[Senate Hearing 107-]
[From the U.S. Government Publishing Office]
S. Hrg. 107- 951
THE ANNUAL NATIONAL EXPORT STRATEGY
REPORT OF THE TRADE PROMOTION
COORDINATING COMMITTEE
=======================================================================
HEARING
before the
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
ON
REVIEWING THE ANNUAL REPORT OF THE TPCC ON ITS NATIONAL EXPORT STRATEGY
AND ITS PLANS FOR THE COMING YEAR
__________
MAY 14, 2002
__________
Printed for the use of the Committee on Banking, Housing, and Urban
Affairs
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WASHINGTON : 2003
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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
Michael James Barton, Republican Professional Staff
Joseph R. Kolinski, Chief Clerk and Computer Systems Administrator
George E. Whittle, Editor
(ii)
?
C O N T E N T S
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TUESDAY, MAY 14, 2002
Page
Opening statement of Chairman Sarbanes........................... 1
Opening statements, comments, or prepared statements of:
Senator Carper............................................... 2
Senator Akaka................................................ 3
Senator Hagel................................................ 6
WITNESSES
Donald L. Evans, Secretary, U.S. Department of Commerce.......... 4
Prepared statement........................................... 23
Eduardo Aguirre, Vice Chairman and First Vice President, Export-
Import
Bank of the United States...................................... 7
Prepared statement........................................... 26
Hector V. Barreto, Administrator, Small Business Administration.. 9
Prepared statement........................................... 29
Thelma J. Askey, Director, U.S. Trade and Development Agency..... 10
Prepared statement........................................... 31
Ross Connelly, Executive Vice President, Overseas Private
Investment
Corporation.................................................... 12
Prepared statement........................................... 33
Additional Material Supplied for the Record
The 2002 National Export Strategy Report submitted by the Trade
Promotion Coordinating Committee............................... 36
(iii)
THE ANNUAL NATIONAL EXPORT STRATEGY
REPORT OF THE TRADE PROMOTION
COORDINATING COMMITTEE
----------
TUESDAY, MAY 14, 2002
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met at 10:35 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 hearing will come to order.
We may be interrupted by a vote shortly. But you are never
absolutely sure when those votes are going to take place, so we
might as well get started, and if the vote comes, we will have
to suspend and resume afterwards.
I am very pleased to welcome before the Committee this
morning this panel of distinguished representatives of the
Trade Promotion Coordinating Committee: Secretary of Commerce
Donald Evans, who serves as the Chairman of the Trade Promotion
Coordinating Committee; Eduardo Aguirre, Vice Chairman and
First Vice President of the Export-Import Bank, in which
capacity he serves as Vice Chairman of the TPCC; Hector
Barreto, Administrator of the Small Business Administration;
Thelma Askey, Director of the Trade and Development Agency; and
Ross Connelly, Executive Vice President of the Overseas Private
Investment Corporation.
Peter Watson, the President, is in Africa, as I understand.
Mr. Connelly. Correct.
Chairman Sarbanes. Before we address today's subject, I
want to take just a moment to acknowledge someone who was on
this panel when the Banking Committee held its last hearing,
but is not, regrettably, with us today, and that is John
Robson.
I had the highest regard and respect for John. I thought he
was a very effective Chairman of the Export-Import Bank. He
brought great stature, depth of public sector experience, and
just plain good judgment to the position. As Chairman of the
Export-Import Bank, he also served as Vice Chairman of the
TPCC, in which I know he took a very strong interest. Not only
the Export-Import Bank and the TPCC, but also, indeed, the
Nation, will greatly miss his leadership and his dedicated
service.
I very much wanted to put that on the record this morning.
The purpose of today's hearing is to review the Annual
Report of the TPCC on its National Export Strategy and its
plans for the coming year.
The Trade Promotion Coordinating Committee was established
in statute by the Export Enhancement Act of 1992. I should note
that before that, actually, we had a trade promotion
coordinating committee as an initiative of the first Bush
Administration. In fact, the legislation was passed during the
Bush Administration.
I make that point only to emphasize that this has been a
bipartisan effort from its inception. It has commanded strong
support on both sides of the aisle and it was also, I think, a
reflection of close Executive-Congressional cooperation at the
time, and I think that has continued to be reflected as we have
worked on this over the last decade.
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 Government-wide strategic plan for carrying out
Federal export promotion and export financing programs. The
statute designates the Secretary of Commerce as the Chairman
and designated as members all the Federal agencies involved in
export promotion.
The effectiveness of the TPCC depends greatly on the
leadership it receives from the Chairman and other key members,
and let me say that it has been my perception that Secretary
Evans and Under Secretary Grant Aldonas have recognized the
TPCC from the time they took office as an opportunity to bring
a greater sense of strategy and focus to U.S. export promotion
efforts, and we very much appreciate that perception on their
part and their efforts to energize the TPCC as a priority.
And they appear, at least, to have gotten active
cooperation and leadership from the other agencies represented
on the panel--well, certainly, the ones represented on the
panel and, hopefully, others not here represented.
As I mentioned, last October, the Banking Committee held a
hearing on the preliminary report of the TPCC, in expectation
of the Annual Report submitted today. At that time, Secretary
Evans indicated that the Committee planned to undertake a
benchmarking exercise to learn more about what customers of the
agencies want from U.S. export promotion programs, and to
examine the best practices of the governments of our major
competitor countries to determine how they promote exports. I
understood that then they would review U.S. export promotion
programs in light of this exercise and develop recommendations
for making improvements.
As I understand it, that exercise has been completed, or at
least a good part of it has, and Secretary Evans and the other
members of the Trade Promotion Coordinating Committee are here
this morning to present their findings and recommendations.
So, we very much look forward to your testimony. With that,
I yield to Senator Carper.
STATEMENT OF SENATOR THOMAS R. CARPER
Senator Carper. Thank you, Mr. Chairman. And to each of our
witnesses, good morning, and welcome.
There are three old Governors, who sit right here, side by
side--former Governor Evan Bayh, former Governor Zell Miller,
and former Governor Tom Carper. And even though we serve in the
Senate----
Chairman Sarbanes. It is a powerful bloc.
[Laughter.]
Secretary Evans. Indeed.
[Laughter.]
Senator Carper. A lot of frustration over here on this part
of the panel.
[Laughter.]
Not really. One of the things that each of us used to do as
Governors is lead trade delegations to countries all over the
world. And during the time that I was privileged to be Governor
of Delaware, I remember going to places like Japan, Vietnam,
Taiwan, Canada, Mexico, Chile, and some other places.
I was a shut-in compared to some of the Governors. They
really got around the globe to promote their States and trade
with other countries.
One of the things we focused on within the National
Governors Association was the belief that if governors led
trade delegations to other parts of the world, if we went over
a little better briefed, and our staffs went over a little
better briefed, we might not only do maybe some good for our
States, but also we might do some more good for the country.
I think your predecessor, Mr. Secretary, was good to work
with us, and I think the State Department was good to work with
the National Governors Association and with the governors.
I think that in your testimony here today, Secretary Evans,
you indicate that the Department of Commerce plans to dedicate
some more resources to training State partners in trade
promotion coordinating activities.
I applaud that. I know if Senator Bayh and Senator Miller
were here today, they would as well. But we help our States and
we help our country to the extent that we can continue to work
as partners in training and in export promotion.
I simply wanted to make that point to remind you that it is
important, and to let you know that these old Governors, and I
think I speak for my two colleagues as well, appreciate and
applaud what you are doing here.
Thank you, Mr. Chairman.
Chairman Sarbanes. Thank you, Senator Carper.
Senator Akaka.
COMMENTS OF SENATOR DANIEL K. AKAKA
Senator Akaka. Thank you very much, Mr. Chairman.
I want to join you in welcoming the witnesses. I also thank
them for appearing here today. I look forward to your
discussion of the Annual National Export Strategy Report of the
Trade Promotion Coordinating Committee.
The work of the TPCC in coordinating and developing Federal
activities to increase exports is extremely important to our
Nation, and really, the world as well. Increased exports have a
positive impact on the economy through the potential creation
of jobs, increasing wages, and acceleration of economic growth.
Representing a State where small businesses are such a
vital part of the economy, I am particularly interested in the
efforts being made to provide assistance to small businesses
that export their products or have the potential to do so.
Mr. Chairman, I look forward to today's discussion on a
strategy for U.S. export promotion and export financing
programs.
Thank you very much, Mr. Chairman.
Chairman Sarbanes. Thank you, Senator Akaka.
The light has gone off. The vote has begun. Mr. Secretary,
I think probably that we should suspend and go and vote and we
will come back, and then we will take your testimony.
Secretary Evans. Very well.
Chairman Sarbanes. So the Committee will stand in recess
for a few minutes.
[Recess.]
Chairman Sarbanes. The Committee is prepared to resume.
Mr. Secretary, I have no colleagues here who want to make
opening statements, so why don't we go right to you.
STATEMENT OF DONALD L. EVANS
SECRETARY
U.S. DEPARTMENT OF COMMERCE
Secretary Evans. Thank you, Mr. Chairman. I am delighted to
be back in front of your Committee. This is one of the subjects
we talked about in our very first meetings. I know how
important it is to you. I appreciate your focus on it.
I also want to associate myself with the remarks you made
with respect to John Robson. He was truly an extraordinary
public servant. He served this country with great dignity and
integrity and he will be missed. His presence was very much
felt on this Committee for the period of time that he was on
it. And so, again, thank you for those kind words that you
offered.
Mr. Chairman, and other Members who are not here, as
Chairman of the Trade Promotion Coordinating Committee, I am
extremely pleased to be here today with my colleagues to
preview the President's first National Export Strategy.
I ask that you include my written testimony in the record.
Chairman Sarbanes. It will be included in the record.
Secretary Evans. Thank you, Mr. Chairman.
I intend to focus my oral remarks on three basic points.
One, the tool the President needs to pry open markets for
American goods, services, investments, and ideas. Two, the
means by which we can ensure that the President's export
promotion objectives are met. And three, the continuing role I
expect the TPCC to play in implementing the President's
strategy. President Bush and I both start from the proposition
that American farmers, workers, and business already compete in
a global economy. The only real question is whether we will
give the President the tools that he needs to shape that global
economy to our advantage or leave others to write the rules of
the road.
The President and, by extension, the United States, has
been shunted aside in the battle to open new markets because
the President lacks the tools he needs to defend our interests
at the negotiating table --Trade Promotion Authority. With TPA,
the President could conclude trade agreements that might
contribute as much as $1.9 trillion to worldwide economic
growth. Without TPA, those new markets will go to our trading
partners, along with the investments in jobs that those markets
will create.
The question before the Senate is whether U.S. farmers,
workers, and entrepreneurs will get a chance to compete for a
slice of the expanding global economic pie or find their goods
and services increasingly locked out of markets around the
world.
The President needs TPA, or Trade Promotion Authority, now.
While Trade Promotion Authority is a necessary condition
for defending America's trade interests, it is not sufficient.
That is where our export promotion strategy and the TPCC comes
in. I can summarize our approach in three words that lie at the
very heart of the President's management agenda--follow-
through, results, and accountability.
First, I say follow-through. I mean ensuring that the
benefits of our trade agreements accrue to American exporters,
rather than our trading partners. Too often, the United States
has left its trade gains on the bargaining table.
We aim to reverse that trend. We have already begun to
implement that strategy. The most significant market opening
initiative in recent years has been China's accession to the
World Trade Organization. That is why I recently led a trade
mission to Bejing and Shanghai. It is also why I will send a
high-level Commerce official to China each month to ensure that
China implements its WTO obligations, so that our small- and
medium-sized companies can reap the gains from China's
compliance. We have adopted the same approach with our free
trade agreement partners. I will lead a trade mission for
small- and medium-sized U.S. businesses to one of our NAFTA
trading partners, Mexico, this summer. I will be joined on that
trip by many of my TPCC colleagues here with me today because,
as I have told my colleagues, we would be better prepared to do
business.
Second, when I focus on results, it is because that is what
the President and I both expect. When we met with you last
October, Mr. Chairman, we described our intention to ensure our
export promotion programs were best in class, when compared
against our Government counterparts abroad and within private
industry.
Today, after 7 months of research and a true team effort,
my colleagues and I are confident that we have laid the
groundwork for achieving just that goal.
