[Senate Hearing 107-586]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 107-586
 
                          REPORT OF THE TRADE
                 PROMOTION COORDINATING COMMITTEE--2001
=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                                   ON

 THE REPORT ON SECTION 201 OF THE EXPORT PROMOTION ENHANCEMENT ACT OF 
 1992, TO COORDINATE THE EXPORT PROMOTION AND FINANCING ACTIVITIES OF 
 THE FEDERAL GOVERNMENT AND TO DEVELOP A GOVERNMENTWIDE STRATEGIC PLAN 
    FOR CARRYING OUT FEDERAL EXPORT PROMOTION AND FINANCING PROGRAMS

                               __________

                            OCTOBER 2, 2001

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs
                





                          U.S. GOVERNMENT PRINTING OFFICE
80-952                          WASHINGTON : 2002
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512-1800  
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001







            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                  PAUL S. SARBANES, Maryland, Chairman

CHRISTOPHER J. DODD, Connecticut     PHIL GRAMM, Texas
TIM JOHNSON, South Dakota            RICHARD C. SHELBY, Alabama
JACK REED, Rhode Island              ROBERT F. BENNETT, Utah
CHARLES E. SCHUMER, New York         WAYNE ALLARD, Colorado
EVAN BAYH, Indiana                   MICHAEL B. ENZI, Wyoming
ZELL MILLER, Georgia                 CHUCK HAGEL, Nebraska
THOMAS R. CARPER, Delaware           RICK SANTORUM, Pennsylvania
DEBBIE STABENOW, Michigan            JIM BUNNING, Kentucky
JON S. CORZINE, New Jersey           MIKE CRAPO, Idaho
DANIEL K. AKAKA, Hawaii              JOHN ENSIGN, Nevada

           Steven B. Harris, Staff Director and Chief Counsel

             Wayne A. Abernathy, Republican Staff Director

                  Martin J. Gruenberg, Senior Counsel

      Amy F. Dunathan, Republican Senior Professional Staff Member

                Adrienne B. Vanek, Republican Economist

   Joseph R. Kolinski, Chief Clerk and Computer Systems Administrator

                       George E. Whittle, Editor

                                  (ii)
?

                            C O N T E N T S

                              ----------                              

                        TUESDAY, OCTOBER 2, 2001

                                                                   Page

Opening statement of Chairman Sarbanes...........................     1
    Prepared statement...........................................    23

Opening statements, comments, or prepared statements of:
    Senator Miller...............................................     3
    Senator Stabenow.............................................    18
    Senator Enzi.................................................    24

                               WITNESSES

Donald L. Evans, Secretary of Commerce, Chairman, Trade Promotion 
  Coordinating Committee.........................................     3
    Prepared statement...........................................    24
John E. Robson, Chairman and President, Export-Import Bank of the
  United States, Vice Chairman, Trade Promotion Coordinating 
  Committee......................................................     5
    Prepared statement...........................................    27
    Response to written questions of Senator Reed................    39
Hector V. Barreto, Administrator, U.S. Small Business 
  Administration.................................................     7
    Prepared statement...........................................    29
    Response to written questions of:............................
        Senator Reed.............................................    41
        Senator Miller...........................................    42
Peter S. Watson, President and CEO, Overseas Private Investment
  Corporation....................................................     8
    Prepared statement...........................................    31
    Response to written questions of Senator Reed................    43
Thelma J. Askey, Director, U.S. Trade and Development Agency.....    10
    Prepared statement...........................................    35
    Response to written questions of Senator Reed................    45

              Additional Material Supplied for the Record

An Interim Report to Congress from the Trade Promotion 
  Coordinating Committee on the 2002 National Export Strategy....    48

                                 (iii)



       REPORT OF THE TRADE PROMOTION COORDINATING COMMITTEE--2001

                              ----------                              


                        TUESDAY, OCTOBER 2, 2001

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.

    The Committee met at 10:25 a.m., in room SD-538 of the 
Dirksen Senate Office Building, Senator Paul S. Sarbanes 
(Chairman of the Committee) presiding.

         OPENING STATEMENT OF CHAIRMAN PAUL S. SARBANES

    Chairman Sarbanes. The Committee will come to order.
    As our witnesses I think realize, there is a vote on. It 
was scheduled for 10 a.m., but it never quite starts on time. 
And in any event, I think other Members will be coming in 
shortly. But I think we should get underway.
    I am very pleased to welcome before the Banking Committee 
this morning this panel of distinguished representatives of the 
Trade Promotion Coordinating Committee, the TPCC: Don Evans, 
Secretary of Commerce, who serves as the Chairman of the TPCC; 
John Robson, Chairman and President of the Export-Import Bank, 
serves as Vice Chairman of the Trade Promotion Coordinating 
Committee; Peter Watson, President and CEO, Overseas Private 
Investment Corporation, OPIC; Hector Barreto, Administrator of 
the SBA, Small Business Administration; and Thelma Askey, 
Director of the Trade and Development Agency.
    The purpose of today's hearing is to review the preliminary 

report of the Trade Promotion Coordinating Committee on its 
National Export Strategy and the Coordinating Committee's plans 
for the coming year.
    The Trade Promotion Coordinating Committee was established 
by the Export Enhancement Act of 1992. As stated in the 
statute, its purpose is ``to provide a unifying framework to 
coordinate the 
export promotion and export financing activities of the U.S. 
Gov-
ernment and to develop a Government-wide strategic plan for 
carrying out Federal export promotion and export financing 
programs.'' The statute designates the Secretary of Commerce as 

the Chairman of the Coordinating Committee and designated as 
members all of the Federal agencies involved in export 
promotion.
    And there is quite a long list of them. We have only some 
of them, perhaps the lead, the more relevant ones, at the 
table.
    Well, some of the others are highly relevant, too, so I do 
not want to divide us into categories here.
    The effectiveness of the Trade Promotion Coordinating 
Committee depends on the leadership it receives from its 
Chairman and the other key members. The first Chairman, 
Secretary of Commerce Ron Brown, working together with Ken 
Brody, who was then the Chairman of the Export-Import Bank, 
provided the initial leadership and energy to get the 
Coordinating Committee off the ground and functioning. As a 
result, the Trade Promotion Coordinating Committee has a 
significant list of accomplishments it can point to during its 
first 8 years. And let me just touch on some of those very 
quickly.
    First, the establishment of 18 U.S. Export Assistance 
Centers in major metropolitan areas around our country, one-
stop shops to provide marketing and trade finance support to 
local exporters.
    Second, improved interagency coordinating of advocacy for 
U.S. companies seeking to do business overseas.
    Third, a joint Ex-Im Bank-SBA working capital guarantee 
program for small exporters.
    Fourth, a partnership with the National Governors 
Association to increase coordination between State and Federal 
export promotion efforts.
    Fifth, the establishment of offices within the Commerce 
Department and the U.S. Trade Representative to monitor and 
enforce trade agreements.
    The legislation which established the Coordinating 
Committee required it to propose to the President an annual 
unified Federal trade promotion budget that would support its 
strategic plan. In 1999, the Congress amended the statute to 
change the delivery date for the annual National Export 
Strategy Report to the Congress from September 30 to March 30 
in order to allow the TPCC's export promotion budget 
recommendations to be better coordinated with the development 
and release of the President's budget. The report that is being 
submitted today, in fact, was delayed from earlier this year in 
order to allow the new Administration time to focus on the 
issue.
    A report on March 30 with an incoming Administration would 
not have given people--in fact, I am not even sure everyone was 
in place in their positions, as I look at the witnesses at the 
table.
    Of course, we have a new Administration, a new set of 
leaders for the Trade Promotion Coordinating Committee. I 
simply want to say that I am very encouraged by the response of 
Secretary Evans, the Chairman, and his Under Secretary for 
International Trade, Grant Aldonas, by Ex-Im Bank Chairman 
Robson, the Vice Chairman, and by the other members of the 
Trade Promotion Coordinating Committee who will testify this 
morning.
    From my initial meetings with each of you earlier this 
year, there seems to be an appreciation for the potential of 
the coordinating committee to bring even greater coherence and 
a sense of strategy to the Federal Government's export 
promotion effort.
    It is my perception that these witnesses and others in the 
Executive Branch have made this a priority in planning the 
agenda for their agencies and I very much look forward to 
hearing their testimony this morning.
    Finally, let me note that the attention of Congress has 
been drawn away from its normal agenda because of the tragic 
events of September 11. It is a measure of the importance that 
we attach to the work of the Coordinating Committee that this 
hearing is going forward today. In fact, all of the economic 
reports, it seems to me, that we are now receiving only 
emphasize the work of the Coordinating Committee.
    The Los Angeles Times, in an article about 10 days ago, 
said, and I quote: ``The world economy is in a fragile state, 
according to U.S. trade figures, and is likely to flow further 
as additional security measures triggered by last week's 
terrorist attacks hinder the flow of goods and services.''
    The Coordinating Committee may thus have an additional 
challenge posed to it as it moves ahead with its work. It 
perhaps may prove useful in assisting U.S. exporters to cope 
with the new obstacles to trade that may result from the recent 
events.
    Gentlemen, and lady, we are pleased to have you before the 
Committee this morning. We look forward to hearing your 
testimony.
    I am going to yield to Senator Miller before we turn to--
and then when we do, I think we will just move right across the 
panel, from Secretary Evans, Mr. Robson, Mr. Barreto, Mr. 
Watson, Ms. Askey--last, but not least, I hasten to add.
    Senator Miller.

                COMMENTS OF SENATOR ZELL MILLER

    Senator Miller. Thank you, Mr. Chairman. These witnesses 
have waited long enough. I do not have a statement to make at 
this time. I may have some questions later on.
    As always, I am interested in the level of cooperation 
between your agencies and the States as they relate to export 
promotion. But I have no statement.
    Chairman Sarbanes. Thank you very much.
    Secretary Evans, we would be happy to hear from you.

                  STATEMENT OF DONALD L. EVANS

                     SECRETARY OF COMMERCE

        CHAIRMAN, TRADE PROMOTION COORDINATING COMMITTEE

    Secretary Evans. Thank you very much, Mr. Chairman.
    Let me begin by saying how much I appreciate our initial 
meeting some 8 months ago when you called my attention to this 
very important responsibility that was one of my important 
responsibilities, this important initiative.
    As I have learned more about it over the past 7 or 8 
months, and worked with my colleagues, I have a great 
appreciation for your leadership on the Trade Promotion 
Coordinating Committee.
    Like you said, I think there is great potential here. I 
think I am enthusiastic about what this Committee will do in 
the months and years ahead. I am delighted to have the chance 
to be here to report to you on that.
    Chairman Sarbanes--Senator Gramm is not here--but Members 
of the Committee, as Chairman of the Trade Promotion 
Coordinating Committee, TPCC, I am pleased to be here today 
with my colleagues to discuss our proposals for increasing 
exports by providing U.S. companies, especially small- and 
medium-sized companies, with state-of-the-art export promotion 
services.
    My brief remarks will be accompanied by written testimony 
which I will submit for the record.
    The Trade Promotion Coordinating Committee was created to 
help American companies get export information quickly and 
easily, and we do thank you, Mr. Chairman, and the other 
Members of the Committee, for making the TPCC permanent in the 
Export Enhancement Act of 1992.
    Significant progress has been made. A worldwide export 
assistance network has been established. A U.S. advocacy center 
has been created. And there is extensive trade information 
available by the Internet.
    We are now in a new century with intense competition. 
Falling market shares where commercial opportunities are 
greatest, and achieving the unmet export potential of our small 
firms, compel us to take a new look at the needs of our 
customers, as well as at the best practices of our competitors. 
Many of these competitors, may be doing a better job when it 
comes to getting their small- and medium-sized companies into 
the markets with greatest potential.
    Today, what we are proposing is to use the TPCC as a 
management tool to reevaluate our export promotion programs 
from the ground up through a comprehensive bench-marking 
exercise. This study will give us information we need to 
determine how to ensure our export promotion services are best 
in class.
    We have a three-part strategy, Mr. Chairman: First, we will 
assess customer satisfaction. We have commissioned a survey of 
the business community, including those who use our export 
services and those who do not. And we will meet with ``focus 
groups'' to hear firsthand experiences with our programs.
    Second, we will review how the governments of our major 
competitor countries go about promoting exports. We already 
know that many of these governments focus their programs on 
small businesses and that they target these initiatives to 
developing and emerging countries. The French have a small 
business initiative targeted to Eastern Europe. Spain has a 
plan to get their companies into the Asia-Pacific region. And 
Canada has targeted South America for its small business 
exporters.
    A number of countries have closely linked export-and-
investment promotion programs. Additionally, we will look at 
how the private sector in the United States and abroad promotes 
exports.
    The final phase of our benchmarking study will be an 
analysis and comparison of our programs with other best 
practices, such as leveraging the Internet to promote exports. 
We have a short list 
of export promotion processes. Our ultimate goal is to 
benchmark each with the best practices we identify so we can 
target areas for improvement.
    We anticipate providing this Committee with recommendations 
next March that can fully be implemented by 2004. We expect 
these recommendations will be both strategic and programmatic. 
They will address duplications and gaps in our services. And 
they will also attempt to leverage services provided by Federal 
agencies with the private sector and others.
    As this Committee knows, trade is a vital contributor to 
the economic foundation of our Nation. Exports have fueled our 
economic growth and support millions of American jobs. 
Continued expansion of trade is essential to our Nation's long-
term prosperity.
    Mr. Chairman, the Trade Promotion Coordinating Committee is 
eager to work with you and the other Members to provide world-
class export promotion services so the American business com-
munity can take advantage of global opportunities. To do this, 
we 
believe it is critical that our trade promotion agencies know 
the needs of our customers, as well as the practices of our 
competitors, so we can respond with appropriate programs and 
initiatives.
    We welcome your thoughts and those of your colleagues on 
the benchmarking proposals we are presenting today. Thank you, 
and I will be happy to answer any questions that you might 
have.
    Thank you, Mr. Chairman.
    Chairman Sarbanes. Well, thank you very much, Mr. 
Secretary. The full statements of all of the witnesses will be 
included in the record.
    Mr. Robson, we will turn to you.

                  STATEMENT OF JOHN E. ROBSON

                     CHAIRMAN AND PRESIDENT

            EXPORT-IMPORT BANK OF THE UNITED STATES

                         VICE CHAIRMAN

             TRADE PROMOTION COORDINATING COMMITTEE

    Mr. Robson. Thank you, Mr. Chairman. It is a pleasure to be 
back before you and Senator Miller again.
    I too will submit my formal statement for the record and 
present orally a brief summary of points that I hope will be 
relevant to today's hearing.
    First, let me remind everyone, as you have already said, 
that a central inspiration for TPCC's establishment by Congress 
was the observation that trade and exports, while growing 
spectacularly in importance to the U.S. economy, were not 
getting cohesive and appropriate export and trade promotion 
assistance from the Federal Government.
    Under our economic system, of course, the roles of 
Government and private-sector business are distinct. But all 
America has a stake in seeing our businesses compete 
effectively against their foreign commercial adversaries. And 
those adversaries often receive considerable help from their 
governments in many forms.
    So it is a legitimate function of the U.S. Government to 
find ways to keep the playing field level for our businesses 
and the global marketplace. That, of course, is what Ex-Im Bank 
does by providing credit guarantees, credit insurance and loans 
for exports to often risky emerging markets in situations where 
the private banking, insurance and finance firms won't 
participate. We do not compete with them.
    Ex-Im Bank has been doing this since 1934, and we are good 
at it. But, by and large, Ex-Im Bank has done its mission as a 
solitary player, with very little collaboration or outreach to 
other U.S. Government agencies with which we might, with only 
modest effort, find common enterprise which would create more 
diverse and powerful support for American business.
    And it is my experience that there has not been a strong 
practice or tradition in the many agencies comprising the TPCC 
to invest a great deal of time, thought, or effort in creating 
opportunities for partnering with one or more sister agencies 
for the purpose of promoting exports and trade for American 
businesses.
    That is why the revitalization of the TPCC and the efforts 
we have underway described by Commerce Secretary Donald Evans 
in his testimony are timely and important.
    The goal, as I see it, is not to establish a seamless 
phalanx among the TPCC agencies, with a one-size-fits-all 
effort in export and trade promotion. This approach will not 
work because the programs, constituencies and objectives of the 
agencies are not identical. But what TPCC can do is help set 
the stage and infuse some momentum to create shifting clusters 
and alliances among its membership directed at export and trade 
promotion which might be broad in scope or more narrowly 
focused on a region, an industrial sector, or even a specific 
transaction. The TPCC program now underway is a great 
contribution to that outcome.
    We should know and be sharing what other agencies in our 
Government are doing and, more importantly, what the 
competition is doing. How can we contend more effectively on 
behalf of American business with the competition's best 
programs and practices and, indeed, what of those programs and 
practices we should adopt?
    The TPCC, in my opinion, is an ideal vehicle for gathering 
and analyzing a broad base of data from around the world and 
within our country as we have set out to do. And the Ex-Im Bank 
is very pleased to participate in these efforts and is looking 
forward to some concrete data that we will undoubtedly find 
useful going forward. Let me touch very briefly on the areas 
that appear to me to offer the prospect for improving our 
programs, as well as illuminating opportunities where we might 
successfully collaborate with our TPCC colleagues.
    One, many other nations have established counterpart 
agencies to our Ex-Im Bank. They too have recognized the 
importance of export and trade to their economies and have 
stepped up very aggressively. For example, Canada and Germany 
have created new official entities called ``market windows,'' 
which enjoy many benefits of being a public entity but may 
operate as and really compete with private banks. They may be 
having a competitive impact, and we are urgently attempting to 
pull together sufficient data to get an accurate picture of 
what they are really doing in the marketplace.
    Two, Tied aid use has seen a recent resurgence, 
particularly by Japan. The United States has a so-called Tied 
aid capital projects war chest, but it has seen relatively 
sparing use.
    Three, the potential for attracting more small- and medium-
sized businesses into the exporter universe appears promising. 
And TPCC survey efforts of that market should be very 
important.
    Finally, let me just mention some collaborative efforts we 
have recently made that I hope capture the spirit of the TPCC 
vision.
    One, OPIC, TDA and the Ex-Im Bank forged a joint 
investment, export and technical assistance venture directed at 
Indonesia's energy sector and other industries.
    Two, the same three agencies have just established a task 
force which will be sending representatives from each agency to 
find 
and help implement opportunities for United States business in 
Pakistan.
    And three, Ex-Im Bank, the Commerce Department and the 
State Department have put in motion a program where Ex-Im Bank 
will learn in advance about governors trade missions and will 
undertake to play a role in such a mission.
    Mr. Chairman, Members of the Committee, that concludes my 
remarks and I too will be happy to answer any questions.
    Chairman Sarbanes. Thank you very much.
    Mr. Barreto.

