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EXPORT-IMPORT
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Thursday, May 2, 2002 |
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EX-IM ANNUAL CONFERENCE LUNCHEON MAY 2, 2002 |
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[ TRANSCRIPT PREPARED FROM A TAPE RECORDING.] |
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Introduction Small Business Broker of the Year Exporter of the Year Small Business
Small Business Bank of the Year
MR. AGUIRRE: Good afternoon. I realize it's May, but it's like Christmas in May. We just got a gift. I realize that you're still going through your meal, but I ask for your attention. Given the busy schedule that the Hill has today and, in fact, every day, we are very grateful for the Senator being able to join us. In fact, we're grateful for all of the congressional members that have taken time to join us at this annual conference and have been here, in and out, and will be here, in and out, for the rest of the conference. Senator Sarbanes was first elected to represent Maryland in the U.S. House of Representatives in 1970 and in the U.S. Senate in 1976. He was reelected to his fifth term in the year 2000. The Senator has worked very hard over the years to promote free and fair trade and is a major proponent of the Trade Promotion Coordinating Committee, a multi-government agency which cooperates and brings together all of the trade agencies and exporter programs so that an exporter or a small business can do one-stop shopping to learn about how to export their goods and services. Senator Sarbanes is a forceful power in the Senate and has been a major supporter of the Bank over the years. I, personally, want to thank him for his support and for chairing my hearing on my conference. His committee has overseen the reauthorization of the Bank in the Senate and will be working with the House on the Conference Committee to pass a final version of the bill, hopefully in the next few days.
Let us welcome Senator Paul Sarbanes. There's a wonderful story they tell about Senator Aiken, just so you get some sense of what our lives are like up on the Hill, who, of course, served here for many years from Vermont. He took out his daily schedule, and he was peering at it. Every member of the Senate carries something like this around with them. Some of my colleagues have very fancy ones. They have a kind of a leather case in which they enclose their card and everything. But, in any event, Aiken was peering at his schedule in a committee meeting one morning. So some bright, younger staffer sitting there said, "What are you doing, Senator Aiken, trying to figure out where you're supposed to go next?"
And Aiken looked up with a smile, and he says, "No, no." He says, "I'm trying to figure out where I am now." I can remember the days not too long after I came to the Senate, when we had to beat back an effort to actually do away with the Export-Import Bank. That was when we had kind of these free-market idealogues, I mean, very rigid people, and they sort of said, "Well, the market is not supposed to operate this way, and we're intervening into the market, and we ought to get rid of the Export-Import Bank." Fortunately, that view did not prevail, and we've been able of course to sustain the Bank and enhance its functions over the years. First, let me just take a moment to say what I'm sure others have said here, and that is the tremendous loss for the Export-Import Bank and, indeed, for our nation with the passing of John Robson. I had enormous respect and regard for John. In my view, the Ex-Im Bank and the administration were fortunate to get an individual of his experience and stature to lead the Bank, and our country I think will miss his outstanding leadership and his dedicated service. I'm sure those of you who knew him would share that view with me. I told John Robson when he took over the Bank that we'd try to accomplish two things by the end of his first year; one was to get a full board in place, in terms of the members of the Export-Import Bank Board, and, secondly, was to get the reauthorization bill. Well, we got a full board in place during the first year, and with Eduardo Aguirre as its Vice Chairman. Of course, now we, regrettably, have a spot to fill. And on the reauthorization, we didn't make the year, but we're getting close--we did get the bill through the Senate. I was able to tell John, he was then ill at the end, that we'd gotten the bill through the Senate, and that seemed to mean something to him, but you know we're working hard to get this reauthorization done.
