Clearing the Air

On AAR OperationsIn Andrea Chancellor's column, "Inside Talk on Transportation," (JofC, Dec. 1), the statement that the AAR is developing a regional railroad database to help investors is less than accurate. We are developing such a database, but the purpose is to help our members not to help investors.

Second, the assertion that the AAR will provide consulting services to both investors and regional railroads is inaccurate. We do not act as ''consultants" in the traditional sense of that term, but rather consult strictly with our members on matters of common interest to them.

The AAR is involved in a joint research project with the Federal Railway Administration, the American Short Line Railroad Association, and a major Washington law firm. This effort will culminate in a book, "Dynamics of Local and Regional Railroads."

One component of the book focuses on a historic evaluation of local and regional railroads that terminated service over the past 10 years. The statistical analyses may aid investors in their approach to financing new railroads, but that is not its main purpose. Rather, the data are publicly available and are part and parcel of the public policy section of the joint study.

Harvey A. Levine, Vice President Association of American Railroads Washington

Gray Market View

Too Simplistic

Your Op-ed article, "Making a Case for Gray Markets," (JoC, Jan. 6), portrays the efforts of U.S. trademark owners to prevent the importation of gray market goods as an attempt to have the U.S. government enforce their ''market segmentation strategies," allowing them to continue to reap the benefits of "price discrimination" resulting from the higher prices charged for their goods in the United States than abroad.

Such a simplistic view of the gray market glosses over the legal question of whether U.S. trademark owners are entitled, by the express language of the law, to have such goods denied entry into the United States. (The lower courts have split over this question and the Supreme Court hopefully will make a definitive determination this term.)

It also completely ignores the fact that while gray market goods often may be purchased by U.S. consumers at lower prices than similar merchandise purchased from authorized dealers, what is being purchased more often than not is not the same product but one that merely appears to be the same.

For electronic goods and cameras, this may translate into lower quality goods. In the case of foods or beverages, or products made with chemicals, it may mean that the goods contain ingredients banned in the United States under its stringent health and safety regulations.

Gray market goods often are not shipped as carefully, nor inspected as carefully, resulting in the production of damaged and defective goods into the marketplace. Gray market goods also may have different (again, generally lesser) warranty and/or service guarantees, or none at all. Replacement parts become very difficult to obtain. Labels, instructions, manuals and other accompanying documents are generally in a foreign language, or missing altogether. Purchasers of gray market goods usually are not eligible for advertise promotional programs, such as manufacturer's rebates.

The gray market controversy is not a question of whether U.S. trademark owners should be allowed to reap the benefits of higher U.S. prices charged for the same goods available at lower prices overseas. The question, instead, is should gray marketeers be allowed to continue to deceive the consuming public into purchasing goods that are not what they are represented to be, and to "free ride" on the efforts of U.S. trademark owners and their authorized distributors.

Steven P. Kersner, Partner Donald S. Stein Brownstein, Zeidman & Schomer Attorneys at Law Washington, D.C.

Article on Arco Unit

Draws Opposition

I am writing to protest your story (JofC, Dec. 1) "Arco's Brazil Unit Fights Imports," by James Bruce. The story refers to an Arco subsidiary, known as EMCA, that owns and operates two facilities in Brazil which manufacture additive components for lubricating oils. EMCA has gone on record opposing the importation of certain competing products by other companies, calling this practice a clear violation of long-standing government regulations designed to encourage domestic manufacturing.

We take issue with Mr. Bruce on three counts. First, at no point did his article mention EMCA's contention that Brazilian import regulations were being violated. Anyone reading Mr. Bruce's story would conclude that EMCA was taking a narrow-minded, protectionist position to maintain high domestic prices. The truth is that the price charged domestically by EMCA is no different than the import price for the same quality product. EMCA was not asking for new restrictions on imports; it simply wanted others to abide by existing controls and regulations.

Second, the article started that EMCA "invested $20 million over the past three years to build the plants," etc. This is untrue. The two facilities have been operating for about 20 years. EMCA's only recent investments have been for routine maintenance which in no way approximate $20 million.

The article also failed to emphasize that EMCA is an autonomous, locally managed operationpursuing its business interests as a Brazilian company. The decision to protest the import abuses was made in Brazil, not Los Angeles.

Mr. Bruce's story is correct on one important point. If these violations are not corrected by the government, EMCA is prepared to close the two plants.

K.G. Riley, Vice President International Marketing, Coordination and Product Supply Arco Petroleum Products Co. Los Angeles, Calif.

Please consider registering in order to access the full article.