That said, after 30 years of experience in the private
sector, I can tell you that if you cannot measure your
progress, you won't make any progress. That is why I will
insist that our first step in implementing the recommendations
set out in the TPCC's Report will be to define the results we
want to achieve and develop the means to measure our progress
toward those goals.
The guideposts I intend to use to measure our progress
include the growth of U.S. exporters, particularly small- and
medium-sized exporters, and the level of exports that take
place as a result of our efforts. And three, whether we have
met our customers' expectations. That will ensure that our
export promotion programs remain grounded in what our customers
want, which is the surest way to guarantee results.
Third, and finally, I intend to emphasize accountability.
My colleagues and I have assumed personal responsibility for
making this work. We expect to be held to that standard. The
President expects nothing less, nor should you.
The role that the TPCC will play in implementing our export
strategy is straightforward. I intend to adopt what my friends
in business would call a total quality approach to export
promotion, with the TPCC serving as the auditor of our progress
toward that goal. The TPCC agencies will meet at least once a
month at the cabinet level or subcabinet level to take stock.
The TPCC will produce quarterly reports so that we can check
our progress throughout the year, rather than waiting for the
Annual Report.
In the process, I expect the TPCC process to ensure that
the agencies involved are coordinating our efforts, to name
only a few of the recommendations contained in this Report.
Working together to discover projects sooner and bringing
the prospect of U.S. financing early on in order to help U.S.
companies take full advantage of these opportunities. Also
presenting a single face to the exporter, tailing agency
programs to meet the exporters' needs by functioning as one-
stop shops.
We want our people in the field to function like account
managers, helping firms navigate the full array of Government
export promotion programs. Also combining the marketing efforts
of SBA, Ex-Im Bank, and the Commercial Service to make sure
lenders know how these programs can help their small business
clients.
In addition, enhancing our use of the Internet as a
communication tool, particularly our primary portal--
export.gov--so that exporters can find the Government's best
information on trade leads in one place in real time. And
reaching out to our State and local partners, elected
officials, and private sector representatives, as a means for
reaching small- and medium-sized companies as multipliers of
our services.
In closing, let me reiterate my appreciation to you,
Senator, and all the Members of this Committee for your
interest in and oversight of the export promotion process. What
the TPCC really offers us is an avenue through which we can
apply many of the principles of private sector management to
Government programs, yielding what I promise will be both
effective and results-oriented.
I welcome your thoughts and those of your colleagues on the
recommendations we are presenting today, and would be pleased
to answer any questions you may have.
Chairman Sarbanes. Thank you very much, Mr. Secretary.
We have been joined by Senator Hagel. Chuck, did you have
any opening statement?
COMMENT OF SENATOR CHUCK HAGEL
Senator Hagel. No. Thank you, Mr. Chairman.
Chairman Sarbanes. Well, we will move right along, then,
and we will now hear from the Vice Chairman of the Export-
Import Bank, Mr. Aguirre.
STATEMENT OF EDUARDO AGUIRRE
VICE CHAIRMAN AND FIRST VICE PRESIDENT
EXPORT-IMPORT BANK OF THE UNITED STATES
Mr. Aguirre. Thank you, Mr. Chairman.
Before I begin my remarks, I would like to once again thank
you for your comments and for the comments of so many others
regarding the passing of our late Chairman Robson. Clearly, Ex-
Im Bank is still in mourning and will be for some time. We miss
him. But our extended family, and certainly the Robson family,
very much appreciate all the sympathy that we have been
receiving over the past month and a half.
Chairman Sarbanes. I note that there is a very nice tribute
to John Robson in the opening of the TPCC Report. I commend you
for that.
Mr. Aguirre. Thank you, Mr. Chairman. And thank you for the
opportunity to appear before you today, particularly in my role
as Vice Chairman of the TPCC, and to present the National
Export Strategy. We are very pleased to share our collective
strategy on how to increase U.S. exporter competitiveness
through collaborative Government support. And with your
indulgence, and in the interest of brevity, a more extensive
testimony is being provided for the record.
Chairman Sarbanes. It will be included in the record.
Mr. Aguirre. Thank you, Mr. Chairman.
My testimony focuses on Ex-Im Bank and the export finance
arena. The Export-Import Bank of the United States is in step
with the Administration's commitment to free and fair trade.
Ex-Im Bank supports American jobs by assisting U.S. exporters
to compete fairly and successfully in the world marketplace.
U.S. businesses rely on Ex-Im Bank to facilitate the financing
of exports that would otherwise not take place. We attempt to
level the playing field for U.S. businesses by offsetting
market imperfections and trade-distorting subsidies that
disadvantage U.S. exporters.
Last year alone, Ex-Im Bank supported $12.5 billion worth
of U.S. exports. Of all Bank transactions, 90 percent were in
direct support of small businesses, representing $1.7 billion
or 18 percent of the exports supported. In fact, 383 new small
businesses utilized the Bank for the first time last year to
support their exports. As all of you know, Ex-Im Bank does not
compete with the private sector financing.
The Bank works closely with other U.S. Government agencies
to capture possible efficiencies and to protect the interest of
the taxpayer. Let me briefly review some of the prior TPCC
initiatives
involving Ex-Im Bank and what Ex-Im Bank is currently doing to
address them.
The Bank maintains eight regional offices across the
country. For the past 2 years, the Bank has delivered direct
marketing material jointly with the Department of Commerce and
some of their divisions. We are doing more educational seminars
outside of Washington and have reformatted them into efficient
one-day mini-courses.
We actively participate in trade association shows, where
thousands of exporters and buyers are gathered in a very cost-
effective outreach tactic. Just 2 weeks ago, the Bank hosted
1,500 participants, who came to learn about the Bank and to
network, at our annual conference. Participants included
exporters, bankers, brokers, foreign buyers, and the United
States and foreign government officials. Now onto the current
TPCC recommendations.
The recommendations of the National Export Strategy were
developed in close coordination amongst the TPCC agencies and
with significant input from the U.S. export community. From
this dialogue, the TPCC developed the recommendations.
Highlights of the recommendations that pertain to the Ex-Im
Bank include five key areas:
Number one, technology. Employ technology to maximize
customer service, creating processing efficiencies, and
leveraging scarce human resources through automation. We also
have several upgrading programs in place, and we aim to provide
faster turn-around time and more up-to-date management
information.
Number two, tied aid. Develop a multipronged approach to
address the trade-distorting effect of commercially driven tied
aid.
Number three, Ex-Im Bank and SBA coordination. We aim to
better integrate Ex-Im Bank's and SBA's Working Capital
Guarantee Programs. In fact, last week, Administrator Hector
Barreto of the SBA and I signed an agreement to coordinate
marketing
efforts and to work together to identify additional
opportunities to
integrate these programs.
Number four, market windows. Commission a study to assess
the impact of market window activity on U.S. exporter
competitiveness.
And last, number five, the service sector. Examine the
unique
financing needs of the services sector and develop programs and
procedures that address those needs.
In conclusion, since last October, when the TPCC agencies
collectively last testified before this Committee, we have been
working very hard to identify innovative ways to serve Ex-Im
Bank's customers--the Nation's exporters. I look forward to
working with you and the other TPCC agencies in implementing
these critical steps to improve U.S. exporter competitiveness.
Mr. Chairman, Senator Hagel, and Senator Akaka during my
34-year banking career, I have always tried to make decisions
on what is right for the customer. In the private sector, it
was a matter of survival, aligning your organization around
your customers' needs and expanding your services through
strategic alliances. Those were, and still are, one of the best
ways for companies to expand market share.
In the public sector, the principles of the TPCC are
fundamentally issues of efficiency and providing our exporters
with a unified and simplified Government response. Our
exporters need the best their Government can offer. The best
will only come through our collective and coordinated actions.
While the TPCC has made progress in the past few years, we
recognize that we have more to do in several areas. The TPCC is
committed to this effort. We appreciate your leadership on
these issues and I look forward to addressing your questions.
Thank you.
Chairman Sarbanes. Thank you very much.
Next, we will hear from Hector Barreto the Administrator of
the Small Business Administration.
STATEMENT OF HECTOR V. BARRETO
ADMINISTRATOR
SMALL BUSINESS ADMINISTRATION
Mr. Barreto. Thank you, Chairman Sarbanes, and
distinguished Members. Thank you for inviting me to testify on
the Trade Promotion Coordinating Committee's National Export
Strategy, and the role that the U.S. Small Business
Administration plays in the Federal Government's export
promotion strategy.
I would first like to recognize the outstanding leadership
of Secretary Evans, Under Secretary Aldonas, and the TPCC staff
for their dedication to this effort. The SBA has been working
closely with the Department of Commerce, Ex-Im Bank, OPIC, and
other TPCC agencies in developing recommendations for the
National Export Strategy that incorporate small business issues
in order to grow them to be the most competitive in the world.
Small businesses create two-thirds of new U.S. jobs, are
responsible for much of our economy's innovation and generate
over half of our private gross domestic product. But while 97
percent of U.S. exporters are small businesses, fewer than 1
percent of our small businesses export.
The TPCC conducted a formal survey of 3,000 U.S. small- and
medium-sized businesses to determine what was needed for them
to be more competitive in the global marketplace. The survey
found that small companies face more hurdles exporting than
large companies. Specifically, small businesses need good
information and expertise in a way that does not require large
resources of time. Small businesses also need capital. And the
SBA is a resource for these needs.
The National Export Strategy presented today by the TPCC
recommends: ``A Government that provides better customer
service through joint promotion, training, trade finance, and
information delivery.'' In order to meet the need to create a
one-stop-shop approach, we have enhanced our working
relationships with our partners in the following ways:
SBA and the Ex-Im Bank have entered into a Memorandum of
Cooperation. The first phase of this initiative will be to
leverage marketing resources across SBA and Ex-Im Bank to raise
awareness among lenders and exporters.
SBA and the Department of Commerce are working more closely
to coordinate marketing and outreach efforts to the U.S. small
business community in the delivery of both technical and
financial assistance programs. The SBA's and Commerce's
national network of service providers will collaborate and will
work in partnership to provide significantly improved
counseling, training, and financial assistance, while also
forming a more efficient and transparent delivery system for
these services. We are already making great strides in cross-
training. For example, in recent months, SBA has participated
in Commerce's annual regional meetings of Senior Commercial
Officers and have begun the process of training them on SBA's
International Trade Loan Programs.
Another example of our efforts in leveraging our
partnership to further promote export opportunities for U.S.
small businesses will be the Small Business Initiative between
SBA and OPIC that will focus on cross-training and outreach to
provide the necessary tools and products needed to invest
internationally. We look forward to formalizing this
opportunity in the very near future.
After reviewing our existing International Trade loan
programs and the recommendations from the National Export
Strategy, SBA increased the Export Express loan guaranty to a
new maximum of $250,000. The SBA Export Express loan guaranty
program can be used to finance small businesses' export
development costs such as participation in a foreign trade show
or translation of product catalogues, as well as finance actual
export orders.
SBA is also a partner in many of the President's E-
government initiatives to make information available on-line 24
hours a day, 7 days a week. We are currently working together
with Commerce to strengthen our links with export.gov and
looking at enhancing SBA's International Trade website to allow
the customer to access information at the time and the place of
his or her convenience.
SBA currently provides information to small businesses
through the Export Trade Assistance Partnership, or E-TAP. E-
TAP is a training program offered at each of the 19 U.S. Export
Assistance Centers and some Small Business Development Centers,
which combined with individual business counseling, offers
effective and customized assistance to new-to-export companies
looking to enter the global marketplace. We are looking at ways
of increasing the number of E-TAP programs being offered by
encouraging our resource partners to implement the program.
SBA is fully committed to the National Export Strategy. We
believe that the recommendations in this Report will help to
streamline and improve Federal export assistance programs and
benefit U.S. small businesses so that they will continue to be
the most competitive companies in the world.
I look forward to SBA's ongoing contribution to the TPCC
and our commitment to evaluate and harmonize our programs. I
would be happy to answer any questions you may have, and thank
you very much for the opportunity.
Chairman Sarbanes. Thank you very much. And in introducing
you, I wanted also to thank you for the SBA's quick response to
the tornado that struck Southern Maryland. Your people were on
the scene and we very much appreciate that.
Mr. Barreto. Thank you, Mr. Chairman.
Chairman Sarbanes. It has been very helpful.
Next, we will hear from Thelma Askey, Director of the U.S.
Trade and Development Agency.
