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This section contains the key results from the Exporter and Lender survey regarding customers’ experience during the most recent calendar year arranging transport for transactions subject to the Public Resolution 17 (PR-17) U.S.-flag shipping requirement.4 The survey solicits customers’ views regarding the U.S.-flag shipping policy, particularly the ease in arranging for U.S.-flag carriage and how the requirement compares with what other ECAs may require. Additionally, the survey also asks customers to report on the outcome of their requests for exceptions (certifications or determinations) and their usage of MARAD’s facilitation services, which assist shippers in arranging transport on U.S.-flag vessels. These survey results contributed to the conclusion that PR-17 places U.S. exporters at a disadvantage relative to competitors supported by foreign ECAs.

There are four types of permissible exceptions to PR-17. Figure R gives a brief description of each.

Figure R: Types of MARAD Certifications or Determinations

Statutory (Non-Availability) An official certification by MARAD confirming the non-availability of U.S.-flag vessel transport for a particular shipment.
General A determination by MARAD to allow up to 50%, on a revenue ton basis, of a total export sale to ship on carriers of the cargo purchaser’s nation.  Such an arrangement is based on the cargo purchaser’s nation having a merchant navy and not engaging in discriminatory treatment of U.S.-flag vessels in foreign trade.
Compensatory A determination by MARAD to allow an exporter to ship an equivalent amount of future cargo on U.S. carriers when not required to do so by U.S. shipping policy as a substitute to fulfill the PR-17 requirement for a prior shipment that was transported on a foreign-flag vessel.
Reach Back A determination by MARAD that allows an exporter that has already shipped part of its cargo on a foreign-flag vessel and is unable to commit to substitute future cargo shipments on a U.S. carrier for it to receive EXIM support at a reduced rate of coverage provided the rest of the cargo shipments associated with the export transaction comply with PR-17. 

Exporter and Lender Survey Results

Customers’ Views Regarding PR-17

Fourteen (out of 39 total survey) respondents reported having transactions subject to the PR-17 shipping requirement. Nine judged compliance with PR-17 to be somewhat or very difficult. Ten reported that the PR-17 policy was “Far Below” what other ECAs offered.

Figure S: Respondents Subject to PR-17 in CY 2014

Respondent Type Number of Respondents Requested Certification or Determination Requested MarAd Facilitation
Exporters 7 6 6
Lenders 4 2 1
Sponsors 3 1 1
TOTAL 14 9 8

Figure T: Ease of Arranging U.S.-Flag Shipping

  Very easy Somewhat easy Neither easy nor difficult Somewhat difficult Very difficult Don't Know
Complying with PR-17 0 1 2 4 5 2

Figure U: How Did EX-IM Bank’s MARAD PR-17 Policy Compare With Those Offered By Other ECAs

Respondent Type Equal to Most Competitive Equal to the Average A Notch Below Far Below Don't Know
Exporters 0 1 0 4 2
Lenders 0 0 0 4 0
Sponsors (Others) 0 0 0 2 1
Total 0 1 0 10 3

Outcome of Requests for Certifications or Determinations

Nine of the 14 respondents indicated they had requested a certification or determination. Four found the process to be difficult and were critical of the processing time. The survey also asked respondents who had requested a certification or determination to report whether or not U.S.-flag shipping was required. Only five of the nine respondents also answered the follow-up question. Since some had submitted multiple requests, however, the five respondents provided a total of 17 observed outcomes. (One additional request was still pending a decision.) The results show that foreign-flag shipments were allowed for only eight of the 17 shipments. The nine respondents required to use U.S.-flag vessels would have received either a Compensatory or Reachback determination.     

Figure V: Certification or Determination Experience (9 respondents)

  Very easy Somewhat easy Neither easy nor difficult Somewhat difficult Very difficult Don't Know
Sought certification or determination 0 2 3 3 1 0
Processing time 0 3 2 3 1 0

Experience with MARAD Facilitation

Eight respondents used MARAD’s facilitation service for assistance in arranging U.S.-flag shipments. Three judged the facilitation process to be difficult. For these three, processing time was problematic.

Figure W: Facilitation Experience (8 respondents)

Very easy

Somewhat easy

Neither easy nor difficult

Somewhat difficult

Very difficult

Don't Know

Sought facilitation 0 3 1 3 0 1
Processing time 0 3 1 3 0 1

4While the survey clearly asks for respondents experience during the prior calendar year, in some cases, responses could include experience that occurred before or after calendar year 2014.