[Congressional Record Volume 144, Number 87 (Monday, July 6, 1998)]
[Senate]
[Pages S7362-S7363]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             TRADE LAW ENFORCEMENT IMPROVEMENT ACT OF 1998

 Mr. ABRAHAM. Mr. President, on Friday, June 26th, the day the 
Senate adjourned for the July 4th recess, I introduced the Trade Law 
Enforcement Improvement Act of 1998. This bill would clarify an 
ambiguity in an important U.S. antitrust law and thereby ensure that 
U.S. law will be effectively utilized to combat anticompetitive foreign 
cartels, acts, and conspiracies designed to unfairly exclude American 
products from overseas markets.
  The principal aim of my bill is to codify the U.S. Department of 
Justice's (DOJ) current--and correct--interpretation of the Foreign 
Trade Antitrust Improvements Act of 1982 (FTAIA) which is currently 
embodied in Footnote 62 of the International Antitrust Guidelines. This 
footnote makes it clear that there are no unnecessary jurisdictional 
obstacles to challenging anticompetitive acts and conspiracies that 
take place outside our borders.
  The FTAIA authorized the U.S. to assert jurisdiction over 
anticompetitive conduct abroad that has a ``direct, substantial and 
reasonably foreseeable'' effect on export trade or commerce or those 
engaged in export trade or commerce with foreign nations. However, in 
1998 DOJ issued International Enforcement Guidelines which included 
Footnote 159, a new interpretation of FTAIA confining U.S. enforcement 
efforts solely to anticompetitive conduct that affected U.S. consumers, 
without regard to its effect on U.S. exporters. Specifically, the 
footnote announced that henceforth ``the Department [would be] 
concerned only with adverse effects on competition that would harm U.S. 
consumers * * * .''
  Fortunately, in 1992, DOJ announced that Footnote 159 would be 
superseded by a policy which recognized that harm to U.S. exporters was 
sufficient to trigger an antitrust enforcement action regardless of 
whether there were harmful effects on U.S. consumers. Thus, the 
interpretation was revised to affirmatively permit DOJ to enforce ``our 
antitrust laws against anticompetitive practices that harm U.S. 
commerce.'' That interpretation now appears in Footnote 62 of the 
current International Enforcement Guidelines.
  While the correction to Footnote 159 was drafted by Assistant 
Attorney General Jim Rill in the Bush Administration, it is important 
to note that it has been fully endorsed by the Clinton Administration. 
Assistant Attorneys General Rill, Bingaman, and Klein should all be 
recognized and commended for their strong leadership in strengthening 
international antitrust enforcement and for bringing cases under the 
authority of the FTAIA.
  Let me describe why this provision in our trade law is so important 
and why it is crucial that it be properly interpreted and enforced.
  The opening of global markets has advanced America's current economic 
prosperity, but it also poses fundamental challenges for U.S. antitrust 
laws. One example is the U.S. flat glass industry. For the better part 
of a decade, America's leading flat glass producers have been seeking 
access to the Japanese market, the largest and richest in Asia. 
American companies are already leaders in producing and selling high-
quality innovative glass products around the world. U.S. firms have 
been very successful in Europe, Asia, the Middle East, and Latin 
America--but not yet Japan. The fact is that securing effective 
distribution channels for American glass has not proved to be a 
significant barrier to entry in any country other than Japan.
  It is not for a lack of trying. In 1992, President Bush and Japanese 
Prime Minister Miyazawa negotiated an agreement in which Japan 
committed that the Japan Fair Trade Commission (JFTC) would study 
anticompetitive practices in the flat glass sector. For over a quarter-
century, the Japanese market has been controlled by a cartel, 
consisting of the three leading Japanese producers--Asahi, Nippon, and 
Central. Because of the cartel, market shares for the three companies 
have been remarkably constant: Asahi has had a 50% market share, Nippon 
has had 30%, and Central has had 20% for nearly three decades, while 
other major markets in Europe and North America have undergone dramatic 
competitive shifts.
  When the JFTC, one year later, issued its report, it found a long-
standing history of anticompetitive practices in the Japanese flat 
glass industry, but concluded that enforcement action was 
``inappropriate.''