         STATEMENT OF HECTOR V. BARRETO, ADMINISTRATOR

               U.S. SMALL BUSINESS ADMINISTRATION

    Mr. Barreto. Mr. Chairman, Senator Miller, and to the other 
distinguished Members, thank you for inviting me to testify 
today about SBA's role in the Federal Government's export 
promotion strategy.
    The President recognizes the critical link between the U.S. 

domestic economy and our foreign trade policy. Trade expands 
markets, grows business, and creates jobs. Free and open 
markets foster economic and political freedom, strengthen 
democracy, and enhance our national security.
    We need to do as much as possible to give businesses in 
America every opportunity to succeed by enabling them to access 
all markets. Trade Promotion Authority will remove barriers to 
allow these businesses involved in trade to thrive in a global 
economy through free, fair and open markets, thus allowing U.S. 
small businesses to become more competitive in the global 
marketplace.
    Currently, 97 percent of U.S. exporters are small 
businesses, numbering a little over 200,000. However, they 
account for just under a third of the total value of U.S. 
export sales. This is where SBA has a significant role to play.
    Small businesses face barriers to exporting. Many simply 
lack basic information on how to go about exporting and many 
currently lack the financing necessary to sell their products 
overseas.
    Each of SBA's financial and technical assistance programs 
can assist businesses interested in exporting and we have 
specific programs in place to assist in creating markets 
outside the United States. To date, our efforts and results 
have been sporadic. I intend to more effectively focus our 
efforts. Through expanded public/private partnerships we can 
facilitate access to needed information and capital with the 
goal of increasing revenue, employment and business longevity.
    Firms engaged in trade are 20 percent more productive, pay 
wages which are 15 percent higher than nontraders, and are 9 
percent less likely to go bankrupt, and may experience 20 
percent greater job growth.
    SBA has several loan programs tailored to small businesses 
in search of capital to either start or expand their business 
in 
exporting.
    The International Trade Loan Program provides long-term 
financing for fixed assets and working capital for companies 
impacted by foreign competition or expanding exports.
    The Export Working Capital Program is a short-term, 
transaction-backed guaranty program. SBA has worked with Ex-Im 
Bank to develop a seamless product to address a wide range of 
small business financing needs. In fiscal year 2000, the 
average SBA export working capital loan was $400,000. The 
average size of an Ex-Im Bank loan was $1.6 million.
    To help firms with very small export finance needs, the 
SBA's Export Express program provides loan guarantees on export 
loans up to $150,000. We believe it will provide much-needed 
financial assistance to the fastest-growing segment of the 
small business export community--the service sector. Let me 
give you two examples of how this loan program is being used.
    One of these loans went to a Jackson, Mississippi firm for 
$11,000 to export produce to South America. Another loan for 
$50,000 allowed a firm located in Los Angeles to obtain orders 
worth $4.8 million for piping insulation and industrial 
chemicals.
    SBA also has public/private partnerships to satisfy the 
needs of small businesses for information on exporting. SBA is 
a partner with the Commerce Department and the Ex-Im Bank in 
the U.S. Export Assistance Center, or the USEAC's, U-S-E-A-C's, 
nationwide network.
    To help firms become export-ready, SBA took the lead in 
working with our public/private partners in creating the Export 
Trade Assistance Partnership Program, known as E-TAP. E-TAP is 
a customized process of taking a small group of export-ready 
companies through all the stages of becoming an exporter. This 
program relies on the support of SBA's Small Business 
Development Centers and their Service Corp of Retired 
Executives. It also relies on State and local trade offices, 
individual freight-forwarders, customs brokers, insurance 
brokers, and international attorneys to bring together 
essential export information at little cost to the small 
business owner.
    E-TAP recently enabled a Dallas, Texas company to grow 
their markets and use SBA's capital programs. The company 
produces a medical product to repair oxygen sensors used by 
hospitals for monitoring trauma victims. It now exports to over 
30 countries.
    I am excited about the prospects for U.S. small business in 
the global marketplace. We need to reach more of the 25 million 
small businesses in the United States today. We need to do a 
better job of outreach and adapt and create products that meet 
their changing needs. We are committed to expanding our 
tradition of enrolling our public and private partners in these 
efforts.
    This is an exciting time to be involved in international 
trade and we have a President who has made it a priority to 
assist the American businesses in the global marketplace.
    Thank you. I would be happy to answer any questions.
    Chairman Sarbanes. Thank you very much for your statement.
    Mr. Watson.

                  STATEMENT OF PETER S. WATSON

             PRESIDENT AND CHIEF EXECUTIVE OFFICER

            OVERSEAS PRIVATE INVESTMENT CORPORATION

    Mr. Watson. Thank you very much, Mr. Chairman, and Senator 
Miller, for holding this hearing today. Like my colleagues, I 
will just have a few brief comments, so we may have a broader 
conversation and discussion of my complete written statement.
    Like the other members of the panel, Mr. Chairman, I also 
want to thank you for your strong leadership and the support 
that you have given toward establishing a coordinated United 
States trade program. It is a privilege for me to join in this 
panel today with my distinguished colleagues.
    Even before the creation of the TPCC, OPIC and the other 
trade agencies have had a long tradition of cooperating with 
each other. However, I think it is clear that the mechanism of 
the TPCC has allowed us, frankly, to do so in a more systemic 
and coordinated way, and we will continue to do so.
    As you have heard, the TPCC is reinvigorating a unified 
trade program for the U.S. Government and as you stated, Mr. 
Chairman, this is a particularly important responsibility given 
the economic disruption and foreign policy challenge we face as 
a result of the tragedy on September 11.
    As a development agency, OPIC is well positioned to play an 
important role in the U.S. response to those events and, 
indeed, we can assist in helping stabilize financial markets in 
the developing world.
    We are also keenly aware that OPIC's mission is in many 
ways distinct from that of the more traditional trade agencies. 
As you are particularly knowledgeable, Mr. Chairman, OPIC, of 
course, is an integral part of the foreign assistance and 
development program of the United States, borne out of the 
Marshall Plan and focused on the belief that concessional aid 
alone cannot bring about the economic development so sorely 
needed in much of the world.
    Today, OPIC is prepared to provide similar U.S. support for 
countries who are supporting and assisting broader U.S. 
interests. This includes, but is not limited to, moderate 
Islamic countries in the Middle East and Central Asia, and 
others most in need of support and economic development at this 
time.
    In meeting today's challenges, OPIC will benefit from the 
cooperation, support, and information flow from all of the 
trade agencies represented on the TPCC. And as mentioned by 
Chairman Robson, we have already seen the benefits of this 
interagency cooperation.
    During the recent visit of Indonesia President Megawati, as 
Chairman Robson mentioned, we were pleased to be able to join 
with Ex-Im and TDA in a joint trade and finance initiative 
developed in support of Indonesia, which is not only an 
important U.S. ally, but also a country that has a large Muslim 
population.
    Another area of cooperation is promotion of business 
development in countries of specific U.S. interest. I am 
pleased to be able to participate in the business development 
delegation being led by Secretary of Commerce Evans to Russia 
next week. That delegation will include senior executives from 
approximately 15 U.S. companies representing a wide variety of 
sizes and sectors. The mission will reaffirm United States 
Government support of Russia's economic reforms and assess ways 
to improve access by United States business to the Russian 
market.
    If I may, in closing, Mr. Chairman, mention briefly one 
specific area of renewed focus--it is how OPIC pays attention 
to the special needs of American small business.
    OPIC, I believe, has yet to fulfill its potential in this 
area and we are actively examining opportunities in order to be 
able to assist small business.
    One particular avenue that we have already identified and 
are exploring is the extent to which OPIC can work with the 
SBA. I am pleased to have had the opportunity earlier of 
meeting with my colleague, Administrator Barreto, to discuss 
our mutual interests in this area.
    We have a working group between our two agencies who have 
already met to pursue arrangements and we are hoping to 
establish similar mechanisms that Ex-Im has in place with SBA.
    Looking ahead, Mr. Chairman, in cooperation with our TPCC 
colleagues, OPIC's activities will focus more closely on 
development and on companies and countries that have difficulty 
accessing private financing and assurance.
    Working together, within the Administration and with the 
Congress, OPIC can make an important difference to people in 
the developing countries and in America during these 
challenging times.
    I will be happy to answer any questions you may have. Thank 
you, Mr. Chairman.
    Chairman Sarbanes. Thank you very much, Mr. Watson.
    Ms. Askey.

             STATEMENT OF THELMA J. ASKEY, DIRECTOR

               U.S. TRADE AND DEVELOPMENT AGENCY

    Ms. Askey. Thank you, Mr. Chairman and Senator Miller. I am 
pleased to be the clean-up hitter.
    A number of you have been friends of the U.S. Trade and 
Development Agency for many years, and are well acquainted with 
the agency. However, I recognize that TDA is a small agency 
outside the jurisdiction of the Banking Committee, and I would 
like to take this opportunity to outline briefly what TDA does 
and how it works with the Trade Promotion Coordinating 
Committee to promote U.S. exports and create American jobs.
    I have been insistent on being an activist in the TPCC 
because I see that our agency, although small, has a strong 
reputation as a disciplined and responsive agency that reflects 
best practices.
    TDA promotes American private sector participation in 
development projects in low- and middle-income countries, with 
special emphasis on economic sectors that represent significant 
U.S. export potential. This is no easy task in today's global 
marketplace. U.S. firms face aggressive competition from 
foreign producers who often receive substantial assistance from 
their home governments in pursuing projects.
    By now, you have already heard which governments are TDA's 
biggest competitors and about their use of Tied Aid. TDA must 
work harder and smarter than our competitors to level this 
uneven playing field.
    TDA's toolbox for fighting unfair foreign competition 
contains a number of instruments. The most common methods are 
funding feasibility studies, conducting orientation visits, and 
hosting trade conferences. TDA also provides training and 
technical assistance grants. TDA's technical assistance may be 
project specific, or more broad-based--supporting capacity-
building institutions and trade agreement implementation.
    TDA's goals are two-fold--helping American businesses 
export their products and thereby creating jobs, while 
simultaneously promoting commercially-viable economic growth in 
developing and middle-income countries. Since 1981, TDA has 
been associated with more than $17 billion in exports--or over 
$35 in exports for every dollar invested in its program 
activities.
    TDA typically promotes U.S. exports by providing assistance 
for specific infrastructure products around the world. However, 
TDA is also effective in promoting U.S. exports at a more 
fundamental level--by providing technical assistance to support 
broader sectoral efforts and by increasing trade-related 
capacity.
    This strategy entails helping countries develop better 
legal and regulatory regimes and promotes exports by creating a 
more favorable commercial environment for U.S. firms.
    Such an improved commercial environment serves the long-
term interests of the United States and its businesses, as well 
as the foreign partners.
    Technical assistance provided by TDA can also be a useful 
tool to support trade policy objectives. Upon conclusion of a 
trade agreement or multilateral or bilateral understanding, TDA 
can provide the technical assistance some trading partners need 
to implement the provisions. This assistance enhances our 
trading partners' ability to meet their trade obligation and 
ensures that U.S. firms will be able to fully realize the 
benefits of these agreements--namely, a fair and open trade, 
regulatory and legal environment.
    TDA has worked hard to achieve its success, but it has not 
done so alone. TDA takes great pride in the close relationships 
it maintains with other U.S. Government entities in identifying 
and pursuing U.S. export opportunities. The agency is 
especially grateful to Secretary Evans for his leadership of 
the Trade Promotion 
Coordinating Committee. TDA believes that TPCC provides an 
excellent framework to coordinate the Government's trade 
promotion operations and we actively support TPCC's efforts to 
identify and quantify the means that foreign governments use to 
obtain advantageous benefits for their national companies at 
the expense of U.S. firms.
    Overall, the TPCC can be most useful by providing a 
mechanism for focusing the resource of various agencies in 
order to respond to particular immediate or longer-term 
priorities, such as supporting the Administration's 
environmental strategy, reinforcing regional efforts such as in 
Africa or the Caspian region, supporting the negotiation and 
implementation of new trade agreements, and coordinating the 
development of efforts in the wake of September 11.
    Additionally, the TPCC can focus efforts to work with 
foreign governments, assuring the shift to democracy and 
market-based economies.
    The best long-term strategy for the United States is to 
make its presence felt in such countries and to do so by 
supporting commercial development. The TPCC is well suited and 
well positioned for such a role.
    Among TPCC agencies, TDA frequently partners with Ex-Im and 
OPIC, to conduct trade promotion activities overseas and 
identify promising project opportunities. These three agencies 
also jointly operate two regional offices--the Caspian Finance 
Center in Turkey and another jointly-supported office in 
Croatia.
    Maintaining these regional offices allows us to work hand-
in-glove to develop the regional economies, while promoting 
U.S. exports. In the near-future, we will look to these field 
offices to respond more quickly to the commercial and 
development needs of countries in strategic locales during 
difficult, uncertain times.
    In the wake of the September 11 attacks, Peter Watson, John 
Robson, and I met last week to develop joint strategies for 
projects in Eurasia and Asia, as both gentlemen have already 
mentioned.
    We and our staffs are evaluating how we can best respond, 
both as individual agencies in complementary ways, and 
collectively, to changes in the business climate and increased 
levels of risk in those regions and around the world.
    We are currently exploring potential future joint 
activities in 
Africa and elsewhere and Peter and John have already mentioned 
our efforts in Indonesia.
    TDA looks forward to continuing its efforts with these two 
agencies particularly, as well as with other TPCC members on 
other important initiatives, such as the U.S.-Jordan Free Trade 
Agreement, the focus on Africa through the AGOA conferences, et 
cetera.
    TDA believes that the role of trade promotion is even more 
important today than it was before September 11. So your 
decision, Chairman Sarbanes, to hold this hearing in the wake 
of the attacks is particularly appropriate.
    Supporting U.S. businesses as they pursue overseas 
opportunities and connecting them with projects in developing 
nations is critical to ensuring that the world economy 
continues to grow and that the people around the globe enjoy 
the benefits of economic development and free trade.
    Accordingly, TDA will continue to carefully evaluate how it 
can best continue to serve U.S. interests in the wake of recent 
events.
    Senator Miller, I would also say that we do look at State-
specific activities. Most recently, we have sent letters to the 
USTR Zoellick and to the Finance and Ways and Means Committees 
outlining environmental projects in each State within those 
Committees. TDA is also available to analyze other States in 
support of trade promotion authority renewal.
    In closing, I would like to thank the Chairman and Members 
of the Committee for the opportunity to appear today and to 
discuss what TDA is doing to increase U.S. exports and create 
American jobs, and how TDA works with other members of the 
TPCC.
    I look forward to answering your questions.
    Chairman Sarbanes. Well, thank you, Ms. Askey, and thank 
you all very much. I want to underscore how we appreciate how 
much thought and effort went into the statements that have been 
submitted and have been included in the record.
    Mr. Secretary, let me start with you.
    I really welcome this benchmarking exercise that you have 
outlined that you are now going to go through to, one, 
ascertain the needs of your customers and, two, the practices 
of our competitors.
    I think that is a very important exercise and I think, 
actually, the whole process you have outlined in your statement 
is very positive and ought to provide us with a real base off 
of which to act.
    Now as I understand your timetable, you intend to finish 
that in time to encompass the lessons you draw from it in the 
report that you will present at the end of March of next year. 
Is that correct?
    Secretary Evans. That is correct, Mr. Chairman.
    Chairman Sarbanes. Well, let me just commit the Committee 
to that, to the extent that your report contains 
recommendations for legislative action, we will certainly 
schedule hearings and try to move ahead on that because we are 
very anxious to give you whatever weapons you judge to be 
necessary after we have had an opportunity to review them.
    Do you expect that you will be able to influence the budget 
of the Administration that will be submitted for the next 
fiscal year--in other words, the one that is submitted in late 
January or February--in terms of how it deals with export 
promotion, both affecting maybe the levels and the coordination 
and the allocation of funds within the Executive Branch for 
that purpose?
    Secretary Evans. Mr. Chairman, certainly we expect we will 
be able to influence the coordination; I certainly believe that 
out of this, I think, important process and exercise that we 
are going to go through with respect to benchmarking our own 
programs against the rest of the world and understanding what 
each of the respective agencies is engaged in.
    It is likely we will find some duplication. And it is 
likely that we will, as a result of that, be coming in and 
recommending some redirection of some of the funding. Now 
precisely what that is, I certainly do not know yet. I do not 
want to prejudge the conclusions of the report.
    In terms of amount of funding, again, I guess I would say 
that I want to go through this exercise in a very thoughtful, 
thorough kind of way, but being comfortable that when we 
present the report to you in March, this is a program that we 
think will get results, will deliver the kind of results that 
you should expect, and the American people should expect.
    I certainly call everybody's attention to the fact that 
only 1 percent of the small businesses in America are exporting 
outside the United States. I look at that and I understand the 
tremendous economic engine small business is for our economy in 
the United States. It ought to be a similar engine for the 
global economy. And for only 1 percent of our small businesses 
to be engaged in exporting around the world--I think that needs 
our attention.
    So, I do not want to prejudge what kind of levels we may 
request. But I will commit that it is my intention to present 
to this Committee, with the work of my colleagues, a report 
that will be effective and will deliver results.
    As you know, I am from the private sector and am a results-
oriented kind of person. If we have a program in place, I 
expect 
it to work.
    Chairman Sarbanes. Well, as you go through the benchmarking 
exercise, I think you should remain alert to what lessons may 
leap out at you that could in fact be implemented within the 
Executive Branch with respect to the budget that the President 
is going to submit. Otherwise, we are going to have to go 
through another cycle to get at that budget.
    Secretary Evans. Certainly.
    Chairman Sarbanes. Although we could try to alter or amend 
it as it moves through the Congress.
    Ms. Askey, I was very much taken by this exercise you say 
you are doing with Ex-Im and Small Business on how to help our 
exporters in light of what has happened in terms of the impact 
of 
the events of September 11. It seems to me that that is a 
project 
that the entire coordinating committee could be engaged in, the 