STATEMENT OF THELMA J. ASKEY
DIRECTOR
U.S. TRADE AND DEVELOPMENT AGENCY
Ms. Askey. Thank you, Chairman Sarbanes, Senator Hagel, and
Senator Akaka, for providing this opportunity for TDA and the
other members of the TPCC to come before you today.
As has already been said, the last time we were before you
was October 2 of last year, shortly after the attacks of
September 11. Now, 6 months later, I think it is even more
clear that trade promotion efforts such as those we are
discussing here today, are vital to the United States--and
global--economic and political security. In particular, our
ability to foster development in and trade with the Front Line
States, with countries in South and South-East Asia, and with
struggling markets in Africa, will go a very long way toward
promoting international stability.
To begin with, let me first express my appreciation to
Secretary Evans, Under Secretary Aldonas, and their staffs for
the tremendous amount of work that they have put into the TPCC
process in the past 7 months. They are to be commended for
their proactive efforts to discern the needs of the exporting
community and to develop specific strategies to respond to
those needs.
The Report contains a number of specific proposals
pertaining to TDA, and I will outline them in a moment, but
since TDA does not regularly appear before this Committee, I
would like to quickly take a moment to reiterate TDA's mission
and activities.
As directed by statute, TDA promotes American private
sector participation in developing and middle-income countries,
with special emphasis on economic sectors that represent
significant U.S. export potential. TDA is a small, nimble
agency that partners with U.S. companies and assists them in
building mutually beneficial relationships with overseas
project sponsors and Government officials. The result is
increased U.S. exports and jobs, as well as the completion of
high-quality, successful projects and other solutions that
address priority developmental needs in host countries.
TDA's operations put it at the forefront of U.S. foreign
and trade policy, where it works in concert with a wide array
of other U.S. Government agencies, such as the Departments of
State, Commerce, Treasury, Agriculture, Energy, and
Transportation, the U.S. Trade Representative, Export-Import
Bank, of course, and the Overseas Private Investment
Corporation.
Turning to the TPCC Report, there are a number of
recommendations that involve U.S. TDA. Since my colleagues have
already identified many of them, I will simply highlight a few
key recommendations.
First of all, we will continue to focus on developing
coordinated strategies in crisis regions. For example, TDA has
been working closely with OPIC in developing potential projects
in Afghanistan, particularly in the telecom sector. In fact,
TDA is already providing funding for an advisor to the
communications ministry, to assist them with evaluating
proposals for the telecommunications sector. We also have been
working closely with Commerce and the FAA in developing a
technical assistance program for the aviation sector in
Afghanistan that will support U.S. commercial interests.
In addition, as proposed by Treasury and other TPCC
agencies, TDA will explore opportunities to fund front-end
engineering and design studies, which are commonly referred to
as FEED studies. Other countries sometimes fund such studies as
part of aggressive efforts to win large development projects,
and TDA will initiate a pilot program to support U.S. companies
who are confronted with this type of competition.
TDA also looks forward to continuing its efforts in the
area of biotechnology. We continue to work with USDA, USTR, and
the Department of State to support public-private partnerships
that help promote sound regulatory environments overseas for
American biotech products. These efforts are crucial for
ensuring that our trading partners continue to allow the import
of American pharmaceutical and agricultural products.
Additionally, TDA will continue to develop strategies for
supporting efforts in the service sector, such as in insurance,
banking/finance, tourism and e-commerce. For example, TDA has
been supporting feasibility studies and technical assistance
for projects around the world involving e-commerce. Most
recently, 2 weeks ago, TDA signed a grant with Sinopec, China's
leading petroleum and petrochemical company, for a feasibility
study to help develop an e-trade platform, putting all of the
company's procurement activities online. And of course, that is
particularly beneficial to U.S. exporters.
In sum, TDA will continue to work closely with the TPCC and
its member agencies in making sure that U.S. policy objectives
are supported by concrete results, and that U.S. companies have
the support they need to operate around the world. This
obviously is of benefit to the U.S. economy, as it supports
exports and creates U.S. jobs. But equally important, the
dissemination of U.S. goods, technology, services, and business
practices around the world represents a cost-effective, market-
based means of effectuating the President's strategy of
supporting economic growth and development in developing
countries.
Again, I appreciate the opportunity to appear before you
today and look forward to answering any questions you may have.
Chairman Sarbanes. Thank you very much.
Our concluding panelist is Ross Connelly, the Executive
Vice President of the Overseas Private Investment Corporation.
STATEMENT OF ROSS CONNELLY
EXECUTIVE VICE PRESIDENT
OVERSEAS PRIVATE INVESTMENT CORPORATION
Mr. Connelly. Thank you, Mr. Chairman, and Members of the
Committee. I am pleased and honored to be here today on behalf
of Dr. Peter Watson, OPIC's President and CEO. Dr. Watson
regrets that he could not be here today in person due to
previously scheduled travel to Africa.
Mr. Chairman, I have some brief verbal remarks I would like
to make and ask that my written statement be submitted for the
record.
Chairman Sarbanes. Mr. Connelly, your full statement will
be included in the record.
Mr. Connelly. Thank you.
At the onset, Mr. Chairman, I want you and the Committee to
know that OPIC is committed to working with our sister agencies
to meet the objectives of the TPCC Report.
I am very pleased to be sitting here with my colleagues
from the Trade Promotion Agencies, many with whom we have
developed good and productive working relationships.
I want to briefly speak to the most encouraging fact of
this entire TPCC exercise, that not only have the agencies
reached consensus on these recommendations, but also many of us
are already implementing them.
As you know, Mr. Chairman, I spent 25 years in the private
sector. Policy-setting and goals are very important. But at the
end of the day, as Secretary Evans said, success in the private
sector is measured by tangible results. In that regard, I am
pleased to report on specific actions that we have taken in
support of the TPCC objectives.
The TPCC Report calls for greater cooperation among the
agencies in early project development, as well as better
coordination in crisis regions. This has been a major objective
of mine in the last 10 months at OPIC, and I am pleased to
report that with our colleagues at the Ex-Im Bank and TDA, we
are making this a reality.
In the company of my friend, Eduardo Aguirre, our three
agencies conducted an investment assessment mission to Pakistan
this past February that has helped us develop a significant
volume of U.S. investment opportunities in that country.
More recently, as you have heard, OPIC and TDA have been
working closely to develop opportunities in Afghanistan that we
believe should lead to fruition shortly.
There are other areas where we have played a more pro
active role--sub-Saharan Africa being an example. But I would
like to state for the record that, based on my own experience,
early identification and development of market opportunities is
a role OPIC can perform quite effectively for the benefit of
U.S. businesses and taxpayers in the context of OPIC's overall
development mission.
The TPCC call for better customer service for U.S.
businesses, mirrors our own effort to date. Through an internal
reorganization, OPIC is working to empower its individual line
departments who work directly with U.S. businesses to take
ownership of a project as it works its way through the agency
approval process, to utilize new internal structures to resolve
disputes quickly, and to streamline the application process so
that we can provide a more efficient, less costly service.
As a small agency, OPIC is looking for ways to leverage its
resources with other agencies. And in this regard, as
Administrator Barreto has indicated, OPIC soon hopes to
conclude an agreement with the Small Business Administration
that will provide a vehicle to seamlessly connect interested
U.S. companies currently doing business with the SBA with the
tools and the products that OPIC provides, in order to help
U.S. firms expand internationally.
Through these efforts and through the implementation of the
recommendations of the TPCC Report, we will have better
coordination, improved customer service, and more aggressive
outreach and advocacy for U.S. business, particularly U.S.
small business.
We at OPIC are confident that the TPCC recommendations have
placed us on the right path.
Thank you very much, Mr. Chairman. I would be pleased to
answer any questions.
Chairman Sarbanes. Thank you very much.
First of all, I want to commend you and the Committee. I
think both the survey you did of exporters and the review you
did of what other countries do provide us a very important data
base.
I am particularly interested in the Committee following up
on the resources that our competitors devote to export
promotion. And if you can get the material, what their budget
breakdown is, what goes into it, a summary of the activities
that they are doing.
I think it is very important that we fully understand and
appreciate what we are up against, what our exporters are up
against and, in effect, what you all are up against. It may
influence people here to make somewhat different judgments
about the kind of commitment that we should make to the export
strategy.
So, I think that is a very important initiative and I hope
you will build on it in future reports.
I want to focus for a moment on the two charts at the end
of the Report, which show where the money goes for export
promotion.
Now, I guess the first question that I am interested in,
and I know that budget issues are difficult and sensitive for
interagency committees to deal with. But did the TPCC play a
role in formulating the export promotion budget recommendations
that are contained in the President's budget, or did each
agency simply come forward with their proposal and got it
included one way or another, so that there was no coordination
on the budget proposal?
Secretary Evans. Mr. Chairman, I think as far as these
charts are concerned, which refers to the 2003 budget, it was
clear that each agency and department acted on their own,
independent of one another.
We are making the effort to talk about this issue as we go
into the 2004 budget cycle, particularly as it relates to an
important area like training. That is one of our focused
initiatives, to train individuals across Government as to all
the various programs that are available to our exporters in
this country, making sure that the right hand knows what the
left hand is doing, what each agency is doing. And so, we are
having discussions about that. I cannot tell you that it is
formal yet. But I do recognize the importance of talking about
a coordinated effort.
So, Mr. Chairman, as was mentioned in my comments, I think
that we have come a long way since the October meeting. We have
a long way to go, though. We are going to meet every month and
talk about priority issues that this Coordinating Committee
must deal with.
I think one of those priority issues are the resources that
we have available to us, like our budgets, and make sure that
there is not duplication, make sure there is not overlap, make
sure that there is discussion as to the kind of dollars that
each agency is using as it relates to the Coordinating
Committee and are there some savings there some place?
I do not know the answer to the question, but we are
having, and will have, those discussions as it relates to the
2004 budget.
Chairman Sarbanes. Well, we changed the date for the Report
from September to March in 1999, in an effort to try to get the
TPCC into the budget cycle, so that there was a coordinated
Administration strategy on export promotion, which kind of
reflected the judgment of the interagency committee.
I am encouraged to hear that, to some extent, you are
thinking in those terms for the 2004 budget. I think as you
look at what other countries are doing, it would be helpful if
we got some sense of how they allocate their assistance, to. I
notice 50 percent of the promotion is done by the Department of
Agriculture.
Secretary Evans. Right.
Chairman Sarbanes. Now, without more analysis, I do not
know whether that is the right figure, too much, too little. It
is hard to judge. But it would be interesting to know what
other countries do and how this relates.
I am struck by the fact that in the Report, because I have
a feeling that probably the overall amount we are providing is
not adequate. Actually, I know you all are bound by the OMB,
but I might try to find some indirect way to put that question
because you indicate that Canada last year spent 13 times more
on export promotion than the United States did per dollar of
GDP. And that France and the United Kingdom outspent and
outstaffed the United States in absolute terms. In other words,
they had a bigger budget than we have. Is that correct?
Secretary Evans. They have a larger budget than we have,
yes. I do not know the exact numbers, but, yes.
Chairman Sarbanes. Those are pretty challenging figures
when you look at them. What kind of issues besides the budget
issue do you anticipate focusing on as you move toward the
future?
Secretary Evans. Well, I guess there are two or three, Mr.
Chairman. One is education. I think one of the real challenges
we face in this country is educating small- and medium-size
companies, really educating America, as to the importance of
trade in our growing and changing economy.
I think that it is clear that our global economy is
becoming integrated at a much faster pace than certainly any of
us would have thought 5 years ago, and certainly much faster
than any of us would have thought some 10 years ago when you
passed the Export Enhancement Act.
We are rapidly moving into a very integrated, global
economy. And it is important that we provide the tools to not
only educate our companies as to how that economy will
function, but also have the tools and the support and the
resources to facilitate our small- and medium-size enterprises
participating in that.
So, I think I would say, education is a large focus of
ours. I mentioned training in my earlier comments, training
across agencies. And in that, Mr. Chairman, I would say a
serious, coordinated effort. Not an effort where we talk to
each other once every 4 or 5 months and then send you a report
once a year, but let's get results. Let's talk. Let's make sure
we are meeting monthly and make sure that we are receiving
results on a monthly basis. This is not something that I want
to hear about a year from now. I want to hear about it on an
ongoing kind of basis.
I would say a focus is to just--and we have great
cooperation. We absolutely are talking to each other. I have
heard nothing but a spirit of cooperation throughout all
agencies and all departments. I want to make sure that we
sustain that, make sure that we are focused on not only
continuing that, but also achieving results. What are the
action items that we need to be dealing with month to month to
month, and let's check them off.