The Senate passed its bill back in the fall, and the House just yesterday took up and passed, by voice vote, its version of the bill. Actually, we passed the bill out of committee in the fall. We passed it a couple of months ago, finally, by unanimous consent. Sometimes if you just let it hang around-- The House just yesterday took up and passed its version of the bill, and I'm hopeful we'll be able to go to conference shortly, resolve the differences between the two bills, which are not very great, and complete the reauthorization process. In the meantime, we keep passing these short-term reauthorizations, which are, of course, important because if the authorization lapses, the Ex-Im Bank can't do business, and so all of a sudden everything comes to a screeching halt, which is of course no way to run the government or anything else, for that matter. I feel very keenly that the need for the Ex-Im Bank is perhaps as strong as it's ever been, perhaps even stronger. When we last reauthorized the Ex-Im Bank four years ago, there was a sense that some progress was being made worldwide and controlling the growth of export credits being provided by national governments. The OECD arrangement on tied aid credits seemed to be having some effect, and there was hope that future progress could be made. Of course, it's always been a part of American policy to try to limit or restrain those credits; indeed, if possible, to do away with them. But what has been happening, I think, in recent developments is that we've been moving in the opposite direction. Funding for export credit agencies of other governments have been growing. In addition, foreign governments have been utilizing other mechanisms such as market windows in order to get around the OECD arrangements. I mean, the U.S. had to exercise a lot of influence at the OECD in order to try to place these limitations and restrictions on the offering of credits and to really reduce the playing field to a straight price and quality competition, in which I am convinced the U.S. would do very well indeed. Given these developments, I think the need for the Ex-Im Bank to have the resources to carry out its function and also to have the mandate to, in effect, come up against these new mechanisms that other countries are now using is extremely important. The Senate-passed version of the Ex-Im Bank reauthorization bill gives the Ex-Im Bank explicit authority to match financing terms that are being offered by so-called market windows which, as you know, are government-sponsored enterprises which provide export financing at below-market rates. The foreign governments, which support them, and notably, in this regard, Germany and Canada, claim these enterprises are not official export credit agencies and therefore not subject to the discipline of the OECD arrangement. We're simply not going to accept that, and we're going to be prepared to compete with them. The bill also directs the U.S. to seek negotiations in the OECD for multilateral disciplines and transparency for market windows. As I indicated, I think U.S. exporters are able to compete very effectively in the market on the basis of price and quality. In a world in which export subsidies did not exist, if you had such a world, I think the U.S. would do very well, but the fact of the matter is we don't live in such a world today. When foreign governments provide subsidies to their exporters, the U.S. has to respond or our exporters will clearly be placed at a competitive disadvantage, not because of some economic competition in the market, but because of the actions of foreign governments in support of their own exporters. The Ex-Im Bank has a critical role to play in leveling the playing field for U.S. exporters by matching the public financing made available by foreign governments and, furthermore, the Ex-Im Bank provides important leverage to U.S. negotiators seeking to achieve international agreements to limit the use of government export subsidies. I've been a very strong supporter. I think, as you know, of the war chest, again, because I think that we have to be able to, in effect, back foreign governments off. I think if the U.S. which, if it's prepared to do it, has very deep pockets, can really pretty well compel others to pull back and, if not, then we match them, and then our exporters can go in on a fair basis and see what they can do, in terms of getting the contract. As I indicated, if we can keep the competition straight out to price and quality, I think we'll come out ahead, if not all the time, at least most of the time. Now let me mention one other issue, which I think is extremely important, and we just did a hearing on it yesterday, and I want to take just a moment or two to touch on it. Before I turn to it, let me say that we are going to hold a hearing on the 14th of May of the Trade Promotion Coordinating Committee. A number of years ago I chaired a hearing in our committee on exports, and export promotion and so forth. We had a number of representatives from different departments and agencies of the federal government. We had about 10 of them at the table, all of whom deal with exports in one way or another. So I said to them, as they were each sort of putting out their program and so forth, I said, "Well, let me ask you this question. How many of you know one or more of the other people sitting at the table here with you?" It was staggering. They didn't know one another. Now these are, you know, Department of Agriculture, Department of Commerce, Ex-Im Bank, the SBA, the OPIC, the TDA, and on and on, through all of the relevant departments and agencies. They'd sent the point person, as it were, who deals with the export issue, and they didn't know one another, which of course only dramatized the fact that we had no overall coordinated government policy on exports, that we lacked this interrelationship which ought to exist as certainly within the Executive Branch as we dealt with that issue. So, out of that, we put together the Trade Promotion Coordinating Committee, which required these groups to meet as a group under the chairmanship of the Department of Commerce. They were required to come up each year with a trade promotion strategy, with a report that set out a trade promotion strategy, and of course it has had the impact, within the Executive Branch of the government, of finally forcing them to start thinking together and evolving a coordinated, comprehensive plan.
