Speech

Linda Conlin
Board Member
Export-Import Bank of the United States

Breakbulk Conference
New Orleans, Louisiana, October 29, 2004

INTRODUCTION

Good morning, and thank you, Captain Schubert, for your kind introduction. MARAD is very fortunate to have someone with your 30 years of experience with the maritime industry. And, we at Ex-Im Bank, are fortunate to have someone who has worked so hard to cultivate the partnership between our agencies.

I also want to thank the Journal of Commerce for organizing this conference and for inviting me to participate in it. It's an honor to be here.

It's a pleasure to meet with so many distinguished leaders of the shipping industries and so many exporters. Coming from a U.S. government financial institution, I know that financiers sometimes seem to get their share of the glory, but the true, unsung, heroes of exporting are all those involved in shipping and logistics. Without you, exports and trade simply would not happen. In addition to all the jobs in your industry, you indirectly support millions of export-dependent jobs throughout our nation.

What I have to say this morning will be very specific. I want to talk about why we feel that is a good time for exporting and, given this environment, how the Export-Import Bank helps exporters take advantage of these opportunities, and, lastly, how a brand new agreement between Ex-Im Bank and the Maritime Administration (MARAD) can help many of you grow your businesses and increase jobs.

I'm pleased to say that Ex-Im Bank and MARAD enjoy a longstanding, and productive, partnership. This has benefited U.S. flag vessels and our nation.

Clearly, the importance of the U.S. merchant fleet goes far beyond the freight that they carry. U.S. flag vessels are vital to U.S. national security, as our Maritime Security Program (MSP) enables 47 flag vessels to be available to transport U.S. troops and military equipment to defend our nation in times of need. This, in turn, provides significant savings to the Defense Department. Ex-Im Bank has also done its part to support the U.S. merchant fleet by encouraging the use of U.S. flag vessels. By maintaining our flag vessels, they remain of service to our nation.

AN EXCELLENT ENVIRONMENT FOR EXPORTING

Of course, the principal purpose of shipping is commerce. And, one of the main messages I want to communicate this morning is that this is an excellent time for exporting. No one knows this better than the people in this room. With the forces of global competition being what they are, exporting is no longer optional. The United States and, for that matter, other countries no longer have the luxury to rely solely on domestic markets for success. Increasingly, the success of American business will depend on its ability to compete in the global economy.

Sometimes, there is a temptation to fear competitors from developing countries, but we need to recognize that the millions of people outside our borders as a huge potential market for American goods and services. We have 5 percent of the world's people; that means the other 95 percent can be our customers.

Exports are critical to our economy. They have accounted for 25 percent of U.S. economic growth during the last decade, and support 12 million high-paying U.S. jobs.

Exports have grown significantly during the last 35 years - from about $40 billion to nearly $1.1 trillion. And the conditions for exporting today are better than ever.

I say this for three reasons. First of all, the world economy has continued to strengthen, with the IMF expecting the strongest global growth in 30 years in 2004. Second, the Bush Administration has aggressively moved to open markets and lower barriers to trade. And third, Ex-Im Bank is a key player in providing financing options that help U.S. companies increase exports.

I'd like to say a few words about each.

First, the economy. There's clearly good news about the economy and job growth. Contrary to what some would like you to believe, 1.9 million new jobs have been created in the United States in the last year, and economic growth has been strong.

As President Bush said recently: "Our economy is growing again and creating jobs, and nothing will hold us back."

The U.S. economy is an important driver of the global economy. If we're doing well, we tend to bring the rest of the world along with us. We're doing that right now, and much of the world is experiencing a synchronized global recovery.

But, there are also other reasons why now is a good time to export. Exchange rates are making many U.S. products more cost-competitive. And interest rates are still extremely low, so conditions are excellent for borrowing for capital expansion.

On top of strong economic conditions, the Bush Administration has made significant progress in enhancing the opportunities for trade.

President Bush signed into law the Trade Act of 2002, which restored the President's "Trade Promotion Authority" to negotiate and enter into preferential trade agreements on behalf of American business. The Bush Administration has used this to achieve important gains on many fronts.

The President has reinvigorated efforts within the World Trade Organization to create a global trade agreement. The Bush Administration is working to establish the Free Trade Area of the Americas, and has completed free trade agreements with 12 countries and is negotiating with 10 others. This is more than the total for all previous administrations combined.

In May, the Administration signed the Central American Free Trade Agreement, and Chile has joined Canada and Mexico as the third nation in our hemisphere to have a bilateral trade agreement with the U.S. In addition, the Bush Administration has achieved $6.4 billion in tariff reductions commitments, and is working to achieve another $1.9 billion in reductions.