Another area that came up in the meeting last October was
this coordination--and came up again by the good Senator this
morning--coordination between Federal and State and how
important it is to coordinate our efforts. We have made good
progress on that. We have some 12 States right now where we
share office space, so people are right next to each other
talking to each other. We have programs underway where we are
providing support to promote trade State by State.
That is an education tool. We are going to focus on working
very closely with the States because they are the ones that are
the closest to the small- and medium-size businesses.
I think those are probably several of the highlights. I
think one last one we would mention, Mr. Chairman, is the
importance of, after the training, you really do have people in
the Government that can take people through a project from
start to finish and can stay with them, and not only help them
identify the market, identify the opportunity, but also once it
is identified, work with them on helping them find and source
financing.
Once financing is found and sourced, then making sure that
they understand the rules and regs and standards of the country
that they are moving into, and how to deal with customs in this
country that they are going into. And then stay with them for
any kind of regulatory or any kind of related issue that they
may deal with in another country. That is the challenge. These
are new countries and different rules and different regs.
You want to have kind of a start to finish. Somebody that
can stay with them. So those are four or five, I think, of the
very important issues that we are focused on.
Chairman Sarbanes. Very good.
Senator Akaka.
Senator Akaka. Thank you very much, Mr. Chairman.
Mr. Secretary, I am here because I want to talk about
tourism.
Secretary Evans. Good.
Senator Akaka. I would like to go back and quote Mr.
Doggett, the former Deputy Assistant Secretary for Tourism
Industries, who said, ``International travel to the United
States is an export just like the sale of agricultural
products, automobiles, or consumer goods, and that strength
plays over into our GDP.'' So it is very much a part of the
export of services that you promote. One of the recommendations
in the Report is that the Department of Commerce's Office of
Travel and Tourism in Trade Development should develop public-
private partnerships. You mentioned in your statement that you
are even doing that at the office here.
My question to you is, how will these partnerships be
developed and how will the Department coordinate promotion
efforts with State agencies?
Secretary Evans. Well, Senator, a couple thoughts on that.
One is we certainly put a lot of emphasis on tourism and
travel in the last 15 months, but even more so since September
11, because if there was any industry that was seriously
impacted by September 11, it was the travel and tourism
industry. And we recognized that early.
I met with the private sector probably no longer than a
couple of weeks after September 11. I cannot remember the exact
date. But I asked them to come to Washington and sit down and
visit with us and talk about ways we can work together in
partnership to promote tourism.
Out of that came an ad campaign that we encouraged and I
think has been helpful to the industry. Out of that meeting
came the idea of revitalizing the Tourism Policy Council, which
gives us a regular opportunity to sit down with the private
sector to talk about joint efforts, joint ideas, joint
promotional kind of campaigns.
I cannot point to anything specific right now, other than
the ad campaign that took place this last--I think the ad
campaign probably was right after the first of the year, if my
memory serves me right. There were some TV spots that were not
only run here in America, but also in Europe and in Japan.
It is certainly something that I talk about everywhere I
go, and I will continue to do that.
But the focus for us to look for opportunities of public-
private partnerships will be through our Tourism Development
Desk, as well as our Tourism Policy Council, which keeps us,
and myself, frankly, in regular communication with the private
sector.
Senator Akaka. Do we have any efforts that place agency
representatives in particular countries to work with that
country on tourism at this time?
Secretary Evans. We have, of course, Commercial Service
offices all over the world and we will, through those offices
and through our embassies, quite frankly, but through those
offices, through our foreign commercial service offices around
the world, we encourage those to promote tourism and travel any
way that they can.
Again, I think it is a part of the overall training
initiative, we should make sure that the people that are around
the world have the tools that they should have to promote
American products and goods and services. One of those is
export of tourism and travel.
Senator Akaka. I just want to say, Mr. Secretary, that we
appreciate what you are doing for the Commerce Department.
Thank you very much.
I want to move to----
Ms. Askey. Senator Akaka.
Senator Akaka. Director Askey, I appreciate the way you
describe your agency as being small and nimble. You are also
working on partnerships, especially with other countries and
our U.S. companies to promote exports.
You mentioned in your statement that the Trade and
Development Agency will continue to develop strategies for
supporting efforts in the service sector, including tourism.
What strategies are being developed by the TDA to support
tourism?
Ms. Askey. Thank you. I had wanted to add to the
Secretary's comments on that because we happen to have a
concrete example. This month, we are hosting a conference for
exporters of tourism packages, et cetera, opportunities in
Istanbul. And we worked very closely with the Department of
Commerce's Foreign Commercial Service officers in the region.
We particularly reinvigorated our effort in the post-
September 11 period, both because it is important for those
front-line States and some of the other countries in the
region, to look to tourism as kind of the first steps or early
steps in development.
Of course, it is very important for U.S. exporters to be
active participants in that. And the conferences that we set up
are very project-specific type conferences. Along with the
Foreign Commercial Service and with Ex-Im Bank and OPIC, we
have worked hard to try to develop specific opportunities that
we can highlight for U.S. participants and foreign country
participants that will be coming together for this tourism
conference.
And it is one of the ways that we both let our trading
partners around the world know about U.S. service exports in
this particular sector, but also U.S. providers in this sector,
what opportunities there are, what development opportunities
there are in this region, and throughout the world.
We very much look at tourism as an important service sector
and as one where U.S. providers are very competitive.
Chairman Sarbanes. Thank you.
Mr. Aguirre.
Mr. Aguirre. Senator, if I could just add a couple of
comments about tourism. As you know, Ex-Im Bank is very
involved in aircraft financing, export aircraft financing.
Obviously, a lot of that is going to the Pacific Basin.
I would suspect that many of the 560 or so aircraft that
are currently in our portfolio are landing in Hawaii, just as
we speak. So, in a round-about way, I think we are financing
some exports which are clearly bringing tourism to our shores.
Senator Akaka. Thank you.
Mr. Secretary.
Secretary Evans. I would add one other quick thought,
Senator. I was in Tokyo about 3 weeks ago and signed a tourism
promotion agreement with the Minister of Land and
Transportation Ogi. We were very pleased to be able to sign
that as another indication of our cooperation with Japan to
promote tourism.
She further said that she would be happy to save me the
journey all the way to Tokyo next time and would meet me in
Hawaii. So maybe that is another way to promote tourism to
Hawaii.
Senator Akaka. Thank you very much, yes.
Secretary Evans. Thank you.
Mr. Barreto. Senator Akaka, I also wanted to contribute
that the SBA has been very involved since September 11 with our
disaster loans. Obviously, whenever there is a disaster, we are
always at the forefront. We were recently in LaPlata, Maryland.
Right after September 11, we received a lot of calls into
the SBA, and some of those were from Hawaii, especially from
the travel and tourism industry.
One of the things that the SBA has done, as well as
continuing to coordinate with the Secretary's roundtable on
travel and tourism, is that we have also reached out across the
country, outside of the disaster area, to do economic injury
disaster loans. Those are the loans that the SBA does directly.
They are 4 percent loans over as much as a 30-year time
horizon. We took the unprecedented move of changing our
regulations to be able to allow us to do those types of loans
all across the country.
It has been very successful. We have done a lot of
outreach. And I know that one of the areas that has been the
most effective is the travel and tourism industry, and we will
continue to reach out to that very important segment of our
economy.
Senator Akaka. Thank you, Mr. Barreto.
Mr. Chairman, thank you. My time has expired.
Chairman Sarbanes. Thank you.
I think Senator Akaka is on to a very important point here.
There are a number of Members in the Congress who are very
interested in promoting travel and tourism. Senator Reid in
Nevada actually heads up a Congressional Caucus in that regard.
Obviously, it is very important to Hawaii.
I know other countries have these major tourism promotion
outlets here, like France and the United Kingdom. Up in New
York, they have that. Does the United States have anything that
is comparable overseas, trying to promote the residents of
those countries to come here?
Secretary Evans. I do not know what it would be, Mr.
Chairman. Something may be escaping me, but I do not know that
we have anything on that level.
Chairman Sarbanes. I think we have left it primarily to the
private sector to do, I guess.
Secretary Evans. Right.
Chairman Sarbanes. But it might be worth looking at.
I have a few more questions, then we will let the panel go.
We had a hearing about a week ago on the Treasury
Department's Report on the International Economic and Exchange
Rate Policy, which you probably read about. I know the
Secretary of the Treasury pronounces or not, as the case may
be, on dollar policy and its exchange rates.
I do not want to get anyone in trouble here, but let me ask
you this question, since you survey our exporters. How much are
you hearing from them that the exchange rate of the dollar,
what many of them would argue is the over-valued exchange rate
of the dollar, is impacting their ability to compete
internationally with respect to exports? When you did your
surveys and everything, or in the course of doing your normal
business, how much of this do you run into?
Secretary Evans. Mr. Chairman, we did have a question on
that. Actually, I think our survey says it was not ranked very
highly. We hear comments about it, of course, but I haven't
seen the ranking specifically. So if you would like to see that
study, I am sure we could provide you with that.
Chairman Sarbanes. Was that the one you just did with the
small and medium people who are not very much into the export
business, or did that cover all of the export community?
Secretary Evans. I am sure it was just the one we did with
the small- and medium-size companies.
Chairman Sarbanes. Because the NAM came before us.
Secretary Evans. Right.
Chairman Sarbanes. The president of the NAM stated, and I
am now quoting him: ``Exports of U.S.-manufactured goods have
plunged $140 billion in the last 18 months at an annual rate,
the largest such fall in U.S. history. The export losses,
principally due to the over-valued dollar, are a key factor
explaining why the manufacturing sector has fared so much more
poorly than the rest of the economy in this recession.''
And the American Farm Bureau was also at the table
asserting that their ability to export had been significantly
hampered by what they asserted was the over-valuation of the
dollar. So have any of the others run into that assertion?
Mr. Aguirre. Mr. Chairman, I cross the threshold with
trepidation here because I certainly believe Secretary O'Neill
is responsible for foreign monetary policy and for U.S. export
financing. We are not going to cross into each other's
territory. But I think there are so many factors involved in an
export. The dollar and the strength of the dollar is a very
important factor.
What we heard most about, quite frankly, in the TPCC Report
had to do with being user-friendly and having the right
technology that gives the right management information systems
to the exporters so that we could work with them and provide
better accessibility to financing.
Quite clearly, the dollar was brought up, but I do not
think it ranked that high. And it might have been just the
timing of the survey why that factor did not bubble up that
high.
Chairman Sarbanes. Anyone else want to comment?
Mr. Connelly. Mr. Chairman, I would just point out that in
our experience, the issue is not so much the level of the
exchange rate, but the volatility of the exchange rate. And I
think that is the concern that our clients express more than
anything else.
Chairman Sarbanes. I have one closing question. I would
like to ask each of you what is the single impediment that you
encounter, that if it could be cleared away, would be most
helpful to you in doing your work? And if you wish, you may
take on the OMB.
[Laughter.]
After all, you are here and we have you here. You are
supposed to give us very straightforward responses. Why don't I
just go right down the list.
Secretary Evans. I am not sure. I think that I would put a
more positive spin on it. I have been really encouraged by what
has been a committee that has not been particularly active
coming together with a very strong focus on wanting to make a
difference in providing the kind of information to our small-
and medium-sized businesses that they need to export their
products and services. And until I see what are our results,
what are we accomplishing, I am not sure I am ready to talk
about what our real impediments are yet. I think we might be in
a better position to do that in 6 months or so. I would be glad
to come back up and talk about it. But I think we are still
building what will be a very effective, forceful effort in
promoting trade. I do not see any real impediments yet. It is
certainly not dollars, as far as I am concerned, at this stage
of the game.
Chairman Sarbanes. Mr. Aguirre.
Mr. Aguirre. Senator, as you know, I am fresh to the
Government from the private sector, so my comments are tainted
by the perception that I had until recently.
Chairman Sarbanes. Well, they might be enhanced, rather
than tainted.
[Laughter.]
Mr. Aguirre. It could be.
[Laughter.]
I think that the issue is actually being addressed right
here at TPCC. The exporting community does not appreciate the
many resources that our Government puts in front of them. And I
think they perceive dealing with the various agencies as a task
and not an opportunity.
