Advisory opinion concluding that proposed barter program with foreign countries for phosphate rock would avoid respondent's involvement in other than export trade and falls under the protection of the Webb-Pomerene Act

Proposed barter program with foreign countries for phosphate
rock would avoid respondent's involvement in other than
export trade and falls under the protection of the Webb-
Pomerene Act. [Phosphate Rock Export Association, P86 9613]
Dear Mr. Fogt: 	December 3, 1986
This letter responds to your request on behalf of the Phosphate
Rock Export Association ("Phosrock") for an advisory opinion con-
cerning a proposed barter program. That request poses a novel ques-
tion oflaw, for which there is no clear Commission or court precedent,
and thus under Section 1.1 of the Commission's Rules of Practice an
advisory opinion is appropriate. Your first letter, dated April 8, 1986,
proposed Phosrock involvement in a kind of activity not authorized
by the Commission in its 1983 advisory opinion. [102 F.T.C. 1844] The
Commission feels now, as it did then, that Phosrock's sale in the
United States of the bartered-for products would not be solely export
trade or in the course of export trade. As modified by your July 10,
1986 letter, however, Phosrock's proposed use of a broker to liquidate
received products appears to avoid Phosrock's involvement in other
than export trade and therefore falls under the protection of the
Webb-Pomerene Act (the "Act"), 15 U.S.C. 65.
Based on the information provided, the Commission understands
that Phosrock is an association formed pursuant to Section 5 of the
Act. Membership is open to any person, firm or corporation mining
phosphate rock in the United States. Phosrock makes no sales for
United States domestic consumption, and does not have anything to
do with determining the price of phosphate rock or any other product
sold for United States domestic consumption.
Phosrock proposed in its July 10, 1986 letter to negotiate sales of
phosphate rock on behalf of the Association to India and the Philip-
pines. Phosrock anticipates that both India and the Philippines will
not permit 100 percent cash payment, but will require Phosrock to
accept as payment or partial payment some products of those coun-
tries. Phosrock proposes to accept shrimp. If the purchasing country
requires Phosrock to accept Indian or Philippine products rather than
cash in exchange, Phosrock will negotiate the exchange ratio of phos-
phate rock for shrimp. If a member requests that it receive its propor-
tional share of the shrimp, Phosrock will arrange for it to receive
bartered-for products in proportion to that member's contribution to
the total amount of phosphate rock exported. Phosrock itself will
neither consume nor resell the shrimp. If members elect not to receive
their proportionate share of shrimp, Phosrock will turn the shrimp
over to a shrimp broker for resale. Phosrock will distribute the cash
proceeds of that sale to its members in proportion to their contribu-
tion to the amount of phosphate rock exported.

398 	FEDERAL TRADE COMMISSION DECISIONS
While Phosrock's current proposal contemplates Phosrock involve-
ment in activities different from those the Commission approved in
1983, the Commission believes that, as long as Phosrock uses a broker
to liquidate received products in this or any future barter programs
it would be engaged solely in export trade as that term is defined in
Section 1 of the Act, 15 U.S.C. 61, and its acts would constitute acts
done in the course of export trade as that phrase is used in Section
2 of the Act, 15 U .S.C. 62.
The Commission has not examined the United States markets for
phosphate rock and shrimp, to determine whether the proposed bar-
ter program will restrain trade in phosphate rock or shrimp in the
United States, restrain the export trade of any of Phosrock's domestic
competitors, artificially enhance or depress prices in the United
States, substantially lessen competition, or otherwise restrain trade
in the United States. Phosrock should take care to assure that its
barter activities will not have any of the domestic effects prohibited
by the Act.
This advisory opinion, like all those the Commission issues, ap-
proves only the conduct described in this letter, and that only so long
as the barter program does not have any of the domestic effects pro-
hibited by the statute. Phosrock would risk losing its Webb-Pomerene
Association status, or an enforcement action, ifit enlarged its partici-
pation in the proposed barter program beyond that described above.
The Commission reserves the right to reconsider the legal and factual
issues involved in this request, andto rescind or revoke its opinion in
accordance with Section l.3(b) of its Rules of Practice if implementa-
tion of the proposed barter program results in substantial anticom-
petitive effects, if Phosrock engages in activities not herein approved,
or if the public interest otherwise requires.
