[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]





 
                        PROMOTING AMERICAN JOBS:
                        
                         REAUTHORIZATION OF THE
                         
                        U.S. EXPORT-IMPORT BANK

=======================================================================

                                HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 4, 2019

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 116-28
                           
                           
                           
                           
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]     




                           
                           ______                      


              U.S. GOVERNMENT PUBLISHING OFFICE 
40-158 PDF             WASHINGTON : 2020 
                            
                           
                           
                           

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             PETER T. KING, New York
GREGORY W. MEEKS, New York           FRANK D. LUCAS, Oklahoma
WM. LACY CLAY, Missouri              BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            SEAN P. DUFFY, Wisconsin
ED PERLMUTTER, Colorado              STEVE STIVERS, Ohio
JIM A. HIMES, Connecticut            ANN WAGNER, Missouri
BILL FOSTER, Illinois                ANDY BARR, Kentucky
JOYCE BEATTY, Ohio                   SCOTT TIPTON, Colorado
DENNY HECK, Washington               ROGER WILLIAMS, Texas
JUAN VARGAS, California              FRENCH HILL, Arkansas
JOSH GOTTHEIMER, New Jersey          TOM EMMER, Minnesota
VICENTE GONZALEZ, Texas              LEE M. ZELDIN, New York
AL LAWSON, Florida                   BARRY LOUDERMILK, Georgia
MICHAEL SAN NICOLAS, Guam            ALEXANDER X. MOONEY, West Virginia
RASHIDA TLAIB, Michigan              WARREN DAVIDSON, Ohio
KATIE PORTER, California             TED BUDD, North Carolina
CINDY AXNE, Iowa                     DAVID KUSTOFF, Tennessee
SEAN CASTEN, Illinois                TREY HOLLINGSWORTH, Indiana
AYANNA PRESSLEY, Massachusetts       ANTHONY GONZALEZ, Ohio
BEN McADAMS, Utah                    JOHN ROSE, Tennessee
ALEXANDRIA OCASIO-CORTEZ, New York   BRYAN STEIL, Wisconsin
JENNIFER WEXTON, Virginia            LANCE GOODEN, Texas
STEPHEN F. LYNCH, Massachusetts      DENVER RIGGLEMAN, Virginia
TULSI GABBARD, Hawaii
ALMA ADAMS, North Carolina
MADELEINE DEAN, Pennsylvania
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
DEAN PHILLIPS, Minnesota

                   Charla Ouertatani, Staff Director
                   
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    June 4, 2019.................................................     1
Appendix:
    June 4, 2019.................................................    59

                               WITNESSES
                         Tuesday, June 4, 2019

Dempsey, Linda Menghetti, Vice President, International Economic 
  Affairs, National Association of Manufacturers (NAM)...........     4
Herrnstadt, Owen, Chief of Staff to the International President, 
  International Association of Machinists and Aerospace Workers 
  (IAM)..........................................................     6
Hinson, David, Vice President, Diversity and Emerging Business, 
  U.S. Chamber of Commerce.......................................     8
Kamphausen, Roy D., Commissioner, U.S.-China Economic and 
  Security Review Commission.....................................     9
Sharma, Archana, Chief Executive Officer, AKAS Tex, LLC..........    11
Wilburn, Steven P., Chief Executive Officer, FirmGreen 
  Incorporated...................................................    13

                                APPENDIX

Prepared statements:
    Dempsey, Linda Menghetti.....................................    60
    Herrnstadt,Owen..............................................    69
    Hinson, David................................................    74
    Kamphausen, Roy..............................................    81
    Sharma, Archana..............................................    89
    Wilburn, Steven..............................................    95


                        PROMOTING AMERICAN JOBS:

                         REAUTHORIZATION OF THE

                        U.S. EXPORT-IMPORT BANK

                              ----------                              


                         Tuesday, June 4, 2019

             U.S. House of Representatives,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:06 a.m., in 
room 2128, Rayburn House Office Building, Hon. Maxine Waters 
[chairwoman of the committee] presiding.
    Members present: Representatives Waters, Maloney, 
Velazquez, Green, Cleaver, Perlmutter, Himes, Foster, Beatty, 
Heck, Vargas, Gottheimer, Gonzalez of Texas, Lawson, Tlaib, 
Porter, Axne, McAdams, Wexton, Lynch, Adams, Dean, Garcia of 
Illinois, Garcia of Texas, Phillips; McHenry, Wagner, Lucas, 
Posey, Luetkemeyer, Huizenga, Duffy, Stivers, Barr, Tipton, 
Williams, Hill, Emmer, Zeldin, Loudermilk, Mooney, Davidson, 
Kustoff, Hollingsworth, Gonzalez of Ohio, Rose, Steil, Gooden, 
and Riggleman.
    Chairwoman Waters. The Financial Services Committee will 
come to order. Without objection, the Chair is authorized to 
declare a recess of the committee at any time.
    Today's hearing is entitled, ``Promoting American Jobs: 
Reauthorization of the U.S. Export-Import Bank.''
    I will now recognize myself for 4 minutes to give an 
opening statement.
    Today, this committee convenes for a hearing to discuss the 
revival and long-term reauthorization of the Export-Import Bank 
(Ex-Im), which plays an important role in the U.S. Government's 
effort to support American jobs, maintains the validity of 
critical industry sectors, and thwarts the movement of 
manufacture and production overseas. For 85 years, the Ex-Im 
Bank has helped U.S. exporters compete in the global markets by 
assuming credit risk that the private sector is unable or 
unwilling to accept, and by helping U.S. firms compete on an 
equal footing against foreign competitors with access to 
generous export financing through their own government export 
credit agencies.
    Over the last 10 years, Ex-Im financed more than $255 
billion in U.S. exports, supported more than 1.5 million 
American jobs, and remitted more than $3.4 billion in deficit 
reducing receipts to the Treasury.
    Despite its numerous contributions to our economy, this 
critically important institution has repeatedly found itself 
under attack.
    In July 2015, the previous chairman of this committee 
allowed the Bank's charter to lapse for the first time in the 
Bank's 81-year history. After months of hard work, 
Representatives Heck, Moore, Hoyer, and I joined an 
overwhelming majority of our colleagues on both sides of the 
aisle in voting to renew Ex-Im's operating charter through 
September 30, 2019.
    The reauthorization legislation mandated a number of 
important reforms, including provisions to boost the share of 
financing for small businesses and ensure that Ex-Im maintains 
its fiscal soundness.
    Although Ex-Im has finally been reauthorized, Republican 
Senate leadership refused to confirm the directors of Ex-Im's 
board, thereby denying the board the required quorum to approve 
transactions over $10 million. Without the ability to consider 
the full range of transactions pending approval, Ex-Im reported 
that $40 billion worth of transactions, which would support an 
estimated 250,000 jobs, languished in its approval pipeline. 
Fortunately, last month, the Senate finally confirmed three new 
board members of Ex-Im Bank, reviving the agency.
    Failure to reauthorize and strengthen Ex-Im would result in 
the loss of tens of thousands of jobs as U.S. exporters suffer 
declining overseas. This includes thousands of small- and 
medium-sized businesses across the country.
    Without a strong and competitive Ex-Im, companies may be 
forced to move jobs to locations where export credit is still 
available, and American workers will suffer. Additionally, this 
will undermine America's manufacturing base which, in turn, 
will negatively impact America's industrial production capacity 
that is critical to our economic growth and international 
competitiveness.
    So I look forward to today's discussion on ways to support 
U.S. workers that ensure our exporters will get the certainty 
they need to grow, compete globally, and keep good jobs here at 
home.
    I now recognize the ranking member of the committee, the 
gentleman from North Carolina, Mr. McHenry, for 5 minutes for 
an opening statement.
    Mr. McHenry. I thank the chairwoman, and I appreciate her 
organizing this very distinguished panel today. And I 
appreciate the panel being here.
    The Export-Import Bank can trace its origins back to the 
1930s. One of its first loans was extended to China for the 
construction of the Burma Road, an important supply route when 
China found itself at war with Japan, and certainly a hard-
fought path during World War II.
    I raise this example to underscore how much has changed in 
the intervening 8 decades, but also to highlight what must 
remain constant as we approach a reauthorization of Ex-Im.
    Our relations with China and Japan, not to mention their 
internal governance, have undergone a dramatic transformation 
since Ex-Im's founding. But the use of Ex-Im as a tool of our 
national interest and even our national security interest has 
increased importance today.
    China is providing unparalleled levels of export subsidies 
for its company, especially its state-owned enterprises, with a 
goal of dominating the technologies of tomorrow and extending 
its influence through the Belt and Road Initiative.
    In the face of this challenge, no one expects the Export-
Import Bank to singlehandedly neutralize China's efforts. But 
as we continue to examine how to modernize Ex-Im, it is 
imperative that we look reality in the eye and adapt the Bank 
to the present day. This means focusing Ex-Im on the exports of 
the future. It means supporting jobs that are central to the 
culture of competitiveness and innovation. This is how Ex-Im 
can best advance U.S. leadership in the face of China's plans.
    At the same time, we have to recognize that our 
competitiveness is not just a product of America's largest 
companies, but also springs from our startups and small 
businesses, a unique source of vigor that distinguishes us, not 
just from China, but from every other country on the globe.
    I am confident that Members from both parties want to 
ensure that Ex-Im allows our small exporters to grow and 
flourish by seeking out new markets.
    Let me conclude by noting that while Ex-Im must be better 
adapted to confront Beijing's ambitions, we continue to hope 
for a future where the Chinese government joins international 
order and adheres to the standards of developed nations, 
including standards governing export subsidies.
    As we know, on this day 30 years ago, the Communist Party 
trampled on its people's calls for reform in the Tiananmen 
Square massacre, the remembrance of which is still suppressed 
to this day by leaders in Beijing.
    So while we continue to work towards a peaceful and 
constructive relationship with China, I hope we will remain 
clear-eyed about the nature of its regime, especially as we 
consider how to employ Ex-Im's resources much more 
strategically going forward.
    I yield to the subcommittee ranking member on this very 
subject, Steve Stivers.
    Mr. Stivers. Thank you, Ranking Member McHenry.
    I want to thank the Chair for calling this hearing today. 
As everyone knows, we don't have much time to reauthorize the 
Ex-Im Bank.
    In 2017, China's export credit agencies provided 
approximately $36 billion in medium- and long-term financing to 
support its manufacturers. Meanwhile, the United States Ex-Im 
Bank deployed approximately $200 million of assistance to 
American exporters.
    China is aggressively pursuing a comprehensive industrial 
strategy, China 2025, to erode America's industrial base and 
dominate technologies for the 21st Century. If we are going to 
fight back, we need to recognize that modernizing and 
strengthening the Ex-Im Bank is part of what we have to do, and 
it is a national security issue. While we do this, we can also 
support efforts that make Ex-Im more transparent and 
accountable to taxpayers.
    I look forward to hearing from our witnesses today about 
the unfair advantage that foreign export credit agencies have 
in providing support to their manufacturers and how we can 
reform and strengthen our Ex-Im Bank to level the playing field 
for American employers and the American economy.
    Thank you. I yield the gentleman his time back.
    Mr. McHenry. And I yield back.
    Chairwoman Waters. Thank you.
    I now recognize the Chair of our Subcommittee on National 
Security, International Development, and Monetary Policy, Mr. 
Cleaver, for 1 minute.
    Mr. Cleaver. Madam Chairwoman, this is an important piece 
of legislation for the people of the Fifth District and for the 
State of Missouri. We have a significant number of companies 
who are involved with Boeing, who are spending significant 
amounts of money and hiring as a result of the Ex-Im activity. 
And it would be my hope that we can get this bill out of 
committee, on the Floor, and through the Senate. A lot depends 
on it.
    Thank you. I yield back the balance of my time.
    Chairwoman Waters. Thank you.
    I want to welcome today's distinguished panel: Linda 
Menghetti Dempsey, vice president, international economic 
affairs, National Association of Manufacturers; Owen 
Herrnstadt, chief of staff of the international president, 
International Association of Machinists and Aerospace Workers; 
David Hinson, vice president, Institute for Diversity and 
Emerging Business, U.S. Chamber of Commerce; Roy Kamphausen, 
commissioner at the U.S.-China Economic and Security Review 
Commission; Archana Sharma, CEO, AKAS Tex, LLC, a textile 
manufacturer and exporter based in Pennsylvania; and Steven 
Wilburn, CEO, FirmGreen Incorporated, an integrated energy 
company focusing on green technology and alternative fuels 
based in California.
    Without objection, all of your written statements will be 
made a part of the record. And each of you will have 5 minutes 
to summarize your testimony. When you have 1 minute remaining, 
a yellow light will appear. At that time, I would ask you to 
wrap up your testimony so we can be respectful of both the 
witnesses' and the committee members' time.
    Ms. Dempsey, you are now recognized for 5 minutes to 
present your oral testimony.