In TPCC, what we are trying to do is do better
coordination, better communication, and in some cases,
eliminate duplication, as I think we are trying to do with the
various agencies.
So the obstacle, if there is one, is a perception obstacle.
Clearly, there are a lot of things that we need to do to make
ourselves more user-friendly. But if we can persuade the
exporters that, in fact, there are so many resources here that
we can provide for them, I think we will help the country.
Chairman Sarbanes. I thought you might say for Congress to
give me an Export-Import Bank authorization.
[Laughter.]
Mr. Aguirre. That would be more an extra focus.
[Laughter.]
Chairman Sarbanes. We are working on that. We are going to
conference on it, as you know, so let's see what we can
produce.
Mr. Aguirre. Thank you, Mr. Chairman.
Chairman Sarbanes. Mr. Barreto.
Mr. Barreto. Mr. Chairman, I would also concur with my
colleague. I am also, as many of the members here, coming from
the private sector. When you are in the private sector and you
are thinking about taking advantage of Government programs, and
we talk to small businesses every day and they tell us, no, it
is going to take too long.
I can take a yes, I can take a no, but the maybes kill me
and I would rather not even try.
So, we have a major challenge to kind of go out and
reintroduce ourselves to our clients. I oftentimes say, they do
not really know what they do not know. There are a lot of great
programs and services. And me, coming from the private sector
as well, I did not even realize how much was out there until I
got back here.
We have to change the perception so that the people that we
are supposed to be benefiting really think of us as their
partner. They really think of us as an advocate, somebody that
they can count on to respond to them.
I think that we have some very good tools available to us.
And I also agree with Vice Chairman Aguirre that the
collaboration that we are going to have is going to help us
leverage the existing resources that we have.
One of the benefits that the SBA has is a pretty large
network. We have offices and resource partners in every State
in the union and many of the major cities, multiple offices.
So, we need to leverage what we have. And working together, I
think we will get that word out and start helping more small
businesses.
Thank you.
Chairman Sarbanes. Director Askey.
Ms. Askey. Thank you, Mr. Chairman. Since we are in the
business of partnering with U.S. firms abroad, and we have two
parts to our activity. One is direct support of projects and
the other is more of a technical assistance training activity.
With respect to U.S. businesses and firms that we are
working with overseas, I think the impediment is two-fold. One
is subsidized competition by our trading partners. That is
generally why we are there, to give some additionality to the
process. So subsidized competition by our foreign trading
partners is key.
Also the staying power of small- and medium-sized business
in difficult markets. Exporting is not an easy task over time.
And so, getting companies to focus on their sustainability in
the export market is a task.
On the technical assistance side and the more policy-
oriented things we do, it is generally trying to persuade the
governments to have a stake in the outcome of the technical
assistance. For example, on our biotechnology initiative with
China, the important thing is getting the Chinese government to
participate in the process of developing the technical
assistance and understanding the United States technical
expertise to be brought to bear. We are not just giving them
money and saying, work on your biotechnology regime.
So on the technical assistance side, it is basically
getting a mesh between the foreign government policy goals and
U.S. policy goals. But when it comes to U.S. exporters, I think
it is subsidized competition that they face and sustainability
in export markets.
Chairman Sarbanes. Good.
Mr. Connelly.
Mr. Connelly. Well, I need to preface my remarks by saying
we have an excellent relationship with the OMB.
[Laughter.]
I think I would summarize the challenge from my standpoint
in that it is not a budgetary challenge.
Chairman Sarbanes. I am sure everyone else would echo that
comment.
Mr. Connelly. Yes.
[Laughter.]
But we do have the need to innovate, to modernize our
products and services, and to meet the challenges of a world
that is becoming more complex and highly globalized.
We have in the agency, what I have learned--I have just
been out of the private sector for 9 or 10 months. We have
excellent people, tremendously dedicated professionals, and
they can do the job.
We have to find a way to recognize how the world has
changed, to organize to meet those challenges and to introduce
products and services that deliver the best service to our
clients in a way that passes muster, as it must, within the
entire interagency process.
Chairman Sarbanes. Thank you all very much. It has been a
very helpful panel, and we look forward to the implementation
of the recommendations in the Report, and also, to the various
new initiatives that you talked about for the next report.
The hearing stands adjourned.
Secretary Evans. Thank you, Mr. Chairman.
Mr. Barreto. Thank you.
Mr. Aguirre. Thank you, Mr. Chairman.
[Whereupon, at 12:15 p.m., the hearing was adjourned.]
[Prepared statements and additional material supplied for
the record follow:]
PREPARED STATEMENT OF DONALD L. EVANS
Secretary, U.S. Department of Commerce
May 14, 2002
Thank you, Mr. Chairman. My colleagues and I are extremely pleased
to have the opportunity to present to you this Administration's first
National Export Strategy. The Report is the culmination of the best
efforts of all of the agencies here with me today, as well as the
Departments of State and the Treasury, USAID, and USTR. It has truly
been a team undertaking, and we are confident that the steps we have
laid out are grounded in what our customers want, need, and expect from
their Government export promotion programs. We think these steps will
make a difference in the way we serve our clients-- especially small
businesses.
This is very much the approach the President wants all of us in the
Administration to take. The President, through his Government-wide
Management Agenda, has made clear that he believes that Americans
deserve a Government that is ``best in class'' in service and
effectiveness and that is results-oriented.
In the broader context of our trade agenda, this commitment to
results translates into two things. First, it means aggressively
opening new markets for our exporters. Second, it means having the best
tools available to our exporters to realize sales in those markets once
they are open.
The first prong of the trade agenda--opening new markets--is, quite
frankly, on hold, waiting for the Senate to give the President Trade
Promotion Authority. The President believes this bill is overdue.
Simply put, we are losing real trade opportunities without it. We know
the trade 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 for the Senate is, what slice of this growing pie
of opportunities will belong to U.S. companies? We believe the longer
the delay on Trade Promotion Authority, the more it costs American
farmers, business owners, and workers. We are pleased that the
legislation appears to be moving to a vote as a carefully crafted,
bipartisan balance. Amendments that would upset that careful balance
would be strongly opposed by the Administration.
Senator Sarbanes, we appreciate the opportunity to articulate here
the second aspect of the President's strategy--expanding the base of
exporters and providing the promotional support they need to ``fill
in'' behind the agreements we negotiate. From the perspective of a
small U.S. company wanting to export, new trade agreements are only
half the battle. Agreements are meaningless to a company if it does not
have the information, expertise, and financing it needs to get started
exporting and to do the deals.
All of you are aware that trade has never been more important to
the United States and world economy. It now accounts for about a
quarter of both the United States and world GDP and is growing at over
twice the rate of any other sector. The goal of the 60 recommendations
in this Report is to make sure all export-ready U.S. companies can
participate in this growth. Small companies now account for just under
30 percent of the value of U.S. exports; yet our survey found that 30
percent of U.S. small companies that do not currently export would like
to. Moreover, of those that export, two-thirds only export to one
market. By improving customer service and providing new export
opportunities, we want to tap the unrealized export potential of both
large and small U.S. companies.
These recommendations give our exporters a new strategic partner,
and provide them with the tools they need to be globally competitive.
We want to help those companies exporting to only one market broaden
their horizons and make sure that capable small businesses can take
full advantage of new market openings.
The recommendations in this Report were the result of 7 months of
research and interagency deliberations. As we explained last October,
we took a management approach, starting first with our customers. The
driving force behind all of these recommendations was to respond to
customer needs. We talked to about 100 exporters in focus groups and
one-on-one meetings, about half of which were smaller companies. We
undertook a survey of more than 3,000 small and mid-sized U.S. firms.
We asked them what works and what doesn't work. We asked them to tell
us how to improve Government services and to tell us about other
Government, State, and local agencies that do a great job of meeting
their needs. We talked to both exporters and nonexporters to get at the
question of why many small businesses choose not to export.
From our survey and interviews with clients, we came away with a
number of observations:
Our clients are pleased with our products and services, but
want them to be even more streamlined and timely. Time is critical
to companies of any size. Even the smallest customers have very
high expectations about how quickly they get what they need.
Our clients think Government agencies have an important role
to play in both trade and investment promotion. This is
particularly true because other governments are more strategic in
helping their companies get the best shot at possible opportunities
and providing high-level focus and coordination of small business
programs.
U.S. companies want more than export assistance. They want an
account manager to take them from their first transaction, to their
first investment, through the life of a project. They want
Government personnel trained and skilled enough to take them
through the maze of Government programs, and they want the
Government to help generate new opportunities.
U.S. companies want more coordinated Government service. They
want us to operate as if we were one company--not a collection of
individual agencies. They expect seamless programs with a common
set of standards and requirements and want coordinated client
management among the agencies.
U.S. companies look to the Government first for information on
market opportunities and financing. The companies that do not
export would export if they had more information about foreign
market trends and trade leads.
In addition, we took an in-depth look at the programs offered by
our major competitors:
We were particularly impressed by the high level of support
our trading partners give to small- and middle-sized firms. Here in
the United States, we know that these firms are a tremendous engine
of job growth. And when these firms are successful in international
markets, they can achieve even higher growth rates and pay better
wages here at home. Our competitors also understand the dynamism
and power of small business. We found that a number of our trading
partners have coordinated, Cabinet-level task forces dedicated to
getting small companies into overseas markets. Korea, for example,
is moving away from support for large conglomerates or chaebols,
and has a Presidential Commission that integrates programs and
budgets that help small business exporters. France, Canada, Spain,
and the UK also have coordinated, high-level programs to help small
business
exporters.
Our competitors take a more active approach in generating
opportunities for their exporters. Many governments cultivate
relationships with procurement officials in emerging markets and
``cherry pick'' the best projects for their exporters--presenting
them with shopping lists of the most lucrative projects.
Other governments take a more holistic view toward export
promotion, combining their export and investment promotion
programs. Rather than focus strictly on
export sales, they focus on their firms' international
competitiveness.
And we found especially in Europe, the Swedes, the French, and
the British have elaborate e-business strategies that have become
the organizing principle for their trade promotion programs. By
next year, the British will have all of their export promotion
services online. All of the trade promotion agencies will be linked
with each other and with all of their known exporters.
The National Export Strategy
Our strategy, simply put, is to make sure our exporters have the
best tools to take advantage of the commercial opportunities we
negotiate. It boils down to three important points:
A more active U.S. Government partner with U.S. exporters when
it comes to major project competitions.
Better customer service through joint promotion, training,
trade finance, and information delivery.
A Government that is working harder, through State and local
partnerships and trade education to make sure that potential
exporters know about the services
we provide.
Strategic Approach to Project Development
One of the themes that came up repeatedly in our discussions was
that companies want Government to take a more coordinated and more
strategic approach to helping them compete internationally. This
applies to a wide range of issues including major project development,
a coordinated commercial response in crisis regions and advocacy
support throughout the life of the project. Our competitors often have
the upper hand in major project competitions well before the project is
publically tendered. Other governments indicate that they can finance a
particular project early on and then coordinate their response between
the agencies responsible for on-the-ground market intelligence,
technical assistance and financing. Ex-Im Bank, Commerce and a number
of TPCC agencies are going to meet this challenge by working together
to discover projects sooner, show an early likelihood of U.S. financing
and help U.S. exporters take advantage of these opportunities. In key
pilot countries, we will now have a coordinated, team approach to
bringing buyers and sellers together.
Exporters also told us they want to see the U.S. Government take a
more active role in countering and discouraging market distorting uses
of tied and untied aid. As a result, we have expanded the tools
available to exporters to address tied aid, including a more aggressive
response to Japan's use of tied and untied aid (Japan is the largest
provider of both), a pilot program that would enable the Trade
Development Agency to fund engineering studies that often set the
standards and specifications for future projects, exploring the design
of a pilot project that would provide mixed credits for specific
developmentally sound projects, and use of the war chest to address
instances where non-Japanese trading partners use tied aid to capture
market share in emerging markets.
Better Customer Service
In the area of client service, we found that U.S. firms that export
have an increasingly sophisticated understanding of what they need to
be successful overseas. They are aware of competing Government programs
and have very high expectations about the quality of service that they
get. Not surprisingly, the more experienced exporters want better
coordination among the Government agencies; in short, they want the
agencies to operate as if they were part of the same U.S. Government
``company.''