Now we're not altogether where I'd like to be, but we've made, I think, enormous strides in that regard, and on the 14th of May, very shortly, we're going to be holding a hearing in the Banking, Housing, and Urban Affairs Committee, which I'm now privileged to chair. All hail to Vermont, if I may say that. Now the issue I wanted to touch on, on which we held the hearings yesterday, which some of you may have read about in the press today, was we held a hearing yesterday with Treasury Secretary O'Neill on the Treasury's Annual Report to the Congress on international, economic and exchange rate policy. This was put into place back in 1988, when we concluded that we weren't keeping close enough tabs--we, the Congress--close enough tabs on international economic policy, and particularly on the exchange rate and the possibility of its manipulation by other governments in order to gain trade advantage. It's one thing to have a textbook theory of how you compete and how the markets operate, but if that's going to be the case and that's generally the path we follow, we support markets, and that's how we think economies ought to be organized. But if other governments are intervening in those markets to the advantage of their own people, and you don't take some measures to address or counter that, obviously, you're on the downward slope, particularly if their interventions are skewing the operation of the market. In other words, you need to back them out of that situation. I am not coming and advocating our intervention to skew the market, but I am strongly advocating our intervention to preclude others from trying to skew the market in order to back them out. Well, we had this hearing with Secretary O'Neill yesterday. We're very concerned about the current account deficit, which is running very large, and I have to say very candidly to you that I was taken aback when Secretary O'Neill, the Secretary of the Treasury, indicated not only that he thought nothing should be done about the dollar, and I'll touch, in a moment, of the testimony we received about its overvaluation, but that he doesn't even consider the U.S. current account deficit, which last year was over 4 percent of GDP and may go up to 5 percent this year as a problem. I mean, his attitude to that was no problem, but this is a view that hardly any other informed observer of the world economy shares. We had Alan Greenspan a couple of weeks ago, and he said that at some point this large current account deficit is a real problem, and we need to be aware of that because we're building up these tremendous obligations that we owe abroad. Now we can carry them at the moment because they continue to pump money into the United States, but you become more and more dependent--that wonderful in "A Street Car Named Desire" about dependent on the kindness of strangers--and I don't think that's where we want to be, if I may say so. We also heard yesterday from representatives of the National Association of Manufacturers, from the American Farm Bureau Federation, the AFL-CIO on the devastating impact which the overvaluation of the dollar is having on U.S. manufacturers, workers and farmers. Jerry Jasinowski, the President of the NAM, said in his testimony to the committee, and I quote him, "The overvaluation of the dollar is one of the most serious economic problems, perhaps the most serious economic problem now facing manufacturing in this country. It is decimating U.S. manufacturing exports, artificially stimulating imports, and putting hundreds of thousands of American workers out of work. It is leading to plant closures and to the off-shore movement of production away from the United States with harmful, long-term consequences for future U.S. economic leadership." I agree very strongly with that statement. Because what happens, and Japan and China are both examples of this, they are constantly intervening in order to keep their currency from appreciating so that they can sustain a competitive advantage in terms of the trade relationship. Once, again, this is an instance in which most reasonable observers conclude that the markets are not being allowed to operate the way they're supposed to. Everyone says, well, you can't intervene in the market. Let the market set the exchange rate.
