goods, old and accumulated stock, "seconds," etc., at bargain prices need not necessarily involve an element of unfair competition.

An entirely different situation arises in case of a permanent and deliberate export policy of selling abroad below the domestic price. Some consider this policy justifiable from an economic point of view. They look upon the foreign market as a safety valve against over-production at home, and believe in selling abroad their surplus output, as a by-product, for whatever price it will bring. That part of their output allotted to export trade constitutes the marginal volume needed to keep their plants working efficiently.

However this may be, a policy of deliberately selling cheaper abroad than at home with the avowed purpose and intent of putting rivals out of business or otherwise injuring them, no matter whether they be domestic or foreign competitors, by means of predatory price-cutting and other unfair methods, doubtless is repugnant to good morals and contrary to law.1

The payment of export bounties may serve a similar purpose, and serve as a cloak for a permanent dumping policy which by common agreement among nations is objectionable.

Export Trade Act Can Restrain Dumping.

Thus far the remedies applied against dumping consisted in protective measures established by various countries against the dumping of foreign goods in their markets. The Webb-Pomerene Law marks a new stage in this field of commercial legislation. It offers a means of suppressing dumping by domestic parties in foreign countries. Whenever the practice of dumping involves an artificial or intentional enhancement of domestic prices, restrains the domestic trade or injures an American competitor in export trade, whether it be carried on by an export association or by an individual, it can be reached under the terms of the Webb-Pomerene Law and effectually arrested.3 1See Chapters on "Extraterritorial jurisdiction of the Webb-Pomerene law." p. 221; and on "Unfair Competition in Foreign Trade," p. 237. 2See p. 383.

See p. 239.

CHAPTER XIV.

Sections IV-V of the Webb-Pomerene Law.

Extraterritorial Jurisdiction of the Webb-Pomerene Law1

I.

SECTION 4-EXTRATERRITORIAL JURISDICTION OVER ALL EXPORTERS, INDIVIDUALS AS WELL AS ASSOCIATIONS.

As most of the provisions of the Export Trade Act relate to export "associations," their powers, limitations, duties, etc., the Act has in the public mind become identified chiefly with the subject of export trade combinations. In the numerous publications and discussions on the law no account has been taken, up to the present time, of a special feature contained in Section. 4 of the Act. That section apparently has no direct connection with export "associations." The term "association" is not even mentioned in it. The scope of Section 4 is of a wider nature, extending to American export trade in general. It is a signficant fact that Section 4 established a new principle in our foreign trade policy, viz., the extension of the "unfair competition clause" (Section 5) of the Federal Trade Commission Act, so as to make it apply to acts constituting such unfair methods committed without the territorial jurisdiction of the United States.

Section 4 of the Export Trade Act provides as follows:

"That the prohibition against 'unfair methods of competition' and the remedies provided for enforcing said prohibition contained in the act entitled 'An act to create a Federal Trade Commission, to define its powers and duties, and

1See article on "The Webb-Pomerene Law-Extraterritorial Scope of the Unfair Competition Clause," in the Yale Law Journal, November, 1919, vol. 29, no. 1, pp. 29-45.

for other purposes,' approved September twenty-sixth, nineteen hundred and fourteen, shall be construed as extending to unfair methods of competition used in export trade against competitors engaged in export trade, even though the acts constituting such unfair methods are done without the territorial jurisdiction of the United States."

The foregoing section of the Act involves a number of interesting points, important from a legal as well as an economic point of view. Under this section the Federal Trade Commission is empowered to issue and serve a complaint containing a notice of a hearing upon any American person, partnership or corporation concerning which it has reason to believe that such party has been or is using any unfair method of competition in export trade against competitors engaged in export trade, even though such acts are done in a foreign country. If the Commission believes, as a result of a hearing, that the method of competition in question is unlawful, it may issue an order "to cease and desist." The Circuit Court of Appeals of the United States, within whose circuit the methods of competition in question are used, where the defendant resides or carries on business has the power to affirm, enforce, set aside or modify the order of the Commission. Apparently this provision of the Webb-Pomerene Act makes the "unfair competition clause" of the Federal Trade Commission Act a personal statute binding upon the citizens of the United States everywhere. By inserting Section 4 into the Webb-Pomerene Law, Congress evidently assumed that the United States has the right to restrain its citizens abroad from doing acts, which if committed within its territory would constitute violations of its statutory law.

