as an export joint venture of nine members, including grower-owned cooperatives and packing houses. It received a COR in 1995 and has been able to help members to cut export costs and increase export effectiveness. The COR allows members to share transportation and market development costs, engage in joint promotional activities, speak with one voice in negotiations with export service providers and foreign buyers, prepare joint bids, assist each other in maintaining quality standards, and spread risks. The coordination of transportation is particularly important in exporting perishable commodities.

Questions 1. What are the benefi ts of certifi cates of review to U.S. exporters?

2. A certifi cate of review is not granted in certain cases. Discuss .