WORLD TRADE  
ORGANIZATION  G/STR/Q1/USA/13 
8 July 2008 
 (08-3279) 
Working Party on 
State Trading Enterprises Original:   English 
 
 
 
STATE TRADING 
 
Replies to Questions Posed by AUSTRALIA1 
Concerning the New and Full Article XVII Notification of the UNITED STATES2 
 
  The following communication, dated 7 July 2008,  is being circulated at the request of the 
Delegation of the United States.    
_______________ 
 
 
Question 1 
 
What is the US reasoning fo r allowing scope for agricultu ral entities to enjoy a lesser 
standard of antitrust compliance than  other companies doing business?   
 
Reply
 
  The Capper-Volstead Act, which was enacted in 1922, clarified the legal right of farmers to 
organize for the purpose of marketing agricultural commodities without risk of being held in violation 
of the antitrust laws.  Farmers received "through agricultural coope ratives acting as en tities, the same 
unified competitive advantage-and responsib ility-available to businessmen acting through 
corporations as entities".  Maryland & Virginia M ilk Producers Association v. United States, 362 US 
458, 466 (1960).  Because of the unique nature of agricultural production and the individual 
producer's weaker bargaining position relative to s ubstantially larger processors and distributors, 
Congress provided a limited antitrust exemp tion to agricultural producers.   
  Although the Capper-Volstead Act provides an exemption permitting the formation of 
cooperatives, section 2 of the Act protects the public and consumers from market abuse by a 
cooperative.  The cooperative exemption is carefully  drawn, and strictly limited.  Cooperatives are 
voluntary organizations.  Cooperatives that engage in pr edatory, unfair or coercive conduct in order to 
restrain trade and commerce, or engage in an ticompetitive activity with non-cooperatives are subject 
to action under the Sherman Act as is any other busi ness.  Thus, the rules of US antitrust policy also 
apply to cooperatives.   
                                                     
 
1 G/STR/Q1/USA/12.   
2 G/STR/N/11/USA.   G/STR/Q1/USA/13 
Page 2  
 
  Question 2 
 
Could the United States provide details on the names and number of entities granted 
certificates of exemption under the Export Trading Company Act 1982 ?   
 Reply
 
  For clarification, the United States Government does not grant "certificates of exemption", but rather, does grant "Export Trade Certificates of Review".   
 
 Currently, 70 entities hold an Export Trade Certificate of Review.  As of May 2008, these 
Certificates covered 2,500 member individuals and firms, primarily small and medium-sized 
companies.  Upon issuance of an Export Trade Cert ificate of Review, a notice is published in the 
Federal Register identifying the Certificate holder,  its member firms and individuals, and the export 
conduct for which the certificate h as been issued.  A current list of Certificate holders and Federal 
Register Notices of Issuance can be accessed at http://ita.doc.gov/td/oetca/
.   
 
Question 3 
 
Could the United States provide details on the number and names of entities which have 
entered into marketing arrangements under the Agricultural Marketing Agreement Act?    
 
Reply  
  Presently, there are 31 active marketing order programs:    
 Florida Citrus Fruit, Texas Oranges & Grape fruit, Florida Avocados, California Nectarines, 
California Pears & Peaches, California Kiwifruit, Washington Apricots, Washington Cherries, Washington-Oregon Fresh Prunes, California Desert Grapes, Oregon-Washington Pears, 
Cranberries, Tart Cherries, California Olives, Washington Potatoes, Colorado Potatoes, Idaho-
Eastern Oregon Potatoes, Virginia-North Carolina Potatoes, Georgia Vidalia Onions, Walla Walla 
Onions, Idaho-Oregon Onions, South Texas On ions, Florida Tomatoes, California Almonds, 
Oregon Hazelnuts, California Pistachios, California Walnuts, Far West Spearmint Oil, California 
Dates, California Raisins, California Dried Prunes.     Additional information can be found at:  http://www.ams.usda.gov/fv/moabmotab.htm
.   
 Question 4 
 
 Australia understands that the Agricultural Marketing Agreement Act  provides antitrust 
immunity to marketing agreements formed under the direction of the Secretary of Agriculture. 
Australia understands that this Act is intende d to establish and maintain orderly marketing 
conditions for agricultural commodities in interst ate and also foreign commerce so that farmers 
receive higher prices.    
Reply
 
