Votes to Send Letter to EXIM Board Encouraging Modernization of Agency’s Content Policy for Transformational Exports
FOR IMMEDIATE RELEASE December 3, 2020
Office of Communications (202) 565-3207
WASHINGTON – The Export-Import Bank of the United States (EXIM) Advisory Committee convened its quarterly meeting virtually yesterday to discuss EXIM’s role in countering aggressive export credit financing from the People’s Republic of China (PRC), and how modernizing EXIM’s content policy for transformational exports ensures U.S. workers have the best opportunity to succeed in today’s global marketplace.
The Advisory Committee also discussed and voted to send a letter encouraging the EXIM Board of Directors to modernize EXIM’s content policy for transformational exports, as defined in EXIM’s historic seven-year reauthorization.
The meeting was opened by EXIM Advisory Committee Chair Stevan Pearce, and remarks were provided by EXIM President and Chairman Kimberly A. Reed, who outlined the feedback she has received during her time at EXIM from exporters and stakeholders.
Counselor to the Chairman and Senior Vice President David Trulio provided Advisory Committee members with strategic context around competition with the PRC, and an update on the Program on China and Transformational Exports (Program). Under EXIM’s reauthorization, the agency is charged with supporting U.S. innovation, employment, and technological standards through direct exports in the following transformational export sectors:
- Artificial intelligence.
- Biomedical sciences.
- Wireless communications equipment (including 5G or subsequent wireless technologies).
- Quantum computing.
- Renewable energy, energy efficiency, and energy storage.
- Semiconductor and semiconductor machinery manufacturing.
- Emerging financial technologies.
- Water treatment and sanitation.
- High-performance computing.
EXIM Chief Banking Officer Stephen Renna joined Trulio in a discussion of the severe limitations of EXIM’s current content policy in supporting exports in transformational export sectors. Trulio noted that the greatest obstacle to using EXIM financing in transformational export sectors, as identified by the more than 1,100 exporters and stakeholders who participated in this year’s Strengthening American Competitiveness Initiative, is EXIM’s domestic content requirement.
Senior Vice President for Policy and International Relations Jim Cruse compared EXIM’s content policy to that of international competitors, noting that EXIM’s current policy is the most restrictive of the world’s major export credit agencies. Korea’s export credit agency KSURE has a 30% domestic content minimum, Germany’s Euler Hermes has a 51% domestic content minimum (30% for environmentally beneficial transactions), and Canada’s EDC can go as low as 0% content based on the national benefit of the transaction.
Ambassador Paula Dobriansky, EXIM Advisory Committee Member and Chair of the EXIM Advisory Committee Subcommittee on Strategic Competition with the People’s Republic of China (informally known as the Chairman’s Council on China Competition), also provided the Advisory Committee with an update from the Subcommittee, which last week met to discuss and draft a letter to Advisory Committee Chair Pearce encouraging EXIM to modernize its content policy.
EXIM Advisory Committee Virtual Meeting. Top row (l-r) Jim Cruse, David Trulio, C. Derek Campbell, EXIM Chairman Kimberly A. Reed, EXIM Advisory Committee Chairman Steve Pearce; Middle row (l-r) Maria Cino, Venkee Sharma, Ambassador Paula Dobriansky, Elaine Dezenski, Bill Huntington; Bottom Row (l-r) Rodney Ferguson, Joanne Young, Stephen Renna, Sean McGarvey
“I thank Chair Pearce and the Advisory Committee and Ambassador Dobriansky and the Chairman’s Council on China Competition for their thoughtful and thorough insight and advice on EXIM’s new Congressionally-mandated Program on China and Transformational Exports and related policies that our Board may need to modernize to ensure EXIM can support the key export sectors identified in the historic reauthorization legislation, like 5G, artificial intelligence, renewable energy, and semiconductors,” said Chairman Reed. “As the Advisory Committee recognized, U.S. exporters seeking to sell their high-quality goods and services around the world face intense competition, particularly from the People’s Republic of China. I have heard from an overwhelming number of businesses, high-level government officials, allies, partners, and stakeholders that EXIM’s decades-old content policy must evolve to support today’s transformational sectors.”