By direction of the Commission.
Letter of Request
April 8, 1986
Dear Ms. Rock:
On behalf of the Phosphate Rock Export Association C(Phosrock"
or the ((Association") and its members, we are submitting this request
for an advisory opinion from the Federal Trade Commission regard-
ing a proposed barter program. The Federal Trade Commission previ-
ously approved Phosrock's request to barter phosphate rock for sulfur
with the Governments of Mexico and Poland in an August 1, 1983
advisory opinion attached hereto as Exhibit A.* Phosrock's current
request seeks an advisory opinion with respect to a contemplated
• Not reproduced herein. See 102 F.T.C. 1844.

barter program for various additional products with a variety of dif-
ferent countries. This proposed program is set forth in greater detail
below along with a discussion of the pertinent background facts and
our view of the program's legality under the antitrust laws.
Phosrock was formed in 1970 pursuant to Section 5 of the Webb-
Pomerene Act.I Its Articles oflncorporation, By-Laws, form of Mem-
bership Agreement and current Annual Report are on file at the
Federal Trade Commission.2 The Association engages in all aspects of
export sales activity in phosphate rock as a non-exclusive export
channel for its members sales. Its responsibilities include market
research and analysis, technical assistance, solicitation, negotiation
and conclusion of export sales contracts, traffic coordination, invoic-
ing, order processing and collection and distribution of the proceeds
of sale. Phosrock is headquartered in Tampa, Florida, and has an
office in Paris, France.
Phosrock is engaged solely in "export trade." The Association
makes no sales for United States domestic use or consumption; it has
nothing to do with determining the price of phosphate rock sold for
consumption or use in the United States. Not only does Phosrock not
control the amount of phosphate rock available either for sale in the
United States or for export, it does not control the amount of rock its
members will export. Under the Association's Membership Agree-
ment, each member, acting individually, determines the amount of
disposable phosphate rock it will make available for sale each year
through the Association. A member's share of Association sales is
determined as a function of its relative participation in past Associa-
tion sales and as the proportion its nominated tonnage bears to the
disposable phosphate rock nominated for sale by all members through
the Association. Each member, in addition, retains the unfettered
right to sell phosphate rock on terms and conditions which it deter-
mines individually, to any domestic person for whatever purpose,
including exportation.3 Phosrock has no involvement in export sales
by a member company to any affiliated company abroad.4
The phosphate rock exported by Phosrock is a mined raw material
used in various phosphorous derivative industries, particularly in the
manufacture of complex phosphatic fertilizers.5 Apart from the phos-
phate rock miners operating in the United States, virtually all other
phosphate rock miners in the world are government-owned or con-
I 15 U.8.C. 65.
2 The members of Phosrock are: Agrico Chemical Company, AMAX Chemical Corporation, Freeport Phosphate
Rock Company, Gardinier, Inc., International Minerals & Chemical Corporation, Mobil Mining and Minerals
Company, Occidental Chemical Company and W.R. Grace & Co. Membership in Phosrock is open to any person,
firm or corporation engaged in the United States mining of phosphate rock.
3 In addition, subject to availability and mutual agreement on terms and conditions, Phosrock will sell and has
sold phosphate rock to domestic persons for exportation.
4 The term "affiliated company" is defined in Phosrock's Membership Agreement to be a corporation in which
a member has a 20% ownership interest.
5 See generally Fertilizer Technology and Use (2d Ed. 1972).

400 	FEDERAL TRADE COMMISSION DECISIONS
trolled. For example, the Office Cherifien des Phosphates (OCP) of
Morocco holds the largest known deposits of minable phosphate rock
in the world and derives a substantial portion from the export sale of
phosphate rock. Other countries in which phosphate rock miners are
government-controlled include Algeria, Egypt, Senegal, Tunisia, Jor-
dan, Syria, China, Viet Nam, Ocean Islands, U.S.S.R., Brazil and
Mexico.