     STATEMENT OF LINDA MENGHETTI DEMPSEY, VICE PRESIDENT, 
    INTERNATIONAL ECONOMIC AFFAIRS, NATIONAL ASSOCIATION OF 
                      MANUFACTURERS (NAM)

    Ms. Dempsey. Chairwoman Waters, Ranking Member McHenry, 
members of the committee, thank you for the opportunity to be 
here today on behalf of the National Association of 
Manufacturers, the largest manufacturing association in the 
country.
    I am here because the 14,000 manufacturers we represent, 
small and large, in every industrial sector and in all 50 
States and the more than 12.8 million women and men who make 
things in America depend on the ability to sell overseas and to 
be globally competitive. Access to foreign markets is critical 
to growing manufacturing in the United States, getting 
innovative products to consumers, and creating good, high-
paying jobs.
    The United States has the world's most productive 
manufacturing sector, but the U.S. market represents only 10 
percent of global consumption. Our manufacturers need to be 
globally competitive to reach customers outside of our country 
if we are going to keep growing.
    As the official export credit agency of the United States, 
the Export-Import Bank operates as the lender of last resort 
for thousands of U.S. exporters that cannot obtain financing or 
related services from commercial banks.
    For the exporters that use this tool, it is often the 
difference between winning and losing a deal and growing or 
risking jobs. That is why manufacturers are grateful that the 
Senate confirmed the three nominees to the Ex-Im board last 
month, and the agency is now fully functional for the first 
time since 2015.
    I have outlined in my written testimony the many reforms 
the Ex-Im Bank has implemented pursuant to the 2015 
reauthorization, including working to expand usage by small 
businesses, heightening the Ex-Im Bank's risk and ethics 
controls, prohibiting discrimination against any eligible 
exporter, and keeping Congress better informed of its 
activities. Many of these reforms awaited the installation of 
the new quorum, and their impact is only just starting to be 
felt.
    Now, we are asking Congress to revitalize and reauthorize 
the Ex-Im Bank quickly to provide certainty and a level playing 
field for manufacturers in America. The Ex-Im Bank serves 
several critical roles that fill gaps when commercial financing 
is not available. It supports small and medium-sized exporters 
that can't obtain working capital, financing, and guarantees. 
It also supports exporters of all sizes that require longer-
term financing for large deals, financing for sales to emerging 
markets, and support for sales to foreign state-owned entities.
    Since 2000, the exports made possible by the Ex-Im Bank 
have supported more than 2.5 million American jobs. Last year, 
more than 90 percent of the Ex-Im Bank's transactions directly 
supported small businesses. And many more small businesses 
benefit when our larger companies can export more.
    Action to revitalize and reauthorize the Ex-Im Bank is also 
critical, given the unprecedented challenges that manufacturers 
face in the global economy. There are more than 100 foreign 
export credit agencies around the world working to support 
their country's manufacturers at the expense of ours. When U.S. 
businesses can't bid on or finance overseas projects or secure 
foreign sales in the absence of Ex-Im, other countries are more 
than happy to fill the void.
    The NAM estimates that during the nearly 4 years that the 
Ex-Im board lacked a quorum and the ability to fully operate, 
manufacturers lost at least $119 billion in manufacturing 
output and the loss of 80,000 jobs in 2016 and 2017 alone. 
These losses are particularly hard for small and medium-sized 
businesses and the broader industrial base.
    Meanwhile, China, India, Korea, and others have been 
growing their export credit agencies substantially, both for 
commercial and other national interests. China's total medium 
and long-term export assistance totaled more than the rest of 
the world combined in Fiscal Year 2017. China has used its 
financing to advance its economic and geopolitical interests. 
In one instance, its massive loans won foreign government 
approval of a Chinese military base adjacent to America's only 
permanent military installation in Africa.
    This issue, however, is much larger than just China, and it 
is much larger than our economy. When America fails to lead, 
other nations fill the vacuum. Unless Congress takes action to 
reauthorize and revitalize the Ex-Im Bank quickly, our 
country's standing in the world will falter.
    Here is what manufacturers are asking of Congress: 
reauthorize the Ex-Im Bank for a significant term; fix the 
quorum issue to avoid costly disruptions; revitalize the Ex-Im 
Bank's mission to help counter the growing challenge of state-
directed export financing; and continue to ensure the Ex-Im 
Bank promotes exports by all eligible exporters without 
hampering its ability and flexibility to help manufacturers of 
all sizes and types. Proposals to restrict usage by particular 
firms and industries through strict concentration or similar 
limits would undermine Ex-Im's mission and America's ability to 
compete globally, to the detriment of manufacturers.
    Thank you.
    [The prepared statement of Ms. Dempsey can be found on page 
60 of the appendix.]
    Chairwoman Waters. Thank you very much.
    Mr. Herrnstadt, you are now recognized for 5 minutes to 
present your oral testimony.

      STATEMENT OF OWEN HERRNSTADT, CHIEF OF STAFF TO THE 
     INTERNATIONAL PRESIDENT, INTERNATIONAL ASSOCIATION OF 
             MACHINISTS AND AEROSPACE WORKERS (IAM)

    Mr. Herrnstadt. Thank you, Chairwoman Waters, Ranking 
Member McHenry, and members of the committee, for the 
opportunity to testify before you today on the vital importance 
of the Export-Import Bank in promoting American jobs.
    The International Association of Machinists and Aerospace 
Workers represents hundreds of thousands of workers in North 
America. Our members produce, service, assemble, and transport 
products, parts, and assemblies that create the global economy. 
They are responsible for the success of many of this nation's 
leading export industries.
    Given our members' work in the export industries, we are 
uniquely positioned to share with you our strong support for 
the Bank so that it can continue its critical mission of 
supporting U.S. jobs by financing exports that meet strong U.S. 
employment policy requirements, including those concerning 
domestic content.
    We need a fully funded and reauthorized Ex-Im Bank now more 
than ever. Global competition has never been more intense, and 
the stakes for our economy have never been higher as U.S. firms 
and U.S. workers struggle to compete in today's global 
marketplace.
    As just mentioned, many other countries have implemented 
their own policies and industries that promote domestic 
industries and employment, including Germany, France, Italy, 
Japan, and China, to name a few.
    Unlike these other countries, the U.S. has only one 
government institution that supports U.S. exporters and U.S. 
workers: the Ex-Im Bank. Since the Ex-Im Bank began in the 
1930s, its mission has been to support U.S. exports that 
support U.S. workers. The Bank's efforts, as noted, have been 
stymied over the past few years by delaying authorization and 
then by preventing the existence of its quorum of its board of 
directors.
    During this period, companies have announced closures of 
facilities while they are struggling to find financing. While 
uncertainty over the Ex-Im Bank's future continues, export 
credit agencies (ECAs) in other countries have become more and 
more aggressive, as has already been noted. Aerospace is one of 
the principal targets of foreign ECAs, as noted in Ex-Im's 
report on global export competition.
    China's use of the ECAs is of special concern given the 
massive amount of financing that they are providing their 
export industries and the lack of transparency. While we don't 
know a lot about the financing, what we do know is of serious 
concern. We know that China has focused hundreds of billions of 
ECA dollars on its export industries. As the Bank notes, 
Chinese activity now accounts for roughly 40 percent of global 
total trade for medium- and long-term support. China's ECAs 
mandate support for its own One Belt, One Road initiative.
    Now, some critics of the Ex-Im Bank want to eliminate the 
export credit financing entirely. They argue that if no country 
can engage in this activity, no country will be able to use 
ECAs to promote their own industries and employment. Their 
criticism is based on two presumptions. First, they presume 
that all countries will agree to eliminate export credit 
agencies, which is seriously doubtful. Second, they presume 
that the elimination of export credit agencies will eliminate 
other countries' efforts to support their own industries and 
employment. Unlike the U.S., however, as Europe's Strategic 
Aerospace Review for the 21st Century and China's Made in China 
2025 efforts clearly indicate, other countries utilize 
comprehensive policies that are not limited to ECAs to support 
their own industries and employment.
    As indicated at the outset, the IAM's support for the Ex-Im 
Bank is directly linked to strong public policies that support 
U.S. employment, like domestic content in shipping 
requirements. Strong domestic content means that a greater 
percentage of the product for export is made here in the United 
States. Strong shipping requirements mean that U.S. workers on 
U.S. flagships, not foreign workers on foreign flagships, will 
transport the Ex-Im Bank-financed exports.
    Past efforts to weaken these essential public policies 
should continue to be rejected if at all raised. If domestic 
content and U.S. shipping requirements are weakened in any way, 
U.S. workers will suffer. Moreover, U.S. taxpayers, including 
the U.S. workers whose jobs are at stake, should not have to 
question whether their hard-earned money is going to create 
jobs here at home or in other countries.
    The IAM strongly urges this committee to act as quickly as 
possible to simply, cleanly, and fully reauthorize the Ex-Im 
Bank with strong U.S. employment policies.
    [The prepared statement of Mr. Herrnstadt can be found on 
page 69 of the appendix.]
    Chairwoman Waters. Thank you, Mr. Herrnstadt.
    Mr. Hinson, you are now recognized for 5 minutes to present 
your oral testimony.