Fine. Fine. But if the other countries are intervening in the market in order to affect the exchange rate to their advantage in trade terms, and we do nothing to counter that, then, in a sense, we're on our way to being taken to the cleaners, and I, for one, feel very keenly that that ought not to happen. Let me simply close by, again, expressing my strong support for the Ex-Im Bank. The important public purposes served by the Bank is the basis for the broad bipartisan support which the Bank has enjoyed in the Congress. I am hopeful that we can complete this reauthorization in the near future. That will give the Bank--well, the Senate bill goes to 2006. So we were trying to provide a good, long stretch. I also wanted to get the reauthorization out of the first year of a new administration, which is, of course, what happened last year, but it's very difficult to have a new administration. You get a new Chairman. You need to put it all into place, and then at the same time to be confronted with the possibility that your reauthorization is going to expire and to try to work that in through the Congress is a very heavy task. So we tried to get, the House bill is shorter than that, but we'll try and see what we can do in the conference to get a good extension, so we don't have to redo this thing as frequently. It probably needs to be done from time to time because that constitutes the basis for a careful reexamination, and there are many members of the Congress who I don't think would simply want to put it out there permanently without it having to come back, but we ought to get a good stretch of time in there, so it's not constantly hanging over the Bank. I look forward to continuing to work closely with the exporting community. You are an enormously increasingly important part of the workings of our economy. As I said before, I particularly like working with you because I think, if you're given a level playing field and fair terms, you can outcompete anybody around the world, and that's what we're out to try to do.
Thank you all very much. I am delighted to open this afternoon's Small Business Award ceremony. We will honor three companies for their successful contribution to U.S. small business exporting and job creation. This event, more than any other at our conference, reflects the revolution that's taken place at Export-Import Bank to support small business exporters. Since 1983, we've worked with Congress, with Senator Sarbanes, to support small- and medium-size enterprises. Under the direction of the U.S. Congress, we set aside 10 percent of our financing and 20 percent of our transactions for small business. We have far surpassed those goals. Last year, 18 percent of Ex-Im Bank's total authorization supported small business, and 90 percent of our transactions involved small business. Our small business financing totaled $1.6 billion, and working capital guarantee financing increased nearly 15 percent to a record $660 million. We issued 1,723 export credit insurance policies to small businesses, with authorizations totaling more than $900 million. The increase in working capital guarantees is due largely to our efforts to reach out to asset-based lenders and small community banks, to reach out to the small businesses and their communities, and to give them the kind of financing with our guarantees, to get them and their exports out all over the world.
The Export-Import Bank also reaches out to a broad range of lenders through marketing initiatives, such as our delegated authority lender program. This program allows local lenders to give their customers speedy approval on Ex-Im Bank working capital guarantees without prior Bank approval. Today, I'd like to introduce my colleague, Joe Grandmaison, who will announce the winner of the Small Business Broker of the Year.
Joe Grandmaison. For those of you who attended the Sub-Saharan Africa event and saw my somewhat questionable performance, I want you to know they given me a script, so I'll use the script. Except for the fact that, Mr. Chairman, my friend Eduardo, I'd like to just take one note of personal privilege, if you will, to introduce my successor at TDA. Thelma Askey leads a spectacular group of professionals. I tell people I loved every single day at TDA, except when I had to contact OMB. That was the single only exception.
So, Thelma, would you please stand. I'd like to thank you for joining us. It's my honor to introduce to you the winner of Ex-Im Bank's award for Small Business Broker of the Year, Trade Accept Group of Edina, E-d-i-n-a, Minnesota. This six-year-old company, based on suburban Minneapolis, had more than 60 small business export insurance policies and 12 applications pending as of the fiscal year 2001. It has been particularly successful in helping small businesses gain access to Ex-Im Bank's working capital guarantees and arranging medium-term loans for foreign buyers of capital equipment. Trade Acceptance Group also actively promotes insurance to small business exporters, and its two principles, Curtis L. Hanson and Leslie A. Bergland, frequently voluntarily speak at seminars and other forums about Ex-Im Bank's services and other export support initiatives.
I am honored to present Ex-Im Bank's award for Small Business Broker of the Year to Leslie A. Bergland of Trade Acceptance Group. We are really honored by this. Curt and I have really dedicated our business focus to working with small- and medium-size companies--not to say that we won't work with large companies. We have a number of those, also, but we certainly can't do this on our own. It's really a team effort, particularly with the Exporter Underwriting Division, the Buyer Underwriting Division. Without them, none of this would have happened. I would also like to recognize the regional offices of Ex-Im Bank, particularly our friends in the Chicago office, for all of their assistance and support. Also, we have many banking relationships as our partners in providing financing for our customers, which obviously is very important in getting these deals done.