The United States played a key role in bringing China into the world trading community. And the Administration has made significant progress to ensure that more U.S. companies can benefit from the Chinese market.

The Bush Administration is also working to create the underlying conditions in other countries that are favorable to trade - to spread the rule of law and bring stability. As you know, in order to be a reliable business partner, a country needs a solid legal and judicial system, contracts that are enforced, high corporate accounting standards, and ethical business practices. As these countries raise their standards, we can all do more business together.

As my former boss, Commerce Secretary Don Evans has said: "America moves forward by engaging the world, by exporting not just our goods and services but by exporting our liberating principles of freedom, including free and fair trade."

This Administration has worked diligently to open up markets for U.S. businesses around the world, but President Bush knows it is important to ensure that businesses take full advantage of the new opportunities created by these agreements. That is why trade promotion is so important to this Administration.

In short, the Bush Administration has helped the economy rebound, and laid the foundation for a healthy international trade environment, thereby enabling your businesses to grow.

EX-IM BANK AND ITS PRODUCT LINES

An important player in the U.S. government's trade-promotion efforts is the agency I'm proud to represent - the Export-Import Bank of the United States.

Ex-Im Bank is our nation's official export credit agency. For 70 years, it has been our mission to support the financing of U.S. exports primarily to emerging markets. In the process - like you -- we help U.S. companies create and sustain jobs.

Ex-Im Bank has a long history of developing creative solutions for challenging trade-finance needs. It consistently advocates on behalf of U.S exporters and helps foreign buyers get the financing they need to procure U.S. goods and services.

We finance every kind of export: from oil field equipment and technology, to large commercial aircraft, power projects, machinery, raw materials, food, and consumer goods. You name it. We even financed the export of 600 pregnant cows to Turkey from an exporter in Virginia! We finance services as well, including engineering services, architectural or design services, and training. Last year, we helped finance more than $14 billion in U.S. exports.

Ex-Im Bank does not compete with the private sector. We complement it. We accept political and commercial risks that the private sector cannot accept in higher-risk markets.

We serve companies of all sizes. No transaction is too small or too large. In fact, about 85 percent of our 2,700-or-so transactions each year involve small businesses.

We are active in about 90 countries and are open in 70 more - almost everywhere in the world.

We provide export credit insurance to minimize exporters' risks in challenging markets. We guarantee loans so that foreign buyers can purchase U.S. goods. And we guarantee working capital loans to U.S. businesses so that they can produce goods for export.

Ex-Im Bank's chairman, Philip Merrill, has made customer service a top priority during the last few years. I'm pleased to say that this has been paying off, as we are providing faster and more customized service, and are increasing the range of financial products to assist U.S. exporters and lenders.

MEMORANDUM OF UNDERSTANDING WITH MARAD

That is why I am so pleased at the memorandum of understanding that Ex-Im Bank and MARAD signed in Washington on Tuesday. This new agreement, which I watched Chairman Merrill and Captain Schubert sign, provides a number of benefits for freight forwarders, U.S. exporters, and American workers. As Chairman Merrill said: "It's a win-win-win proposal."

Under this agreement, Ex-Im Bank can now guarantee working capital loans for shipping, logistics, and other companies involved in ocean freight transportation, allowing them to give their clients credit terms. This will relieve considerable pressure on exporters, who often have to wait to receive their buyers' payments before they can pay freight forwarders for their services.

In addition, our new agreement stipulates that Ex-Im Bank can now offer a 95 percent Working Capital Guarantee for exporters who ship on U.S. flag vessels instead of our existing 90 percent guarantee.

At the same time, the threshold at which Ex-Im Bank-supported exports must use U.S. flag vessels is being raised from $10 million to $20 million. This not only addresses inflation since the 1980s, when the $10 million exemption from cargo- preference requirements was set, but also provides greater flexibility for U.S. exporters wanting to use Ex-Im Bank financing.

Of course, we urge you to encourage U.S. exporters to use U.S. flag vessels for their shipments.

But, any way you look at it, this agreement is good for the freight forwarding and shipping industries, and good for U.S. exporters and U.S. jobs.

CONCLUSION

In conclusion, there are three things I invite you to remember: 1) This is an excellent time to export. 2) Ex-Im Bank wants to partner with you in helping you grow your business and expand U.S. jobs through exports. And 3) The new MARAD-Ex-Im Bank agreement will benefit your industry, U.S. exporters and their workers, and our great nation.

Thank you for your attention this morning.