   STATEMENT OF DAVID HINSON, VICE PRESIDENT, INSTITUTE FOR 
   DIVERSITY AND EMERGING BUSINESS, U.S. CHAMBER OF COMMERCE

    Mr. Hinson. Chairwoman Waters, Ranking Member McHenry, and 
distinguished members of the committee, I am pleased to testify 
today on the importance of reauthorizing the Export-Import 
Bank. I am here on behalf of the United States Chamber of 
Commerce, the world's largest business advocacy organization, 
which represents the interests of over 3 million businesses of 
every size, sector, and in every State.
    I also come to you as a former National Director of the 
Minority Business Development Agency in the U.S. Department of 
Commerce, where I focused on supporting the unique export 
capabilities of our nation's 11 million minority-owned and 
operated businesses.
    You have heard the fundamentals of the ongoing debate on 
Ex-Im reauthorization. Ex-Im provides financing and guarantees 
for exporters that directly support American jobs at no cost to 
the U.S. taxpayer. Nearly 90 percent of Ex-Im transactions are 
with small and medium-sized businesses, and approximately 20 
percent of Ex-Im transactions are with women-owned and 
minority-owned businesses.
    What is alarming the business community today is the idea 
that U.S. companies will be forced to operate in the ultra 
competitive global marketplace without an official export 
credit agency. Consider how this would put specific sectors and 
industries at a competitive disadvantage. First, shutting down 
Ex-Im would mean many small businesses couldn't export at all, 
because commercial banks often refuse to accept foreign 
receivables as collateral for a loan without an Ex-Im 
guarantee. For these small businesses, Ex-Im isn't just nice to 
have; it is critical to the success of their export 
opportunities.
    Second, it is common for expensive capital goods such as 
Canadian airplanes, Chinese trains, and Russian nuclear 
reactors to be sold worldwide with backing from their national 
export credit agencies. Even before the lapse in Ex-Im's 
charter in 2015, major tenders for locomotives, turbines, jets, 
and nuclear reactors were slipping away from U.S. exporters. 
These tenders, worth hundreds of millions of dollars, require 
that the supplier finance the significant portion of the 
transaction.
    Chinese competition in particular has been fierce, and they 
come well-prepared with generous financing from one or several 
Chinese government-sponsored export credit agencies. Again, for 
large ticket purposes, the calculus could not be more clear: No 
Ex-Im, no sale.
    Another example of a sector that would be decimated by the 
loss of Ex-Im is the nuclear power industry. Nearly all 
business opportunities in nuclear power are overseas, and 
export credit agency support is required simply to bid on a 
nuclear power plant tender. So for many companies in the U.S. 
nuclear industry, which directly employs more than 100,000 
Americans in high-skilled, high-paying jobs, it is essentially 
the Ex-Im Bank or die.
    Finally, the Ex-Im Bank is vital to the growth of minority-
owned and women-owned exporters. According to the most recent 
statistics, there are over 28,000 minority-owned exporters, a 
growing number of which are African American-owned and 
Hispanic-owned companies, and 30,000 women-owned exporters. 
These firms export products and services valued well in excess 
of $30 billion. They export to over 100 countries, and they 
export products ranging from airline spare parts to wellness 
and nutritional products. These companies rely almost 
exclusively on Ex-Im credit and insurance products to support 
their growth.
    As many diverse companies export to emerging markets, Ex-Im 
Bank is their sole source of export financing support. In an 
environment where minority-owned and women-owned companies 
continue to struggle with access to capital, not authorizing 
the Ex-Im Bank would serve to further cripple the growth of 
America's job-creating diverse businesses.
    In closing, Ex-Im is vital to leveling the playing field 
for U.S. exporters. The discussion should not be if the Ex-Im 
Bank should or should not be reauthorized. The discussion 
should be around how do we reposition Ex-Im to be more 
effective, efficient, and responsive to the needs of small, 
medium-sized, and the growing number of women-owned and 
minority-owned exporters so that they are better-positioned to 
sell their U.S. products and services to the 95 percent of the 
world's consumers who live outside of the United States.
    The U.S. Chamber of Commerce looks forward to working with 
Congress to secure Ex-Im's reauthorization before September 
30th.
    Thank you.
    [The prepared statement of Mr. Hinson can be found on page 
74 of the appendix.]
    Chairwoman Waters. Thank you, Mr. Hinson.
    Mr. Kamphausen, you are now recognized for 5 minutes to 
present your oral testimony.

   STATEMENT OF ROY D. KAMPHAUSEN, COMMISSIONER, U.S.-CHINA 
            ECONOMIC AND SECURITY REVIEW COMMISSION

    Mr. Kamphausen. Chairwoman Waters, Ranking Member McHenry, 
and distinguished members of the committee, thank you for the 
opportunity to appear before you today to share my views on 
China's economic policy as reflected in its Belt and Road 
Initiative, important context for your deliberations regarding 
reauthorization of Ex-Im Bank.
    These views are my own and do not necessarily reflect those 
of the U.S.-China Economic and Security Review Commission, 
where I serve as a commissioner, although they are certainly 
informed by the Commission's body of past and ongoing work. My 
testimony is also informed by my work at the National Bureau of 
Asian Research, which has done important studies on the Belt 
and Road Initiative (BRI), including the seminal study on the 
Belt and Road, ``China's Eurasian Century,'' written by my 
colleague, Nadege Rolland.
    A year and a half ago, in testimony before the House 
Committee on Foreign Affairs, I argued that the BRI represents 
a test case for China's vision for new international order 
throughout Eurasia and possibly even the world. Today, China 
has demonstrated that it intends for the BRI to be, not merely 
a regional initiative, but a global one. China has extended the 
BRI into the Western Hemisphere, Europe, and the Arctic, and 
has launched what it calls a digital silk road and even a space 
silk road.
    More broadly, China has used the BRI to promote its global 
influence in areas from increasing market access and setting 
standards for emerging technologies to controlling global media 
markets, exporting authoritarian-enabling surveillance 
technology, and so forth.
    Indeed, Chinese President and Communist Party General 
Secretary Xi Jinping declared last year that the initiative 
serves as a solution for China to improve global economic 
governance and build a ``community of common human destiny'', a 
concept breathtaking in breadth and scale to recast the 
international system in China's mold.
    Let me briefly focus on several factors. First, although 
Chinese officials like to talk up BRI as a boon to global 
development, and BRI investment may well provide some of the 
necessary resources for urgent infrastructure investment 
shortfalls throughout Eurasia, from Beijing's perspective, BRI 
is designed primarily to boost the competitiveness and 
innovative capacity of Chinese companies by opening up new 
markets and then promoting adoption of Chinese technology 
standards there.
    BRI is closely aligned with China's economic development 
plan, such as the 13th 5-year plan and the Made in China 2025 
initiative. Indeed, BRI directly targets at least half of the 
10 key high technology sectors in the Made in China 2025 
strategy.
    Telecommunications is a particularly notable example of 
China's efforts to sell technology in BRI markets and beyond 
where companies like Huawei, China Mobile, and ZTE set 
standards and then dominate markets as Chinese national 
champions.
    Now, China's policy and state-owned commercial banks do not 
operate the same way as banks in liberal economies do. Policy, 
not profit maximization in all cases, underpins decisionmaking. 
In practice, this means that favored industries and companies 
like Huawei often receive subsidized financing, and projects 
promoted by the government get preferential access to capital.
    BRI is also a tool to promote political and military 
influence. In countries from Africa, to Europe and the Western 
Hemisphere, China has used BRI partnerships to expand its 
influence into local media markets and export digital 
surveillance technology and other means of social control.
    As China has perfected its application of these tools at 
home, including the use of AI and big data to support its 
detention of more than a million Uighurs in western China, it 
has also increasingly exported these surveillance methods 
abroad, including through the digital silk road.
    On the security side, Chinese leaders have reinforced the 
military significance of the BRI and potential military utility 
of BRI investments in ports, airports, and railways.
    Now, almost from its inception, BRI has raised concerns. 
Questionable projects, terms, use of Chinese companies, and 
workers and debt sustainability issues. Indeed, most of China's 
state lending overseas is based on commercial non-concessional 
terms and frequently can create debt sustainability issues. 
China often makes deals that are disadvantageous to local 
countries. And in recent months, we have seen pushback from 
countries like Malaysia, Myanmar, and Kazakhstan.
    Despite concerns, BRI remains a means for extending China's 
political, economic, and military influence abroad. The 
geographic ambition and variety and scale of projects may make 
it seem like BRI is an insurmountable challenge to the global 
order. This is not yet true, but the U.S. and her allies must 
be vigilant in monitoring Chinese activities and relentless in 
protecting our interests.
    Thank you. I look forward to your questions.
    [The prepared statement of Mr. Kamphausen can be found on 
page 81 of the appendix.]
    Chairwoman Waters. Thank you, Mr. Kamphausen.
    Ms. Sharma, you are now recognized for 5 minutes to present 
your oral testimony.

STATEMENT OF ARCHANA SHARMA, CHIEF EXECUTIVE OFFICER, AKAS TEX, 
                              LLC

    Ms. Sharma. Chairwoman Waters, Ranking Member McHenry, and 
members of the committee, thank you for inviting me here today 
to testify about how we work with the U.S. Export-Import Bank 
and how it has helped us.
    I came to the United States in 2005 from India with my 
husband and children. We were both high-ranking professionals 
in India. I found employment as director of quality control at 
Osteotech, Inc., later Medtronic, a company that makes medical 
devices from donated human bones and tissues. My husband is a 
textile engineer who found work in a textile manufacturing 
company in New Jersey, which declared bankruptcy and closed in 
2010. That is when we decided to get into manufacturing our own 
fabrics.
    The recession was at full peak, and no bank was willing to 
lend us the money. We took a leap of faith and invested our 
entire savings in our business. Our first batches were ready by 
the fall of 2010. My son created the website and my daughter 
wrote a blog to attract customers to the website. I did the 
planning in my spare time, and my husband ran production and 
sales. The four of us were co-owners, but the vision and the 
strategy was mine, so I became the chief executive officer.
    During my vacation time and weekends, my husband and I made 
visits to potential customers, makers of reusable cloth 
diapers. And that is where our first big order came from. 
Within 1 year, the fabric became a bestseller, by our modest 
standards, and it was deemed to be the best in the market. We 
had to keep prices competitive with overseas imports. So our 
margins were low, but our confidence in the quality of our 
fabric was high.
    In 2012, I acquired a Canadian company, Wazoodle, with an 
online web store, and added more fabrics to our product lines. 
I am now the CEO of both of the businesses. We invested our 
earnings back into the business and developed more specialty 
fabrics.
    AKAS is a textile manufacturing company now with expertise 
in design, engineering, raw materials sourcing, and 
fabrication. Our experience in fibers, lean manufacturing, 
quality, and supply chain, and our focus on sustainability have 
made us a global leader in specialty fabrics that are safe for 
the environment and safe for end-users. Our business designs 
and produces high-performance, custom-made fabrics desired by 
entrepreneurs and industry giants alike.
    We also make our own lines of fabrics and have engineered 
some of the top brands for absorbency, food safety, 
waterproofing, organics, athletic performance, anti-microbial 
protection, and more. And these go in a wide range of 
fabrications: in the automotive, apparel, food, furniture, 
industrial, healthcare, oil, hospitality, and the military.
    Made from the best yarns available, our textiles have gone 
up in space with the astronauts, and they have been part of the 
winter Olympics torch. They are used in gear for America's 
Armed Forces. And they perform every day throughout the world 
to meet mil spec, food-safe, flame retardant, and other U.S. 
certifications. We are one of the few textile manufacturers in 
the United States that sources our own materials in the USA, 
and we partner exclusively with American mills for production. 
And that is because our mission is to create jobs in America.
    In our manufacturing journey, we came across other small 
textile businesses that had machines to finish fabrics but they 
were sitting idle, so we partnered with them to create a supply 
chain.
    By 2013, we were exporting some of our fabrics and had 
maybe six overseas customers in four countries. Orders had to 
be paid for in advance, so that limited our sales. We could not 
offer credit terms, because we had no way of recovering the 
money if our foreign buyers defaulted on the payment.
    I was introduced to the Ex-Im Bank in 2013 at a trade 
seminar and learned about the export credit insurance program. 
That came as a blessing to us as it has enabled us to offer 
credit terms to international customers and encourage them to 
place larger orders. The customers saved on shipping costs in 
ordering larger amounts, and we were able to give them volume 
discounts. It was a win-win situation.
    Now that we could offer credit terms to overseas customers, 
it leveled the playing field and gave us an edge over 
international competitors, because the quality of our U.S.-made 
fabrics was superior. Ex-Im's team of professionals has been 
invaluable in helping us navigate its export tools, and we have 
benefited immensely by using Ex-Im Bank.
    In 2011, we had six overseas customers in four countries. 
Today, we have more than 800 customers in over 60 countries. We 
are very proud of our American textile industry and grateful to 
our vast supply chain of textile businesses. We work with over 
50 small mills. And I am happy today to recommend Ex-Im Bank to 
other small businesses so that they also are able to use the 
resources.
    I am sorry I am out of time. In closing, I would like to 
thank you all for listening to me. And I would like to thank 
the Ex-Im Bank for helping a small business like ours compete 
globally and export American-made goods. I would be happy to 
answer any questions.
    [The prepared statement of Ms. Sharma can be found on page 
89 of the appendix.]
    Chairwoman Waters. Thank you, Ms. Sharma.
    Mr. Wilburn, it's good to see you again. You are now 
recognized for 5 minutes.