[[Page S7363]]

  In 1995, the Clinton Administration concluded a new trade agreement 
in the U.S.-Japan Framework talks. Japan committed to ``deal with 
structural and sectoral issues in order substantially to increase 
access and sales of competitive foreign goods and services.'' For their 
part, Japanese flat glass manufacturers and distributors pledged 
publicly that the market would be open on a non-discriminatory basis 
for competition by all suppliers, foreign and domestic alike. It was 
agreed that the U.S. and Japanese Governments would jointly monitor 
progress to verify that Japanese distributors would deal in imported 
glass, ``recognizing that token dealings or use does not demonstrate 
diversification of supply sources.''
  So what happened? Trade agreements have done nothing to shake the 
glass cartel's stranglehold on Japan's distribution system. Instead, 
despite a remarkable series of U.S.-Japan trade agreements, 
commitments, and undertakings, the market share of U.S. producers has 
increased from 1.0% to 1.5%, even though imported foreign-affiliated 
glass costs about 30% less. In short, despite years of intensive 
efforts by U.S. negotiators, an illegal cartel continues to control the 
Japanese glass market to the exclusion of U.S. producers.
  Two weeks ago, Deputy U.S. Trade Representative Richard Fisher 
presented the latest U.S. proposal to the Government of Japan. The 
proposal was drafted by the Antitrust Division of DOJ. USTR is asking 
the Japanese Government to establish antitrust-type compliance plans 
for its glass sector that would be modeled on the compliance plans 
currently in effect at most major U.S. corporations. In other words, we 
are not asking anything from Japanese companies that we do not already 
expect of U.S. companies. But reportedly senior Japanese officials 
flatly rejected the U.S. proposal, making it clear that they have 
little regard for robust compliance plans that would deter 
anticompetitive conduct on the part of management and sales personnel.
  Mr. President, it is precisely such intractable trade disputes that 
the FTAIA was intended to address, and it is vital that we make use of 
the one instrument we currently have at our disposal to rectify such 
problems. Given the confusion and uncertainty that has surrounded this 
provision of our antitrust trade law due to the conflicting 
interpretations that various administrations have attached to it, it is 
important for us to eliminate any vestige of ambiguity that may still 
remain even after we have gone back to its original interpretation.
  By clarifying the jurisdictional requirements of the FTAIA, it is my 
hope that we can encourage DOJ and injured U.S. industries to make 
broad use of this important power by challenging cartels, such as those 
blocking distribution of U.S. flat glass in Japan, in the U.S. courts, 
before U.S. juries, under U.S. law. My bill makes simply a 
straightforward point: anticompetitive foreign cartels and conspiracies 
are subject to U.S. antitrust laws, and foreign companies who engage in 
such activities will be held accountable and dealt with accordingly. We 
must ensure that American firms and workers have a timely and effective 
remedy against those who would engage in anticompetitive acts designed 
to exclude American products or services from the international 
marketplace.
  Mr. President, I ask that the text of the bill be printed in the 
Record, and I urge my colleagues to review this legislation and to 
cosponsor and support it.
  The text of the bill follows:

                                S. 2252

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Trade Law Enforcement 
     Improvement Act of 1998.''.

     SEC. 2 AMENDMENTS.

       (a) Amendment of the Sherman Act.--Section 7 of the Sherman 
     Act (15 U.S.C. 6a) is amended by striking the period at the 
     end and inserting the following: ``and without regard to the 
     effect of such conduct on consumers in the United States. A 
     determination of whether the effects of such conduct is 
     substantial may be made solely with reference to the product 
     or type of product affected by the conduct and the 
     geographical area in which the conduct occurs.''.
       (b) Amendment to the Federal Trade Commission Act.--Section 
     5(a)(3) of the Federal Trade Commission Act (15 U.S.C. 
     45(a)(3)) is amended by striking the period at the end and 
     inserting the following: ``and without regard to the effect 
     of such methods of competition on consumer in the United 
     States. A determination of whether the effect of such methods 
     of competion is substantial may be made solely with reference 
     to the product or type of product affected by such methods of 
     competition and the geographical area in which such methods 
     of competition occur.''.

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