To respond to this concern, we are going to do a better job of
promoting each
others' programs. We are planning on training our Commercial Service
officers so they can act as ``account managers'' that can help our
companies with an overseas strategy, and not just an export sale. That
means a much greater emphasis on training across agencies than ever
before, with the goal of creating agency staff that can function as
``one-stop-shops,'' or account managers, that can help a firm navigate
the full array of Government export promotion programs.
Trade Finance
Our survey told us that trade finance is still a major obstacle to
getting small businesses into world markets. It also indicated that too
many U.S. companies turned down sales because they had problems getting
financial support, or limited their exports to those opportunities they
could fund on their own. Too few small exporters are taking advantage
of SBA and Ex-Im Bank working capital programs. While many companies
know about these programs, they are unaware of how they work and are
confused by the fact that there are two, apparently competing programs.
We are going to address this by combining the marketing efforts of SBA,
Ex-Im Bank, and the Commercial Service to make sure lenders know how
these programs can help their clients. We also want to integrate the
programs to the extent we can--while still preserving the benefits of
each. In the future, we will promote one Government trade finance
service to our customers, that can then be customized with SBA and Ex-
Im Bank features, as appropriate, depending upon the resources of the
Bank and the needs of the client.
Information
This came up again and again in our discussions with customers and
was ranked in our survey as the most important service Government
provides and businesses need. We learned that more than half of the
exporters we surveyed use a Government source to gather information on
potential trade opportunities, and that they want a single site where
they can get trade leads and information about specific markets. At the
same time, they are unaware of the full range of Government assistance
that is currently available. In response, we are enhancing export.gov--
our one-stop web portal--so that exporters can find all of the
Government's best information on trade leads and markets in one place,
in real time. We will use our BuyUSA product--which links buyers and
sellers directly--to link foreign affiliates of U.S. multinationals
abroad with U.S. suppliers, who are often small- and
medium-sized exporters looking for project opportunities.
Outreach, Education, and Partnering
We can develop the best programs in the world, but if no one knows
about them, we will not get very far. We need to do a better job of
letting companies know what is available and make it easier for them to
participate. Although our study found that awareness is better today
than it was 5 years ago, we can certainly do a better job of connecting
with business people who want to take advantage of new trade
opportunities. We propose working more closely with State and local
trade groups, as well as elected officials, to expand awareness and
increase outreach. We will also be leveraging technology to offer
simpler Internet solutions for companies looking for help.
We will distribute packages of our export promotion services to the
States to prevent duplication and leverage State resources. We will
encourage joint strategy sessions on outreach and trade events. We will
dedicate more resources to training our State partners in TPCC
programs. We will develop joint TPCC agency marketing materials for our
State and local partners. We will do a better job of leveraging the
information provided by elected officials, who are often the first
point of contact for companies seeking Government assistance. And we
plan to expand education for new-to-export firms and develop a strategy
to use trading companies as multipliers of our services.
To sum up, we are placing a much greater focus on what our
customers need; we are taking a comprehensive approach to making our
companies competitive in the world market; we are actively developing
opportunities for our companies; we are building programmatic bridges
across the agencies; and we are using training and joint promotional
efforts to improve coordination and our effectiveness across the
agencies.
Senator, while in many ways I believe we have gone farther than
ever before with the TPCC, this is really just the starting point of
our work. Some of these recommendations can be implemented immediately;
but some will take more time and require a formal benchmarking effort--
such as training, information, and the speed with which we deliver our
services. We also expect to use this Report as a tool to fit our
resources and programs to key markets where we are negotiating
bilateral and regional agreements.
In the meantime, I want to make sure we are held accountable for
what we have said we are going to do. Whether it is the number of new
project opportunities we generate from these recommendations, or the
number of small business working capital loans we undertake, I think it
is important Congress knows that we expect to measure our progress. We
will report how far we have come next year.
Again, Senator, I appreciate your great interest in the importance
of strengthening our trade promotion programs. I intend to continue to
use the TPCC not only to coordinate our future efforts, but also to
generate new initiatives that will help keep America the most
competitive exporting Nation in the world.
----------
PREPARED STATEMENT OF EDUARDO AGUIRRE
Vice Chairman and First Vice President
Export-Import Bank of the United States
May 14, 2002
Thank you for the opportunity to appear before you today. As Vice
Chairman of the Export-Import Bank, I also serve as Vice Chairman of
the Trade Promotion
Coordinating Committee (TPCC), the body designated by Congress to
coordinate
interagency efforts on trade promotion.
Working in partnership with business and labor, we support exports
in order to create and sustain jobs here in the United States. That
means the Bank must be in tune with the Administration's trade and
foreign policy objectives, as well as the needs of U.S. companies to
compete abroad.
I appreciate the efforts of all the agencies represented here
today, in addition to others both inside and outside the Government,
who contributed time and energy in pursuit of our common goal--to make
U.S. trade promotion efforts second to none by being effective,
coordinated, and user-friendly.
In keeping with the Administraton's firm commitment to free and
fair trade, the Export-Import Bank (Ex-Im Bank) of the United States
assists U.S. exporters in competing fairly and successfully in the
world marketplace. Participation in foreign trade is a critical
component of the Nation's economy. In 2001, exports represented about
10 percent of the Nation's GDP and supported approximately 12 million
jobs (Department of Commerce, U.S. Trade Facts), including one-in-five
manufacturing jobs. Moreover, medium- and small-sized companies
represented 97 percent of U.S. exporters. These companies are an
important source of U.S. employment. Moreover, as jobs in the export
sector on average pay wages that are 13 to 18 percent higher than the
national average of nonexport jobs (Department of Commerce, U.S. Trade
Facts).
Market imperfections and trade distorting subsidies frustrate U.S.
exporters' ability to compete and win business in new markets. The Ex-
Im mission is to meet both of these challenges head-on. When foreign
governments subsidize the financing of products and services sold by
their companies, we step in to level the playing field. These unfair
practices distort free trade, and we are committed to providing the
U.S. exporters a competitive environment where the market drives the
process; in other words, the best product at the best price wins the
sale, and not Government-subsidized financing. Eventually, the hope and
the efforts are to eliminate any Government trade distorting subsidies.
Capital always moves to its best risk-adjusted rate of return.
Especially in dynamic emerging markets, capital tends to be jittery
even during the best of times. When these markets begin to slow or
experience difficulty, capital flight is swift and can be crippling.
Sometimes, especially in the short-term, this phenomenon is counter to
the Bank's broader, long-term financing strategy. These sharp market
movements most affect small companies. South Korea's economic turmoil
during the Asian Financial Crisis was a good example of this
phenomenon. When the private market collapsed in 1997-1998, Ex-Im Bank
stepped up to the plate and supported almost $2 billion dollars in
exports during that critical period. The Bank did not lose taxpayer
dollars, and, in fact, Ex-Im Bank played a role in keeping trade
relations and businesses open for U.S. exports. Now that the economy
has stabilized in South Korea, the private sector has reentered the
market, and the Bank has appropriately scaled back its support. What
was Ex-Im Bank's role? The Bank stepped into the breach and covered
appropriate short-term risk. We to some degree insulated against
potential financial contagion from that crisis.
In carrying out its mission in 2001, Ex-Im Bank supported
approximately 4 percent of all U.S. exports to emerging markets and 6
percent of all U.S. capital goods exports to emerging markets. One of
Ex-Im Bank's missions in this changed world is to take the lead in the
U.S. commercial effort to penetrate the risky emerging
markets.
The Bank also steps up in times of crisis--as Ex-Im Bank did during
the 1997-1998 Asian financial crisis, and as the Bank did this past
fall through supporting the airline industry in the wake of the
September 11 attacks. In this case, Ex-Im Bank has decided not to
exercise its requirement that airlines have third-party war risk
insurance coverage, in coordination with the U.S. Government and other
nations, to keep the airlines of the world flying, until such time as
the airline industry is able to secure a solution that will reinstate
liability insurance. The process was successful, and international
commerce continued without any hitches, as aircraft were not grounded.
In so doing, not only did the Bank increase U.S. exports, but also
fostered stability and economic growth at home and abroad.
Last year alone, Ex-Im Bank supported $12.5 billion worth of U.S.
exports. Of all Bank transactions, 90 percent were in direct support of
small businesses, representing $1.65 billion or 18 percent of the U.S.
exports by dollar volume supported. In fact, 383 new small businesses
utilized the Bank for the first time last year to support their
exports. Ex-Im Bank is proud of its record and intends to continue
these efforts.
At the same time, the Export-Import Bank has several other
mandates, as stated in our charter:
Ex-Im Bank Acts
Ex-Im Bank promotes private sector financing. Where there is not a
private sector alternative and there is a creditworthy transaction, the
Ex-Im Bank steps up and ensures that U.S. exporters can compete and are
not at a disadvantage. In short, Ex-Im Bank's role is to provide
official financing support that levels the playing field for U.S.
exporters until agreements can be reached to eliminate market-
distorting practices.
Ex-Im Bank does not perform this vital job in a vacuum. The Bank
works closely with other U.S. Government agencies to capture possible
efficiencies and to protect the interests of the taxpayer. The TPCC
plays a critical role, as illustrated by the recommendations in the
National Export Strategy Report.
Allow me to briefly review some of the prior TPCC initiatives
involving Ex-Im Bank and our sister trade agencies and what the Ex-Im
Bank is already doing to address some of these key needs.
The Bank maintains eight regional offices across the country.
Six of these offices are located with the U.S. Export Assistance
Centers (USEAC's) with the Department of Commerce (DOC) and the
Small Business Administration (SBA). Co-location allows our
respective staffs to co-market, pursue, and share trade leads and
market information. The Bank has placed offices in strategic
locations (Miami, FL, Washington, DC, New York, NY, Chicago, IL,
Houston, TX, and three in California). The States in which these
offices are located are home to approximately 65 percent of the
exporters in the United States. Where we are not co-located, Ex-Im
Bank employees cross-train with DOC and SBA employees in the
remaining USEAC's to ensure that DOC and SBA professionals are kept
up-to-date on new initiatives at the Bank.
For the past 2 years, the Ex-Im Bank has delivered joint
direct mail with the Department of Commerce's Foreign Commercial
Service and the Census Bureau's Foreign Trade Statistics Division.
This year Ex-Im Bank will deliver close to 50,000 pieces of direct
mail. Not only is this partnered approach cost-effective, (it
reduces the Bank's costs by two-thirds) it gives the recipient a
comprehensive view of the menu of services offered by our
respective institutions. Ex-Im Bank's direct mail initiative has
been a huge success.
Educational seminars have long been a primary approach of many
of the trade agencies. So what is new? First, the Ex-Im Bank is
doing more seminars. Second, the Bank has taken them outside of
Washington and delivers one-day mini-courses. Third, Ex-Im Bank
almost always either partners with the Department of Commerce, a
City/State Partner, or one of Ex-Im Bank's sister trade agencies.
For example, this spring OPIC participated in a well-received
exporter seminar in Indianapolis, and 3 weeks ago Ex-Im Bank's
business development team co-presented with the Department of
Commerce in Lubbock, Texas. This year Ex-Im Bank executed over 50
of these type seminars, all with some form of sister agency
involvement.
Trade Associations: Attending trade association shows where
hundreds, sometimes thousands, of exporters and buyers are amassed
is a very cost-effective outreach tactic for Ex-Im Bank. Partnering
with DOC and the Census Bureau makes Ex-Im Bank's approach even
more effective. The Bank will continue this successful enterprise
with DOC and the Census Bureau and expand upon it.
Ex-Im's Annual Conference: Just 2 weeks ago, the Bank had
1,500 participants in Washington, DC, to learn about the Bank and
network. Participants included exporters, bankers, brokers, foreign
buyers, U.S. Government officials, and foreign government
officials.
National Export Report
Turning to the National Export Report, these recommendations were
developed in close coordination among TPCC agencies and with
significant input from the U.S. export community. The TPCC listened to
the concerns of our customers--the U.S. exporters. The TPCC listened to
those that distribute and market our services, trade finance lenders.
From this dialogue, the TPCC developed the recommendations continued in
the Report.
The highlights of the recommendations that pertain to the trade
finance arena
include:
(1) Maximize customer service orientation by employing technology
to create processing efficiencies and to leverage scarce human
resources through automation.
Many of you on this Committee are aware of Ex-Im Bank's
automation plans. The TPCC recognized we could never substantially
expand our support, especially for small business exporters unless
and until we developed automated tools that made our processes
faster. We have several upgraded programs currently in place that
will assist us with providing faster turn around time and more up
to date information and statistics.