Phosrock's efforts to promote American international trade in com-
petition with foreign governmental units have been severely under-
cut by the worldwide recession in the fertilizer industry. Despite
accelerating costs, real phosphate rock prices in the export market
have declined to levels at or below producers costs. The industry is
currently operating at substantially below capacity; employment has
declined from 10,000 in 1981 to 5,500 in 1985.6 Because of these condi-
tions, the Association has closed offices which it previously operated
in Tokyo, Japan and Sao Paulo, Brazil.
In such a depressed market, Phosrock's problems have been com-
pounded by the inability of many of its customers-usually foreign
governments-to pay hard currency for phosphate rock. This has
been true in the East Bloc countries like Poland as well as in develop-
ing countries such as Mexico and Brazil which are experiencing sig-
nificant financial difficulties. The continuing sharp drop in oil prices
is exacerbating this problem, particularly for countries like Mexico.
In order to combat these market conditions, Phosrock sought and
obtained an advisory opinion from the Federal Trade Commission,
dated August 1, 1983, which permits Phosrock annually to exchange
phosphate rock for up to 400,000 MIT of sulfur with the Governments
of Mexico and Poland.
Since 1983, the opportunities for countertrade have continued not
only with Poland and Mexico but also have arisen in dealings with
other potential customers. Brazil provides a useful illustration. When
Phosrock was formed, Brazil was one of the larger markets for Florida
phosphate rock, importing nearly a million metric tons per year (Ml
T IY) from the Association and its members. Thereafter, the Brazilian
Government determined to develop its indigenous phosphate re-
sources and to aid that development by reducing and then virtually
eliminating phosphate rock imports. After this government decision,
imports fell from 1.6 million MIT in 1977 to 185,000 MIT in 1982 and
to approximately 9,000 MIT in 1984. Despite the restrictions imposed
on the Brazilian market to imported phosphate rock, the Brazilian
government has made it known that purchase of Brazilian goods, like
shrimp, by potential phosphate rock suppliers may aid in securing
necessary import licenses to permit the sale of limited amounts of
6 See U.S. Department of the Interior, Phosphate Rock in 1985 attached hereto as Exhibit B. [Not reproduced
herein.]

phosphate rock into Brazil. Indeed, granting of import licenses for
Brazil from countries such as Senegal, Mexico and Israel have report-
edly been influenced by such a balance of trade considerations.
Given these market conditions, Phosrock desires to be able to en-
gage in a broad range of barter activities with customers in and/ or
with the governments of countries such as Brazil, India, Indonesia,
the Phillippines (sic) and Romania, as well as Mexico and Poland, in
which Phosrock would exchange phosphate rock for shrimp, other
types offish, fruit, or other similar products not regularly sold in the
ordinary course ofbusiness by Phosrock or its members. Accordingly,
we are requesting the Federal Trade Commission to render an adviso-
ry opinion with regard to Phosrock's participation in such a barter
program so that the Association need not seek advisory opinions each
time it contemplates a slightly different form of barter transaction.
Under the proposed program, the Association would negotiate the
exchange ratio for the products involved. No barter transaction will
be considered if the quantity of the product to be obtained by the
Association (the bartered product) in exchange for the Association's
phosphate rock exceeds five percent of the available supply of the
bartered product in any relevant U.S. market. In addition, if the
bartered product is a product of the kind which a member of the
Association or its affiliates sells in the ordinary course of its business,
that member would not participate in the Association's decision
whether to engage in the proposed barter transaction and would not
participate in the Association's decision how to dispose of the bartered
product. Unless a member requests that it receive its share of the
bartered product directly, the Association in most instances plans to
sell the bartered products to foreign or domestic purchasers upon the
best terms it can negotiate.7 The Association then plans to distribute
the money obtained from the sale of the bartered products to Associa-
tion members on the basis of each member's proportionate contribu-
tion of the exported phosphate rock. For the reasons set forth below,
we view the program as a permissible activity of a Webb-Pomerene
association which, in any event, does not raise concerns under U.S.
antitrust law.
