Ex-Im Bank To Provide One-Third Reduction of Its Exposure Fee for Foreign Buyers in Countries Signing, Ratifying and Implementing Cape Town Convention
FOR IMMEDIATE RELEASE May 8, 2003
Linda Formella (202) 565-3200
U.S. Ambassador Tony P. Hall, on behalf of the United States government, today signed the Cape Town Convention, an international treaty that will facilitate cross-border, asset-based financing and leasing of large commercial aircraft and aircraft engines. The treaty and the accompanying Protocol on Matters Specific to Aircraft Equipment were signed at the headquarters of the International Institute for the Unification of Private Law (UNIDROIT) in Rome, Italy. Buyers in foreign countries that sign, ratify and implement the treaty will be eligible for lower-cost financing from the Export-Import Bank of the United States (Ex-Im Bank) for their purchases of U.S. large commercial aircraft.
By signing the Cape Town Convention, the United States has taken a significant step to encourage other countries to adopt the kind of legal framework that will enable airlines to access Ex-Im Bank financing for their U.S. aircraft purchases, said Ex-Im Bank Chairman Philip Merrill.
Previously, Ex-Im Bank adopted a plan to reduce its exposure fee by one-third on financing of U.S. large commercial aircraft for buyers in countries that sign, ratify and implement the Cape Town Convention. Eligible foreign buyers will receive an Ex-Im Bank exposure fee of as low as 2 percent, a one-third reduction of the current minimum 3 percent exposure fee on financings of large commercial aircraft.
Ex-Im Bank's reduced exposure fee plan is consistent with one of the recommendations made in the report of the President's Commission on the Future of the United States Aerospace Industry that recommends that U.S. and multilateral regulations and policies be reformed to facilitate the movement of products and capital across international borders on a fully competitive basis.
The Cape Town Convention, which was developed by an international diplomatic conference in November 2001, establishes a commercially oriented, comprehensive international legal framework to protect security and leasing interests in aircraft equipment. The treaty has been signed by 26 countries and will be in effect when eight countries ratify it. Ex-Im Bank will offer the one-third reduction of its exposure fee (in connection with approvals issued through September 30, 2004) to buyers in any foreign country that has signed, ratified and implemented the treaty (including certain optional provisions of the treaty).
Ex-Im Bank is the official U.S. export credit agency that helps finance the sales of U.S. exports, primarily to developing markets, by providing loans, guarantees and export credit insurance. In the past five years, Ex-Im Bank has supported the export of $18.5 billion of U.S. large commercial aircraft.