Earlier I mentioned the Ex-Im Bank's direct mail initiatives.
The Bank's direct mail, which also includes periodic email contact,
is all initiated and managed from customer management tools.
Inquiries from direct mail are sent electronically to the Bank's
eight field offices for prompt follow-up. When Ex-Im Bank started
direct mail 2 years ago, the Bank used existing database software
and low-cost customer management software. Ex-Im Bank is a victim
of its own success. The Bank has now outgrown its own database and
software system. The database the Bank uses was designed for 50,000
records; Ex-Im now has over 300,000 records. We knew we were doing
right when private sector financial institutions started showing up
at Ex-Im's doorstep asking us how the Bank markets its financing
products; for example, in November 2001 GMAC sent representatives
from their organization to identify how we conduct our direct mail
and how we target trade shows. It is not often that the private
sector asks the Government how to market.
(2) Develop a multipronged approach to address the trade-distorting
effect of commercially-driven tied aid, the means by which other
countries provide partial grants and/or concessional loans either alone
or combined with export credits and linked to procurement from the
donor country, and to add tools to the U.S. cache by combining the
resources and the expertise of one or more TPCC agencies to address the
problem.
Work with Treasury negotiators to use the Tied Aid Credit Fund
(TACF) resources to advance the U.S. position in the Organization
for Economic Cooperation and Development (OECD) to establish
disciplines on the use of untied aid. The goal here is to ensure
that untied aid financing is truly untied, and not defacto tied to
procurement from donor country suppliers. Thus, the Bank would
utilize the TACF to provide a negative incentive that would bring
other untied aid donor ECA's to negotiate greater discipline in
their use of those funds. For example, as cited in the new TPCC
Report, the OECD recently notified Japan that a power project they
wanted to support in China was not eligible for Tied Aid because it
was deemed commercially viable. Within 10 days, Japan converted its
support from Tied to Untied Aid, thereby raising the question: Did
the Japanese really change the financing arrangement, or just
change what policy they state it falls under?
Begin a pilot program where the Trade Development Agency would
selectively finance FEED (front-end engineering and design) studies
until there are multilateral rules that prevent governments from
using these studies to promote exports.
Ex-Im Bank, Treasury, USAID, TDA, and the Commerce Department
will work collaboratively to design creative financing arrangements
for developmentally sound projects for which commercial financing
is not available, achieving Administration trade and aid goals.
Use the Tied Aid Credit Fund to defend U.S. exporters from
patterns of use of tied aid that effectively (whether intentionally
or not) represent a threat to long-run U.S. market share or access
to emerging markets.
(3) In response to concerns raised by the small business community,
better integrate Ex-Im Bank's and SBA's Working Capital Guarantee
Programs, where appropriate. Toward this end, last week Administrator
Barreto of the SBA and I signed an agreement where the two agencies
would begin to coordinate marketing efforts. We have also directed our
respective staff to work together to identify additional opportunities
to integrate these programs.
(4) Commission a study to assess the impact of market window
activity on U.S. exporter competitiveness, which is also a topic of
interest in the Bank's reauthorization bill.
(5) Examine the unique financing needs of the services sector and
develop programs and procedures that address those needs.
Since October, when the TPCC agencies collectively last testified
before this Committee, we have been working hard to identify innovative
ways to serve Ex-Im Bank's customers--the Nation's exporters. And now,
I look forward to working with you and the other TPCC agencies in
implementing these critical steps to improve U.S. exporter
competitiveness.
Mr. Chairman, throughout my 34 years in banking, I have always
tried to make decisions on what is right for the customer. In the
private sector, it was a matter of survival--aligning your organization
around your customers needs, expanding your services through strategic
alliances--these were and still are one of the best ways for companies
to expand market share. In the public sector, the principles of the
TPCC are fundamentally issues of efficiency and providing our exporters
the best unified and simplified Government support possible. Especially
in these tough times, our exporters need the best their Government can
offer. The best will only be realized collective and coordinated
actions. While the TPCC has made progress in the past few years, we
recognize we have more to do in several areas. The TPCC is committed to
this effort. Thank you for your leadership on these issues, and I am
now prepared to answer any questions you may have.
Thank you.
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PREPARED STATEMENT OF HECTOR V. BARRETO
Administrator, Small Business Administration
May 14, 2002
Mr. Chairman, Ranking Member, and distinguished Members, thank you
for inviting me to testify on the Trade Promotion Coordinating
Committee's (TPCC) National Export Strategy and the role that the U.S.
Small Business Administration (SBA) plays in the Federal Government's
export promotion strategy.
I would first like to recognize the outstanding leadership of
Secretary Evans. The SBA has been working closely with the Department
of Commerce, Export-Import Bank of the United States (Ex-Im Bank), the
Overseas Private Investment Corporation (OPIC), and other TPCC agencies
in developing recommendations for the National Export Strategy that
incorporate small business issues in order to grow them to be the most
competitive in the world.
Small businesses create two-thirds of new U.S. jobs, are
responsible for much of our economy's innovation and generate over half
of our private gross domestic product. But while most--66 percent--of
U.S. exporters have fewer than 20 employees, fewer than 1 percent of
our small businesses export. Proportionately far more small businesses
export in other countries, where governments dedicate far more
resources to export promotion, but more importantly take a more
strategic and holistic approach. Most of our trading partners offer
more comprehensive support for small companies--providing assistance
from beginning to end of the export process, and combining their trade
and investment services.
The TPCC conducted a formal survey of 3,000 U.S. small- and medium-
sized businesses to determine what was needed for them to be more
competitive in the global marketplace. The survey found that small
companies face more hurdles exporting than large companies.
Specifically, small businesses need good information and expertise in a
way that does not require large resources of time. Small businesses
also need capital. SBA is a resource for these needs.
The National Export Strategy presented by the TPCC recommends ``a
Government that provides better customer service through joint
promotion, training, trade finance, and information delivery.'' In
order to meet the need to create a ``one-stop-shop'' approach, we have
enhanced our working relationships with our partners in the following
ways:
SBA and the Ex-Im Bank have entered into a ``Small Business
Initiative'' Memorandum of Cooperation. The first phase of this
initiative will be to leverage marketing resources across SBA and Ex-Im
Bank to raise awareness among lenders and exporters. Another part of
the initiative is to make our financing products more compatible,
flexible and streamlined, so that one application form can be used for
either agency's loans.
SBA and Commerce are working more closely to coordinate marketing
and outreach efforts to the U.S. small business community in the
delivery of both technical and financial assistance programs. The SBA's
and Commerce's national network of service providers will collaborate
and work in partnership to provide significantly improved counseling,
training and financial assistance activities while also forming a more
efficient and transparent delivery system for these services. We are
already making great strides in cross-training. For example, in recent
months, the SBA has participated in Commerce's annual regional meetings
of Senior Commercial Officers and have begun the process of training
them on SBA's International Trade Loan
Programs.
Another example of our efforts in leveraging our partnerships to
further promote export opportunities for U.S. small business will be
the Small Business Initiative between SBA and OPIC that will focus on
cross-training and outreach to provide the necessary tools and products
needed to invest internationally. We look forward to formalizing this
opportunity in the very near future.
After reviewing our existing International Trade loan programs and
the recommendations from the National Export Strategy, SBA increased
the Export Express loan guaranty to a new maximum of $250,000. The SBA
Export Express loan guaranty program can be used to finance small
businesses' export development costs such as participation in a foreign
trade show or translation of product catalogs, as well as finance
actual export orders.
The Export Working Capital Program (EWCP) is another of SBA's
International Trade loan programs. It allows SBA to guaranty up to $1
million of a lender's working capital loan to eligible small businesses
for export purposes. A small business that has prospered with SBA's
EWCP assistance is M.A.S. Exports Ltd. of Savannah, Georgia. M.A.S.
Exports is a supplier of auto parts and lubricants. Clifford King,
President and Owner, decided 3 years ago to use an SBA export loan to
help finance additional business to his offshore customers primarily in
the Caribbean and Latin America. King's company, through a $250,000
revolving line of credit for export shipments under the SBA's EWCP,
reached annual sales of $970,000 in 2001.
SBA is also a partner in many of the President's E-Gov initiatives
to make information available online 24/7. We are currently working
together with Commerce to strengthen our links with export.gov and also
looking at enhancing SBA's International Trade website to allow the
customer to access information at the time and place of his/her
convenience.
SBA currently provides information to small businesses through our
Export Trade Assistance Partnership (E-TAP). E-TAP is a training
program offered at each of the 19 U.S. Export Assistance Centers
(USEAC's) and some Small Business Development Centers (SBDC's), which
combined with ongoing individual business counseling, offers effective
and customized assistance to new-to-export companies looking to enter
the global marketplace. We are looking at ways of increasing the number
of E-TAP programs being offered by encouraging our resource partners to
implement the program.
SBA is fully committed to this National Export Strategy. We believe
that the recommendations in this Report will help to streamline and
improve Federal export assistance programs and benefit U.S. small
businesses so that they will continue to be the most competitive
companies in the world.
I look forward to SBA's ongoing contribution to the TPCC and our
commitment to evaluate and better coordinate our programs. I would be
happy to answer any questions you may have. Thank you.
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PREPARED STATEMENT OF THELMA J. ASKEY
Director, U.S. Trade and Development Agency
May 14, 2002
Thank you, Chairman Sarbanes, Senator Gramm, and Members of the
Committee for providing this opportunity for TDA and the other members
of the TPCC to come before you today.
The last time we were before you was on October 2 of last year,
shortly after the attacks of September 11. Now, 6 months later, I think
it is even more clear that trade promotion efforts, such as those we
are discussing here today, are vital to United States--and global--
economic and political security. In particular, our ability to foster
development in and trade with the Front Line States, with countries in
South and South-East Asia, and with struggling markets in Africa, will
go a long way toward promoting international stability.
To begin, let me first express my appreciation to Secretary Evans,
Under Secretary Aldonas, and their staffs for the tremendous amount of
work that they have put into the TPCC process in the past 7 months.
They are to be commended for their proactive efforts to discern the
needs of the exporting community and to develop specific strategies to
respond to those needs. TDA has been an active participant in those
efforts and we look forward to continuing this role as we face the
future challenges and implement the many ideas contained in the Report.
The Report contains a number of specific proposals pertaining to
TDA, and I will outline them in a moment, but since TDA does not
regularly appear before this Committee, I would like to quickly take a
moment to reiterate TDA's mission and activities.
As directed by statute, TDA promotes American private sector
participation in developing and middle-income countries, with special
emphasis on economic sectors that represent significant U.S. export
potential. TDA is a small, nimble agency that partners with U.S.
companies and assists them in building mutually beneficial
relationships with overseas projects sponsors and Government officials.
The result is
increased U.S. exports and jobs, as well as the completion of high-
quality, successful projects, and other solutions that address priority
developmental needs in host
countries.
Thus, the 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. TDA's dual trade and development mission allows it to
serve as an essential catalyst for priority development around the
globe through support of key infrastructure projects and
capacity building initiatives.
TDA's operations put it at the forefront of U.S. foreign and trade
policy, where it works in concert with a wide array of other U.S.
Government agencies, such as the Departments of State, Commerce,
Treasury, Agriculture, Energy, and Transportation, the U.S. Trade
Representative, the Export-Import Bank of the United States, and the
Overseas Private Investment Corporation. Thus, the TDA works together
closely with the other TPCC agencies on a regular basis, in the normal
course of its business.
TDA's role is to ensure that there are early successful
demonstrations that U.S. policies result in viable and in mutually
beneficial economic growth. This demonstration of U.S. support has the
direct effect of increasing exports of U.S. goods, services,
technology, and expertise. TDA accomplishes its mission using a number
of early project planning tools, including the funding of various forms
of technical assistance, feasibility studies, detailed design and
engineering, orientation visits, specialized training grants, and
conferences. TDA utilizes its tools creatively, tailoring its flexible
resources to fit the particular needs of specific opportunities. The
agency thereby achieves two results--assisting U.S. businesses as they
compete for infrastructure and other development projects in highly
competitive, emerging markets, and offering tailored solutions to
foreign governments in need of effective
commercial-sector development assistance.
Turning to the TPCC Report, there are a number of recommendations
that involve TDA. Since my colleagues have already identified many of
them, I will simply highlight a few key recommendations.