“U.S. businesses and workers are increasingly competing against entities that have the full weight of the PRC government behind them,” said Chair Pearce. “Modernizing EXIM’s content policy will make American exporters more competitive, supporting workers and increasing U.S. leadership around the world.”
“I thank the committee members for their time and review of EXIM’s content policy,” said EXIM Board Member and former Member of Congress Spencer Bachus, who highlighted that EXIM’s content threshold is much higher than elsewhere in the U.S. Government. “U.S. exporters have long identified China as their greatest competitor abroad – and this policy specifically as a hindrance – and EXIM is committed to supporting U.S. businesses and workers as they compete globally.”
“The United States must maintain its global leadership role in clean energy. Over the past decade, other nations like China and Russia have been rapidly growing their energy exports putting the climate, our national security, and job growth at risk. Bringing EXIM’s content policy in line with other federal agencies and export credit agencies of allies and OECD members will make it easier for U.S. companies to advance clean energy around the globe,” said Rich Powell, Executive Director of Clearpath, and a member of EXIM’s Advisory Committee. “Not only will this make it easier for EXIM to meet its clean energy goals, it will also support high-quality jobs here in America.”
“Companies like mine know first-hand the challenges of staying competitive in an ever-changing global marketplace. It’s great to see Chairman Reed and the EXIM board of directors take a sharp look at EXIM’s policies and bring them into the 21st century,” said Maria Cino, Vice President, Americas and U.S. Corporate Affairs, Hewlett Packard Enterprise. “Modernizing EXIM’s content requirements will level the playing field and support high-tech jobs here at home.”
Key recommendations in the letter included:
- EXIM should increase the competitiveness of its content policy to better align with other U.S. agencies and foreign export credit agencies. Specifically, we recommend a U.S. content minimum of 20-30 percent to better level the playing field with our foreign allies and competitors within the Organisation for Economic Co-operation and Development (OECD) such as Japan and the United Kingdom.
- EXIM should have flexibility in making a national interest determination similar to the guidelines governing the Advocacy Center at the U.S. Department of Commerce.
- EXIM should have dedicated resources to fund operating costs and financing flexibility to carry out the Program’s mission, including a yearly evaluation of the competitiveness of the Program vis-à-vis China.
- EXIM should be part of a holistic, whole-of-government approach to financing transactions, in concert with other tools and agencies of U.S. statecraft.
The Subcommittee letter can be accessed here.
EXIM’s existing content policy states that for medium and long-term transactions, the level of support for the net contract price will be the lesser of 85% of the value of all eligible exports in the U.S. Export Contract, or 100% of the U.S. content in all eligible exports in the U.S. Export Contract.
EXIM’s new Program on China and Transformational Exports directs EXIM to provide financial products to directly neutralize export subsidies offered by the PRC, helping to ensure a level playing field for U.S. businesses and workers as they compete globally. The program has the aim of advancing the comparative leadership of the United States and supporting U.S. innovation, employment, and technological standards globally in ten transformational export industries key to U.S. prosperity and security, including 5G, emerging financial technology, renewable energy, biomedical sciences, biotechnology, artificial intelligence, and high-performance computing.
The United States Congress established the EXIM Advisory Committee to advise the agency on its programs and “submit its own comments to the Congress on the extent to which the Bank is meeting its mandate to provide competitive financing to expand United States exports, and any suggestions for improvements in this regard.”
EXIM is an independent federal agency that promotes and supports American jobs by providing competitive and necessary export credit to support sales of U.S. goods and services to international buyers. A robust EXIM can level the global playing field for U.S. exporters when they compete against foreign companies that receive support from their governments. EXIM also contributes to U.S. economic growth by helping to create and sustain hundreds of thousands of jobs in exporting businesses and their supply chains across the United States. In recent years, approximately 90 percent of the total number of the agency’s authorizations has directly supported small businesses. Since 1992, EXIM has generated more than $9 billion for the U.S. Treasury for repayment of U.S. debt.
For more information about EXIM, please visit www.exim.gov.