STATEMENT OF STEVEN WILBURN, CHIEF EXECUTIVE OFFICER, FIRMGREEN 
                          INCORPORATED

    Mr. Wilburn. It is a pleasure, Madam Chairwoman.
    Chairwoman Waters, Ranking Member McHenry, honorable 
members of this committee, committee staff, invited guests, and 
members of the public who are here today, it is an honor to be 
here before you to speak on one of the most critical issues I 
think is facing small business exporters today, and that is the 
reauthorization and fully functioning establishment of the 
Export-Import Bank of the United States.
    My name is Steve Wilburn. I was born December 19, 1948. I 
am the oldest of nine kids. My father served honorably in World 
War II. He worked his way through college at the age of 42, 
getting his degree. He gave us an example, a hard-work ethic.
    I grew up as a minority. I talked to Chairwoman Waters 
about this. I grew up in East St. Louis, Illinois. East St. 
Louis, Illinois, is primarily a Black community, so we joke 
about that. But it is not a joke. I learned at an early age 
that there were issues based on racial and economic barriers. I 
have fought my entire life to overcome those racial and 
economic barriers.
    After graduating from high school, I enlisted in the United 
States Marine Corps in 1967. I fought in Vietnam as an 
infantryman, and was wounded. I was medevaced back to the 
United States, and spent 9 months in the Great Lakes Naval 
Hospital. And I am here today as a 100 hundred percent disabled 
veteran. And I am also a small business owner.
    I am the founder and chief executive officer of FirmGreen. 
FirmGreen is a company that I established to take advantage of 
some patents that I had created in the area of renewable energy 
and energy storage. We found out that those particular items 
were of particular interest overseas.
    Our country is blessed with an abundance of energy 
resources, especially lately. We have natural gas resources. We 
have oil resources. Most of the places I do business with are 
energy-poor. They are economically disadvantaged. They are also 
poor when it comes to energy and energy infrastructure. My 
company helps fill that void.
    Fundamentally, I am an energy executive and an inventor. I 
am always curious about things, and I try to improve those 
types of systems that I see that are inefficient.
    As a sort of reference, I spent 2 years on the advisory 
board of the Export-Import Bank as a small business 
representative. I also recently completed a 2-year term on the 
Trade and Finance Advisory Council to the Department of 
Commerce. While I served on that, I was primarily interested in 
what was happening in the trade enhancements offered by China 
and South Korea, two of my major competitors worldwide. We 
issued reports and gave direction, hoping some of it would be 
acted upon, to Secretary Ross and the Department officials.
    More importantly, I come here today to put a face, although 
your face is much better, as a small-medium exporter, Ms. 
Sharma. With my old weathered face, I want to tell you that I 
represent thousands of small business owners who are also 
exporters. We are the backbone of this economy. We create jobs. 
We bring ingenuity. We bring creativity. More important, we 
don't just export goods and services overseas. We export hope. 
We export a vision of what their country could be from a 
democratic standpoint if they were free to exercise democracy 
like we do in this country. They don't have those 
opportunities. I am most proud of exporting hope.
    When I looked in the eyes of the children at the Gramacho 
landfill in 2011--we were invited to build a gas plant there. 
They picked a living out of the trash. There is an infamous 
documentary--please, I encourage you to look at it--called, 
``Waste Land.'' These children and their mothers worked and 
toiled in that landfill pulling out recyclable materials. Some 
of them died in that landfill as a result of that, being run 
over by bulldozers.
    When I went there, I said I would participate in the bid 
project. We used Ex-Im Bank as a backbone in order to get to 
the bid, but I insisted that they pay the children and the 
mothers in order for us to participate to relocate them. The 
government paid them $25 million as a result of us drawing a 
line in the sand.
    So when we talk about the Export-Import Bank, and we talk 
about these things, I wanted to put a human face on it. When I 
look in the eyes of the children and the mothers and the people 
that I work with overseas, we bring them hope, not just goods.
    Thank you, Madam Chairwoman.
    [The prepared statement of Mr. Wilburn can be found on page 
95 of the appendix.]
    Chairwoman Waters. Thank you very much.
    I will now recognize myself for 5 minutes for questions.
    Mr. Wilburn, you came before our committee almost 5 years 
ago. At that time, I entered into the record a letter you 
received from a potential buyer regarding a project you bid on. 
Unfortunately, despite your clearly superior product, the buyer 
went with a foreign supplier because they were certain to get 
financing from a foreign export credit agency.
    How has the uncertainty around Ex-Im affected your 
business?
    Mr. Wilburn. It has been tragic, Madam Chairwoman. Since 
that letter--that was a $57 million project that we lost to the 
South Koreans. That was on the heels of our successful $49 
million Ex-Im Bank facility in Brazil. We have been invited in 
a number of countries as a result of that work that we did 
perform.
    Since then, we have also lost, in the Philippines, 275 
megawatts' worth of solar projects. We were selected by the 
Department of Energy, and in 2017, issued contracts to proceed 
contingent upon ECA financing. That never materialized because 
of the Bank.
    And that is just a few of the examples, Madam Chairwoman, 
of the impact of a nonfunctioning Export-Import Bank on my 
business.
    Chairwoman Waters. Thank you.
    Could you expound a bit on the impact to your workers when 
decisions like that are made by foreign buyers?
    Mr. Wilburn. My workers are like family. I am a small 
business. So when I have to lay off people because of my 
inability, I take this as my responsibility to perform as the 
CEO, We are down to 4 employees today from a top of 35. We are 
struggling to survive, but we are surviving. This Marine 
doesn't quit. I am going to adapt, I am going to improvise, and 
I am going to find a way to get those opportunities.
    And if this committee and the Congress would be so gracious 
as to put the Ex-Im Bank in a fully functioning status, I am 
sure I can increase the number of jobs, and bring back those 
family members--I don't mean directly related family members, 
but those employees that I lost.
    Chairwoman Waters. Thank you.
    Ms. Sharma, I want to thank you for being here today also 
and sharing your story. Can you explain why you have made the 
decision to keep your supply chain in the United States? And 
how does Ex-Im enable you to compete effectively, especially 
against sellers who might have lower-cost products?
    Ms. Sharma. Thank you, Madam Chairwoman. I would like to 
really explain that. When we came to the United States, we came 
to settle down here. We came to adopt this country as our own. 
So when we started this business, the idea was not to bring 
fabrics from overseas. I learned the textile industry in the 
United States used to be great a long time ago. In the 1990s, 
the work went overseas, and many of the mills closed down.
    In our manufacturing journey, we found many small mills, 
knitting mills, and finishing houses, many of which were not 
used. The machines were sitting idle. Maybe one-third of the 
building was being used. That is when I talked to my husband. I 
said, ``What if we use these machines to make our fabric and 
design the fabrics, because they don't have the ability to 
export or make fabrics even.''
    So, we started designing our own. And these are the mills 
that we use. And the people out here are so knowledgeable.
    They have so much innate experience that was not being 
used, so we decided to use that. And we thought if we put up 
one machine, we can make one kind of fabric. But if we use the 
idle machinery of America that is not being used to manufacture 
these, we can make a whole bunch of so many different kinds of 
things and be able to showcase the excellence of U.S.-made 
products.
    And the American worker is really hardworking. The quality 
of those mills is outstanding. We don't have a quality control 
department because we don't have to. Our supplier's chain takes 
care of it. People don't have to inspect our fabrics when they 
come in. They don't get bad quality fabrics. They wouldn't even 
send them to us.
    So we believe in those mills. And that is the reason we 
decided to keep the entire supply chain within America. And 
that has allowed us to really develop a whole different range 
of fabrics that is not there anywhere in the world. And that is 
the reason why, Madam Chairwoman.
    Thank you.
    Chairwoman Waters. Thank you very much.
    The Chair now recognizes the distinguished ranking member, 
Mr. McHenry, for 5 minutes for questions.
    Mr. McHenry. Thank you, Chairwoman Waters.
    Mr. Kamphausen, in your testimony, you note how Chinese 
banks have provided subsidized financing for 5G globally. And 
including--especially Huawei's actions globally.
    So as we seek to prevent China from setting the network 
standards for the future, what can we do to better promote our 
companies' competitiveness? And what can we do to cooperate 
with allies to ensure that Beijing doesn't militarize these new 
technologies?
    Mr. Kamphausen. Thank you, Ranking Member McHenry. I think 
it is important to understand the differences in the Chinese 
system, perhaps, at the outset. China is not a party to the 
OECD arrangements, and so it is not constrained by the 
reporting and accountability procedures that the United States 
and her allies would be, for instance. They also disaggregate 
and diversify their export credit support in ways that require 
some effort to fully understood it. They provide export credit 
insurance through SignAssure, which has provided up to $500 
billion in assistance in the last 6 years.
    There is a China ex-im bank. And our own Ex-Im Bank has 
estimated that they have provided, in 2017, about $36 billion 
in export credit finance. But they also use Chinese policy and 
development banks to provide export credit assistance. And this 
is where it becomes especially difficult to understand or to 
aggregate what they are providing.
    For instance, U.S. Ex-Im Bank estimates that China 
Development Bank provided Huawei, a company that is a global 
leader and a competitor for 5G, a huge amount of export-like 
financing, and totally, perhaps, up to $10 billion a year.
    I noted in my testimony that Huawei undercut Ericsson in 
The Netherlands very recently, I am sure you have seen this, by 
60 percent; terms that were only possible because of the use of 
export credit finance that it had gained from Chinese 
development and policy banks.
    I think the first step is to understand the nature of what 
we are competing with, and I think that will make some 
important progress.
    Mr. McHenry. First to understand, but what do you do in 
response? What should we do as policymakers to ensure that we 
are responding and competing on 5G?
    Mr. Kamphausen. 5G is a complex issue, as there are 
advantages to being the early leader, both in terms of the 
patents that will then provide resources and require payments 
down the line. I think we need to think wholistically about the 
opportunities that 5G represents. And so, the opportunities 
that this committee is considering I think are important ones 
as well.
    Maybe I can get back to you with some more concrete 
examples.
    Mr. McHenry. Ms. Dempsey?
    Ms. Dempsey. If I could add to that, I think one of the 
most important things that we are hearing from our 
manufacturers is assuring robust competition in this market and 
supplier diversity. No one wants to be limited to a sole-source 
supplier, and we shouldn't have our allies similarly being 
limited to sole-source suppliers.
    So in the context of this hearing, and the Ex-Im Bank 
reauthorization, is there more that the Ex-Im Bank can do to 
promote our exports, to promote our participation in the 
development of 5G internationally in a way that promotes 
competition, prevents sole-source suppliers, like what we have 
been talking about, and really has more supplier diversity, I 
think there are some ways we can do that.
    Mr. McHenry. Mr. Wilburn, are there ways that we can 
simplify the paperwork requirements for small businesses so 
they can better access Ex-Im Bank financing?
    Mr. Wilburn. Ranking Member McHenry, that is an excellent 
question, because it is overwhelming for a small business to 
comply. But I understand the need for due diligence and proper 
vetting of all these--
    Mr. McHenry. What does the paperwork look like?
    Mr. Wilburn. What does the paperwork look like?
    Mr. McHenry. Massive. So we could simplify that process a 
little bit.
    Ms. Sharma, would you agree?
    Ms. Sharma. Absolutely, I would agree with that. It is very 
daunting for small businesses like us, and even micro 
businesses, that our customers are able to complete paperwork 
and go to a bank. It is really daunting. To make it simpler 