First of all, we will continue to focus on developing coordinated
strategies in crisis regions. For example, the TDA has been working
closely with OPIC in developing potential projects in Afghanistan,
particularly in the telecom sector. In fact, the TDA is already
providing funding for an advisor to the communications ministry, to
assist them with evaluating proposals for the sector. This work is also
being coordinated with the State Department's Office of International
Communications and Information Policy and with USAID. We also have been
working closely with Commerce and the FAA in developing a technical
assistance program for the aviation sector in Afghanistan that will
support U.S. commercial interests. Similarly, we have worked with Ex-Im
Bank in identifying projects in Uzbekistan that can be supported by TDA
at the feasibility study stage and later by Ex-Im Bank guarantees. We
will continue to work with other TPCC agencies to develop coordinated
strategies in Afghanistan and other crisis areas.
In addition, as recommended by the exporting community, TDA will
explore opportunities to fund front-end engineering and design studies,
which are commonly referred to as FEED studies. Other countries
sometimes fund such studies as part of their aggressive efforts to win
large development projects, and TDA will initiate a pilot program to
support U.S. companies who are confronted with this type of
competition.
TDA will continue working with other TPCC agencies on designing a
pilot project to support capital projects in traditionally commercially
nonviable sectors, such as the environment, renewable energy, health
care, and water. TDA is active in all of these sectors, and will
coordinate with the other TPCC agencies to further expand opportunities
for U.S. businesses.
TDA also looks forward to continuing its efforts in the area of
biotechnology. We continue to work with USDA, USTR and the Department
of State to support public-private partnerships that help promote sound
regulatory environments overseas for American biotech products. These
efforts are crucial for ensuring that our trading partners continue to
allow the import of American pharmaceutical and agricultural products.
Additionally, TDA will continue to develop strategies for
supporting efforts in the service sector, such as in insurance,
banking/finance, tourism and e-commerce. For example, TDA has been
supporting feasibility studies and technical assistance for projects
around the world involving e-commerce. Two weeks ago, the TDA signed a
grant with Sinopec, China's leading petroleum and petrochemical
company, for a feasibility study to help develop an e-trade platform,
putting all of the company's procurement activities online. The study
would show Sinopec how to manage and finance its e-procurement
investments, as well as how to prepare its management for the
organizational requirements demanded by the new system's
implementation. Not only will this lead to a potential of $23 million
in direct U.S. exports associated with setting up the system, but will
also make their procurement process more efficient and transparent,
further increasing the likelihood that U.S. companies will be
successful in doing business with Sinopec in the future.
The TPCC Report identifies exporters' desire that the trade
agencies provide better access to information and to streamline data
collection, such as with the application process. TDA is currently
revamping its computer system, moving to a web-based system that will
both allow our staff to work with data more efficiently and provide
better access for U.S. companies to TDA information and activities. We
are scheduled to have this system operational later this year.
In sum, the TDA will continue to work closely with the TPCC and its
member agencies in making sure that U.S. policy objectives are
supported by concrete results, and that U.S. companies have the support
they need as they operate around the world. This obviously is of
benefit to the U.S. economy, as it supports exports and creates U.S.
jobs. But equally importantly, the dissemination of U.S. goods,
technology, services and business practices around the world represents
a cost-effective, market-based means of effectuating the President's
strategy of supporting economic growth and development in developing
countries.
Again, I appreciate the opportunity to again appear before you and
look forward to answering any questions you may have.
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PREPARED STATEMENT OF ROSS CONNELLY
Executive Vice President
Overseas Private Investment Corporation
May 14, 2002
Mr. Chairman and Members of the Committee, I am pleased and honored
to be here today on behalf of Dr. Peter Watson, OPIC's President and
CEO. Dr. Watson regrets he could not be here in person due to
previously scheduled travel to Africa as part of OPIC's special
initiative to spur development and promote investment in sub-Saharan
Africa.
I want to thank you, Mr. Chairman and Members of the Committee, for
the consistent leadership and support you have provided OPIC and its
sister agencies in the Trade Promotion Coordinating Committee (TPCC).
Given our commitment to the development of a unified and successful
U.S. trade program, I have every confidence that the TPCC Report, and
our ongoing efforts to execute its recommendations, will have the
desired effect: To enable U.S. companies to better compete for access
to existing and emerging markets, to the benefit of American investors
and exporters.
Toward that end, I want to reinforce the Report's recognition of
the invaluable contributions of late Export-Import Bank Chairman John
E. Robson to our cooperative endeavor. John's dedication to excellence
should serve as both a foundation and a beacon to the efforts of the
TPCC agencies.
I also wish to express OPIC's appreciation for the leadership of
Secretary of Commerce Don Evans, whose efforts and vision have been key
in marshaling the collective resources of our agencies for TPCC's
worthy mandate.
Mr. Chairman, in his introductory letter to the TPCC Report,
President Bush makes clear the central goal of his unified U.S. trade
policy: Providing American companies the information, expertise, and
financing they need to take full advantage of the opportunities which
exist in international markets. The President
expects that the TPCC agencies and departments will achieve this goal
by providing customer service that is responsive, streamlined, and
results-oriented. While the
Report contains many specific recommendations, they are all in service
of a single
objective: Providing the investors and exporters ``with the tools they
need to compete.'' OPIC is committed to working with our sister
agencies to meet this worthy objective.
Over the agency's 31-year history, OPIC has promoted sustainable
development and supported $138 billion worth of investment in 3,000
projects from Algeria to Zimbabwe. These same projects have generated
$64 billion in U.S. exports and
created nearly 250,000 U.S. jobs. The activities of these projects are
as diverse as the countries that host them. Over its history, OPIC has
built up reserves of over $4 billion, and as you know, accomplishes its
mission at no net cost to American taxpayers.
In reiterating OPIC's commitment to the goals contained in the TPCC
Report, I want to share with you today specific steps OPIC has taken to
implement the recommendations of the Report, and to outline OPIC's
future course of action to that end. Taken as a whole, these actions
represent demonstrable progress toward better coordination between OPIC
and its sister agencies; improved customer service; and more aggressive
outreach to the American business community. In all these efforts, OPIC
has striven in particular to improve small- and medium-sized
businesses' access to international markets.
Improved coordination among TPCC agencies is a priority of the
Report, with the expectation that this would enable the agencies to
identify investment opportunities more quickly. As the Report points
out, OPIC has already been working in tandem with our colleagues from
the Export-Import Bank (Ex-Im) and the Trade and Development Agency
(TDA) on joint initiatives. These include efforts in Indonesia, and
more recently in Pakistan and Afghanistan.
New OPIC Small Business Emphasis
As another example of improved coordination and cooperation, I am
also pleased to report that one of OPIC's key priorities under the
Presidency of Peter Watson is to establish an innovative framework
agreement between OPIC and the Small Business Administration (SBA).
This important cooperative relationship will provide a new dimension
for American small businesses currently working with the SBA by
providing a vehicle to seamlessly connect interested companies with the
tools and products needed to invest internationally.
The effect of the OPIC/SBA Small Business Initiative will be to
leverage, through cross-training and outreach, the relative strengths
of the two TPCC agencies, in order to provide U.S. small businesses
with the expertise and financial wherewithal necessary to make
investments in international markets. We hope to formalize this
arrangement in the near future.
In the same spirit as our SBA cooperation, OPIC will also seek a
new relationship with the U.S. Commercial Service that will establish a
training program by which Commercial Service officers will be able to
explain OPIC products and services to investors already familiar with
international operations through existing relationships with the
Commercial Service.
Establishing improved customer service is another goal of the TPCC
Report and an OPIC priority. OPIC's management and staff are committed
to increasing responsiveness to and streamlining business processes.
Minimizing the red tape and providing responsive service to those
who have an interest in the agency's products is one of the critical
links in meeting OPIC's development. Towards this end, OPIC will:
Be Responsive to the Needs of Clients. 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.
Measure Results. OPIC will develop and implement measurements
that assess results and outputs, as opposed to inputs, thereby
offering a more effective way to gauge our progress in serving the
taxpayer.
OPIC is committed to servicing our customers as effectively and
efficiently as possible. Indeed, the work of the TPCC will complement
the ongoing efforts that OPIC itself has embarked upon in assessing its
programs, refocusing our efforts toward mobilizing capital where but
for OPIC there would be no private investment, and in streamlining our
operations.
Refocus on Developmental Mission
Our objective since coming to OPIC has been to align our products
and services in a manner that supports OPIC's statutorily-mandated
mission, while also recognizing a robust and growing private market
that has developed since OPIC's founding. As such, we have concentrated
on, among other areas: Refocusing OPIC on its core, developmental
mission; rededicating our commitment to small business; and ensuring
that OPIC's products are complementary, not competitive, with the
private sector. Each of these reforms will also contribute importantly
to meeting the goals of the TPCC Report.
We are working actively to strengthen OPIC's consciousness of its
historical developmental mission. We look to assess the investments
that OPIC ultimately supports by more than simple dollar flows; that
is, to critically examine and benchmark the added value of a particular
investment to the host country, or as we say, to assess the
additionality the project represents.
Our goal is to ensure that OPIC's participation ``adds value'' by
measuring the extent to which there is a market failure, the degree to
which OPIC can leverage its resources for a broader economic impact,
and the extent to which the project in question contributes to the
overall economic development of the host country.
Our ability to refocus on the developmental nature of our projects
is made possible in part by the growth and success of private market
financing and insurance mechanisms. This growth allows OPIC, with its
unique strengths as a Government agency, to complement the private
markets by working in countries in which the private sector would
otherwise not participate. Indeed, OPIC's role is to do things that the
private market will not, such as offering more tolerance for higher
risk countries or projects, longer tenure, or larger per project
capacity, which will help fulfill our development mandate, but to do so
by accepting only prudent financial risk, as OPIC has consistently
practiced over its history.
The TPCC Report also calls for member agencies to formalize
cooperation in pilot investment countries, such as Mexico, South
Africa, Brazil, and Turkey. I am pleased to report that OPIC has been
active in each of those countries, and looks forward to working with
our sister agencies as part of a unified trade program.
The TPCC Report notes that U.S. exporters wanted a coordinated
response to the crisis regions that would enable them to take advantage
of emerging commercial opportunities. Among TPCC agencies, OPIC is uniquely positioned to provide such coordination.
Special Foreign Policy Initiatives
Since the events of September 11, OPIC has announced a series of
initiatives in support of the frontline states in the international war
against terrorism, the cumulative effect of which is to demonstrate to
potential U.S. investors the opportunities that exist in countries
rebuilding from strife.
Last October, OPIC announced an initiative for Pakistan, which
included the extension of a $300 million special line of credit for
U.S. companies interested in investing in Pakistan.
As part of the Bush Administration's commitment to the economic
reconstruction of post-Taliban Afghanistan, OPIC announced in January
that it would establish an initial $50 million line of credit to
support U.S. investment in that country. OPIC has also encouraged U.S.
investment in the neighboring states of Uzbekistan and Kazakhstan.
We have made significant progress in each of these areas, and
expect that within a reasonable period of time, we can fulfill the
commitments we have made.
Before closing, I want to note that the TPCC Report pays special
attention to the needs of U.S. small- and medium-sized enterprises
(SME's). Despite its small staff, OPIC has done remarkably well in
reaching out to small- and medium-sized businesses that constitute a
growing percentage of project participants. Of the 37 new insurance and
finance projects that OPIC supported in fiscal year 2001, approximately
57 percent (21 projects) involved American small businesses. In
addition, thousands of SME's participate as suppliers to OPIC-supported
projects. By comparison, 40 percent of all projects that 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.
OPIC's 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.
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
mobilized to produce viable projects in the developing world.
Conclusion
In conclusion, the measures outlined above speak to OPIC's strong
commitment to a leadership role in providing American companies the
kind of unified trade program President Bush expects of the TPCC
agencies. They represent significant progress toward better
coordination between OPIC and its sister agencies; improved customer
service; and more aggressive outreach to the American business
community, all with a specific eye toward assisting small- and medium-
sized businesses' efforts to access international markets.
I would be remiss in closing without noting that recommendations in
the Report were based on a survey of U.S. exporters, which identified
their expectations and needs. It is vital for we the member agencies
always to keep in mind the investor's understanding of the global
marketplace, its vagaries and opportunities, in formulating our unified
trade program. In that context, we at OPIC have much more to accomplish
before we have made our full contribution to this process, but we are
confident that our attention to investors' needs has placed us on the
right path.
Thank you, Mr. Chairman.
I will be pleased to respond to your questions.