Courtesy Reuters

The Future of International Cartels

THE word "cartel" is enjoying an extraordinary and somewhat curious vogue in the United States. Its meaning, like that of many more or less technical words adopted for popular use, has become more vague while at the same time becoming more portentous. And the overtones are definitely sinister. If international finance is somehow more to be feared than the domestic variety, how much more so is this true of international cartels. People either are for cartels or against them. Very little of the recent literature is devoted to careful description or cool appraisal of their activities. Those opposed have relied on such words as conspiracy, monopoly, Fascism and treason; while, on the other side, people like Lord McGowan of Imperial Chemical Industries describe cartels as a means of assuring orderly marketing, planned expansion of international trade, elimination of cutthroat practices and all that is admirable and reasonable. It must be said that the anti-cartel people have been much more successful than the pro-cartel people in getting their favorite connotations accepted, at least in this country.

Cartels, in the narrow and proper sense of the term, are agreements between firms in the same branch of trade limiting the freedom of these firms in the production and marketing of their products. Cartel agreements aim typically at the restriction of output or sales by the member firms, at an allocation of market territories and a fixing of the price of products. Such restrictive agreements are, of course, illegal between firms engaged in domestic trade in the United States. But American firms can form export associations which, on occasion, have entered into international cartel arrangements with associations or firms in other countries. These American export associations are formed under the Webb-Pomerene law, which contains certain limitations now being tested in a series of anti-trust cases.

As stated by Wendell Berge, present Chief of the Anti-trust Division, export associations are not permitted under the Webb law to enter into international agreements which, "(a) restrain trade within

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