This proposed barter program is substantially similar to the barter
transaction which the FTC approved in its August 1, 1983 advisory
opinion letter. The only difference between the two barter proposals
is that in our earlier proposal, the bartered product to be received-
sulfur-was one that could be consumed internally by Phosrock's
members. Where that was not feasible, it was contemplated that
Phosrock's members would individually resell the sulfur in the for-
7 In some instances however, Phosrock may be able to barter for products such as sulfur and residual oil, which
can he consumed internally by Phosrock's members. Accordingly, in these instances those bartered products will
not be resold, but distributed to Phosrock's members for their own use according to each member's proportionate
contribution of the exported phosphate rock.

402 	FEDERAL TRADE COMMISSION DECISIONS
eign or domestic marketplace. The Commission agreed that such a
barter transaction would constitute an "act in the course of export
trade" and "would not artifically (sic) enhance or depress phosphate
rock prices or otherwise restrain trade in U.S. markets for phosphate
rock or sulfur." Under Phosrock's current barter proposal, most of the
products for which Phosrock anticipates being able to trade-various
types of fruit and fish and other similar products-will not be useable
by Phosrock or its members. Accordingly, unless a member makes a
request to the contrary, Phosrock plans to sell such products in the
United States or elsewhere under the most favorable terms available
and to allocate the money received from such sale to its members.
This slightly different manner of disposing of the bartered products,
however,' does not _remove the barter transaction from the course of
export trade nor create any anticompetitive effects that would make
it subject to antitrust challenge.
As a matter of definition, the exchange of goods for goods universal-
ly is recognized to be as much an act of trade as is the exchange of
goods for currency. Accordingly, the Association's receipt and conver-
sion of the bartered product must be considered to be an "act done in
the course of export trade" in the same way that the Association's
distribution of monies to members (sometimes after the conversion of
such monies to U.S. dollars) is an act in the course of export trade.
Such conduct is one of a variety of ways of implementing an export
sale; in some circumstances, as here, where the members of the As-
sociation have no experience with, or expertise in, using or trading
the bartered product, it is the most efficient and possibly the only
feasible way of implementing the barter transaction.
In light of the Webb-Pomerene Act's primary purpose of promoting
export trade by permitting American companies to combine in export
associations without fear of antitrust exposure, and the Congressional
expectation that the Act would apply to export trade via barter,s it
would be unwarranted to attribute to Congress the intent to bring
certain types of barter transactions within the umbrella of Webb-
Pomerene immunity and to exclude others without clear evidence
that such exclusion from protection of these other types of barter
transactions rested on concerns with respect to the effect on domestic
competition produced by such transactions rather than the form
adopted to accomplish the barter transaction in question.
It is quite true that Congress sought to foreclose the potential for
the abuse of the grant ofWebb-Pomerene immunity if export associa-
tions were to turn around and sell in domestic channels the same
commodities that they had been permitted to band together to export.
In order to safeguard the domestic market, Congress added the follow-
8 At time of the Act's passage, barter was as it is today, an important trading method that was and is necessary
to employ if U.S. associations are to become better matches for their powerful international trading rivals.

ing qualification to the definition of"export trade" in Section 1 of the
Webb-Pomerene Act:
but the words "export trade" shall not be deemed to include the production, manufac-
ture or selling for consumption or for resale within the United States or any Territory
thereof, of such goods, wares or merchandise, or any act in the course of such produc-
tion, manufacture or selling for consumption or for resale. (Italics added)9
The phrase "such goods, wares or merchandise" refers to those pro-
ducts being "exported, or in the course of being exported from the
United States."
While the proviso directly addresses the congressional concern that
members of export association be prevented from colluding to restrain
domestic trade in the class of products they are selling overseas, it
does not preclude a Webb-Pomerene association from receiving and
disposing of other products in exchange for exported products.10 The
limitation to the definition of export trade in Section 1 of the Webb-
Pomerene Act thus offers no support for an artificial interpretation
of the Act which would make the most common forms of barter trans-
actions ineligible for Webb-Pomerene immunity. Barter is export
trade and conversion of a bartered product to currency is a necessary
act in the course of such export trade.