problems for U.S. exporters involving delays in growing costs 
may result as a consequence, including heightened security or 
other measures.
    And I would recommend that to the coordinating committee as 
an immediate short-term agenda item to try to address. 
Obviously, you are going to have some impact.
    Have you perceived any impacts up to this point, any of you 
at the table?
    Ms. Askey. It is hard to assess this early. We certainly 
have gotten some initial nervousness about traveling, et 
cetera.
    All of us, I believe, have been looking at this 
individually at our own agencies. John Robson took the 
initiative to bring the three development agencies together.
    On the one hand, it may make it more difficult to operate 
in some of these countries because of security issues and more 
difficulty in moving goods and services.
    But on the other hand, perhaps the demand and the pressure 
for U.S. presence and activity will be even greater, 
particularly in countries that are going to provide some 
strategic assistance. So, we continue to work together on this 
issue. And Secretary Evans has provided significant leadership 
in this regard.
    Mr. Watson. Mr. Chairman, of course, part of the fuel for 
the economic growth, obviously, is availability and capacity in 
both finance capital markets and, indeed, political risk 
insurance. And what we have seen recently is troubling, 
frankly.
    There has been a very discernible withdrawal of capacity in 
international markets and in developing countries, in 
particular of availability of finance and capital.
    A number of banks and groups that have previously been able 
to provide financing, we have heard that they, in fact, are not 
going to be able to do so in the same type of coverage or 
amounts that have previously existed. And as you know, it is 
always a challenge to get those participants to be involved in 
transitional developing economies, even in the best of times.
    We have had several meetings with clients and we will have 
another meeting with AIG this week to try and identify ways 
that we in fact can step into the breech that will assist in 
responding to this effort to stabilize these financial and 
insurance markets. But it is a very important role at this time 
and one that we take very seriously.
    Chairman Sarbanes. Senator Miller
    Senator Miller. First, I want to say that you make a very 
impressive team and I am glad that you are where you are and I 
thank you for giving up what you did to work in that arena.
    Because of my experience in that other life that I once had 
in State government, and for a while I was a board member of 
OPIC, Mr. Watson, I am very interested in the level of 
cooperation that your agencies have with the States as it 
relates to export promotion. I think that the States have a 
very important role to play in improving that 1 percent, Mr. 
Secretary, and I think that they are willing to do so. They 
just need some help.
    I know that one of the responsibilities of the Trade 
Promotion Coordinating Committee is to review the efforts of 
the States and to see how you can work with them to promote 
exports.
    And I think that there is an agreement or some kind of 
working relationship with the National Governors Association. I 
am not sure, but I believe there was at least plans to.
    I hope it will go further than that. Maybe I am making a 
statement now instead of asking a question, but I would like 
for you to respond.
    I hope that in your study and in your focus groups that you 
will be conducting, that you will ask questions regarding the 
role of the States in improving the export promotion process. 
And I hope that you will include State trade promotion 
officials in your focus groups and your studies.
    I do not know of any recent review that has been done of 
States. And if there has been one, I would be interested in 
seeing it. But I think there is a very important role there for 
your agencies to play. And I think that you will find that the 
States themselves want to work with you on this, but in the 
past decade, there has not been the coordination and 
cooperation that I would like to have seen. Anyone that wants 
to respond to that, fine.
    Chairman Sarbanes. I think that is a very thoughtful 
statement. Actually, I am taken by a sentence at the end of 
Secretary Evans' prepared testimony. At the end of it, he said: 
``I look forward to your reactions.'' So, I would say the same 
thing now, having heard Senator Miller's statement.
    Secretary Evans. Let me take a crack at that and say, 
Senator, I think you are right on the mark. I know at the 
Department of Commerce, we look at each individual State and 
break it down by what exports contribute to the State economy, 
and we will break it down by sectors, and we will break it down 
by regions. We will break it down, even, I think, by district.
    The small business owner is in a little town in south 
Georgia and he needs to hear from his State legislator that 
there is a way for him to access the international markets. And 
he needs to hear from that State legislator that he can get 
into those international markets and feel comfortable that he 
has somebody to talk to as to what the rules are going to be. 
Because any time that small business owner thinks about going 
outside the United States, he is thinking, everybody's always 
told me if I leave the United States, I do not know what the 
rules are; they change them. And so, it is that small business 
owner in south Georgia who needs to be talking to somebody he 
knows and trusts is going to give him good advice as to how to 
get into the international markets.
    The one thing that I have really been moved by in the last 
8 months in this whole area is traveling around the country and 

talking to our foreign commercial service officers and offices, 
and 
talking to small business owners who have taken advantage of 
the foreign commercial service program, which is simply a 
program, as part of which we have export assistance centers.
    The Chairman mentioned some of them. We have them all 
across America. And they are simply centers where a business 
person can go and knock on the door and say, I manufacture 
valves. Is there some place in the world right now that wants 
the kind of valve that I manufacture?
    We have a program where we can go and look around the world 
and see if there is a market for that kind of valve or not. And 
so, the way to get the message to that small business owner is 
down through the State governments and down to the local 
representatives. I have talked to a number of the governors 
about it. We do work with governors as they undertake trade 
missions. We help them organize their trade missions. I know 
Governor Taft went to South America, Governor Ridge is taking 
some trade missions--all the good governors take some. So, we 
will work with them.
    But more than that, within the United States, I think you 
are right on the mark of finding a way we can coordinate with 
States in terms of trade development authorities and trade 
development offices so we can educate the small business owners 
across this country. So, I will be looking for more ways to do 
that. And I think that is a very wise observation.
    Mr. Robson. If I may, add to your comment, Senator Miller, 
and the Secretary's comment, that the predicate for enlisting 
small business in the exporter community is illuminating the 
opportunity for them to go abroad.
    When a small businessman wakes up in the morning, he is not 
thinking about doing business in Central or Eastern Europe. He 
is thinking about making a payroll that week.
    And Ex-Im Bank and the other agencies have the mechanisms 
in place to try to provide the illumination of those 
opportunities, I am sure Hector has them, even if they are 
probably imperfect.
    One of the good things that will come out of the surveys 
that we are doing here is perhaps some insights into ways in 
which we can make those opportunities more effective and find 
ways to work with State and local commercial development 
agencies to enhance them. We have those relationships, as I 
said in my testimony. We are doing something with Commerce and 
State on State trade missions. But it needs to be much broader. 
It is heavy-lifting, but do-able, I think.
    Chairman Sarbanes. Does anyone else want to add anything?
    Mr. Barreto. I also want to confirm some of the comments 
that have been made.
    We work very closely with the State of Georgia in our 
Atlanta, Georgia operation that we have with the Department of 
Commerce. It is really a model. They have done a lot of 
outreach. I think it is a model for other States. Again, some 
of the comments that are being made with regards to this 
leadership really occurring at all levels.
    I am originally from California and I know that oftentimes, 
we were a little stymied why we were not doing as well as some 
of the other States. And it really had a lot to do with that 
leadership. It was not connected. We were doing, for example, 
11 percent of exports to Mexico and States like Illinois were 
doing 22 percent, and Texas was doing 75 percent of their 
exports. But this is something that is on their radar screen. 
They are working with it all the time.
    There are other States--I am originally from Missouri. They 
do an incredible job with their program in the State, 
especially with regards to their agricultural products and 
services that they offer. Florida does an incredible job.
    So, I agree. I think there is a lot of opportunity for us 
to continue to collaborate, the partners on this Committee. But 
also to reach out to our partners in the States. I think we 
have mechanisms that we can bring to bear where we can really 
show some success for the small business community.
    Secretary Evans. May I make one more comment, Mr. Chairman, 
if you do not mind?
    Chairman Sarbanes. Certainly.
    Secretary Evans. I expect that the report we bring to you 
in March is going to have one element that is going to be 
focused hard on education--educating small businesses all 
across the country of this resource that is available to them.
    I was at the Paris Air Show back in June and I talked to 
some 40 companies that were over there. They were small- and 
medium-sized businesses.
    I heard the question asked--I was listening, I really 
wasn't talking to them--do you find this service important to 
you? And every one of them said, listen, we wouldn't be over 
here but for the Foreign Commercial Service Export Assistance 
Centers that you have. We could not have done this without 
them. I kind of stumbled into it. And so, our big challenge, I 
think, in this country is educating small- and medium-sized 
businesses all across America about this very valuable resource 
that is available to them. Our phones should be ringing off the 
wall. Yes, we are busy and we are active. But we ought to be a 
lot more active than we are. And I think one of the keys to 
that is what Senator Miller suggested, which is working back 
down through the States and empowering States to deliver that 
message and educate their businesses.
    I went to Purefil, which is just outside of Atlanta, which 
was one of these small businesses that accessed the world 
market for their unique product through using foreign 
commercial services.
    And there are just so many of those stories out there. All 
we need to do is just educate small businesses and tell them 
about this terrific resource that is available.
    Chairman Sarbanes. Your benchmark survey might include a 
survey of the interaction that the agencies have with the State 
governments as well, it seems to me.
    Secretary Evans. Good idea.
    Chairman Sarbanes. And a following up on Senator Miller's 
suggestion.
    Secretary Evans. Good idea.
    Chairman Sarbanes. Did you want to add anything, Peter?
    Mr. Watson. Just really two sentences. Senator Miller, from 
your time serving on the OPIC Board of Directors, you may well 
have become aware of some of the outreach that we do have to 
State governments. But we are mindful of the fact that OPIC 
does not have domestic offices outside Washington, DC, clearly, 
and it is not part of our charter to have offices in States.
    In fact, at the first meeting when Under Secretary Aldonas 
came and visited with us to talk about the TPCC, we discussed 
mechanisms for precisely more systematically working with the 
domestic foreign commercial office services in each of the 
States. And we are going ahead and doing that.
    But I think of equal importance, if not more so, 
particularly to small business, is to be able to have a 
seamless cooperation with SBA, which does have these offices 
and representation in each of these States, or a significant 
number of them.
    What we are developing is an approach whereby there would 
be a seamless arrangement where small business, when they come 
into SBA, do not get bogged down in bureaucracies. They can 
effortlessly move from SBA product into OPIC-related programs, 
much as with Ex-Im.
    So this is one way that we are going to be building up our 
ability to support small business in the States.
    Senator Miller. That would be very important if you do 
that.
    Mr. Watson. Yes, sir.
    Ms. Askey. I will just add quickly, not to take too much 
time.
    We primarily operate in the States through the Commerce 
Department and through SBA directly with the State governments. 
About 60 percent of our business is with small businesses and 
we provide them a practical opportunity to experience 
international markets, which can be quite difficult.
    We are involved with projects quite early. We do 
definitional missions and desk studies even before feasibility 
studies. And those opportunities, desk studies and definitional 
missions, are always done by small businesses. And it really 
gives them the opportunity to grow into a role that will allow 
them to see what it takes to operate in foreign markets.
    Then they move on to the feasibility studies and to the 
exports. Many of them come to the TDA and say, you saved us. 
That one nice contract, even in a difficult market, held us and 
helped us grow, too. So, we work quite a bit with small 
business.
    Chairman Sarbanes. Senator Stabenow.

