FOR IMMEDIATE RELEASE January 11, 2001
Marianna Ohe (202) 565-3200
The Export-Import Bank of the United States (Ex-Im Bank) has approved major procedural changes in applying its foreign content and local cost policies to finance U.S. export sales. The more flexible procedures, effective immediately, will pave the way for co-financing projects with the export credit agencies (ECAs) of other countries. The changes will enhance the competitiveness of U.S. companies seeking to win foreign sales by making Ex-Im Bank programs easier to use.
Ex-Im Bank worked very closely with all of our constituents in developing these procedural enhancements, said Ex-Im Bank Chairman James A. Harmon. They are the first significant procedural changes in these areas in 14 years. I am particularly grateful to U.S. organized labor for its openness and flexibility in working with us. These changes are an important step in making Ex-Im Bank competitive with its ECA counterparts and therefore better able to support U.S. exports and jobs.
These procedural changes are of fundamental importance to American exporters, said Mary A. Irace, vice president of trade and export finance for the National Foreign Trade Council. They are critical to bolstering Ex-Im Bank's competitiveness and we believe they will lead to increased U.S. exports and high-quality U.S. jobs. We applaud Ex-Im Bank for its leadership in achieving these important changes.
Foreign Content Policy: Ex-Im Bank will continue to support the lesser of: 85% of the U.S. supply contract or 100% of the U.S. content of an export transaction. However Ex-Im Bank will now use an aggregate approach to calculating the foreign content of transactions, replacing the item-by-item procedure used until now. The simplified procedures provide U.S. exporters with a more efficient and predictable disbursement process. Ex-Im Bank will work with exporters to monitor and report on the impact of these procedural changes to ensure they achieve the desired result of maximizing U.S. exports and U.S. jobs.
Local Cost Policy: Ex-Im Bank provides up to15% of the U.S. contract price of an export to support locally obtained products and services in the country of the foreign buyer. Under the new procedures Ex-Im Bank has eased the eligibility criteria in three ways: 1) Now all long-term cases can obtain local cost support when the costs are connected to the U.S. exporter's responsibilities in carrying out his contract. (Ex-Im Bank will continue to offer local cost support for all medium- and long-term environmental exports and for project finance transactions); 2) Ex-Im Bank is eliminating certain documentary requirements for local cost financing to avoid unintended expenses for U.S. exporters; and 3) For limited recourse project finance transactions, Ex-Im Bank may now support any local costs that benefit the project as a whole and contribute to the U.S. export.
Co-financing Procedures: The foreign content and local cost changes pave the way for another important initiative — co-financing. Using the flexibilities created by these changes, Ex-Im Bank has established principles for co-financing transactions with other ECAs which involve exports from each of the respective countries. These principles allow U.S. exporters to offer foreign buyers the convenience of a one-stop-shop approach. When Ex-Im Bank is the lead ECA on an export transaction, the new local cost and foreign content procedures will make Ex-Im Bank's ways of doing business more consistent with the co-financing model used by other ECAs. When Ex-Im Bank is the follower ECA on a transaction, Ex-Im Bank will continue to ensure that it meets all of its policy and legislative responsibilities.
Ex-Im Bank is an independent U.S. government agency that helps finance the sale of U.S. exports primarily to emerging markets throughout the world, by providing loans, guarantees, and insurance. Ex-Im Bank supported $15.5 billion in U.S. exports in fiscal year 2000.