I would also like to recognize all of our customers, our insureds, friends, and our support system that we've had. Six years ago when we left the wonders of international banking, many people thought we were kind of nuts in starting up a new business, but it's been great, and again we're really pleased to be here, and thank you for this award.
And now to present our Small Business Exporter of the Year, my colleague and fellow Board member, Dan Renberg.
What I can tell you about Andrew Kruse and his company, Southwest Wind Power in Flagstaff, Arizona, is that they were using our export credit insurance. They are shipping wind turbines, small wind turbines, I think 400 to 3,000 watts, primarily for off-grid applications, rural applications, they are shipping them to about 50 countries. Now they are using us for about 20 of them. They have used us for a deal as small as a $1,500 transaction to St. Lucia. They have used us to emerging markets like Spain and Germany, also. The irony that I learned about Andrew's company, Southwest Wind Power, is that they didn't even have electricity when they started their company. They had to make their first generators wind-powered so they'd have enough juice to make their product.
It is with great, great pride, on behalf of the renewable energy sector, that it gives me a chance to welcome you, for you the Exporter of the Year Small Business category, Andrew Kruse from Southwest Wind Power. Really, this award really goes to the employees of Southwest Wind Power because they are the ones that have really made it happen. My partner, David Kelly, and I started this company many years ago with a dream, and that was to make a difference in the world, somehow using renewable energy products. We now have distributors in over 50 countries. Our products are constantly finding new markets. Through the use of wind, we bring light, knowledge, and new opportunities to our customers. But with all of that, we both sit back, and we look at our success, but we realize we've just only begun. My special thanks goes out to my sales staff, Rod, and Ricardo, and Sean, and John, and Ketter, and the rest of the gang there, and to Steve and Diane. These are people in our Shipping Department who have really worked hard in trying to understand the bureaucracy of the world because it's not that easy. Once you just ship and sell a product, it's getting it there and getting it into the hands of your customers. It's very important, and Meridian Finance, which has been a very important part of our success in working with Ex-Im Bank.
Lastly, I want to also thank Ex-Im Bank, for they have not only helped us out to be successful through their programs, but they have also helped our customers be successful, which I, in turn, believe in the future will make the world successful. In just five years, the Trade Bank became the number one lender of Ex-Im Bank Working Capital Guarantees. Last year they supported $68 million of Ex-Im Working Capital Guarantees and $358 million in U.S. exports.
It is my pleasure to present Ex-Im Bank's award for Small Business Bank of the Year to Dave Webber, President and CEO of the Trade Bank, and Ken Petrilla, Senior Vice President. There is no doubt in my mind that the most gratifying part of what we do for a living is helping small and new companies establish new markets overseas and watching them grow their employment growth and become prosperous by being able to sell overseas, particularly small businesses, which is our area of specialty. There is no doubt in my mind, also, that these companies would not be able to do it without the assistance of the Ex-Im Bank. There's two groups of people I'd like to recognize in my remarks. One is my colleagues at the Bank, and particularly Ken Petrilla and Brent Marshall, without whose leadership I'm sure we wouldn't have won this award. Secondly, I'd like to give a genuine thanks and gratitude to the colleagues we work with at the Ex-Im Bank. It is remarkable to us that, being a West Coast bank, how often that we call at 5 o'clock West Coast time, 8 o'clock East Coast time, thinking that we're going to get a voice mail from somebody at the Ex-Im Bank to be able to leave a message, and they actually pick up the phone, and they are still live working at that hour.
I would particularly like to recognize two people whom we work very closely with and, to me, personify the spirit of professionalism of the Ex-Im Bank or the spirit of professionalism that anyone would aspire to, and that is Pam Bowers and Sam Zitzer, whom we've had a relationship with for a number of years, and they have really gone out of their way.
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Revised: May 7, 2002
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