would be much--
    Mr. McHenry. Sure. There should be a technology solution, 
as we remove forward, and a mandate on Ex-Im to actually come 
to, really, the private sector standards for completing these 
loans and application reform.
    Thank you, Chairwoman Waters, for holding this hearing. 
Thanks for your engagement on this. And I look forward to 
continuing the bipartisan approach that this committee is 
desirous of on Ex-Im.
    Chairwoman Waters. Thank you very much.
    The gentlewoman from New York, Ms. Velazquez, is recognized 
for 5 minutes.
    Ms. Velazquez. Thank you, Madam Chairwoman. And I just want 
to take this opportunity to also thank the ranking member for 
this important hearing.
    Ms. Dempsey, while I am a strong supporter of the Bank, I 
believe it should be doing more to provide financing 
opportunities for businesses in Puerto Rico and the other U.S. 
territories. They are all U.S. territories.
    For example, since 2014, the Bank has provided only $65 
million worth of financing to only 29 businesses in Puerto 
Rico. This compares to the Bank's total financing of $37 
billion to more than 4,900 businesses over the same period.
    How can we help the Bank provide more financing 
opportunities for businesses in Puerto Rico that are American 
businesses and the other territories?
    Ms. Dempsey. Thank you, Congresswoman. I would love to work 
with you, and certainly with the Ex-Im Bank, on opportunities 
to grow Ex-Im's ability to help exporters in every State and 
Territory and Puerto Rico. Part of it, I think--one of the 
things we have seen with our small businesses that haven't used 
Ex-Im or aren't exporting is first making them aware of these 
opportunities. As you heard from Ms. Sharma, she wasn't aware 
of it. We have had lots of companies who, when they started, 
when they found Ex-Im, they were able to double and triple, not 
just their exports, but their employment. And so that is really 
important.
    I think getting more word out, and I am happy to follow up 
with you and work on a plan for that.
    Ms. Velazquez. That would be great.
    Mr. Herrnstadt, do you have any recommendations for how we 
can help the Bank improve financing opportunities for 
businesses in Puerto Rico and the other U.S. Territories?
    Mr. Herrnstadt. I would agree with what has just been said. 
I think the question is making sure that we have enough reach 
that people know that the Bank is there, that the Bank can give 
support, and then to make sure it happens.
    Thank you.
    Ms. Velazquez. Thank you.
    Ms. Dempsey, in Fiscal Year 2018, Ex-Im approved more than 
$451 million in support of minority- or women-owned businesses, 
accounting for 21 percent of all the Bank's small business 
authorizations. While I am very supportive of this number, I 
believe the Bank can improve in this area as well.
    What recommendations do you have for improving the Bank's 
outreach on financing opportunity for minority- and women-owned 
businesses?
    Ms. Dempsey. Thank you, Congresswoman. Manufacturers very 
much support diversity in our own workplaces and the diversity 
of women- and minority-owned and other manufacturers here. And 
there is work that the Ex-Im Bank is doing. I just participated 
at a small business roundtable on Friday with the new Chair of 
the Ex-Im Bank, Kimberly Reed, and was talking with her staff 
and the Chairman about ways to get more word out on these 
issues.
    We work with a lot of these types of businesses at the NAM, 
and we have a lot of contacts that we are going to be willing 
to share and working on some outreach efforts in that way.
    Ms. Velazquez. It is not only the outreach and providing 
the information, it is a commitment from the Bank to make it a 
priority, because after all, most exporters are small 
businesses.
    Ms. Dempsey. I agree. I urge you to talk to the Bank and 
the new chairman. I believe that there is that commitment. That 
is what I heard on Friday. But, obviously, it would be 
important for you to have those conversations.
    Ms. Velazquez. Ms. Dempsey, as the Bank was without a 
quorum for several years, and many of us here in Congress felt 
the Bank's operation were severely hampered by the lack of a 
quorum.
    As we consider the Bank's authorization, what changes 
should we make, if any, to ensure the Bank's operations and its 
overall authority are not inhibited by the lack of quorum?
    Ms. Dempsey. Thank you, Congresswoman. The loss of the 
quorum was devastating for many of our large and small 
businesses. I believe that to do a successful reauthorization, 
Congress needs to fix the quorum issue. The reauthorization 
needs to provide that the Bank will continue to be able to 
consider all deals going forward. There are many different ways 
to do this. There are ex officio members and others. I don't 
want to put myself in your place, but I think there are ways to 
do this.
    Without that certainty of having a quorum, we are going to 
continue to lose sales.
    Ms. Velazquez. Thank you. I yield back.
    Chairwoman Waters. The gentlewoman from Missouri, Mrs. 
Wagner, is now recognized for 5 minutes.
    Mrs. Wagner. Thank you, Madam Chairwoman.
    And thank you to our witnesses for joining us today to talk 
about renewing the Export-Import Bank. A special thank you to 
Commissioner Kamphausen for your expertise on this issue and 
for mentoring my excellent legislative director, Rachel Wagley, 
who previously worked for you at the National Bureau of Asian 
Research before I hired her away.
    This is an incredibly important discussion, with major 
implications for America's economic output and competitiveness 
in global markets. For reauthorizations of any kind, Congress 
must take the opportunity to consider whether any reforms or 
changes are warranted.
    I want to focus today on better understanding how Ex-Im's 
financing helps us compete with China's global export credit 
subsidies. China's industrial policy, Made in China 2025, is 
aimed at rapidly expanding its high-tech sectors and developing 
its advanced manufacturing base.
    Mr. Kamphausen, can you explain how the Chinese government 
uses its banks and state-owned enterprises to pursue its 
strategic priorities, including Made in 2025 and the Belt and 
Road Initiative?
    Mr. Kamphausen. Thank you. And thank you for the 
opportunity to remember my time with Rachel.
    If we think of the Chinese system in a comprehensive way in 
which policy and financing are intertwined, I think that helps 
us have a sense for how the Chinese leadership can describe its 
priorities, and then, in a very seamless fashion, the variety 
of export assistance financing tools then can achieve those 
national priorities. And so it is the case that policy drives 
investment much more than simply the investment opportunities 
themselves.
    I have often said that in 15 years, Eurasia will be 
littered with failed BRI projects, precisely because the 
Chinese leadership intended for there to be funding and finance 
for projects. And whether they resulted in meaningful and 
useful projects in the end was not as consequential as the fact 
that the loans were made in the first place.
    It is important to understand that very different approach. 
It is not to say that the Chinese are looking to lose money. It 
is to say that policy drives investment to a much greater 
extent than--
    Mrs. Wagner. Commissioner, to that point, in the past 
decade China has helped finance at least 35 ports, 63 coal-
fired power plants, 41 pipelines and oil and gas infrastructure 
pipelines, as well as 203 bridges, roads, and railways. In 
total, over 600 global projects have been partially or fully 
backed by the Chinese government.
    Ms. Dempsey, there is concern that many of China's 
infrastructure investments are predatory and involve opaque 
terms and conditions, since China does not comply with the 1956 
Paris Club standards. How do you think we can help draw China 
into better adherence with international norms, including those 
surrounding debt transparency in particular and responsible 
lending?
    Ms. Dempsey. Thank you, Congresswoman. I couldn't agree 
more that the loss of these types of projects and U.S. 
involvement is costly to our businesses, our workers, but also 
our broader interests as a nation as we are going forward.
    The first thing that I believe Congress has to do is 
reauthorize, for a lengthy period, a robust Ex-Im Bank. We 
cannot compete and draw China to the negotiating table 
successfully from a stance of weakness. If we don't have a 
reauthorized, robust Ex-Im Bank, China has no interest in 
negotiating with us.
    That being said, there is work that is being done with the 
G12 group of countries, including China, to bring them to the 
table, to stop the subsidized financing, to stop the predatory 
activities, and to improve transparency. I talked to Chairman 
Reed about this on Friday. There is a commitment there, but the 
first thing we have to do is get this Bank up and running for a 
long time so China knows that we are serious.
    Mrs. Wagner. Thank you, Ms. Dempsey.
    How much export credit financing does China offer annually? 
Do , off the top of your head?
    Ms. Dempsey. I might turn to Mr. Kamphausen, if he has that 
number.
    Mr. Kamphausen. It is really hard to estimate because of 
the very disaggregated way they do it, but probably in excess 
of $50 billion a year.
    Mrs. Wagner. Wow. All right. My time has expired. I thank 
the witnesses, and I yield back.
    Chairwoman Waters. Thank you very much.
    The gentleman from Texas, Mr. Green, who is also the Chair 
of our Subcommittee on Oversight and Investigations, is 
recognized for 5 minutes.
    Mr. Green. Thank you, Madam Chairwoman. I thank the ranking 
member as well. And I would like to acknowledge my support for 
the Ex-Im Bank. I believe that it has served a meaningful 
purpose. And I am also very pleased that we are making this 
bipartisan effort to do what Ms. Dempsey has indicated and to 
make sure that we have a robust Ex-Im Bank going forward.
    The Ex-Im Bank is quite unique. It makes deposits. Other 
banks receive deposits; it makes deposits. It is estimated that 
the Ex-Im Bank in 2019 will remit $614.4 million to the U.S. 
Treasury, and this is after expenses and expected losses. Since 
2000, the Ex-Im Bank has generated $14.6 billion to the 
Treasury--some things bear repeating--$14.6 billion to the 
Treasury, and has a very low default rate, which averages at 
about .3 percent.
    Usually, the argument for not extending some entity is that 
it is losing money or it costs too much, but we have a 
functioning facility that is making a difference in the lives 
of Americans, and providing jobs. In my congressional district 
alone, the Ex-Im Bank has made a difference, and my guess is 
most of us can make similar claims. So the question becomes not 
whether we should extend it, but how do we do it and make it 
even better to the extent that we can?
    Ms. Dempsey, you used a term that I like. You said 
``robust.'' Would you kindly give some indication as to your 
definition of ``robust?''
    Ms. Dempsey. Of course, Congressman. Thank you. ``Robust'' 
means for a lengthy period.
    Mr. Green. What is a lengthy period, if I may ask?
    Ms. Dempsey. If I wrote the rules, I would talk about 9 or 
10 years. We need that certainty. And when our small 
manufacturers in particular saw the gaps and saw the weakness 
in the Ex-Im Bank they turned away from exporting, and that is 
not what we can have if we are going to continue to have robust 
manufacturing job growth in America. I would like to see as 
long as Congress can do.
    Second, not having the disruptions. The quorum issue I was 
discussing with Congresswoman Velazquez, solving that problem 
as part of the legislative mandate is critical.
    Then, I think it is important to look at other ways to 
revitalize. In 2015, Congress lowered the cap for 
authorizations to $135 billion. Is that something that Congress 
needs to look at again in the face of this growth that we are 
seeing in these foreign state-owned export credit agencies, 
particularly China, which is much, much more active than we 
are?
    If we are going to put our manufacturers on as strong a 
footing as possible, we need to look at that issue. We need to 
be growing our support here, particularly for all the reasons 
that you mentioned: that it is returning money to the Treasury; 
that it has a low default rate; and that we have put in 
additional controls on risk management, on ethics. That was all 
done in 2015.
    And then, are there other flexibilities that the banks 
should take to be able to more nimbly counter the threat that 
we are seeing out of these foreign export credit agencies? And 
then, I go to our small businesses witnesses, is there more we 
can do to cut red tape for small businesses so more and more of 
our small businesses can export and use these opportunities to 
help us grow jobs?
    Mr. Green. Does anyone else have an opinion with reference 
to the length of time that we should extend?
    Mr. Wilburn. Congressman, with all due respect, I think it 
should be for--I agree with Ms. Dempsey. It should be for as 
long a period--7 to 10 years would be, I think, something that 
I would feel would give a clear message to my overseas clients 
that we are serious, that the Agency won't have the rug pulled 
out from under them, like happened to me in the Philippines and 