Moreover, even though the proposed barter program constitutes an
act "in the course of export trade," the program is not automatically
immunized from antitrust scrutiny. Rather, under section 2 of the
Act, Phosrock's proposed barter program still would be subject to
antitrust attack if it: restrained trade within the United States; re-
strained the export trade of any domestic competitor of the Associa-
tion; served artificially or intentionally to enhance or depress prices
with the United States of commodities of the class exported by the
Association; or substantially lessened competition within the United
States.11 However, analysis of the proposed barter program together
with the Commission's prior approval ofPhosrock'sannual barters of
400,000 MIT of sulfur with Poland and Mexico suggest that no such
antitrust concerns will be raised here.
Whether ·Phosrock is engaged in exports for cash or barter, the
Association has no role whatsoever in determining the price of phos-
phate rock within the United States. Thus, there is no feature of the
barter program that might serve "artificially or intentionally to en-
9 15 U.S.C. 61. Congress provided in the same vein that if any conduct, whether an act of export trade or not,
substantially restrained domestic trade or lessened competition in the United States, it would be subject to antitrust
attack. See 15 U.S.C. 62.
10 Thus, it deserves emphasis that Phosrock's proposal does not contemplate either the introduction or the
reintroduction of the export product-phosphate rock-into domestic commerce. Under the plan, the product that
reaches U.S. shores would be that proffered by a foreign customer in exchange for phosphate rock.
11 15 U.S.C. 62. Indeed, it is precisely because of this ability to challenge any such anticompetitive activity of
a Webb-Pomerene Association that the Commission should not adopt an unduly restrictive interpretation of those
activities that constitute "export trade" or acts "in the course of export trade."

404 	FEDERAL TRADE COMMISSION DECISIONS
hance or depress prices within the United States" of Phosrock's ex-
port product. With respect to the possible restraint of the export trade
of a competitor of the Association, we can contemplate no ill effect on
an American rival of Phosrock from the Association's engaging in the
proposed barter program. Just as is the case when Phosrock trades its
export product for currency, a nonmember American company selling
in the same foreign market is free to compete with the Association on
whatever terms it chooses to offer. In addition, membership in the
Association is open to all American producers of phosphate rock.
Finally, no aspects of Phosrock's proposed barter program will re-
strain trade within the United States or substantially lessen competi-
tion within the United States. On the contrary, the proposed barter
program is structured so that the products to be bartered for in most
instances will be products that the Association and its members do not
produce, or sell in the ordinary course of their business.12 While on
occasion, Phosrock may barter for other products like sulfur and
residual oil which its members can consume internally,13 the quantity
of product received will be such that its acquisition and consumption
by Phosrock's members could not restrain trade. Indeed, the Associa-
tion will never engage in a barter transaction in which it intends to
consume or resell the bartered product in U.S. commerce, if the quan-
tity of the bartered product to be received by the Association com-
prises 5% or more of the available supply of that bartered product for
any domestic U.S. market. Moreover, in most instances, the quantity
of the bartered product which Phosrock receives will comprise a frac-
tional percentage at best of the available product supply. In a word,
the program will be operated so as to ensure that the Association does
not possess "market power" in any bartered product for which it may
trade.
Thus, even if Phosrock's proposed barter program is viewed as
employing a joint buying or selling arrangement, it is well-established
that such cooperative buying or selling arrangements in and of them-
selves are not per se illegal. They raise antitrust. concerns only when
the group has substantial economic power in the market for the com-
modity to be purchased or sold14 or when the arrangement is accom-
12 In the event that the Association barters phosphate rock for a product which is sold in the regular course of
business by a member or its affiliate, the member will not participate in deciding whether the Association shall
participate in the barter transactions and shall not participate in the Association's decision regarding the disposal
of the bartered product.
13 See note 7 supra.
14 Thus, the courts have frequently held that the operations of buying and selling groups (e.g., of theatre owners
jointly purchasing films; of small grocers purchasing food-stuffs in bulk; of greeting card buyers using a buying
corporation; of competing coal producers using a joint selling agent; and of copyright holders using a joint licensing
agent) do not violate the antitrust laws. See Central Retailer-Owner Groceries, Inc. v. FTC, 319 F.2d 410 (7th Cir.