              STATEMENT OF SENATOR DEBBIE STABENOW

    Senator Stabenow. Thank you, Mr. Chairman.
    I would echo support for what Senator Miller has spoken 
about. And while in Michigan, we had over $51 billion in 
exports last year to 200 markets, we have a majority of that 
coming from our larger businesses.
    And there is a real need and I am approached all the time 
by chambers of commerce in small- or medium-sized communities 
wanting to know about the Ex-Im Bank or what else can be done 
with SBA, or whatever.
    I would encourage you to be really strengthening the U.S. 
Export Assistance Centers that you have. We have four in 
Michigan and I think they are doing an excellent job, in 
Detroit, in Grand Rapids, in Pontiac, and in Ipsilanti.
    But we need more coordination of what you were talking 
about. SBA plays a critical role. Frankly, MEP, and I do not 
know if you have talked about that today, but the Manufacturing 
Extension Program in the Department of Commerce I think is one 
venue that has not been fully utilized in terms of education. 
They were set up to help provide assistance in education as to 
new technologies for small- and medium-sized manufacturing 
firms.
    I do not know to what extent they are also focusing on 
trade opportunities. But that has been very successful in 
Michigan, the MEP. So, I would encourage you look at that as 
well.
    I had a couple of specific questions for Secretary Evans. I 
want to first thank you for coming to Michigan a little over a 
week ago for a very positive session with Secretary Chou and 
business and labor leaders about manufacturing. Obviously, we 
are very proud of Michigan. We do all kinds of things. But one 
of the things we do is we engineer and make things. And we are 
very proud of the manufacturing economy.
    I have a specific question just to bring to your attention 
and we are talking about trade at this point, and back and 
forth, with our immediate neighbor, which is Canada.
    In light of the current situation that has happened and the 
current terrorist attacks, we ask for your vigilance and I 
would welcome any thoughts or information you have about how 
Commerce is focusing on the border. And I have asked the same 
of Secretary O'Neill with the Customs divisions. They are 
focusing I think in an excellent way to make sure that we have 
the security in place, but also understanding that for the 
manufacturing economy, it is just-in-time supply chain and 
critical that the borders be able to flow as easily as possible 
within safety and security measures.
    I am very interested in knowing what steps from a Commerce 
Department standpoint you have done or would see your 
Department doing as it relates to trade with our immediate 
northern neighbor of Canada, particularly in light of the 
situation in terms of the borders and being able to move across 
the border.
    Secretary Evans. Senator, it is a very important question.
    What we could do is call the just-in-time delivery problem 
to Customs' attention, which is what we did. As you mentioned, 
Customs really controls the border. And in the ensuing days 
after the attack, there was the issue of border crossings being 
delayed because of tighter customs, tighter security, and other 
related factors. We called Customs' attention to the commercial 
implications of that situation. They were already aware of it. 
They took steps to address it.
    It is my understanding after talking to Rick Wagner and 
others, that goods are moving across the border pretty smoothly 
right now.
    Senator Stabenow. It is much better, yes.
    Secretary Evans. So, I am not hearing the concerns that I 
was hearing a couple of weeks ago. Now if that is not right, I 
would like to know about it. But, really, what we can do is 
just call it to the attention of Customs and say, listen, you 
may slow down manufacturing operations and slow down commerce 
if you get too restrictive here. But I think they took the 
necessary steps and it is flowing smoothly now.
    Senator Stabenow. It is much better than it was. I think if 
we are all vigilant, and that is why I am bringing it to your 
attention, we need to keep that in mind.
    And as we are talking about exports and thinking about try-
ing China or Russia or Europe or long distances, I would just 
ask 
you to always keep focused as well on our immediate neighbors 
and 
the policies that come from other important departments and 
areas, and as we are particularly dealing with the current 
situation 
and the challenges on security that we keep in mind that one of 
our biggest exporting markets is right over the border in 
Canada.
    In the case of Michigan, it is right across the bridge or 
the tunnel. And so, we are very conscious of how we balance the 
competing and very important needs. I cannot go without, 
Secretary Evans, asking you if you might comment on any--and 
again, we are talking about trade, grave concerns regarding 
steel that relate to Michigan.
    And while we certainly are talking today about exporting, I 
want to thank you again for the efforts of the Administration 
to focus on what is happening in terms of a fair trading 
atmosphere as it relates to steel and our grave concerns about 
the domestic steel industry. I wondered if you had any update 
as it relates to the 201 or 232 investigations.
    Secretary Evans. No update other than the ITC is reviewing 
it as we speak. And so, that is in process and there will be a 
decision in the not too distant future from the ITC.
    But I have, I think, a very positive comment to make 
regarding our recent meeting at the OECD in Paris. The United 
States has taken the lead in bringing all of the respective 
countries together and focused on global over-capacity.
    We were very pleased with not only the response and the 
attendance, but also the attitude of, yes, the world is faced 
with global over-capacity and we need to sit down and see if we 
can resolve that. And countries have agreed to go back and look 
at their own plants and try and determine what they can do 
within their respective countries to help solve this over-
capacity problem.
    Senator, what I can tell you is we are spending a lot of 
time on it. We are very focused on it. We understand the 
serious nature of it. The President has talked about it as a 
national security issue. We need to have a strong steel 
industry in this country. And so, we are with diligence 
continuing to pursue it and take the steps that we think could 
help find a global solution to this problem.
    Senator Stabenow. I very much appreciate your efforts and 
would just stress, as I always do, the critical nature of this 
to domestic industry. And in light of what is occurring now, 
and in terms of our own national security, I think it would be 
devastating to America to lose a domestic steel industry. So, I 
would just encourage whatever efforts you are to continue to be 
able to make as quickly as possible and as effectively as 
possible.
    Secretary Evans. Thank you, Senator.
    Chairman Sarbanes. Thank you very much, Senator Stabenow.
    I have just two or three questions to ask and then we will 
draw it to a conclusion.
    Without asking you to point the finger specifically, the 
Congress enumerated in the statute the agencies and departments 
that should participate in the TPCC. And also provided that, at 
the discretion of the President, other departments or agencies 
could be added to the list. Are they all participating or do 
you have some recalcitrant actors?
    [Laughter.]
    Secretary Evans. They are all participating, Mr. Chairman.
    [Laughter.]
    Chairman Sarbanes. I want to get the question out there so 
that they know that we are interested in the subject. I 
appreciate that.
    Second, how are the Export Assistance Centers Working 
nowadays? See, Commerce establishes them. But then I think Ex-
Im and SBA go at least into some of them. I do not know about 
all of them.
    Secretary Evans. Right, not all of them. With some of them, 
we have joint offices, so we are there together, fielding 
questions.
    Chairman Sarbanes. I think the Department of Agriculture 
plays a role in some of them.
    Secretary Evans. I do not know if they are in there or not.
    [Pause.]
    Yes, they are there as well. But from my perspective, Mr. 
Chairman, they are working very effectively. As I talk to 
companies that have had real-life experience in dealing with 
them, they have nothing but accolades for them and are very 
supportive of them.
    I just wish we had more people coming through the door. I 
think they are all across America. There are a lot of them out 
there.
    Should we have more? Maybe so. We will take a hard look at 
that. But, again, I think a lot of our focus, my focus, is 
going to be just how do we make more small- and medium-sized 
businesses aware that there are Export Assistance Centers 
available?
    If you took a survey of small- and medium-sized businesses 
across America and asked them what an Export Assistance Center 
was, they wouldn't have any idea what you were talking about.
    That will change. Mr. Chairman, I would say that that 
probably is true down through a lot of States. I think Senator 
Miller had a very good idea. If I were a State legislator in a 
district, it is something I would know about and I would want 
to tell my constituents about.
    And so, I think that that is our big challenge. I really 
do. Just educating small- and medium-sized businesses of this 
very important resource that is available to them.
    Chairman Sabanes. I know the State of Maryland has offices 
overseas, State offices that are designed for export promotion 
and work closely with companies in our State in order to try to 
accomplish that.
    They obviously need to be folded in in a coordinated way, 
they and comparable offices from other States, into your 
efforts.
    And actually, some of this education that you are talking 
about, it could probably be funneled through the State offices 
and certainly enlist their efforts.
    Secretary Evans. You bet.
    Chairman Sarbanes. Let me ask one final question. First of 
all, let me say, I am very supportive of this benchmark 
exercise that you are embarking on. I know some will say, well, 
it is another study. Why don't they actually do something? But 
you have it compressed, in a pretty tight time period.
    Secretary Evans. Right.
    Chairman Sarbanes. I think you need to get this base. I do 
not think it has been done, as best I know. And of course, we 
have a new set of actors with a fresh viewpoint. So, I think it 
could be enormously helpful.
    I think the analytical framework that you have set out in 
your statement in terms of how you propose to do it, what you 
propose to cover, really could be very helpful.
    I just had this sort of question. You are going to look at 
best practices of other countries, which I think is a very 
important thing to do. Of course, a number of those countries 
in the past have taken a page or two from our own playbook, so 
to speak.
    Secretary Evans. Right.
    Chairman Sarbanes. In the course of looking at their best 
practices, if you can find out, it might be helpful to see what 
strategies they use in obtaining and implementing information 
about our own export promotion efforts.
    Some of them have been pretty clever in observing the 
United States--this is in earlier times--and what we were doing 
and how we were doing it, and have picked up on that.
    Now, they have turned around and implemented it and all of 
a sudden, we have a fierce competitor on our hands. So in 
addition to looking at what their practices are, you might look 
a little bit at the process they went through in order to pick 
up on these best practices.
    I do not know how opaque all of that is going to be. I do 
not know how much cooperation you are going to get from 
counter-part governments. I guess that is one of the challenges 
you may confront. One of the things we have always pushed for, 
of course, on the finance arrangements is more transparency.
    Secretary Evans. Yes.
    Chairman Sarbanes. And of course, they are not very anxious 
to provide that. So, I wish you good luck in that regard.
    Secretary Evans. Well, thank you, Mr. Chairman. I think we 
will find ways to understand their best practices. We will 
pursue it with great vigor.
    Chairman Sarbanes. All right. Well, we look forward to 
continuing to meet closely with the members of the TPCC. We 
thank you very much for this preliminary report. And of course, 
we all look forward to the report that is going to come in the 
first part of next year. Thank you very much.
    Secretary Evans. Thank you, Mr. Chairman.
    Mr. Robson. Thank you, Mr. Chairman.
    Secretary Evans. Thank you, Mr. Chairman, for your 
leadership.
    Chairman Sarbanes. The hearing is adjourned.
    [Whereupon, at 11:40 a.m., the hearing was adjourned.]
    [Prepared statements, response to written questions, and 
additional material supplied for the record follow:]
             PREPARED STATEMENT OF SENATOR PAUL S. SARBANES
    I am pleased to welcome before the Banking Committee this morning 
this panel of distinguished representatives of the Trade Promotion 
Coordinating Committee (TPCC): Donald Evans, Secretary of Commerce, who 
serves as the Chairman of the TPCC; John Robson, Chairman and 
President, Export-Import Bank, who serves as the Vice Chairman of the 
TPCC; Peter Watson, President and CEO, Overseas Private Investment 
Corporation (OPIC); Thelma Askey, Director, Trade and Development 
Agency (TDA); and Hector Barreto, Administrator, Small Business 
Administration. The purpose of today's hearing is to review the 
preliminary report of the TPCC on its National Export Strategy and the 
TPCC's plans for the coming year.
    The TPCC was established by the Export Enhancement Act of 1992. The 
purpose of the TPCC as stated in the statute is ``to provide a unifying 
framework to coordinate the export promotion and export financing 
activities of the U.S. Government and to develop a Governmentwide 
strategic plan for carrying out Federal export promotion and export 
financing programs.'' The statute designates the Secretary of Commerce 
as the Chairman of the TPCC and designated as members all of the 
Federal agencies involved in export promotion.
    The effectiveness of the TPCC depends on the leadership it receives 
from the Chairman and the other key members. The first Chairman of the 
TPCC was Secretary of Commerce Ron Brown. Together with Ken Brody, the 
Chairman of the Ex-Im Bank who was designated Vice Chairman of the 
TPCC, they provided the initial leadership and energy to get the TPCC 
off the ground and functioning. As a result, the TPCC has a significant 
list of accomplishments it can point to during its first 8 years:

 Establishment of 18 U.S. Export Assistance Centers in major 
    metropolitan areas around the country--one-stop shops to provide 
    marketing and trade finance support to local exporters.
 Improved interagency coordination of advocacy for U.S. 
    companies seeking to do business overseas.
 A joint Ex-Im Bank-SBA working capital guarantee program for 
    small exporters.
 A partnership with the National Governor's Association to 
    increase coordination between State and Federal export promotion 
    efforts.
 The establishment of offices within the Commerce Department 
    and the U.S. Trade Representative to monitor and enforce trade 
    agreements.

    The legislation establishing the TPCC required it to propose to the 
President an annual unified Federal trade promotion budget that 
supports its strategic plan. In 1999, Congress amended the statute to 
change the delivery date for the TPCC's annual National Export Strategy 
Report to Congress from September 30 to March 30 in order to allow the 
TPCC's export promotion budget recommendations to be better coordinated 
with the development and release of the President's budget. The report 
that is being submitted today, in fact, was delayed from earlier this 
year in order to allow the new Administration time to focus on this 
issue.
    We now have a new Administration and a new set of leaders for the 
TPCC. Let me say that I am very encouraged by the response of Secretary 
Evans, the Chairman of the TPCC, and his Under Secretary for 
International Trade Grant Aldonas; Ex-Im Bank Chairman Robson, the Vice 
Chairman of the TPCC; and the other TPCC leaders who will testify 
before the Banking Committee this morning.
    From my initial meetings with them earlier this year they seemed to 
grasp the potential of the TPCC to bring greater coherence and a sense 
of strategy to the Federal Government's export promotion efforts. It is 
my perception that they have made it a priority in planning the agenda 
for their agencies and I very much look forward to hearing their 
testimony this morning.
    I should mention that the attention of Congress has been drawn away 
from its normal agenda because of the tragic events of September 11. It 
is a measure of the importance in which I hold this issue that this 
hearing is going forward today. In addition, as the Los Angeles Times 
mentioned in an article on September 20:

          The world economy is in a fragile state, according to U.S. 
        trade figures, and is likely to slow further as additional 
        security measures triggered by last week's terrorist attacks 
        hinder the flow of goods and services.