some of the other areas, especially Africa.
    Right now, I am working on a number of projects. We have 
invited in what ECA is mandated for us to participate. China is 
there investing billions in infrastructure. So my answer is, as 
long as possible, sir.
    Mr. Green. I would like to thank everyone, especially those 
who are engaging in this bipartisan process. I think it can be 
meaningful, and I support the Ex-Im Bank. Thank you.
    Chairwoman Waters. The gentleman from Oklahoma, Mr. Lucas, 
is recognized for 5 minutes.
    Mr. Lucas. Thank you, Madam Chairwoman. And I thank you and 
the ranking member for holding this hearing. I very much 
appreciate it.
    I think most of my colleagues who have been in Congress for 
any period of time know that I am a farmer by trade, and 
therefore I am an eternal optimist. It will rain when you need 
it, and the sun will shine when you need it. Therefore, that 
same level of optimism brings me to believe that shortly, we 
will reauthorize the Export-Import Bank and that that 
reauthorization is literally inevitable, because we as Member 
of Congress want to move the economy forward and create 
opportunities for business and those people who make their 
livelihood from those businesses back home. Export-Import 
reauthorization does exactly that.
    And the district I represent, the Third District of 
Oklahoma, is agriculture and energy. Yes, we are oil and gas, 
and we are wheat and cattle and cotton and a whole variety of 
things. But one common thread in my district economically is we 
produce more energy and agricultural products than we can 
possibly consume, and we have to have the ability to move our 
products into the world markets if we are going to have a 
price.
    Now, I am a strong supporter of the Export-Import Bank 
simply for that very reason. As an aggy, I have to sell into 
the world markets. Manufacturing in this country has to have 
the ability to sell into world markets where they won't have a 
price either, and the folks who work for them won't have a job 
either.
    To the panel, I ask the following question--and note that I 
understand in these hearings we tend to discuss things several 
times in a row. But part of educating my colleagues, myself, 
and the process we work through, is repetition, consistency, 
and focus, burning it in, so to speak.
    So I ask the group, how vital is a healthy Export-Import 
Bank for global competitiveness for our exporters here in the 
United States? And, again, reinforce, if you would--and if you 
disagree, I am going to be horrified--particularly why a long-
term reauthorization is so important compared to this knee-jerk 
2- or 3-year stuff we have been going through recently. The 
floor is yours, ladies and gentlemen.
    Ms. Dempsey. Let me just start. The reauthorization of the 
Ex-Im Bank is vital to thousands of small businesses and tens 
of thousands of suppliers to large businesses every year, and 
hundreds of thousands of workers across the country. And if we 
don't do it for a long period of time, a certain period of 
time, we are going to risk our jobs, we are going to leave our 
manufacturers and our farmers and our energy producers outside 
while other countries fill the void.
    Mr. Lucas. Absolutely. Ms.--
    Ms. Dempsey. One more--sorry. One more thing I would like 
to add is when we do our strategic planning, we do it for a 
longer period of time. So when we are developing something and 
trying to export it overseas, there is a time period to it. And 
when you start seeing the results--by the time you start seeing 
the results of that, at that time if there is uncertainty, then 
whatever you have invested into that business is kind of lost. 
So it is important to have a long-term plan and a long-term, 
secure approach to authorizing the Ex-Im Bank.
    Mr. Lucas. Absolutely.
    Mr. Hinson, you testified and explained that Export-Import 
works at no cost to the American taxpayer, correct?
    Mr. Hinson. Yes, sir.
    Mr. Lucas. Maybe I should just leave my colleagues with 
this thought, which is, in this session of Congress we are 
working with what our media friends like to refer to as a 
divided Congress--Democrat House, Republican Senate--and that, 
of course, makes it more difficult to force things through.
    I would argue, again, as that eternally optimistic farmer 
whose glass is always half full, that that makes it easier to 
achieve consensus. Consensus. And we are lucky that Export-
Import reauthorization until the last few years has 
traditionally been one of those consensus processes where for 
reasonable periods of time we have reauthorized the program.
    I would just simply conclude by saying to my colleagues 
once again, we need to do this. We have to do this. We have no 
other choice but to do this. Let's achieve the reforms that are 
doable, but let's not create something so complicated, so 
cumbersome, and so inconsistent that it is unusable. Because 
not only does that hurt our competitiveness from a business 
perspective around the world, it hurts every individual whose 
livelihood is affected, impacted by manufacturing and world 
trade. We cannot let that happen on our watch.
    Madam Chairwoman, Ranking Member McHenry, thank you for 
this hearing. Thank you for what I believe is about to happen. 
Let's just get on with it. I yield back.
    Chairwoman Waters. Wow. Passion, enthusiasm.
    The gentleman from Missouri, Mr. Cleaver, who is also the 
Chair of our Subcommittee on National Security, International 
Development, and Monetary Policy, is recognized for 5 minutes.
    Mr. Cleaver. Thank you, Madam Chairwoman. I probably won't 
have the same enthusiasm as my colleague, but that is visible.
    Let me ask all of you this question. Based on my experience 
here, we go through this imprudent and self-torturing system of 
setting dates to renew the National Flood Insurance Program, 
and the debt ceiling. We are the only nation on the planet that 
allows our debt to run out and then Congress fights over it.
    How many of you would agree that, in terms of our 
competition with China and others, maybe we ought to have an 
open-ended system whereby we have a review every 3 or 4 years, 
because Congress can discontinue any program that it wants to 
discontinue?
    So if we just approve this like we do everything else that 
we really believe in, in the 12 financial services agencies 
that we deal with, then everybody would--would even remotely 
consider funding the IRS for 3 years or the OCC for 4 years. 
How many of you would agree that an open-ended deadline and a 
review process would be healthy in terms of dealing with our 
international competition? Anybody?
    Ms. Dempsey. That proposal would certainly add so much more 
certainty to the process and help revitalize. I would just 
urge--we want to see this done quickly, and we want to see it 
done on as bipartisan a basis as possible.
    Mr. Cleaver. Does anybody disagree?
    Mr. Hinson, I have a list of all of the subcontractors in 
my congressional district, and the only pain I have is the fact 
that none of these are companies that are either led by 
minorities or women, and so that causes me some pain. I am a 
strong and probably irreversible supporter of the Ex-Im Bank, 
but I think there has to be some intentionality about trying to 
make sure that there are subcontractors or contractors with Ex-
Im Bank. What would we need to do and what could the U.S. 
Chamber do to help us?
    Mr. Hinson. Thank you for that question. The U.S. Chamber 
is certainly committed to diversity, certainly committed to 
supplier diversity. The U.S. Chamber recently launched the 
office that I am a part of, the Institute for Diversity in 
Emerging Businesses, with a focus on supporting middle market 
diverse companies and helping them gain access to supply chains 
of corporations as well as governmental agencies.
    It is a good question, and it is an important question 
because it speaks to the multiplier effect that these companies 
can have on the U.S. economy. It speaks to job creation. It 
speaks to essentially creating a much more level playing field 
for all businesses across the country. So, the U.S. Chamber 
certainly is supportive of anything that creates a level 
playing field, anything that creates a stronger, more robust, 
more consistent business environment.
    Mr. Cleaver. Maybe we need to put it in legislation. Maybe 
we need to--it wouldn't be something that I would prefer, but I 
am not sure that there is any other way to make sure that there 
is--that people are actually trying, if we had to depend on 
putting some kind of a section in the legislation that would 
require a level of participation, not unlike what the 
chairwoman did when she organized the OMWI, or any of the other 
Federal programs where we unfortunately have to demand that 
there is minority participation. Would you think that would be 
a way of--
    Mr. Hinson. I think adding an OMWI office to Ex-Im Bank 
would be helpful. I think that directionally, you are correct. 
I think it is important to recognize that we don't do anything 
to hurt the ability for businesses to grow of all sizes, 
positions, and states, but to enhance the economic opportunity 
that Ex-Im provides, particularly for fast-growing minority- 
and women-owned businesses.
    So, yes, I think certainly, the U.S. Chamber would not look 
dimly on that, as well as the other things that were mentioned 
by the panel in terms of more training for minority-owned firms 
and exporting more outreach, all of those sorts of things.
    Mr. Cleaver. Thank you.
    Chairwoman Waters. Thank you. The gentleman from Missouri, 
Mr. Luetkemeyer, is recognized for 5 minutes.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman, and I thank 
all of you for being here today.
    Ms. Sharma, in your testimony or your comments a while 
ago--right here--you indicated that you have about 50 small 
businesses that you buy stuff from in order to be able to 
assemble and manufacture your goods, is that correct?
    Ms. Sharma. Correct.
    Mr. Luetkemeyer. Mr. Wilburn, how many small businesses do 
you buy parts and things from to be able to do what you do?
    Mr. Wilburn. In the Brazil project we bought exclusively 
from small businesses. There were 42 vendors; some of them were 
minority-owned and women-owned. We tried to accommodate that. 
But I would say the answer to your question is in the dozens.
    Mr. Luetkemeyer. Okay. To me this is a weakness in the 
description of how we talk about Ex-Im from the standpoint we 
talked about how many direct small businesses it is helping. 
But I can tell you, and in full disclosure here, I have Boeing, 
one of their plants in my district, and another one just 
outside my district.
    To manufacture one plane takes 1,800 small businesses; and 
67 of those small businesses are in my district alone. But 
1,800 of those small businesses scattered around the United 
States rely on Boeing to be able to buy those parts, to be able 
to exist.
    I would hope that down the road we can look at the numbers 
differently with Ex-Im from the standpoint of, how many direct 
small businesses that it is impacting. I think, Ms. Dempsey, 
you made the comment a while ago about thousands. Do you have 
some data on that, or are you just kind of pulling them out of 
the air, or are you kind of guessing where it comes from? Can 
you help me?
    Ms. Dempsey. No. We know from the data of Ex-Im Bank that 
there are thousands of direct small business users of the Bank 
each year. But to your point, we don't actually have the full 
numbers--and it is a bit hard to get--of how many small 
businesses supply to other--to the direct Ex-Im users. And you 
have heard from small businesses that themselves have 10, 50 
small business buyers.
    Mr. Luetkemeyer. For me, it wouldn't be difficult to 
compile that number. I would have to just say, hey, what--who--
how many--we just got the numbers here from these two and just 
have that as a number on your application. So, it gives Ex-Im a 
better way of disclosing actually how many different entities 
it is helping.
    Because I think that would really help sell all of us on 
the importance of that, and then finally get an understanding 
of how impactful it is in our districts alone when you realize 
that some of the parts that are being put together on those 
planes in my district are coming out of Mr. Loudermilk's 
district or Mr. Lawson's district over here. It would be 
helpful to us to have that information. So, thank you for that.
    The second thing I want to talk about are caps. I know that 
there was a concern out there that there is a rough draft 
floating around that put caps on the amount of investment 
opportunities that can be taken advantage of by certain 
entities through the Ex-Im Bank. Again, I think it goes back 
to, we are helping lots of different manufacturers across--
there is a broad spectrum of things here. Can you guys give me 
an idea on what your thoughts would be on that?
    Mr. Hinson, you represent the U.S. Chamber of Commerce. 
This is a direct impact on all of the folks across-the-board on 
this.
    Mr. Hinson. On the issue of caps, I should probably defer 
to Linda. She has the better knowledge on that position in 
terms of caps.
    Mr. Luetkemeyer. Okay. Ms. Dempsey?
    Ms. Dempsey. We have seen these proposals for some sort of 
caps or concentration limits or restrictions by firm, by 
sector. And I think, exactly to your point, doing so hurts 