1963) (small grocers); Arkansas Brokerage Co. v. Dunn & Powell, Inc., 173 F. 899 (8th Cir. 1909) (mercantile jobbers);
G&P Amusement Co. v. Regent Theatre Co., 107 F.Supp. 453 (N.D. Ohio 1952), affd, 216 F.2d 749 (6th Cir. 1954)
(theatres); Mid-West Theatres Co. v. Cooperative Theatres, Inc. 43 F.Supp. 216 (E.D. Mich. 1941) (theatres); As-
sociated Greeting Card Distrib., 50 F.T.C. 631 (1954) (greeting cards); Appalachian Coals Inc. v. U.S., 288 U.S. 344
(1933) (coal producers); Broadcast Music Inc. v. CBS, 441 U.S. 1, 14-15 (1979) (copyright owners).

panied by anticompetitive restrictions on the members' ability to
resell the commodity purchased.15 As set out herein, neither of those
conditions would be present under Phosrock's proposal. Thus, the
program will not substantially lessen competition within the United
States.16
In passing the Webb-Pomerene Act, Congress sought to provide
American companies with the flexibility for combatting foreign buy-
ing and selling cartels in order to expand U.S. export trade. Phos-
rock's proposed barter program promotes this objective without
endangering U.S. commerce in any respect. Neither domestic com-
merce in phosphate rock or the bartered product will be substantially
affected.17
We would be happy to meet with you to discuss this matter in
greater detail or to provide you with any further written information
you may require. We look forward to hearing from you and, we would
hope, your response could be available as expeditiously as possible.
Thank you for your consideration in this matter.
Very truly yours,
Howard W. Fogt, Jr.
Counsel to the Phosphate Rock
Export Association
Second Letter of Request
July 10, 1986
Dear Ed:
In light of our discussions, Phosrock has decided to revise its April
8, 1986 request• for an advisory opinion regarding a broad range of
proposed barter and countertrade activities. This letter limits our
request, as set forth below, to certain specific activities regarding the
Association's efforts to sell phosphate rock to India and The Philip-
pines. Accordingly, we hereby withdraw all aspects of our April 8,
1986 request which sought advice regarding matters other than those
described below.
15 Under our program, each member will determine individually whether it wishes to participate in any proposed
barter transaction and whether it would like to receive its share of the bartered product directly or receive dollars
after the Association sells the bartered product in the foreign or domestic marketplace.
16 We recognize of course that while the proposed barter program will be structured so that the Association does
not obtain "market power" in any of the bartered products it receives, the Commission will always reserve its right
to take appropriate enforcement action if the program's rules are not followed or otherwise result, for whatever
reason, in a substantial lessening of competition in domestic commerce.
17 Because the proposed barter program would not violate Section 1 of the Sherman Act, it would not run afoul
of the Wilson-Tariff Act, 15 U.S.C. 8, either. As Judge Becker held in Zenith Radio Corp. v. Matsushita Elec. Indus.
Co., 513 F.Supp. 1100, 1163-64 (E.D. Pa. 1981), "the Wilson-Tariff Act sought to make clear that import trade was
subject to the scrutiny of the antitrust laws" and, as such, is coterminous with Section 1 of the Sherman Act. See
also Outboard Marine Corp. v. Petzel, 461 F.Supp. 384, 407 (D. Del. 1978).

406 	FEDERAL TRADE COMMISSION DECISIONS
As you know, in order to promote export trade in phosphate rock
most efficiently, Phosrock must overcome the inability of Phosrock's
actual and potential customers in the ~eveloping world to pay cash for
phosphate rock and their insistance (sic) on barter and countertrade
as, at least, a partial solution to this problem.1 This issue is particular-
ly important in India and The Philippines, both longtime consumers
oflarge amounts of phosphate rock. More importantly, in both coun-
tries, new, significant fertilizer plants are being built. These plants
are among the very few new opportunities to enlarge phosphate rock
export sale that have come along in recent years. With respect to both
the Paradip project in India and the Philphos project in The Philip-
pines, the Association faces intense competition from foreign govern-
ment owned or controlled phosphate rock suppliers from Morocco,
Jordan, Oceania and Israel. Some are competing by offering to take
an equity position in the new facility. All are prepared to engage in
barter and countertrade, if necessary, to get the business. Neverthe-
less, there is an opportunity for Phosrock to sell 400/500,000 MIT of
phosphate rock per year and realize approximately $15,000,000 in
much needed revenues.