    The TPCC may thus have an additional challenge posed to it and 
perhaps may prove useful in assisting U.S. exporters to cope with the 
new obstacles to trade that may result from those events. I look 
forward to hearing the testimony of our distinguished witnesses this 
morning.
             PREPARED STATEMENT OF SENATOR MICHAEL B. ENZI
    I would like to thank the witnesses of the panel for coming before 
the Committee to discuss the Trade Promotion Coordinating Committee. As 
a former member of the President's Export Council, I strongly support 
the work of this Committee and stress its importance as we reevaluate 
the effectiveness of our current export laws and look to reauthorize 
key export control provisions. As you all know, the Banking Committee 
has been particularly active in export promotion with the recent 
passage by the Senate of the Export Administration Act.
    The TPCC plays a critical role in improving and expanding our 
current trade promotion policy. It is now more important than ever that 
we approach export 
promotion and control from a unified standpoint. As such, we must 
continue to foster interagency coordination, which I believe is 
essential in creating effective programs that will improve the 
competitiveness of American businesses in the global marketplace.
    Continued and improved interagency cooperation will also enable us 
to develop a trade promotion policy that will protect our national 
security, stimulate the economy, and encourage small business growth. 
Interagency cooperation must mean more than putting glossy reports 
together. It must mean implementing integrated strategies and 
overlooking the firewalls and turf battles that often are associated 
with funding for individual programs. Agencies must remember that they 
are all there to serve the American people and promote exports, not to 
compete to feather their own nests.
    As small business is the backbone of our economy, we must not 
overlook its importance in our troubled economy. Despite the growing 
number of small businesses, less than 1 percent are taking advantage of 
today's globalization through international exports. As a Senator from 
a State whose economy thrives predominantly on the success of small 
businesses, this is unacceptable.
    In closing, I appreciate the panelists willingness to discuss the 
future of the TPCC and encourage the Committee to continue its efforts 
in promoting access to export information and financing for businesses 
of all sizes.
    Thank you, Mr. Chairman.
                               ----------
                 PREPARED STATEMENT OF DONALD L. EVANS
                         Secretary of Commerce
            Chairman, Trade Promotion Coordinating Committee
                            October 2, 2001
    Mr. Chairman, and other Members of the Committee, my colleagues and 
I appreciate this opportunity to share with you our vision for the 
Trade Promotion Coordinating Committee (TPCC) and the work we will be 
doing over the next several months.
    Let me say at the outset that it is my belief and that of the 
President that 
the events of September 11 make it even more imperative that we move 
our trade 
agenda forward and encourage U.S. firms to enter international markets. 
We have seen the impact of recent events on a number of industries--and 
the truth is that no one will escape from this tragedy unaffected. 
Small companies are no exception, and our trade promotion agencies need 
a coordinated response to the new environment U.S. exporters now face.
    Whether it is a higher perceived risk in international markets, 
slower growth abroad or less available financing from the private 
sector, it is now even more critical that our trade promotion agencies 
are aware of the needs of our customers and can quickly respond to them 
with appropriate programs and initiatives. While all of us are making 
adjustments after last month's events, we cannot let the scourge of 
terrorism become an obstacle to America's and the world's economic 
growth and progress.
    The Administration has made Trade Promotion Authority (TPA) a 
priority for this legislative session. We believe TPA will speed the 
negotiation of trade agreements that are fundamental to our country's 
and the world's economic future.
    The agreements that TPA will let us conclude over the next 5 years 
could contribute as much as $1.9 trillion to world economic growth. The 
question is, what slice of this growing pie of commercial opportunities 
will belong to U.S. companies?
    Of course the answer to that question will primarily depend on the 
innovation and ingenuity of our companies. But it will also be affected 
by our ability to deliver necessary state-of-the-art export promotion 
programs to help our exporters realize the benefits from the agreements 
we negotiate.
    From the perspective of a small U.S. company wanting to export, 
negotiating new trade agreements is really only part of the battle. New 
agreements are meaningless to a company if it does not have the 
information, expertise, and financing it needs to do the deals.
    As a former businessman, I am well aware of two things: that U.S. 
companies are the most competitive in the world, and that they have to 
slug it out everyday in the global market to keep ahead of the curve. 
On everything ranging from major project competitions to small product 
sales, our exporters are competing not only on the basis of price and 
quality of their products, but also against the quality and government 
support behind their foreign competition.
    We know today that our major competitors have made export promotion 
a priority, both in terms of the resources they put behind it and the 
strategic approach they take. Many of their programs are customer-
driven and focused on satisfying their customer's needs. And we know 
that despite gains in many markets, we are losing market share in the 
world's fastest-growing markets. Over the last 10 years, our overall 
share of total exports to developing countries dropped from about 14 to 
12 percent. This is a significant change.
    These high-growth markets are also the markets where trade barriers 
are highest, especially for small companies. And many of our trading 
partners have an edge in these markets, because they have already 
negotiated trade agreements to help their companies get in on the 
ground floor.
    But while some of our small exporters have discovered these markets 
and see their potential, many more could. We still face an export gap 
for small- and medium-sized companies. Only 1 percent of U.S. Small and 
Medium-Sized Business Enterprises (SME's) export, compared to 5 percent 
of French SME's.
    For all of these reasons, the strategic approach of our 
competitors, falling market share where our commercial opportunities 
are greatest, and the unmet export potential of our small firms, I 
believe our export promotion programs should be reevaluated from the 
ground up.
    I would like your support over the next several months as we 
undertake a benchmarking exercise to help us learn more about what our 
customers really want from their export promotion programs and to 
examine best practices of export promotion services. This study will 
give us more information to answer the question of why more U.S. 
companies do not export and how best to take advantage of fast growing 
markets.
    Our vision, in short, is to use the TPCC as a management tool to 
improve our programs so that they respond to customer needs and the 
competitive environment. Our goal is to make sure our companies can 
take full advantage of the new commercial opportunities we expect to 
see in the next decade resulting from new trade agreements negotiated 
with TPA. At the outset, we want to make sure that we have the right 
programs, and that these programs are effective, strategically focused 
and coordinated. At the end of the day, we want to deliver the world's 
best export promotion services.
March 2002 National Export Strategy
    Our goal is to deliver to you in March a set of recommendations we 
believe will get us to world-class standards in export promotion 
service by 2004. Between now and March, we will develop information on 
three fronts.
    First, we will spend the next several weeks assessing customer 
satisfaction with our programs. We will do this in two ways.
    We have commissioned a survey of the business community--
respondents will include exporters, some who use our services and some 
who do not, and businesses who are not exporters. The goal is to get a 
handle on a number of issues related to the question of why more small 
businesses do not export. For example, among other things, the survey 
will try to discover what else Government programs could be doing to 
encourage exporting, and what does Government do best? What is 
Government's comparative advantage vis-a-vis private sector providers 
of similar 
services?
    We will also meet with numerous ``focus groups''--made up of users 
of all of our agencies' services--to try to understand what aspects of 
our programs work and what aspects do not. We will meet with small, 
medium and large exporters, trade associations and banks. We plan to 
talk to companies in Los Angeles, Baltimore, New York, Atlanta, 
Chicago, Boston and Philadelphia. We will ask questions that will help 
us get to broader issues holding back our export potential, such as 
finance risk and underutilization of our trade finance programs. We 
will ask all of these exporters about the competitive environment they 
face and what they think the world's best export promotion services 
should look like.
    The second part of this exercise will be a search for best 
practices, looking at how the governments of our major competitor 
countries go about promoting exports. We already know they dedicate 
more resources--that is not the only issue. We want to learn more about 
their most effective programs, and apply any lessons that are 
appropriate to our own programs. We will be looking for best practices 
in the private sector as well, and applying any lessons we learn.
    We have already gathered initial data from embassy posts on the 
export promotion services of our G-7 trading partners, plus South 
Korea, the Netherlands, Spain and Sweden. This information will help us 
send out a more specific request for State economic officers and our 
commercial service officers to provide a more detailed analysis of some 
of the most intriguing best practices.
    One of the first things we already know is that many of our 
competitors have benchmarked their programs and are copying as best 
practices some of our own programs. South Korea's trade promotion 
agencies have adopted the products and nomenclature of U.S. business 
matchmaking services such as our Gold Key, International Company 
Profile, Customized Market Analysis and International Partner Search 
services. Italy has established a network of regional ``one stop 
shops'' similar to the U.S. Government's Export Assistance Center 
strategy. And nearly all the competitor governments we are looking at 
have established centralized call centers and Internet portals similar 
to our own.
    We have developed some excellent programs, and validation of some 
of these efforts is important. But the main purpose of looking at 
programs in other countries is to learn how we might improve our 
programs. Governments in these countries have many of the same goals 
and face many of the same challenges as the United States. To the 
extent they have developed innovative solutions, we should be open to 
learning and to change.
    We have discovered some interesting themes. A core mission of all 
of these countries is to promote the exports of small business. For 
example, despite recent budget cuts, the French have modernized their 
export promotion services and focused them on SME's. The South Korean 
government is now committed to moving away from the dominance of 
``chaebols'' (conglomerates) as its foundation of export strength and 
is focusing its programs on small business. They have a number of 
innovative programs, including a Small Business Corporation--with a 
budget of $4 billion funded through lottery tickets--to provide SME's 
with financial and technical assistance to improve their 
competitiveness.
    Not only do these governments focus their programs on small 
business, but also in many cases they target these initiatives to 
developing countries. In 2000, the French targeted Eastern Europe and 
other emerging markets for the export of high-tech services. Canada has 
packaged services to help exporters enter emerging markets, and 
recently focused on South America. Spain has a ``Master Plan'' for 
increasing access to the Asia Pacific region, coordinated through a 
number of ministries.
    A second theme is that a number of countries' export and investment 
promotion programs are more integrally linked. For example, Japan's new 
``region to region investment promotion program'' links complementary 
regions rather than working with individual firms. Recently they 
matched a Japanese region known for making eyeglasses with an Italian 
city known for high fashion.
    Third, there is an enormous emphasis on leveraging the Internet to 
promote exports. In Sweden, the Trade Council's websites have become 
the most important source of information to exporters. The free-to-user 
advice service has become increasingly sophisticated since it was 
initiated in 1996, with over 80 percent of users responding that they 
always find what they are looking for. The British also have a 
comprehensive e-business strategy, including e-business services, e-
business infrastructure, Market Access Online and Trade Partners UK.
    It will be very interesting to see how our recently launched 
``Buyusa.com'' on-line matchmaking operation stacks up. By applying 
U.S. leadership in Internet utilization to export promotion, this 
unique partnership with IBM puts the full network of the United States 
and Foreign Commercial Service's 1,800 experienced professional trade 
specialists around the world and throughout the United States behind 
each business relationship and transaction.
    Fourth, a number of competitors place a heavy emphasis on technical 
assistance to promote exports. In the United Kingdom, the government 
helps toward the cost of bringing decisionmakers in key countries to 
the United Kingdom for training by British companies. It is designed to 
help new business contacts in export markets familiarize themselves 
with British technology, production methods and management skills. 
Japan's International Cooperation Agency--with a budget of $1.9 
billion--administers grants that fund technical training of potential 
foreign buyers in Japan and dispatches technical experts abroad.
    The final phase of our benchmarking study will be our analysis and 
comparisons of our programs with other best practices. We have broken 
down all of our programs into a short list of export promotion 
``processes,'' such as providing information, marketing, small business 
trade finance, investment insurance, linking policy and promotion, and 
evaluation of our services and coordination. Our goal is to benchmark 
each of these processes with the best practices we identify, and 
develop recommendations that will put us on a course toward world class 
export promotion services. We expect these recommendations will be both 
strategic and programmatic and identify what we do best while 
responding effectively to our competition. They will address both 
duplication and gaps in our services and attempt to leverage 
opportunities between agencies, the private sector and other export 
service providers. We intend for this to be an ongoing program of 
review that will provide us with continuous feedback on the scope and 
quality of our programs, so that they reflect the changes our exporters 
face everyday in the global marketplace.
    Mr. Chairman, we hope this vision is consistent with what you 
intended the TPCC to be when you created it in 1992. I am sure I speak 
for my colleagues when I say that we appreciate the fact that there is 
such a vehicle available to help us improve and better coordinate our 
programs at this important juncture.
                               ----------
                  PREPARED STATEMENT OF JOHN E. ROBSON
                         Chairman and President
                Export-Import Bank of the United States
          Vice Chairman Trade Promotion Coordinating Committee
                            October 2, 2001
    Thank you for inviting me to testify as the Vice Chairman of the 
Trade Promotion Coordinating Committee (TPCC) and as Chairman of the 
Export-Import Bank of the United States (Ex-Im Bank). While other 
agencies unite American exporters and foreign buyers, the Export-Import 
Bank provides the financing to generate successful transactions in 
emerging markets. Other agencies provide aid to needy countries. We 
attempt to level the playing field for U.S. businesses by ensuring that 
buying decisions are made on the basis of normal market forces and not 
on the basis of market imperfections such as financial support from 
official foreign credit agencies. We consider this institution a 
valuable part of the overall U.S. economic arsenal.
    As directed by our Charter, Ex-Im Bank only approves transactions 
for which we can conclude that there is a ``reasonable assurance of 
repayment.'' The word is in our name, but let me reiterate that we are 
the Export-Import Bank of the United States. We work to preserve the 
competitiveness of U.S. exporters against foreign competition, but we 
also watch over the taxpayer dollars. We do not compete with commercial 
banks. We help them go where they are unable to go without the backing 
of the U.S. Government.
    Because this Bank works in partnership with business and labor, 
because it 
keeps exporters competitive, and because it helps create good jobs for 
U.S. workers, 
Congress and the Executive Branch have recognized the continuing need 
for a 
vigorous Ex-Im Bank. Ex-Im, and the other agencies represented here 
today, are 
working hard to align institutional goals and processes with the new 
global economic environment. While the trade promotion coordination 
effort is not new, it should be renewed. Thus, Secretary Evans and I, 
and the other distinguished members of this panel, are committed to a 
plan of cooperative action that will deliver tangible results.
    Now let me talk about Ex-Im's role in this new effort. My vision, 
like all of those officials represented here, is to use the TPCC as a 
management vehicle to ensure that the appropriate resources of the U.S. 
Government can be in the right place, at one time, and coordinated to 
meet the needs of consumers and customers. Ex-Im Bank is working with 
all the members of the TPCC on the benchmarking survey and strongly 
supports this effort. Secretary Evans explained what we plan to achieve 
with the benchmarking survey. Let me outline what Ex-Im Bank, and U.S. 
companies, are up against in terms of foreign competition, and why we 
believe we need this survey as part of the National Export Strategy.
    In general, wages for jobs supported by exports pay 13 to 16 
percent more than the national average. This applies to both skilled 
and unskilled labor, and to both small and large firms. Employment in 
exporting firms grows 15 to 40 percent faster than in nonexporting 
firms. And exporting firms are 9 percent less likely to fail in any 
year than comparable firms that do not export. This is something of the 
global reality we are now facing.
    Most of our G-7 competitors have fundamentally changed their 
approach to providing ``a competitive edge'' and reoriented their 
organizations to focus on that edge. While in the 1970's and 1980's the 
key competitive tool was cost--interest rates, fees, etc.--by the late 
1990's the key was to find that one aspect of financing in which a 
country or a company has a comparative advantage and magnify its role--
more of a quality differential. A core mission of all our major 
competitors is to not just to promote exports, but also to promote 
exports from small companies.
    As Secretary Evans' mentioned, the TPCC is reaching out to small- 
and medium-sized companies in the United States through a survey that 
seeks to identify obstacles to exporting. Ex-Im Bank is an active 
participant in this survey process. We have provided specific survey 
questions related to trade finance issues, and we have identified 
survey participants whose experiences will add value to the body of 
knowledge in this area. The information gathered by this survey will 
equip TPCC agencies to better handle the specific challenges exporting 
presents to this largely untapped pool of potential exporters. Our task 
is to turn that information into 
programs and policies that address the needs our customers have 
identified. This 
exercise is a prime example of how a coordinated interagency process 
can leverage resources and tackle several issues with a single tool.
    That said, I must urge everyone here today not to lose sight of the 
increasingly coordinated efforts other countries have made in terms of 
their trade promotion. Foreign export credit agencies have been more 
aggressive in developing programs to assist their exporters. U.S. trade 
agencies must be aware of these efforts so that they do not lag behind 
others in an increasingly competitive global landscape.
    As part of fulfilling a TPCC initiative to identify the ``best 
practices'' of trade promotion exhibited by competitor governments and 
the private sector, Ex-Im Bank has reviewed the activities of other 
ECA's around the world. Of all the countries we face, Ex-Im Bank's 
stiffest competition is from Canada, Germany, Japan and the United 
Kingdom.
    Canada has become more proactive and aggressive regarding its trade 
promotion and exports. They have changed their focus from the creation 
of domestic jobs 
to assisting the exporting company itself. Canada has structured its 
export credit 
agency (EDC) to become an active banker in a transaction, encouraging 
more 
foreign buyers to purchase Canadian products. They have developed an 
essentially 
commercial, market-oriented agency, called a market window, regarding 
fees and 
foreign content in which the Canadian government pushes aside its own 
banks and 
directly competes with our commercial banks, as well as with Ex-Im 
Bank. But this 
is a government agency, and obtains money at sovereign cost and pays no 
taxes 
or dividends.
    Germany is another country that has changed its approach to export 
promotion. The key to the German approach is their export credit agency 
Kreditanstalt fur Wiederaufbau (known as KfW). Up until the mid-1990's, 
KfW acted solely as Germany's aid agency. The German government then 
decided to assign an export objective to KfW, and to make those export 
financing activities self-supporting, although KfW does benefit from 
tax and cost-of-funds similar to those of the Canadian export credit 
agency. In the last 5 years, KfW has become perhaps the largest medium/
long-term export credit provider in the world, with most of this 
business conducted outside of OECD controls. Using KfW, Germany can 
give special support to targeted sectors such as aircraft, and operate 
in areas where export agencies are constrained. Germany's current 
strategy is to find ways to expand the utility of KfW while protecting 
it from OECD control.
    In addition to the Market Windows of Canada and Germany, Ex-Im Bank 
must face competition from Japan through its tied aid transactions. The 
Japanese export credit system is the least like Ex-Im Bank in terms of 
mission, legislative oversight, transparency, and sensitivity to 
external concerns such as the environment, human rights, and so on. In 
response to the Japanese recession and the Asian economic crisis, Japan 
has adopted an aggressive strategy of increasing its disbursement of 
tied aid. In 1992, Japan provided $190 million in tied aid support. By 
the year 2000, this support had increased to $4 billion. These numbers, 
and continued concern that Japan operates its ``untied'' aid program so 
that much of it is de facto tied, push the envelope on international 
rules governing government aid programs.
    Finally, in the United Kingdom, Ex-Im faces competition from the 
Export Credit Guarantee Department (ECGD). The ECGD is the export 
credit agency most like Ex-Im Bank in terms of its basic mission, 
legislative oversight, transparency, and sensitivity to current 
political events. However, the ECGD has recently remodeled itself to be 
a customer-driven ECA, aggressively responding to the changing export 
environment by positioning itself to be a ``one stop shop'' and is 
entering cofinancing arrangements with other ECA's. Lately, other 
credit agencies such as Hermes of Germany and COFACE of France, have 
entered into similar reinsurance agreements based on the ECGD model.
    Ex-Im Bank will continue to watch the practices of other ECA's and 
the trade promotion activities of other nations. We will continue to 
engage intermediaries involved in international trade and improve our 
export promotion programs to better compete with other exporting 
nations. In addition, we will continue to think and act creatively to 
respond to the rapidly changing patterns of global trade and to provide 
U.S. exporters with the support they need to succeed in this dynamic 
environment. TPCC coordination will be at the center of these efforts.
    Thank you.
                               ----------
                PREPARED STATEMENT OF HECTOR V. BARRETO
           Administrator, U.S. Small Business Administration
                            October 2, 2001
    Mr. Chairman, Ranking Member and distinguished Members, thank you 
for inviting me to testify today about the Trade Promotion Coordinating 
Committee's preliminary report and the role that the U.S. Small 
Business Administration (SBA) plays in the Federal Government's export 
promotion strategy.
    The Bush Administration recognizes the critical link between the 
U.S. domestic economy and our foreign trade policy. Expanding trade has 
shown to have many benefits in the United States and around the world. 
Trade expands markets, grows business and creates jobs. This translates 
to more choices and better prices for American consumers.
    Free and open markets foster economic and political freedom, 
strengthen democracy and enhance our national security. The Bush 
Administration is focused on achieving these goals, and it is essential 
for the Congress and the Administration to work together to increase 
opportunities for U.S. businesses in international trade.
    While the United States is certainly open for business, passage of 
Trade Promotion Authority will demonstrate to the world that the 
President and the U.S. Congress are united in their desire to further 
open trade globally. We need to do as much as possible to give 
businesses in America every opportunity to succeed by enabling them 
access to all markets. TPA will remove barriers to allow these 
businesses involved in international trade to thrive in a global 
economy through free, fair and open markets, thus allowing U.S. small 
businesses to become more competitive in the global marketplace.
    Currently 97 percent of U.S. exporters are small businesses, 
numbering a little over 200,000. However, they account for just under a 
third of the total value of U.S. export sales. This is why SBA's role 
in fostering U.S. small businesses is so im-
portant. Each of SBA's financial and technical assistance programs can 
assist 
businesses interested in exporting and we have specific programs in 
place to assist 
in creating markets outside the United States. However, to date, our 
efforts and 
results have been sporadic.
    I intend to more effectively focus our efforts. Through expanded 
public/private partnerships we can facilitate access to needed 
information and capital with the goal of increasing revenue, employment 
and business longevity. Firms engaged in trade are 20 percent more 
productive, pay wages which are 15 percent higher than nontraders, are 
9 percent less likely to go bankrupt and they experience 20 percent 
greater job growth. The following represents a discussion of SBA's 
programs and services which we will be examining as part of the TPCC 
process and as we listen to our customers.
Access to Capital
    SBA has several loan programs tailored to small businesses in 
search of capital to either start or expand their business in 
exporting. They are the International Trade Loan Program, the Export 
Working Capital Program, and SBA's Export Express. For fiscal year 
2001, we approved 419 export loans with a value of $167 million. The 
International Trade Loan Program provides long-term financing for fixed 
assets and working capital up to a maximum of $1.25 million for 
companies impacted by foreign competition or expanding exports.
    The Export Working Capital Program is a short-term (less than a 
year), transaction-backed guaranty program. The program was established 
by working closely with the Export-Import Bank of the United States 
(Ex-Im Bank) to develop a seamless product for all of our customers, 
including the use of the same application for both programs. SBA's 
program has a maximum of $1 million. The Ex-Im Bank program addresses 
the needs of companies in excess of that amount. In fiscal year 2000, 
the average SBA EWCP borrower had 9 employees and the average size of 
the loan was $400,000. The average size Ex-Im Bank loan was $1.6 
million.
    One example of a firm that has prospered with SBA's EWCP assistance 
is American Microwave Incorporated of Frederick, Maryland. American 
Microwave manufactures electronic components for defense systems. In 
the early 1990's, a cash flow problem brought them to the SBA's Export 
Working Capital Program. The EWCP program enabled them to expand their 
export efforts from $40,000 in initial revenues to $2.4 million today.
    To help firms with small export finance needs, on October 1, 2000, 
the Agency rolled out its pilot export loan guaranty product, called 
SBA Export Express (Export Express). Export Express provides loan 
guarantees on export loans of up to $150,000. This product can be used 
to finance export development costs such as participation in a foreign 
trade show or translation of product catalogs, as well as finance 
actual orders. We have nearly 300 lenders around the country eligible 
to participate in Export Express lending. We believe it will provide 
much-needed financial assistance to the fastest growing sector of the 
small business export community--the service sector.
    Let me give you two examples of how this loan program is being 
used:

 One of the first loans SBA approved under Export Express was 
    to a firm in Jackson, Mississippi for $11,000. This company exports 
    produce to South America.
 In May 2001, SBA provided an Export Express loan guaranty for 
    $50,000 to a Los Angeles small business distributor of piping 
    insulation and industrial chemicals. They used the proceeds of the 
    loan to support their participation in a trade show in Seoul, 
    Korea. The firm returned from the trade show with orders totaling 
    $4.8 million.
Providing Technical Assistance and Access to Information
    Technical assistance and access to information are some of the 
greatest needs of U.S. small businesses according to the TPCC's 
National Export Strategy report. As with our access to capital 
programs, SBA has public/private partnerships in this area to satisfy 
these needs.
    SBA is a partner with the Department of Commerce (DOC) and Ex-Im 
Bank in the U.S. Export Assistance Center (USEAC) network, colocated at 
19 different sites nationwide. SBA/USEAC personnel serve as the primary 
delivery mechanism for the Agency's export assistance programs, 
including marketing, counseling and processing of loan applications. 
USEAC's also provide a critical link between small business clients and 
a vast array of export promotion services offered by the Federal 
Government.
    To help firms become export-ready, SBA took the lead in working 
with our public/private partners in creating the Export Trade 
Assistance Partnership (E-TAP) initiative. E-TAP is a customized 
process of taking a small group of export-ready companies through all 
the stages of becoming an exporter. These stages include market 
research, financing, insuring shipments, and dealing with freight 
forwarders. Many E-TAP courses incorporate foreign trade events as part 
of the program. Because 
of the scope of customized assistance, this program would not be 
possible without 
the dedicated support of SBA's private and public sector partners. 
Partners who pro-
vide coordinated assistance include SBA's Small Business Development 
Centers (SBDC's), particularly their International Trade Centers, 
Service Corp of Retired Executives (SCORE), DOC's Commercial Service, 
Ex-Im Bank, State and local trade offices, individual freight 
forwarders, customs brokers, insurance brokers and international 
attorneys. All bring together essential export information, at little 
cost to the small business.
    In fiscal year 2000, SBA delivered E-TAP training to 328 small 
business participants, resulting in export sales of $138 million. This 
initiative made it possible for an E-TAP-trained company in Dallas, 
Texas to grow their export markets and use SBA's capital programs. They 
produce a niche medical product, which essentially allows for the 
repair rather than the replacement of oxygen sensors used by hospitals 
for monitoring trauma victims. The company now exports to over 30 
countries.
Conclusion
    I am excited about prospects for U.S. small business in the global 
marketplace. We realize the need to reach more of the 25 million small 
businesses in the United States today. We need to do a better job of 
outreach, and listen to them in order to adapt and create products that 
meet their changing needs. We are committed to expanding our tradition 
of enrolling our public and private partners in these efforts and will 
continue to work toward these goals with our TPCC partners.
    It is an exiting time to be involved in international trade, and we 
have a President who has made it a priority to assist the American 
businesses in the global marketplace. I look forward to working with 
our President, other TPCC members and the Congress to assist our small 
business exporters.
    Thank you. I would be happy to answer any questions you may have.
                               ----------
                 PREPARED STATEMENT OF PETER S. WATSON
                 President and Chief Executive Officer
                Overseas Private Investment Corporation
                            October 2, 2001
    Mr. Chairman and Members of the Committee, thank you for the strong 
leadership and support you have given toward establishing a coordinated 
United States trade program. It is a privilege for me to join in this 
panel today with my distinguished colleagues from the Commerce 
Department, Small Business Administration, Export-Import Bank (Ex-Im 
Bank) and Trade and Development Agency (TDA).
    As you have heard today, the Trade Promotion Coordination Committee 
(TPCC) is poised to assess and reinvigorate a unified trade program for 
the U.S. Government, a particularly important responsibility given the 
economic disruption which we have experienced since the tragedy of 
September 11.
    Our success will be driven considerably by the guidance and vision 
which Secretary of Commerce Don Evans has given the TPCC, in part based 
on his long years of private business experience, and by the strong 
leadership of Under Secretary of International Trade Grant Aldonas, who 
has helped develop the blueprint before you today.
    Even before the creation of the TPCC, the Overseas Private 
Investment Corporation (OPIC) has had a long tradition of cooperation 
with its sister agencies. Today, I pledge to build and strengthen that 
relationship.
    OPIC plays a vital role in the economic and social development of 
less developed countries and areas, as well as countries in transition 
from nonmarket economies. These countries look to U.S. investment to 
help create jobs, improve infrastructure, generate goods and services, 
and thereby contribute to economic growth and the creation of free-
market systems. As a developmental agency, OPIC can help stabilize 
financial markets in the developing world by facilitating U.S. private 
investment in countries most in need of support and economic 
development.
    As the primary U.S. Government agency focused on private sector 
investment in exclusively the developing world and emerging economies, 
OPIC builds on the premise that trade is the initial step in the 
international expansion of a company. Only after a manufacturing 
company is comfortable with the establishment of export relationships 
and is confident of an overseas market for its products will it 
seriously contemplate the next step of making an overseas investment. 
For this reason, we have valued and benefited from the cooperation, 
support and information flow from all of the trade agencies represented 
on the TPCC.
    At the same time, we are keenly aware that OPIC's mission is in 
many ways distinct from that of the more traditional trade agencies. 
OPIC is an integral part of the foreign assistance program of the 
United States, born out of the Marshall Plan, and focused on the belief 
that concessional aid alone cannot bring about the economic development 
so sorely needed in much of the world.
    Private investment has been viewed as a highly effective method of 
achieving the goal of teaching nations ``how to fish'' rather than 
giving them fish. And years of experience have amply demonstrated that 
U.S. overseas private investment continues to be a magnet for U.S. 
exports as overseas affiliates of U.S. companies source their goods and 
services from here. And so, OPIC has the enviable job of supporting 
investments that not only serve our Nation's foreign/development 
assist-
ance objectives, but also have beneficial impacts in the U.S. through 
the creation of export-related jobs.
    Our focus is increasingly on those countries where the needs are 
greatest and on the U.S. small and medium businesses that otherwise 
would hesitate to expand overseas without OPIC financing or insurance. 
Fortuitously, these are the same markets where our Nation's trade 
assistance programs as implemented by fellow members of the TPCC can 
also have significant impact. It is the developing country markets that 
will continue to grow the fastest and it is those same markets where 
our exports are in demand.
    We have already seen the benefits of interagency cooperation in the 
recent White House visit of Indonesia President Megawati. During that 
visit President Bush announced a joint trade and finance initiative 
developed by OPIC, the Ex-Im Bank and TDA. This cooperative undertaking 
will provide up to $400 million in financing to promote trade and 
investment opportunities in Indonesia, with OPIC and Ex-Im Bank 
focusing on projects in the oil and gas sector. Financing will be 
subject to the normal terms and conditions established by each agency's 
programs. OPIC is pleased to join with our sister agencies to support 
the President's policy of assisting economic development in Indonesia, 
an important U.S. ally and a country with the world's second largest 
Muslim population, and I can report today that discussions are already 
underway with private sector companies that could fulfill this 
important commitment to Indonesia.
    Another area of cooperation is promotion of business development in 
countries 
of specific U.S. interest. I am pleased to be a participant in the 
business devel-
opment delegation being led by Secretary of Commerce Evans to Russia on 
Octo-
ber 14-16, 2001. The mission, undertaken at the direction of President 
Bush, will 
include senior executives from approximately 15 U.S. companies 
representing a 
variety of sizes and sectors. The mission will affirm U.S. Government 
support of 
Russia's economic reforms and assess ways to improve access by U.S. 
businesses to the Russian market.
    OPIC continues to play a key role in the TPCC's interagency 
Advocacy Network, which provides systematic U.S. Government advocacy 
support to small, medium, and large U.S. exporters to help level the 
playing field against foreign competition and win foreign government 
contracts. Through the Commerce Department's Advocacy Center, OPIC has 
worked closely with advocacy counterparts from the trade agencies, 
providing financing and insurance support for U.S. exporters involved 
in various industry sectors in emerging markets and developing 
economies worldwide. The ``team approach'' employed by OPIC, the 
Departments of Commerce and State, and the United States Embassy in 
Bulgaria in providing continuous and aggressive advocacy support, 
including $200 million in political risk insurance, for a $450 million 
United States power plant project in Bulgaria epitomizes the importance 
of TPCC interagency cooperation.
OPIC Will Refocus Its Activities Toward Development
    At its core, OPIC remains committed to return to its overarching 
developmental mandate. OPIC's principal mission is ``to mobilize and 
facilitate the participation of United States private capital and 
skills in the economic and social development of less developed 
countries and areas, and countries in transition from nonmarket to 
market economies, thereby complementing the development assistance 
objectives of the United States.''
    Since 1971, OPIC has accomplished this mission by supporting more 
than 3,000 projects throughout the developing world. Cumulatively, 
these projects have supported host country jobs and have contributed to 
the host country tax base and infrastructure. As of March 31, 2001, 
OPIC is managing a portfolio of 316 active projects in locations that 
range from Algeria to Zimbabwe. The activities of these projects are 
diverse and include manufacturing plants, communications operations, 
gas pipelines, power plants, financial services institutions, mining 
operations, tourism/hotel projects, and agricultural operations.
    Equally true is the proposition that U.S. small and medium 
businesses are increasingly important drivers for our economy and have 
the most to gain from increasing their share of the export market. All 
of this gives me great confidence that despite differences in our 
mandates, OPIC and the other members of the TPCC will continue to have 
great synergy in our work and in achieving results that are critical 
for long-term economic development abroad at the same time that they 
create jobs and exports here in the United States.
    We at OPIC look forward to the benchmarking exercise that the TPCC 
has launched and applaud the outreach to customers of our services. We 
are committed to serving them as effectively and efficiently as 
possible and tailoring our products and services to meet their changing 
needs. Indeed the work of the TPCC will complement quite well the work 
that OPIC itself has embarked upon in assessing its programs, 
refocusing our efforts toward the countries in greatest need and 
streamlining our operations.
OPIC Will Make Small Business A Top Priority
    OPIC's authorizing legislation directs the agency to pay special 
attention to the needs of American small businesses. However, OPIC has 
yet to fulfill its potential in this area. In the coming months, OPIC 
will reexamine its opportunities to assist small business.
    One particular avenue that we have already identified and are 
exploring is the extent to which OPIC can complement or even leverage 
the work of other agencies. For example, the U.S. Small Business 
Administration (SBA) is a great resource for U.S. small businesses that 
are seeking to establish themselves or expand in and from the United 
States, which may be significantly enhanced with OPIC support. We are 
engaging for OPIC to partner with the SBA in a mutually beneficial 
manner that would advance the achievement of both agencies' missions. 
OPIC is also working closely with the U.S. and Foreign Commercial 
Service at the Department of Commerce to provide small companies with 
the most up-to-date information on international markets and the 
appropriate financing tools they need.
    Most importantly, such cooperation would greatly assist American 
small businesses seeking to establish a presence in developing regions. 
Small businesses often do not meet the profile that private sector 
financial institutions and insurers are looking for in their overseas 
clients. This is where the development goals of the U.S. Government, 
the needs of small business, and OPIC's programs intersect. With OPIC's 
assistance, the proven dynamism of U.S. small businesses can be 
leveraged to produce viable projects in the developing world.
OPIC Will Streamline And Improve Business Procedures
    In addition to the TPCC review, OPIC's management and staff are 
committed to increasing responsiveness to stakeholders and streamlining 
business processes. By streamlining OPIC's application process and 
publicizing OPIC's political risk insurance and finance products, OPIC 
will continue to improve its efficiency and effectiveness. Minimizing 
red tape and providing responsive service to all who have an interest 
in the agency's operations is one of the critical links in OPIC's 
efforts to leverage its funding into viable projects. Toward this end, 
OPIC will:

 Be Responsive to the Needs of Clients and Stakeholders. 
    Through customer surveys and hosting annual client conferences, 
    OPIC will explore new ways to improve communications with its 
    clients and stakeholders, both in formal and informal contexts.

 Streamline Application Processes. One of the most effective 
    ways that OPIC can improve its ability to leverage investment is by 
    eliminating bureaucratic procedures. By streamlining its paperwork 
    requirements and adopting electronic processes, OPIC will be better 
    able to serve American businesses--both large and small--that 
    cannot afford a long and expensive application process that is not 
    geared to the faster pace of decisionmaking that is required today.

 Delay the Decisionmaking and Approval Process. In keeping with 
    Presidential guidance to make Government more citizen-centered, 
    OPIC is reducing the distance between the line staff who deal with 
    the public on a day-to-day basis and program leadership.
OPIC's Programs And Benefits
    For those less familiar with OPIC's responsibilities of supporting 
development and stability in strategic regions around the world, let me 
describe our programs and their results.
    Because of its core development and foreign policy mission, OPIC 
operates under the Foreign Assistance Act, under the direct oversight 
of the Senate Foreign Relations Committee, and the Subcommittee 
currently chaired by Chairman Sarbanes, and formerly chaired by Senator 
Hagel. Working together, they have given OPIC a strong vision for 
promoting international economic development which also provides 
significant benefits to the United States at no cost to the taxpayers.
    OPIC provides financing and political risk insurance to mitigate 
the risks faced by U.S. investors in emerging markets and developing 
economies where private support is generally not available. Insurance 
is available for up to 20 years for new investments in new projects or 
expansions of existing projects. OPIC protects against the risks of 
inconvertibility, expropriation, and political violence.
    OPIC provides financing to U.S. companies, or companies with 
significant U.S. management involvement, in the form of direct loans 
and loan guaranties with medium- to long-term repayment terms. OPIC 
also supports the creation and capitalization of long-term, private 
direct equity funds that invest in new, expanding, or privatizing 
companies in emerging and developing market economies.
    All OPIC-supported projects must be financially sound, promise 
significant benefits to the social and economic development of the host 
country, and cause no harm to the U.S. economy. Projects must also 
avoid major or unreasonable environmental, health and safety impacts, 
and comply with OPIC's statutory requirements with respect to 
internationally recognized worker rights.
    I am pleased that OPIC projects are having a positive impact in 
developing countries. OPIC projects have helped developing countries to 
generate host-government revenues and create host-country jobs. At the 
same time, OPIC-supported investments are helping create American jobs 
and U.S. exports. Over the agency's 30-year history, OPIC has supported 
$138 billion worth of investments that will generate $64 billion in 
U.S. exports and support nearly 250,000 American jobs.
    In fiscal year 2000, OPIC assisted 40 projects in 27 countries or 
regions, involving a wide range of industries. These projects will have 
a significant developmental impact in the host country. Thirty-seven of 
the 40 OPIC-supported projects in fiscal year 2000 were located in the 
low- and middle-income developing countries. The projects are also 
expected to generate $2.3 billion in U.S. exports, support over 6,000 
U.S. jobs and have a positive impact on the U.S. balance of payments.
    Forty percent of all projects OPIC supported in fiscal year 2000 
involved U.S. small businesses. Data on the specific U.S. companies 
that will provide goods and services to OPIC-assisted projects for the 
7 fiscal years 1994 through 2000 show the specific U.S. suppliers for 
$11.4 billion in expected procurement for OPIC-assisted projects. These 
U.S. companies are located in 46 States. It is estimated that 
approximately 62 percent of these identified suppliers to OPIC-backed 
projects are U.S. small businesses.
    Finally, it is very important to note that at the same time OPIC is 
reaching out to serve the needs of small business in challenging 
regions, OPIC remains financially strong. In fiscal year 2000, OPIC 
generated net income of $185 million and received an unqualified audit 
opinion from the independent accounting firm of PricewaterhouseCoopers 
LLP. At the close of fiscal year 2000, OPIC's combined finance and 
insurance portfolio maximum exposure was $16.8 billion while 
accumulated reserves reached a record $4 billion. This balance provides 
strong financial protection against future claims or defaults.
    OPIC projects are having a broad impact across the globe. In South 
America, OPIC is helping build the foundation for economic growth in 
the region by supporting various infrastructure projects in the 
telecommunications, energy, and banking sectors. In Trinidad and 
Tobago, OPIC is providing financial support for the 
development of a seawater desalination plant that will help alleviate 
chronic drinking water shortages in the country.
    In Africa, recent projects involve a wide variety of sectors, such 
as gas field development and production, a tourist hotel, a 
microlending facility for microenterprises, and a toothpaste 
manufacturing facility. In Equatorial Guinea, OPIC provided a $173 
million guaranty for the construction, ownership and operation of a 
methanol plant. This is the largest single investment OPIC has ever 
supported in sub-
Saharan Africa. The project will contribute simultaneously to private 
sector development in Equatorial Guinea and to the improvement of local 
air quality by processing gas that would otherwise be flared.
    Elsewhere, OPIC recently approved a $2.5 million direct loan to 
support home improvements in Mexico--OPIC's largest project in Mexico 
since establishing a new small business initiative there. The OPIC 
direct loan, to Maryland-based CHF International (Cooperative Housing 
Foundation), will help establish a new on-lending 
facility to provide loans for home improvements in Mexico, including 
the provision of safe and adequate housing for workers along the United 
States-Mexico border. Proceeds of the loan will go to Mexican nonprofit 
organizations, which in turn will lend money to individual Mexicans to 
finance home improvements. CHF will also offer educational programs for 
potential lenders and borrowers.
    CHF, which celebrates its 50th anniversary next year, has since 
1962 provided international shelter-related technical and capital 
assistance and training, and currently supports programs in Mexico, 
Gaza, Honduras, Jordan, Lebanon, Philippines, Romania and El Salvador. 
Adequate housing is the most basic unit of a country's infrastructure, 
and a necessary foundation for its economic development. OPIC is 
pleased to work with a respected organization such as CHF to enable 
Mexico to improve its housing stock, to the economic benefit of both 
our countries.
    In the Philippines, OPIC has supported Counterpart International 
and its affiliate EnviroVentures for the first two projects to be 
financed by a $1 million initiative to assist environmentally friendly 
small- and medium-sized enterprises. OPIC released $200,000 in loans 
for construction of environmentally sustainable low-cost housing, as 
well as for a project expanding the marketing program for a seaweed-
based fertilizer product. For the housing project, construction 
materials that require less energy to produce than do standard 
materials will be purchased from small local producers, thereby 
benefiting both the environment and the small business community. The 
seaweed-based fertilizer project, will benefit the environment in two 
ways: First, the fertilizer product is manufactured by recycling waste 
from local seaweed processing plants. Second, increasing the use of 
organic versus chemical fertilizers is environmentally beneficial, 
particularly in areas of the Philippines where overuse of chemical 
fertilizers is a concern.
    As part of its continuing effort to promote private investment in 
the Newly Independent States, OPIC supported a project to restore an 
historic hotel in Armenia, one of the largest private foreign direct 
investments of its kind in Armenia. OPIC is providing an $18 million 
loan to a small business group comprised largely of 
Armenian-Americans to privatize the Hotel Armenia--the agency's first 
finance deal in the Caucasus nation. Opening of the Hotel Armenia 
project is expected to spur economic development in Armenia and to 
foster tourism. The project is expected to generate $25 million in U.S. 
exports during the first 5 years of operation. In addition, 
approximately $14 million will be spent in Armenia on renovating the 
hotel, plus annual operating procurement of $6 million from the host 
country. The project will also bring much-needed private sector career 
training in the hospitality sector to Armenia, as Marriott 
International, Inc. will manage the hotel and train the staff in the 
hospitality practices and procedures developed for its hotels 
worldwide.
Conclusion
    Looking ahead, in cooperation with our TPCC colleagues, OPIC's 
activities will focus closely on development and companies and 
countries that have difficulty accessing private financing or 
insurance. OPIC will also increase its efforts to ensure that its 
programs complement the private market rather than compete with it. 
Working together we can develop OPIC as a foreign policy program 
focused on development that is making an important difference to people 
in developing countries and in America, as well.
    I will be pleased to respond to your questions.
                               ----------
                 PREPARED STATEMENT OF THELMA J. ASKEY
              Director, U.S. Trade and Development Agency
                            October 2, 2001
Introduction
    Good morning, Chairman Sarbanes, Senator Gramm and Members of the 
Committee. A number of you have been friends of the U.S. Trade and 
Development Agency (TDA) for many years, and are well acquainted with 
the agency. However, I recognize that TDA is a small agency outside the 
jurisdiction of the Banking Committee, and I would like to take this 
opportunity to outline briefly what the agency does and how it works 
with the Trade Promotion Coordinating Committee (TPCC) to promote U.S. 
exports and create American jobs.
What TDA Does
    TDA promotes American private sector participation in development 
projects in low- and middle-income countries, with special emphasis on 
economic sectors that represent significant U.S. export potential. As 
you all know quite well, this is no easy task in today's global 
marketplace. In addition to the substantial economic challenges facing 
U.S. exports in many markets, U.S. firms face aggressive competition 
from foreign producers for contracts associated with projects in the 
countries where TDA operates. TDA's biggest competitors for overseas 
projects are Japan, Canada, and the European Union and its member 
states.
    Overseas competitors often receive substantial assistance from 
their home governments in pursuing projects. Many, if not most, of the 
countries I named earlier use foreign aid programs to secure contracts 
for their companies. They also concentrate their foreign aid on 
influencing spending by the World Bank and other multilateral 
development banks (MDB's) through trust funds. While TDA also maintains 
trust funds at these institutions, the contributions made by other 
countries dwarf TDA's in size. Because of the manner in which MDB's 
look for financing, these larger trust funds give TDA's competitors an 
edge in identifying project opportunities for their national companies.
    TDA works hard to level this uneven playing field. Because foreign 
governments provide higher assistance levels to their businesses, TDA 
must work harder and smarter to produce results for U.S. firms. In 
particular, most of TDA's work focuses on the initial planning stages 
of development projects. By supporting U.S. company involvement at the 
ground level, TDA enhances the chances that project specifications will 
be compatible with U.S. standards and that U.S. firms will be well 
positioned for follow-on project work.
    TDA's ``toolbox'' for fighting unfair foreign competition contains 
a number of 
instruments. The most common tools are funding feasibility studies, 
conducting 
orientation visits, and hosting trade conferences. TDA also provides 
training and technical assistance grants, and performs preliminary 
internal due diligence efforts to evaluate potential development 
projects and ensure that potential projects warrant the use of taxpayer 
funds. TDA's technical assistance may be project specific, or more 
broadbased, supporting capacity building institutions and trade 
agreement implementation. These tools assist TDA in building mutually 
beneficial partnerships between American companies and overseas project 
sponsors, which result in increased U.S. exports and jobs and the 
completion of high quality, successful projects in host countries. All 
TDA-provided assistance such as feasibility study grants or technical 
assistance must be used to hire U.S. firms to conduct the work.
    For funding consideration, all TDA-affiliated projects must meet 
four criteria. The project must:

 Be likely to receive implementation financing and have a 
    procurement process that provides ``equal access'' to U.S. firms.
 Represent an opportunity for sales of U.S. goods and services 
    that is many times greater than the initial investment of TDA 
    assistance.
 Be a development priority of the country where the project is 
    located and have the endorsement of the U.S. Embassy in that 
    nation.
 Face strong competition from foreign companies that may 
    receive subsidies and other support from their governments.

    TDA's goals are two-fold: helping American businesses export their 
products, thereby creating jobs, while simultaneously promoting 
commercially viable economic growth in developing and middle-income 
countries. Since 1981, TDA has been associated with more than $17 
billion in exports--or over $35 in exports for every dollar invested in 
its program activities.
    I mentioned above that TDA provides technical assistance in areas 
such as telecommunications and the environment. These programs are 
among the U.S. Government's tools for supporting capacity building 
initiatives and the implementation of trade agreements. TDA can provide 
funding for technical assistance to countries as they establish or 
revise laws and regulations, either in order to comply with existing or 
anticipated international agreements, or as a part of an overall 
strategy to expand trade and economic capacity. TDA aims to provide 
resources to governments seeking to create or modify their legal and 
regulatory structures in particular sectors that are compatible with 
competitive U.S. exports. Such assistance is intended to support TDA's 
dual trade and development mission by both fostering development in the 
host country and assisting U.S. businesses develop relationships, which 
lead to an increase of U.S. exports.
    TDA has funded such broadbased technical assistance projects around 
the world. For example, TDA has placed a technical advisor in the 
Venezuelan telecommunications agency, advisors in Bosnia and 
Herzegovina for developing infrastructure programs related to energy 
and utilities, and a privatization advisor with the Romanian Ministry 
of Transportation to provide policy, technical and executive support to 
privatization efforts. TDA is currently in the process of placing an 
advisor in Azerbaijan to assist with that country's World Trade 
Organization accession efforts.
TDA Work With Other Agencies
    TDA has worked hard to achieve this level of success, but it has 
not done it alone. TDA takes great pride in the close relationships it 
maintains with other U.S. Government entities in identifying and in 
pursuing U.S. export opportunities while advancing development 
priorities in low- and middle-income countries. The agency is 
especially grateful to Secretary Evans for his leadership of the Trade 
Promotion Coordinating Committee. TDA believes that TPCC provides an 
excellent framework to coordinate the U.S. Government's trade promotion 
operations.
    Most prominently, TDA works with TPCC policy agencies, such as the 
Departments of Commerce and State. Additionally, TDA frequently 
partners with the U.S. Export-Import Bank (Ex-Im) and the Overseas 
Private Investment Corporation (OPIC) to conduct trade promotion 
activities overseas and identify promising project opportunities. 
Notably, the three agencies work together in joint centers in Croatia 
and Turkey. In the near future, we will look to these field offices to 
respond more quickly to the commercial and developmental needs of 
countries in strategic locales and during difficult, uncertain times. 
TDA also supports initiatives of the Office of the U.S. Trade 
Representative.
    TDA is extremely proud of its ability to increase U.S. exports by 
working with agencies that do not have a traditional trade promotion 
focus. For example, both the Federal Aviation Administration (FAA) and 
the Federal Emergency Management Agency (FEMA) have worked with TDA to 
promote U.S. exports in recent years. In support of TDA trade promotion 
efforts, the FAA has trained foreign air traffic controllers in U.S. 
technology and FEMA has promoted U.S. emergency management technology 
by cohosting emergency management conferences with TDA. TDA's 
coordination with these and other agencies allows TDA to promote U.S. 
exports and helps project sponsors meet their development objectives by 
utilizing the specific expertise of a wide range of U.S. Government 
agencies. Moreover, TDA's export and development oriented mission helps 
other agencies to achieve their own international policy objectives.
FAA Projects
    An example of where TDA has coordinated with the FAA is aviation 
technology in India. Over the next decade, India's air passenger 
traffic is projected to grow at an annual rate of 12.5 percent for 
domestic travel and 7 percent for international travel. TDA and the FAA 
are working to ensure that India can meet this demand through the 
implementation of a modern and efficient integrated communications, 
navigation, surveillance, air traffic, and maintenance (CNS/ATM) 
systems. To help India develop this system, last year TDA provided a 
$450,600 grant to Airports 
Authority of India (AAI) to hire an American firm to conduct a 
feasibility study on 
implementing such a system. Subsequently, TDA funded a workshop for the 
FAA 
to train AAI and Indian Ministry of Civil Aviation officials on the new 
technology. 
As the leading manufacturer of CNS/ATM systems, TDA expects U.S. 
companies 
to export over $180 million in procurements related to this project 
when it is 
implemented.
FEMA Projects
    TDA also has worked with FEMA on several events in recent years. In 
2000, TDA cosponsored an Asian regional conference with FEMA and the 
Department of Commerce on emergency management in Honolulu, Hawaii. The 
conference highlighted 40 projects in 10 Asian countries that hold 
significant United States export potential in a variety of sectors, 
including flood plain management, disaster management information and 
communications systems, and interagency disaster training. The National 
Oceanic and Atmospheric Administration, the Data and Information 
Service, the Centers for Disease Control and Prevention, the Department 
of Defense's Center for Excellence, the U.S. Agency for International 
Development, and the U.S. Export-Import Bank also participated in the 
Honolulu conference.
TPCC
    As mentioned previously, TDA is an active member of the TPCC in its 
efforts to coordinate trade promotion activities and develop trade-
related data to evaluate U.S. export promotion policy. TDA is actively 
supporting the TPCC's efforts to identify and quantify the means that 
foreign governments use to obtain advantageous benefits for their 
national companies at the expense of U.S. firms.
    TDA and the other members of the TPCC are ready to meet the 
challenges before us in preserving and promoting commercial 
environments around the globe, even in these difficult times. We are 
particularly focused on those countries in which the United States has 
particular trade, economic or strategic interest.
    In fact, this is exactly how the TPCC can be most useful, by 
providing focus to the various agencies in order to respond to 
particular priorities, such as coordinating trade development efforts 
in the wake of the September 11 attacks, supporting the 
Administration's environmental strategy, and supporting the negotiation 
and implementation of new trade agreements. Additionally, the TPCC can 
focus 
efforts to work with foreign governments making the shift to democracy 
and to 
market-based economies. The best long-term strategy for the United 
States to make its presence felt in such countries is by supporting 
commercial development, and the TPCC is well-suited, and well-
positioned, for such a role.
TDA Supports U.S. Trade Expansion Efforts
    TDA typically promotes U.S. exports by providing assistance for 
specific infrastructure projects around the world. TDA's record shows 
that the agency excels at using this approach to assist U.S. companies 
competing for development projects. However, TDA is also effective in 
promoting U.S. exports at a more fundamental level. For example, TDA 
looks at supporting broader sectoral efforts that can result in 
increased U.S. exports and prevent other countries from imposing 
standards that exclude U.S. firms. This strategy of helping countries 
develop better legal and regulatory regimes promotes exports by 
creating a more favorable commercial environment for U.S. firms. For 
example, TDA recently provided technical assistance to aid the 
Venezuelan government's deregulation of its telecommunications industry 
and to develop new specifications for modernizing that industry. TDA 
estimates the potential value of exports to Venezuela in the 
telecommunications sector will top $10 billion over the next few years. 
Because of TDA's work with the Venezuelan government, U.S. firms are 
well positioned to provide the bulk of these goods.
    TDA-provided technical assistance also can be a useful tool for 
USTR. Once USTR negotiates a trade agreement, TDA can provide the 
technical assistance some trading partners may need to implement their 
commitments. Most U.S. trading partners want to comply with the 
standards in international agreements, but some of them may not possess 
the technical expertise to bring their international trade regimes in 
line with their obligations. By providing such technical assistance to 
our trading partners, TDA enhances their capability to meet their 
commitments and ensures that U.S. firms will be able to realize the 
benefits of these agreements, namely a fair and open regulatory and 
legal environment. TDA is committed to working with USTR in this manner 
to create favorable export climates for U.S. firms.
    TDA also is committed to improving the physical climate and 
environment of the nations in which we operate. Water and environment 
projects constitute TDA's third largest economic investment sector and 
typically involve such projects as clean potable water and wastewater 
treatment. Additionally, TDA examines environmental issues in virtually 
all TDA activities and identifies possible solutions to minimize or 
alleviate these concerns. By promoting environmentally friendly 
projects, TDA is a valuable part of the U.S. Government's toolkit for 
promoting trade.
    As an agency dedicated to promoting U.S. exports overseas, TDA 
supports the 
Administration's efforts to obtain Presidential Trade Promotion 
Authority (TPA). As you know, prior to this Administration, every 
President since President Nixon has had the authority to negotiate 
trade agreements with foreign nations. TPA is necessary because other 
nations are unwilling to negotiate with the United States and make 
trade concessions if the U.S. Congress is likely to overturn elements 
of the final package. Currently, there are over 150 free trade 
agreements among world nations. The United States is a party to fewer 
than half a dozen of these. Every free trade agreement negotiated 
without U.S. involvement puts American firms at a further competitive 
disadvantage in exporting goods to the nations involved in 
the agreement.
    Currently, free trade agreements give our competitors an advantage 
and make U.S. goods comparatively more expensive in the affected 
markets. These tariff differentials hinder TDA's ability to do its job 
because cost considerations make project sponsors less likely to select 
U.S. suppliers if American goods are significantly more expensive. The 
United States must level the playing field for U.S. firms by securing 
equal tariff treatment for them in foreign markets.
Closing
    In closing, I would like to the thank the Members of this Committee 
for the opportunity to appear today and discuss what TDA is doing to 
increase U.S. exports and create American jobs and how TDA works with 
the other members of the TPCC. I look forward to answering your 
questions.

         RESPONSE TO WRITTEN QUESTIONS OF SENATOR REED 
                      FROM JOHN E. ROBSON

Q.1. Can you discuss, in detail, some of the specific programs 
or strategies which will reach out to small- or medium-sized 
businesses in order to encourage greater export promotion?

A.1. Ex-Im Bank's Small & New Business Group was established in 
the early 1990's to dedicate resources to small businesses and 
to develop programs and products that address their exporting 
needs. The group works along cross-divisional lines within the 
Bank to promote its services to small business. Initiatives 
geared toward small business include direct rural campaigns, 
local seminars, strategic partnerships with both private and 
Government agencies, effective website design and selective 
advertising. Bank products also provide special enhancements to 
small business exporters thereby creating a more attractive 
financial package for the small business. In addition, an 
Emerging Exporter Group has been established to support the 
Bank's effort and statutory mandate to support specific 
underserved markets such as minority- and woman-owned 
businesses.
    In fiscal year 2001, Ex-Im Bank authorized more than $1.6 
billion in support of U.S. small businesses, which is nearly 18 
percent of total authorizations. The Bank approved 2,124 small 
business transactions that represented 90 percent of the total 
number of transactions. Fiscal year 2001 was also a record year 
for Ex-Im Bank's working capital guarantee program with $660 
million in authorizations of which $518 million benefited small 
businesses.

Q.2. How will these strategies compete with other nations' 
programs, especially with the comparatively less funding that 
we provide to our trade promotion agencies?

A.2. With a limited budget Ex-Im Bank has effectively promoted 
its efforts through effective technology innovations and the 
development of an exporter database, which serves as the 
cornerstone of small business product delivery. In fact, Ex-Im 
Bank's strategies have been emulated by other export credit 
agencies worldwide.

Q.3. How can you work more effectively with organizations, 
agencies, or the private sector on a regional or local level to 
carry out this goal of greater export promotion?

A.3. Ex-Im Bank has joined forces with many entities to create 
greater awareness of small business. The establishment of U.S. 
Export Assistance Centers throughout the country has created a 
``one stop shop'' that provides valuable information to small 
business exporters. The Bank also works with city/State 
partners, commercial banks, asset-based lenders, brokers and 
other Government agencies to provide financial assistance to 
small business. We are constantly striving to improve these 
relationships and our service. In addition, the Bank has 
delegated lending authority to some of these delivery 
mechanisms to improve the application and decision efficiency.

Q.4. How will you ensure that these programs are effectively 
reaching and assisting these businesses?

A.4. Ex-Im Bank constantly monitors its outreach efforts and 
products to insure program effectiveness. Response rates to 
direct mail and critiques to regional and local seminars are 
analyzed to improve our delivery mechanisms to the marketplace. 
Our exporter database now numbering over 200,000 is constantly 
evaluated and ``scrubbed'' for completeness and accuracy to 
insure that we are reaching the proper clientele.

Q.5. How can you target these programs to emerging markets, 
where our country is rapidly losing the most market share?

A.5. Attaining emerging market share becomes a self-policing 
mechanism for Ex-Im Bank inasmuch as it is these markets 
that demand the Bank's support more so than developed 
countries. 
Ex-Im Bank accomplishes emerging market objectives through 
partnerships with commercial banks and other partners, who en-
tertain this business only with the Bank's support. Ex-Im Bank 
is 
also marketing its products to all exporters dealing in 
emerging 
markets.

Q.6. How do you envision recent heightened security concerns 
to affect exporting industries? What measures are being taken 
to 
both assist current U.S. exporters and ease the concerns of 
potential exporters?

A.6. The events of September 11 have had a negative impact on 
U.S. export industries. Export sales have been hurt by 
declining demand in overseas markets that have been affected by 
the economic downturn in the United States. In addition, 
terrorist activities in the West and military hostilities in 
South Asia have raised concerns about country risk and have 
made financial institutions more risk averse, which has reduced 
the availability of private sector finance for sales to 
emerging markets.
    Ex-Im Bank fills a valuable role by assisting exporters 
during these difficult times. One of the Bank's main missions 
is to fill financing gaps created by the unwillingness of 
private lenders to accept certain risks. As a result, while 
maintaining its mandate for a reasonable assurance of 
repayment, the Bank remains open for business in many emerging 
markets where private sector financing is now limited or 
unavailable. To fill a specific financing gap arising from the 
September 11 events, Ex-Im Bank, along with many other 
governments, agreed to provide for a limited time, ``gap'' 
third party war risk insurance coverage for air carriers that 
had lost or could no longer afford the insurance. The Bank 
continues to monitor developments in the private market to fill 
other gaps in private market financing, as appropriate.