jobs, hurts small businesses, hurts all businesses, and does 
nothing to counter the growing threat that we are seeing from 
these foreign export credit agencies.
    Every time we say that a certain firm or a certain industry 
can't use Ex-Im authorizations and Ex-Im tools, we are 
essentially outsourcing our manufacturing and jobs. And so, we 
have a lot of concerns down that road.
    Mr. Luetkemeyer. To me, this is important from the 
standpoint of getting at that argument, from the standpoint 
that if you understand all the other businesses that are 
impacted by the ability to finance a Boeing or a GE or a 
Caterpillar or whoever it is, those folks buy lots of other 
parts around the country, and I think that it would be helpful 
to be able to understand the importance of that issue with 
regards to caps.
    Has there ever been a study done with regards to the 
potential of where Ex-Im could be? As we get these trade deals 
done at a level playing field across the world, how much 
potential is there for the United States to be able to become 
even greater--a greater manufacturer and exporter of goods and 
services and then have Ex-Im be a potential partner with them? 
Has anybody done any studies on that, the Chamber perhaps, or 
Ms. Dempsey?
    Ms. Dempsey. I have not seen that study, but what we can 
use as a proxy is the export financing that our competitors are 
doing overseas.
    Mr. Luetkemeyer. Okay. The amount of business we lost, you 
are saying?
    Ms. Dempsey. Yes. In a lot of these cases, we could have 
been supplying those products. During the period we didn't have 
a quorum, Americon, a small company that makes school buses, 
lost a deal to Angola, putting workers at risk in the United 
States. That deal went to Brazil, not because they had better 
buses but because we couldn't use Ex-Im.
    Every time these foreign export credit agencies are winning 
deals, in most of those cases there could be a U.S.-competing 
product if Ex-Im is fully authorized, and is robust enough to 
compete.
    Mr. Luetkemeyer. Thank you very much. I yield back.
    Chairwoman Waters. The gentleman from Colorado, Mr. 
Perlmutter, is recognized for 5 minutes.
    Mr. Perlmutter. Thank you, Madam Chairwoman.
    I have just a couple of comments and then a question. Ms. 
Sharma, I have to tell you, it tickled me when you talked about 
your son building the website and your daughter blogging about 
your products. So, that is how a company really gets started, a 
family company and it just--it sounded great.
    This hearing--and I appreciate the testimony of everybody, 
but for me, this is so simple: We need to have an Export-Import 
Bank. The ideological arguments that have been made by some 
people in the Administration, by our former chairman just make 
no sense, especially in a world where we have China putting all 
sorts of money behind its companies, anf Italy, Korea, South 
Korea, whatever.
    It makes absolutely no sense to me and I guess my only 
question--I am kind of with Congressman Cleaver that we ought 
to just say we have an Export-Import Bank, and if a future 
Congress at some point says, no, we shouldn't, then we will 
worry about it then. But let me just sort of get some numbers.
    Ms. Dempsey, would you object--or how do you feel about a 
10-year extension?
    Ms. Dempsey. Manufacturers would very strongly support a 
10-year reauthorization.
    Mr. Perlmutter. Mr. Herrnstadt?
    Mr. Herrnstadt. Yes, I agree, predictability, consistency, 
a fully funded bank with no caps would be absolutely admirable.
    Mr. Perlmutter. Mr. Hinson?
    Mr. Hinson. Always, an instance where you create a level 
playing field and consistency would be supported by the U.S. 
Chamber of Commerce.
    Mr. Perlmutter. Mr. Kamphausen?
    Mr. Kamphausen. From the perspective of the message it 
sends to China, I think that would be a very strong one.
    Mr. Perlmutter. Ms. Sharma?
    Ms. Sharma. Absolutely. That would really help us develop 
more fabric so that--I mean, we are here for the long haul. If 
Ex-Im is here for the long haul, it helps us better.
    Mr. Perlmutter. Do your kids still work for you?
    Ms. Sharma. Oh, yes, absolutely.
    Mr. Perlmutter. All right. I was just curious.
    Ms. Sharma. My son is there taking care of the business 
right now.
    Mr. Perlmutter. All right. Good.
    Mr. Wilburn?
    Mr. Wilburn. Absolutely. Anything that would add certainty 
to the process for us, we support 100 percent.
    Mr. Perlmutter. Okay. And I guess just as a Member of 
Congress on this committee for a long time, everything can 
always be improved. We can get rid of some of the paperwork. We 
can streamline it, all those kind of things, but that is just 
something you do from year to year with anything.
    And for us to lurch and stop and start and not have a 
quorum for this organization, for this entity to put our people 
at a competitive disadvantage has never made sense, and I just 
appreciate the testimony.
    And with that, I yield back to the Chair.
    Chairwoman Waters. Mr. Perlmutter, you just asked the 
question of all of the witnesses about whether or not a 10-year 
reauthorization would be the kind of reauthorization that they 
had been alluding to. And we just got a strong response from 
all of our witnesses that a 10-year reauthorization would 
provide the kind of certainty that is so desperately needed in 
trying to compete in this highly competitive export business.
    So I am very appreciative for that, and that is one of the 
items that Mr. McHenry and I are working on as we try to come 
to a consensus about what this reauthorization will be. It is 
difficult work. We have some questions that still need to be 
answered.
    But I am appreciative for what you have shared with us thus 
far because we have Members who are listening very closely to 
you, and it is one of the issues that Mr. McHenry and I will 
have on our list of things to resolve. So I want to thank you, 
Mr. Perlmutter, for entering into that discussion.
    The gentleman from Ohio, Mr. Stivers, is recognized for 5 
minutes.
    Mr. Stivers. Thank you, Madam Chairwoman. I appreciate you 
holding this hearing.
    My first question is for Mr. Kamphausen. Your testimony was 
very revealing regarding China's efforts to capture market 
share in innovative technologies including 5G. Do you think it 
would make sense for the Ex-Im Bank to take a new emphasis on 
promoting American innovation in these spaces?
    Mr. Kamphausen. That is a bit outside my expertise, but it 
certainly would not send a wrong signal to China. I think it is 
also important to note that there are other tools that we can 
use. And earlier, Ranking Member McHenry asked what should we 
do. Last year, the U.S.-China Economic and Security Review 
Commission recommended the Congress develop a plan to provide 
resources to countries that are considering the challenges they 
face from China.
    I would just like to highlight that in 2018, while it 
wasn't part of officially funded resources, the USAID sent an 
interagency team to Myanmar that helped the government of 
Myanmar reduce the very challenging Chinese BRI loan for a 
report by more than 80 percent.
    Mr. Stivers. Thank you.
    Mr. Kamphauser. And so, I think we can do those sorts of 
things.
    Mr. Stivers. Thank you. As a follow-up to that, Ms. 
Dempsey, and Mr. Hinson, do you believe if we have a new 
emphasis on these innovative technologies, they should come at 
the expense of current loans or supplant current loans or 
should it be in addition to--in a way that where we build 
additional capacity and expand those efforts?
    Ms. Dempsey. Thank you, Congressman.
    I believe very strongly that it needs to be in addition to 
the existing financing and activities of the Ex-Im Bank. I 
heard from many small businesses as I was coming here for this 
hearing--Tucci in Florida, that makes patio umbrellas; a 
company up in Massachusetts, Riverdale, that makes lobster 
traps and wire meshes for fences--and we don't want to 
disadvantage these job creators in our country.
    Mr. Stivers. And as we look at the relative scale of 
China's export credit agencies and the Ex-Im Bank, we are $200 
million, they are $36 billion, it doesn't make sense to eat 
into that $200 million, does it?
    Ms. Dempsey. That is exactly right. That is what I was 
talking about earlier, about expanding the cap. Could I just 
say, it is not just innovative areas. It is also in 
infrastructure and beyond.
    Mr. Stivers. I would like to give Mr. Hinson a chance too.
    Mr. Hinson. Thank you for the question. We would agree with 
Ms. Dempsey.
    Mr. Stivers. Thank you. Excellent.
    Mr. Luetkemeyer's questions on small business were, I 
think, informative in your answers about the supply chain. Mr. 
Hinson, or Ms. Dempsey, do you believe that we should have one 
of the reforms in the way we count our small business--the 
effectiveness of the Ex-Im Bank to include supply chain 
companies?
    Ms. Dempsey. Yes. Yes, we agree with that. Thank you.
    Mr. Hinson. Yes, we agree, as well.
    Mr. Stivers. Great. Thank you.
    And, again, Mr. Hinson, I don't think you--Ms. Dempsey was 
very clear on concentration limits. Would you like to also be 
clear on the effect of concentration limits and what that would 
do to those small businesses?
    Mr. Hinson. It is not an area of my expertise, so I would 
defer to Ms. Dempsey. She has more knowledge.
    Mr. Stivers. So if a big company can't get loans because of 
concentration limits like Boeing, what happens to their 
suppliers? Do they get business?
    Mr. Hinson. No. As a practical matter it--
    Mr. Stivers. What happens to American jobs? Do they go up 
or down?
    Mr. Hinson. They go down.
    Mr. Stivers. Thank you. That is what I needed.
    Mr. Kamphausen, and with due respect to our ranking member, 
North Carolina and Ohio both contributed to the birthplace of 
aviation. Ohio contributed the brain power, and North Carolina 
contributed the wind, so we needed them both.
    Mr. McHenry. It is very tired. It is very tired, Steven.
    Mr. Stivers. I know. I know. But China is very focused on 
aerospace in their China 2025. Specifically, they are trying to 
gain more aerospace market share. Do you think having a 
successful civilian aviation industrial base that can produce 
wide-body airframes will enhance China's military capabilities 
as well?
    Mr. Kamphausen. Certainly potentially, yes.
    Mr. Stivers. So would you say it is a national security 
issue that we support our aerospace industry?
    Mr. Kamphausen. Yes.
    Mr. Stivers. Thank you.
    Finally, I have 5 seconds. I want to give a quick shout-out 
to a bunch of small businesses in my district that use the Ex-
Im Bank, and I appreciate the fact that the Ex-Im Bank is 
there.
    Thanks for having this hearing, Madam Chairwoman. I yield 
back.
    Chairwoman Waters. Thank you.
    The gentlewoman from Ohio, Mrs. Beatty, who is also the 
Chair of our Subcommittee on Diversity and Inclusion, is 
recognized for 5 minutes.
    Mrs. Beatty. Thank you, Madam Chairwoman.
    And to the witnesses, thank you. I have a brief comment 
that I want to give before asking a few questions. Thank you to 
all the panelists. I really want to also say that there has 
been a lot of emphasis on business development and competition 
or competitiveness abroad with regards to the Export-Import 
Bank. These are important conversations, but I want to take a 
moment to thank the American workers.
    Mr. Herrnstadt, as a representative of the International 
Association of Machinists and Aerospace Workers, can you 
briefly describe the impact of a fully functioning Export-
Import Bank on the workers in your organization?
    Mr. Herrnstadt. Absolutely. And thank you very much for the 
question. It is a tremendous factor. All one needs to do is 
take the public tour of Boeing in Everett to take a look at all 
of the aircraft that are being built with suppliers from around 
the nation that have a foreign airline stamped on the tail, and 
then look at all of the workers who are involved in that to 
realize the importance, the direct importance of the Bank. And 
all one needs to look at is the development of large commercial 
aircraft in China to see the impending threat, particularly 
when they have their own export credit agency that is 
supporting them.
    Mrs. Beatty. Okay. Thank you.
    Mr. Hinson, first, let me also thank you, and on a personal 
note say how pleased I am to see you. I have followed your work 
over the years, and I want to thank you for standing up not 
only for the American people but for all of your work in 
diversity and inclusion, not only in the position you are in 
now but in many capacities. I consider it an honor to ask you a 
question today.
    We have heard--and I want to thank Mr. Cleaver and others 
for introducing OMWI and being in the bill, and thank you for 
saying that you think that would be a positive thing. I also 
have an interest in small businesses. My question to you is, 
when we talk about Ex-Im and fully integrating the ideas of 
diversity and inclusion into every facet of the work in the 
culture to attract, to retain, and to sustain a workforce that 
mirrors the richness of American diversity, can you tell this 
committee why the Export-Import Bank is such a critical and 
crucial agency for minority- and women-owned small businesses?
    Mr. Hinson. Thank you for that question. There is a variety 