In both situations, the Association has been told that barter and
countertrade will be important considerations in selecting phosphate
rock suppliers. In India, fertilizer imputs (sic) are purchased by the
government-owned Minerals and Metals Trading Corporation of
India Ltd. ("MMTC"). While preferring to do business on a cash basis,
MMTC has recently informally advised that Indian government poli-
cy will require that twenty percent of the cost of fertilizer imputs be
paid for through barter or countertrade of Indian products. It is un-
derstood that this minimum level of barter and countertrade activity
may be raised in the near future by the Indian government to fifty
percent. Similar incentives to barter phosphate rock exist in The
Philippines. In light of the prospects for export trade in phosphate
rock to be undertaken on the basis of barter and countertrade, the
Association has identified shrimp from India and The Philippines for
sale in the United States or elsewhere as an important opportunity
for Phosrock to secure a share of this new phosphate rock export
business.
There can be no legitimate question that Phosrock's barter or coun-
tertrade of phosphate rock for shrimp, under these circumstances,
would restrain any domestic trade. The United States is the world's
largest consumer of shrimp. American apparent consumption of
shrimp increased from 423 million pounds in 1980 to 604 million
1 See, Agrawai, "Countertrade and Bilateral Trade Agreements in Fertilizers" and Tanco, "Countertrade in the
Fertilizer Industry," IX Agro-Chemicals News In BrieflO ff(1986), attached hereto as Exhibit A. [Not reproduced
herein.]

pounds in 1984.2 The industry is highly unconcentrated. Much of the
shrimp consumed in the United States is imported from many coun-
tries around the world. U.S. shrimp imports increased from 219 mil-
lion pounds in 1980 to 342 million pounds in 1984.3 The value of 1984
imports was $1.2 billion. The industry is "extremely competitive"
with prices in this ''highly competitive market ... adjusting daily to
changes in supply and demand."4
The barter and countertrade of phosphate rock for shrimp presents
(sic) a very practical and natural way for Phosrock to respond to the
opportunities presented in India and The Philippines. Such acyvity
would clearly enhance U.S. international trade without any possible
legitimate question of restraints on domestic trade in phosphates or
shrimp. Indeed, even if Phosrock were to trade shrimp for all of the
500,000 MIT potential of this new phosphate rock business, it would
account for only .08% of U.S. value of shrimp imports. No serious
antitrust risk can be posed by such activity. Accordingly, the Associa-
tion requests the Federal Trade Commission, through its advisory
opinion, to authorize Phosrock to barter and countertrade phosphate
rock for shrimp up to an annual limit of $15,000,000.
As in past barter transactions, the Association would negotiate the
exchange of phosphate rock for shrimp. Each member of the Associa-
tion would determine individually whether it wished to participate in
the transaction. Unless in the unlikely event a member requests that
it receive shrimp as its share of the consideration for the phosphate
rock sold, the Association immediately plans to convert to cash the
shrimp received in such transactions through the use of a seafood
broker who will have full authority to sell the shrimp at market on
terms which it alone will negotiate. Immediately thereafter, the As-
sociation will distribute the money obtained from the sale to its mem-
bers on the basis of each member's proportionate contribution of the
exported phosphate rock. We believe these activities to be sustantially
similar to the barter activities approved in the·Commission's August,
1983 advisory opinion and to constitute "export trade" or "act[s] done
in the course of export trade."
Because this matter has been pending since April 8, 1986 and be-
cause ofits great importance for the Association, we would appreciate
your most expeditious consideration of this request.
Sincerely yours,
Howard W. Fogt, Jr.
Counsel for the Phosphate Rock
Export Association
2 United States International Trade Commission, "Conditions of Competition Affecting the U.S. Gulf and South
Atlantic Shrimp Industry," Report No. 332-201, p.143 (1985).
3 Id. at 153. See Table 61 attached as Exhibit B. [Not reproduced herein.]
4 Id. at iii and 188.