  The Agricultural Marketing Agreement Act of 1937 (AMAA) authorizes marketing 
agreements and orders, through which fruit and vegetable growers can work together to solve 
marketing problems that they cannot solve individually.     The AMAA specifies that marketing agreements  and orders can regulate the handling of 
agricultural commodities that are moving in interstate  or foreign commerce or which directly burdens,  G/STR/Q1/USA/13 
 Page 3 
 
 
  obstructs, or affects, interstate or foreign comme rce in such commodity.  Section 8b of the AMAA 
provides that marketing agreements shall not be held  to be in violation of any US antitrust laws.  
Additional discussion of the antitrust implications of the AMAA can be f ound in a USDA comment 
submitted by Keith Collins, former Chair, USDA Capper-Volstead Committee, to the Antitrust Modernization Commission.  That comment may be found at:  
(http://govinfo.library.unt.edu/amc/public_studi es_fr28902/immunities_exemptions_pdf/050715_Coll
ins_USDA.pdf ).   
  The "AMAA" requires USDA to terminate programs no longer complying with statutory objectives, and USDA has terminated a number of ma rketing orders on this basis.  Also, under the 
Regulatory Flexibility Act, USDA reviews selected marketing orders on a periodic basis.   
 
Question 5 
 
Could the United States provide details on the Agricultural Marketing Agreement Act , 
including in particular in regard to the objective and operation of orderly marketing in 
international trade?   
 
Reply
 
  The AMAA authorizes the implementation of Federal marketing orders and agreements 
designed to establish and maintain orderly market ing conditions for the regulated commodities.  
Orders and agreements ar e implemented by USDA's  Agricultural Marketing Service following 
public notice and hearing at the request of industr ies that demonstrate interest in regulating the 
handling of commodities produced within specifi ed geographic areas.  Orders may include the 
authority to regulate the grade, size, quality, packaging, inspection, and/or volume handled of 
certain agricultural commodities.  Orders may also  provide for production and marketing research, 
market development, and promotional activiti es.  Once established, compliance with order 
regulations is mandatory for all handlers of the affected commodity within the production area.  
Orders must be approved by gr owers in referenda prior to im plementation.  In comparison, 
agreements may be entered into by growers, handl ers, processors, or others engaged in the handling 
of any agricultural commodity or its product.  Signatories voluntarily agree to participate in the 
programs and comply with the regulations establis hed by the agreements, which may include-but 
are not limited to-the types of regulation authorized  for orders.  Violation of order regulations may 
result in the assessment of civil penalties.   
 
Question 6 
 
Could the United States explain whether consideration has been given to limiting the 
scope for creation of cartels which can result in raised prices?   
 
Reply
 
 
 It is not clear what programs Australia is refe rring to.  However, as a general matter, we note 
that, under long-established US antitrust jurispruden ce, antitrust exemptions are strictly construed, 
including those relating to agriculture.  More speci fically with regard to the Capper-Volstead Act's 
particular exemption, we reiterate that it is a limited one.  It extends only so far as to permit 
cooperation between producers of agricultural products  in cooperatives, so that they may jointly 
process, prepare for market and market their product s.  It does not cover external acts that aim to 
interfere with competitive rivals.  The Agri cultural Marketing Agreement Act only protects 
participating handlers who engage in activities provided for under certa in agreements, not other forms 
of potentially anticompetitive conduct not authorized by such agreements.   
 G/STR/Q1/USA/13 
Page 4  
 
  Question 7 
 
Could the United States provide further in formation on how surplus commodities are 
disposed and reserve pools are established under this Act?   
 Reply
 
  Marketing orders and agreements may provi de for establishing volume controls, including 
reserve pools.  Requirements vary, but may include withholding a portion of the commodity received from farmers for sale at a later time when marketing conditions improve.  There are only 
3 commodities that actively use reserve pools:  tart cherries grown in 7 States, Far West spearmint oil 
and California raisins.    
Question 8 
 
Does this Act confer privileges to entities wh ich enable them to purchase commodities 
under favourable circumstances for later export?   
 
Reply
 
  Under some marketing orders, either growers or handlers, depending on the order, have 
equity in the reserve pool.  The respective marke ting order administrative committees, which locally 
administer the orders, may be authorized to hold the commodity for the account of the equity owners, and the committees can act on their behalf.  The marketing order committees do not own the 
commodities.  Any reserve pool commodities made ava ilable to handlers must be sold as directed by 
the local committee and approved by USDA.  Handl ers cannot hold such reserve for later more 
favourable export.   
 
Question 9 
  Australia notes that the United States ha s recently finalised a comprehensive review of 
the US antitrust laws to determine whether such  laws should be modernised.  The Antitrust 
Modernisation Commission's report of April this  year recommended that statutory immunities 
should be disfavoured, amongst other things.    
Can the United States provide further information on to what extent the report's 
recommendations have been adopted as it relates to agricultural entities, including those 
granted immunities from anti-trust laws under the Capper Volstead Act , the Export Trading 
Company Act  and the Agricultural Marketing Agreement Act ?   
 
Reply
 
  The United States is not aware of any specific actions taken by the US Congress on any 
recommendations relating to agricultural entities under these three acts.   
  
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