SECTION 5-EXTRATERRITORIAL JURISDICTION OVER EXPORT ASSOCIATIONS OR COMBINATIONS.

Section 4 is not the only section, of the Export Trade Act in which the jurisdiction of the United States is extended to acts done in the course of trade and commerce in a foreign country. A further and similar provision is embodied in Sec

tion 5. In paragraph 2 of that section of the Act it is provided that the Federal Trade Commission shall have investigatory powers where

"An association, either in the United States or elsewhere, has entered into any agreement, understanding or conspiracy, or done any act which artificially or intentionally enhances or depresses prices within the United States of commodities of the class exported by such association, or which substantially lessens competition within the United States, or otherwise restrains trade therein."

The Act goes on to say that if the Commission concludes that the law has been violated, it may recommend that the association readjust its business, and if not complied with, the Commission is directed to refer its findings and recommendation to the Attorney General of the United States for such action as he may care to take.

Provisions Jointly Construed.

A comparative analysis of the two sections will bring out several points worth noting. Although extraterritorial jurisdiction is provided for both in Section 4 and in Section 5, there are several differences in the provisions of these two sections. Section 4 provides for extraterritorial jurisdiction over unfair methods of competition used in export trade against competitors in export trade. It is not stated explicitly in this section whether the competitors so to be protected are American or foreign competitors. However, from the debates on the bill in Congress it is quite clear that American competitors are meant.1 Besides, in Section 1 the words "'export trade' wherever used in this Act" are restricted to "trade or commerce * * * from the United States." Consequently, the words "competitors engaged in export trade" in Section 4 must mean competitors engaged in export trade from the United States. For Congress to go beyond this and enact legislation for the protection of foreign com

I

1See Congressional Record, Sept. 2, 1916, p. 16010.

petitors would be likely to provoke justifiable criticism on constitutional grounds as well as from the point of view of public interest. Legislation of this kind is a matter for each foreign State to provide for itself, as it deems fit, or for joint action. among nations engaged in world trade. A report of a special committee accepted and approved by the Chamber of Commerce of the United States at its annual meeting in Washington in February, 1915, stated as follows:

"It would not be sound and economically advisable even from a moral standpoint for this Government to assume to protect consumers and producers in other countries where other conditions prevail and where governments exist with full power to act for the benefit of their own citizens from any results, baleful or otherwise, of business combinations in the United States."

Moreover, no mention is made in Section 4 of "associations," so that as the section stands any American exporter who commits an act of unfair competition abroad against an American competitor becomes amenable to this law. From the debates on the bill in the House of Representatives it appears that the word "association" was omitted advisedly in Section 4. This section was enacted to meet the decision of the United States Supreme court in the case of the American Banana Company v. United Fruit Company (213 U. S. 347) and the intent of the law appears to be to hold simple corporations, as well as all individual American exporters, amenable to our laws for violations of the unfair competition statutes committed abroad, not merely combinations or associations of exporters.2

In Section 5, on the other hand, extraterritorial jurisdiction is asserted specifically over export "associations." Jurisdiction beyond the territorial limits of the United States is here made to cover agreements, understandings, conspiracies or acts resulting in three things, viz., (a) artificial or intentional enhancing or depressing of domestic prices of commodities belonging to the same class as those exported by the defendant association, (b) substantial lessening of domestic competition, (c) re

1See also p. 311 (Senator Kellog's statement). 2See p. 376.