Q.7. Can you discuss any ongoing coordination with agencies 
such as the Department of State, Department of Defense, and the 

Department of Agriculture to address these ongoing security 
concerns?

A.7. Ex-Im Bank works closely with the Department of Treasury, 
the Department of Commerce and other U.S. Government agencies 
as well as the National Security Council to monitor economic 
and political developments in emerging markets and to stay 
abreast of business opportunities for U.S. exporters. The Bank 
is also working closely with its sister agencies, OPIC and the 
Trade Development Agency, on a number of projects in emerging 
markets. Finally, the Trade Promotion Coordinating Committee 
continues to be an avenue of coordination and consultation with 
individual agencies on trade issues as they arise.

         RESPONSE TO WRITTEN QUESTIONS OF SENATOR REED 
                     FROM HECTOR V. BARRETO

Q.1. Can you discuss, in detail, some of the specific programs 
or strategies which will reach out to small- or medium-sized 
businesses in order to encourage greater export promotion? How 
will these strategies compete with other nations' programs, 
especially with the comparatively less funding that we provide 
to our trade promotion agencies? How can you work more 
effectively with organizations, agencies, or the private sector 
on a regional or local level to carry out this goal of greater 
export promotion? How will you ensure that these programs are 
effectively reaching and assisting these businesses? How can 
you target these programs to emerging markets, where our 
country is rapidly losing the most market share?

A.1. Recent trade statistics from the Census Bureau show that 
two-thirds of all U.S. exporters have less than 20 employees 
and 
one-third of these firms had just one employee. To support and 
en-
courage the growth of this segment of the exporter population, 
the SBA developed a new loan guaranty program called Export 
Express. Export Express combines lending and technical 
assistance 
to help small businesses that have difficulty in obtaining 
adequate 
export financing. Export Express lenders use streamlined and 
expedited loan review and approval procedures and receive SBA's 
guaranty on loans of up to $150,000. Completed loan 
applications are faxed to the Agency's Sacramento Processing 
Office for review; the SBA typically provides lenders with a 
response within 36 hours.
    Technical assistance is provided to borrowers under this 
program by the U.S. Export Assistance Center personnel, in 
cooperation with the SBA's network of resource partners. Export 
Express can finance the start-up costs associated with 
developing a new export market, including translating product 
brochures into foreign languages and participating in foreign 
trade shows. In addition, the program can be used to provide 
general export lines of credit.
    The SBA works extensively with other Federal agencies such 
as the Department of Commerce and the Export-Import Bank to 
coordinate the delivery of services to small firms. To ensure 
that these programs are effectively reaching and assisting 
small businesses, the SBA is actively participating in the 
Trade Promotion and Coordinating Committee's (TPCC) current 
review of Federal export assistance programs. The SBA is 
providing both financial and technical support of the TPCC/
Keenan Institute survey of U.S. small business exporters that 
will be completed this coming January and we are providing 
technical support for TPCC-run focus groups which are being 
held around the country to solicit the input of the small 
business community.
    To facilitate access to emerging markets for small 
business, SBA is involved in strategic partnerships with other 
countries' small business support agencies to match business 
participants. For example, to take advantage of the 
opportunities we see for U.S. small businesses in Mexico, the 
SBA signed an External Cooperative Agreement with Nacional 
Financiera (NAFIN), Mexico's development bank, and the Ministry 
of the Economy in March of 2001. The agreement allows the SBA 
to have a working relationship with Federal agency counterparts 
in the facilitation of trade promotion and finance in Mexico. 
As part of the agreement, the SBA and the Commercial Service 
(CS) Mexico City worked with the Mexican Government in 
organizing a conference on Business Opportunities for United 
States and Mexican small- and medium-size companies, March 27-
28, 2001. Seventy U.S. small businesses participated in this 
event which allowed U.S. firms to meet one-on-one with pre-
screened Mexican businesses.
    More recently, SBA led a delegation of United States small 
companies to Guadalajara attending a conference on ``Doing 
Business in Mexico.'' SBA recruited new-to-export and new-to-
market small businesses to participate in this event. It 
provided participating small businesses with a chance to not 
only attend a unique trade conference on doing business in 
Mexico but also with the opportunity to meet with Mexican small 
and medium firms in selected industry sectors.

Q.2. How do you envision recent heightened security concerns to 
affect exporting industries? What measures are being taken to 
both assist current exports and ease the concerns of potential 
exporters? Can you discuss any ongoing coordination with 
agencies such as the Department of State, Department of 
Defense, and the Department of Agriculture to address these 
ongoing security concerns?

A.2. While SBA does not have initiatives underway to address 
ongoing security concerns that may effect exporting industries 
as 
a result of September 11, we are an active partner in the Trade 

Promotion and Coordinating Committee's (TPCC) network of 19 
agencies. The TPCC--which includes the Department of Defense, 
Department of State, and Department of Agriculture--meets 
regularly to discuss challenges, propose program initiatives, 
work on developing new products, and avoid duplication of 
efforts in relation to meeting small business needs. As the 
TPCC addresses these issues, SBA expects to play a role in 
representing the interests of U.S. small business.
    The SBA is working specifically with DOD to develop and 
expand contract opportunities available in the areas of 
international trade with a special emphasis on Federal 
procurement.

       RESPONSE TO A WRITTEN QUESTION OF SENATOR MILLER 
                     FROM HECTOR V. BARRETO

Q.1. Will the SBA be providing ``Disaster Relief '' type loans 
to those aviation businesses directly affected by the FAA's 
``No Fly Rule'' after the WTC Disaster, and if so, in what 
aspects?

A.1. The U.S. Small Business Administration is currently 
providing working capital loans to small businesses, including 
aviation businesses, that were directly impacted by the 
destruction of the World Trade Center or damage to the Pentagon 
on September 11, 2001, or Federal actions taken in response to 
those actions between 
September 11 and October 22, 2001. The FAA's ``No Fly Rule'' is 
a 
Federal Action. An aviation small business may be eligible for 
con-
sideration of a loan under SBA's Economic Injury Disaster Loan 
program where there is a direct causal relationship between the 

business and the Federal Action.
    Under the Economic Injury Disaster Loan program, the SBA 
can make direct low interest and long-term working capital 
loans to help eligible businesses meet their obligations and 
pay ordinary and necessary operating expenses that they are now 
unable to pay as a direct result of the disaster.

         RESPONSE TO WRITTEN QUESTIONS OF SENATOR REED 
                      FROM PETER S. WATSON

Q.1. Can you discuss, in detail, some of the specific programs 
or strategies that will reach out to small- or medium-sized 
businesses in order to encourage greater export promotion? How 
will these strategies compete with other nations' programs, 
especially with the comparatively less funding that we provide 
to our trade promotion agencies? How can you work more 
effectively with organizations, agencies, or the private sector 
on a regional or local level to carry out this goal of greater 
export promotion? How will you ensure that these programs are 
effectively reaching and assisting these businesses? How can 
you target these programs to emerging markets, where our 
country is rapidly losing the most market share?

A.1. OPIC is responding in several ways to the needs of U.S. 
small businesses seeking to make an investment in a developing 
country. We have reduced our loan size from $2 million to $ 
100,000 to better address the needs of small business. We have 
also created new loan structures that are more useful and 
friendly to the needs of small- and medium-sized businesses and 
streamlined the application process for small businesses and 
reduced red tape. For example, our insurance application went 
from 20 pages down to 5 pages for small businesses, OPIC has a 
small business hotline and a small business outreach 
coordinator to respond to the unique needs of the small 
business community.
    To be more effective, OPIC is also reaching out to small 
businesses in two additional ways. OPIC works very closely with 
the U.S. Export Assistance Centers (USEAC's) and their 
satellite offices, which are coordinated by the U.S. Department 
of Commerce and include officials from the Export-Import Bank 
and the Small Business Administration. They serve as 
coordinated centers for trade information and are listed in 
most telephone directories under U.S. Government agencies. The 
19 USEAC's are located in the major population areas throughout 
the United States and the U.S. Commerce Department also 
operates smaller satellite offices. They provide walk-in and 
one stop service for small businesses interested in trade, 
exports or overseas investment. Frequently, they are the first 
and most accessible points of contact for a small 
businessperson. OPIC works very closely with USEAC's officials 
to be sure that they have the latest information about OPIC's 
services and can provide referral advice when a small business 
is interested in overseas investment. The USEAC's are also 
repositories of the latest OPIC educational and marketing 
materials and a listing of OPIC's small business services. This 
includes an information booklet targeted for small businesses, 
the small business hotline that provides specific small 
business information, a small business electronic mailbox, a 
public information officer for general information, and the 
small business outreach coordinator to provide more detailed 
information.
    OPIC is also utilizing the Internet to reach out to small 
businesses. This is an efficient and cost-effective means to 
carry out our mission and it can be done without matching 
expenditures by competitor programs. Most small businesspersons 
interested in trade, exports or overseas investment are 
familiar with the web and have Internet access. The central 
U.S. Government website includes a link to the OPIC website. In 
addition, the SBA, the Ex-Im Bank, and the DOC websites include 
links to OPIC's website. OPIC has also proactively ensured that 
search engines using generic key words--that is small business, 
loans, investment--will bring the small business person to 
OPIC's website. Once in the website the small businessperson 
will find a specially designated small business section. This 
section includes an interactive small business training on 
OPIC's products to help a small businessperson determine how 
they can best utilize OPIC's products and an investor's gateway 
that provides country and sector information and links, and 
personnel contact information.
    Of the services that OPIC can provide, one serious obstacle 
for a small business investing overseas is preparing for the 
political uncertainty in the host country and securing adequate 
financing. OPIC, through its political risk insurance and 
financing products, helps small business to overcome these 
obstacles. We also solicit client feedback to make certain we 
are effectively meeting client 
requirements.
    For a small business looking for growth opportunities, 
doing business in today's global economy can be challenging. 
This is particularly true in emerging markets. But OPIC fills 
an important role in helping small businesses meet this 
challenge in these key markets. OPIC's political risk insurance 
can protect small businesses from political uncertainty. As a 
U.S. Government agency, OPIC also serves as an effective 
advocate for its small business clients who are confronted with 
the arbitrary actions of a host country's government. Finally, 
OPIC helps small businesses respond to the challenges of 
investing in emerging markets by providing financing when 
private sector financing is not available.

Q.2. How do you envision recent heightened security concerns 
to affect exporting industries? What measures are being taken 
to 
both assist current U.S. exporters and ease the concerns of 
potential exporters? Can you discuss any ongoing coordination 
with agencies such as the Department of State, Department of 
Defense, and the Department of Agriculture to address these 
ongoing security concerns?

A.2. The Department of Commerce is the Agency more directly 
involved in remedying security concerns encountered by U.S. ex-
porters. OPIC, as a developmental agency which promotes private 
sector investment in third world countries and countries in 
transition to a free market economy, is prepared to assist 
projects that it supports with advocacy as necessary.

         RESPONSE TO WRITTEN QUESTIONS OF SENATOR REED 
                      FROM THELMA J. ASKEY

Q.1.a. Can you discuss, in detail, some of the specific 
programs or strategies that will reach out to small- or medium-
sized businesses in order to encourage greater export 
promotion? How will these strategies compete with other 
nations' programs, especially with the comparatively less 
funding that we provide to our trade promotion agencies?

A.1.a. The majority of companies with which TDA works are small 
businesses. Small companies conduct more than one-third of TDA-
funded feasibility studies, and over 60 percent of the firms 
with which TDA works are small. Absent TDA involvement, many of 
these firms would not have the opportunity to become involved 
in international development projects.
    The small businesses that produce one in three of TDA's 
feasibility studies gain valuable experience in analyzing 
foreign projects, and then having a foot in the door to obtain 
even more of the work associated with those projects. However, 
the real impact for small business lies in the implementation 
phase of major projects, where small companies stand to export 
millions of dollars in goods and services as suppliers and 
subcontractors to major projects.
    Additionally, all of TDA's due diligence projects--
Definitional Missions and Desk Studies--are undertaken by small 
businesses. This provides interested small businesses with an 
opportunity to gain experience in working with TDA and in 
international markets, and allows them to progress to 
performing feasibility studies. Feasibility studies are 
considerably larger and provide an opportunity to compete to 
participate in the implementation phase of a development 
project. Accordingly, TDA provides small businesses with many 
opportunities to expand their international work.
    TDA actively is participating in the Trade Promotion 
Coordinating Committee's current analysis of foreign government 
programs and looks forward to using that information to 
establish benchmarks against which to measure our performance. 
Because, as you rightly point out, other governments provide 
higher levels of export promotion assistance, TDA must work 
much harder and smarter to produce results for U.S. firms.

Q.1.b. How can you work more effectively with organizations, 
agencies, or the private sector on a regional or local level to 
carry out this goal of greater export promotion?

A.1.b. TDA works extensively with members of the Trade 
Promotion Coordinating Committee, including the Small Business 
Administration, the U.S. Export-Import Bank (Ex-Im) and the 
Overseas Private Investment Corporation (OPIC). Among TPCC 
agencies, TDA most frequently partners with Ex-Im and OPIC to 
conduct trade promotion activities overseas and identify 
promising project opportunities. The three agencies also 
jointly operate two regional offices, one in Turkey and one in 
Croatia. Maintaining these overseas regional offices allows the 
agencies to work hand in glove to develop the regional 
economies while promoting U.S. exports. In the near future, we 
will look to these field offices to respond more quickly to the 
commercial and developmental needs of countries in strategic 
locales and during difficult, uncertain times.
    In addition, TDA works extensively with the Departments of 
Commerce and State to promote U.S. exports. The Commerce 
Department's U.S. Foreign and Commercial Service (FCS) is a 
primary intelligence source in identifying many projects that 
TDA funds. Because FCS officers are stationed overseas, they 
have established local business and government contacts that 
help them target potential business opportunities for U.S. 
firms in foreign markets. TDA's coordination with FCS allows 
the agency to use its own resources more efficiently and to 
accomplish more than it could alone by utilizing FCS expertise 
in identifying projects for possible TDA support and funding.
    TDA also works closely with American Embassies to design 
and market the agency's overseas trade conferences to maximize 
our 
effectiveness. Additionally, State Department staff often 
provide 
another good intelligence source for projects with significant 
U.S. 
export opportunities.
    This interaction is a two-way street. By working with TDA 
to provide development assistance to host countries, FCS 
officials gain access to higher-level foreign officials than 
those with whom they typically work. This partnership, in turn, 
helps FCS to raise its profile in host countries and enhances 
its ability to gather information for the benefit of U.S. 
companies. At the same time, TDA involvement with U.S. 
Embassies supports U.S. Ambassadors and their Foreign Service 
staff as they strive to assist U.S. businesses competing 
overseas and to help foreign project sponsors meet important 
development needs.
    Finally, TDA coordinates with the multilateral development 
banks and the International Finance Corporation to ensure 
financing is available for projects to which TDA provides 
funding.

Q.1.c. How will you ensure that these programs are effectively 
reaching and assisting these businesses?

A.1.c. In TDA's experience, limited resources tops the list of 
challenges facing small businesses in exporting their goods and 
services. TDA conducts numerous outreach efforts, including 
such 
activities as business briefings, trade conferences and reverse 
trade missions, to directly respond to this challenge. These 
outreach efforts benefit small businesses in particular because 
they reduce the need for such companies to travel the world to 
identify opportunities, and they provide ready access to key 
decisionmakers on significant projects.

Q.1.d. How can you target these programs to emerging markets, 
where our country is rapidly losing the most market share?

A.1.d. By law, TDA only operates in developing and middle-
income nations, which are the very nations that comprise the 
so-called emerging markets. All TDA activities serve the dual 
purpose of promoting U.S. exports and fostering development in 
those markets, thereby creating jobs and developing 
commercially viable economic growth in the host nation.

Q.2.a. How do you envision recent heightened security concerns 
to affect exporting industries? What measures are being taken 
to 
both assist current U.S. exporters and ease the concerns of 
potential exporters?

A.2.a. As we already have seen in news reports, heightened 
security is slowing the shipment of some goods across borders 
as customs services become more vigilant. TDA will continue to 
work with our contractors and with exporters as they navigate 
the new economic and political environment, and will work 
creatively to resolve difficulties they may encounter. You may 
be interested to know that TDA already is active in an area 
that will provide direct 
relief for this problem, namely supporting customs 
modernization projects in developing countries. In addition to 
producing more export opportunities for U.S. firms, these 
projects help host nations improve their inspection processes 
while reducing the time these processes consume.

Q.2.b. Can you discuss any ongoing coordination with agencies 
such as the Department of State, the Department of Defense, and 

the Department of Agriculture to address these ongoing security 

concerns?

A.2.b. As mentioned above, TDA's staff regularly works with the 
Departments of Commerce and State, as well as other TPCC 
members to assess conditions affecting U.S. exporters and 
develop suitable responses to these challenges. In fact, in the 
wake of the September 11 attacks, Peter Watson, John Robson and 
I met to develop joint strategies for projects in Eurasia and 
Asia. We and our staffs are evaluating how we can best respond, 
both as individual agencies and collectively, to changes in the 
business climate and increased levels of risk in those regions, 
and around the world. Our agencies want to be ready to meet the 
significant challenges ahead. We will, of course, continue to 
work together, and with the other members of the TPCC, to 
assist U.S. businesses in weathering the current situation.
















