of reasons, but I would like to focus on one, and that is 
capital access. For many of the minority- and women-owned 
exporters, Ex-Im Bank is it in terms of their ability to 
attract the capital to actually sell their goods and services 
abroad.
    In the absence of the Export-Import Bank, these companies 
would not have the opportunity to actually participate in the 
global markets. I would also add that when you look at the 
growth of minority-owned and women-owned businesses, the growth 
is really with African American female-owned and Hispanic 
female-owned businesses. Those will be the exporters of the 
future. And so it is critically important that the Ex-Im Bank 
be here to help these companies gain access to the capital they 
need to expand their businesses and export abroad.
    Mrs. Beatty. Let me ask you this: Do you believe that as 
many of the minority- and women-owned export small businesses 
would be able to do as many deals internationally if they 
didn't have the Export-Import Bank?
    Mr. Hinson. I think, without question, they would not. What 
is unique to minority-owned firms is they have unique export 
capabilities that more traditional firms don't have. We are 
talking about these companies generally had--they are 6 times 
more likely to transact business in a language other than 
English. They are twice as likely to export than non-minority-
owned firms.
    We are talking about cultural connectivity. There is a big 
component of gender connectivity that is oftentimes not 
discussed when U.S. companies export into other markets. And 
so, we don't take full advantage of the full breadth and depth 
of the skills and capabilities of these firms. In the absence 
of the Export-Import Bank, these companies would fall short.
    Mrs. Beatty. Let me say--my time is running out--to all of 
the panelists and especially you, Ms. Dempsey, for also using 
in your testimony words like ``fair playing field,'' and 
especially ``level playing field.'' I fully support the Ex-Im 
Bank and would like to see us move forward. I thank the 
chairwoman for this bipartisanship.
    And lastly, I had the honor to work with and have in my 
district the former Chair, Fred Hochberg.
    My time is up. Thank you.
    Chairwoman Waters. Thank you very much.
    The gentleman from Kentucky, Mr. Barr, is recognized for 5 
minutes.
    Mr. Barr. Thank you, Madam Chairwoman.
    Thank you to our witnesses today. And thank you for the 
testimony from many of you, particularly Mr. Kamphausen, about 
the Belt and Road Initiative and the serious national security 
implications of China's malign state-directed export financing 
efforts.
    In that vein, I do sympathize with the testimony that we 
have heard here today that one of the principal goals of the 
Export-Import Bank is to enable the United States to compete on 
a level playing field in markets and industries where China is 
aggressively supporting their own exporters.
    I am, however, alarmed when I see on the screen above all 
of you the fact that China is the number two destination of Ex-
Im Bank-supported exports, and the fact that Ex-Im has 
subsidized Chinese companies and in some cases Chinese state-
owned enterprises and even the Chinese government.
    And so my question to you on behalf of the American 
taxpayer is--and anyone can chime in, but in particular because 
of your expertise and your interest in the topic, Mr. 
Kamphausen--why is it or why should it be U.S. policy to use 
U.S. taxpayer funds to subsidize Chinese companies, including 
Chinese state-owned enterprises?
    Mr. Kamphausen. Thank you, Mr. Barr. I am not an expert on 
the functions of U.S. Ex-Im Bank. It is the case that as China 
has developed so rapidly over the last 30 years or so, many of 
the old rules that were intended to engage and to bring about a 
China that would be a more meaningful partner for the United 
States international system require reassessment. And I think 
that applies across-the-board, and so a general statement would 
be we need to reevaluate the conditions that would allow this 
very thing to occur.
    Mr. Barr. I welcome that comment. And my question may 
appear to the many friends of the Ex-Im Bank in this room as a 
hostile question. It really is not. It is to invite that kind 
of feedback that we need to reevaluate the policies of the Ex-
Im Bank with respect to the core mission of countering malign 
Chinese competition.
    And I think that if we are going to attract support for 
reauthorization, particularly long-term reauthorization, we 
need to be very cognizant of the policies of the Ex-Im Bank so 
that we do not continue to subsidize Chinese importers. I think 
the American taxpayer, particularly American taxpayers who have 
read Michael Pillsbury's book, ``The Hundred-Year Marathon'', 
that explores Chinese industrial espionage and forced transfer 
of technology and theft of intellectual property, I think the 
American taxpayer would be alarmed and concerned to find out 
that their hard-earned tax dollars were going to actually 
subsidize malign competitive activities from Chinese-owned 
businesses.
    I do see Ms. Dempsey wanting to chime in, and I will give 
you that opportunity.
    Ms. Dempsey. Congressman, thank you. I appreciate that. 
And, look, I--we care deeply. Our biggest competitor and the 
source of most of the concerns I hear from my members is China. 
It is our third largest export market. These exports support 
hundreds of thousands of jobs overall. Why do companies use Ex-
Im to sell to China, including to China state-owned 
enterprises? And it is not taxpayer-subsidized. Companies are 
paying fees. The loans are being paid back. It is actually not 
being subsidized, and maybe there is more work we need to do to 
prevent that.
    Consider one of my small manufacturers in Maryland. They 
sell medical rehabilitation equipment, with about 55 
manufacturing workers that they have been able to double over 
time because of exports working with Ex-Im. They sell to 
hospitals in China, in Russia. Many of those hospitals are 
state-owned enterprises. Our goods, our American goods that go 
overseas are like our ambassador.
    Mr. Barr. Yes, I understand that. I am going to have to 
reclaim my time. I do appreciate the comment, but I want to 
just reemphasize that it is--I think it is--in order to gain 
the support that you want to reauthorize the Bank, when we are 
talking about competition with China, I think we need to have a 
clear-eyed policy with respect to supporting Chinese state-
owned enterprises when China is engaged in systematic theft of 
our intellectual property, systematic national security 
undermining efforts to transfer American technologies in a way 
that undermines U.S. national security.
    So I just admonish the panel here that this is an important 
issue that Congress cares about, as do you, because the issues 
that you are talking about in terms of competition raise the 
concern of malign competition from China. We should be 
cognizant that we don't unintentionally enable China's 
mercantilist, communist-driven activities that actually 
undermine U.S. national security. And I yield back.
    Chairwoman Waters. The gentlewoman from New York, Mrs. 
Maloney, who is also the Chair of our Subcommittee on Investor 
Protection, Entrepreneurship, and Capital Markets, is 
recognized for 5 minutes.
    Mrs. Maloney. I thank the chairwoman and the ranking member 
for calling this important hearing and I also thank all of the 
important witnesses today.
    I am a strong supporter of the Ex-Im Bank and feel that it 
should be reauthorized, but certainly questions and oversight 
are important. Particularly when you look at the extent that 
our competitors in trade subsidize their countries, China is 
subsidizing their exports to the tune of $36.3 billion, with a 
``B'', a year compared to the United States. We are number 25 
on the list. They are number one. And we are at $200 million.
    But I think the gentleman did raise an important point that 
you don't want to subsidize the selling of technology that is 
important and protected by CFIUS for our national security. But 
since there are no indications that other countries will 
dissolve their export banks and we cannot change this in 
reality, we are making it very hard for our companies to 
compete in the new world economy.
    So I would like to ask the representative from NAM, Ms. 
Dempsey, could you please explain exactly what type of 
difficulties American exporters would face if we did not 
reauthorize the U.S. Ex-Im Bank, specifically when facing 
foreign competition that is aggressively backed and subsidized 
by their nation's export banks. Would more American companies 
simply lose bids in the world economy and world competition? 
Ms. Dempsey?
    Ms. Dempsey. Congresswoman, thank you for your question. 
The simple answer is ``yes.'' If we didn't have Ex-Im to 
participate in a number of these deals, small businesses would 
lose out, and hundreds of thousands of workers each year would 
be losing out on opportunities, and we are going to risk our 
standing in the world.
    When the U.S. exports our products, our best-in-class 
products, whether it is medical equipment or satellites or the 
great products our small business witnesses here are talking 
about, we are being an emissary to the rest of the world and 
that helps us in our standing.
    We should be looking favorably at exporting products of all 
sorts, of all sizes, of all types everywhere in the world--with 
respect to Congressman Barr--including China. We have rules, as 
you mentioned, Congresswoman, the new Export Control Reform 
Act, to make sure that we are not exporting our sensitive 
technologies.
    We have a U.S. Trade Representative working very hard right 
now to get the best modern rules with China to stop the theft 
of intellectual property. But if we cut ourselves off from 
exporting, including to hospitals with which we are not 
competing globally, if we cut ourselves off from providing our 
best-in-class products to Chinese consumers or other consumers, 
we are hurting our diplomatic standing in the world.
    Mrs. Maloney. Can you get us in writing--since this debate 
is going to continue for a while--real examples of how we have 
benefited companies? I would particularly be interested in New 
York companies, that is where I represent, but other Members 
are interested in their localities. I would like to ask the 
U.S. Chamber of Commerce, David Hinson.
    And I worry a lot about today's sort of debate and 
discussion in today's economy. Now we are in a very good, 
strong economy and we are exporting. But what about if we had 
an economic downturn, like in 2008 when we were literally in a 
tremendous stress position, and there wasn't a lot of private 
capital around, to say the least. We were dependent really on 
the government to get the economy moving and to help during 
this stressful period.
    So can the Ex-Im Bank offset a major shortfall in 
commercial credit and prevent a dramatic, say, drop in exports 
during a financial crisis, and did it do so during the 2008 
recession? Can you tell us about your experience during that 
time of financial stress? Thank you.
    Mr. Hinson. Yes. And thank you for the question. I think 
your question is excellent because that is exactly what 
happened. During the economic downturn, Ex-Im stepped up and 
filled the void that commercial banks weren't willing to fill 
to support U.S. companies exporting abroad. So, you are right 
on point with that. That is exactly what happened.
    And that is one of the strengths of Ex-Im. During the times 
when we have economic downturns--and we will have another at 
some point--Ex-Im is in the position to step in and provide the 
sort of capital and loan supports and insurance supports that 
the private sector can't--could not provide.
    Mrs. Maloney. You make a very strong argument for 
reauthorization. My time has expired. Thank you.
    Chairwoman Waters. The gentleman from Florida, Mr. Posey, 
is recognized for 5 minutes.
    Mr. Posey. Thank you, Madam Chairwoman.
    One reason our country has enjoyed relatively great 
economic success is because we trusted our economic well-being 
to a free enterprise economy. In 1974, the late Nobel Prize-
winning economist, Milton Friedman, said, ``You must separate 
out being pro-free enterprise from being pro-business.'' Today, 
we consider the reauthorization of an institution that many see 
as pro-business but certainly not as pro-free enterprise.
    The Import-Export Bank has been criticized by many as 
picking winners and losers and providing financing to large 
companies and government enterprises. For example, one study 
identified Premex, the state-owned Mexican oil company, to have 
received the largest value in loans from the Bank. When the 
Bank's reauthorization lapsed a few years ago, we learned that 
the Bank was financing the purchase of American commercial 
aircraft by a foreign airline, which was unfortunately 
competing with our airlines and costing us jobs and boosting 
our economy at home.
    We have recommended reforms to the Ex-Im Bank before as 
part of reauthorizing it, most of which have been ignored. I 
believe we should look at reforms as part of the 
reauthorization, and I want to ask some questions about some 
reforms, and start with Commissioner Kamphausen. One of the 
reforms that has been suggested is that applicants for Bank 
financing be required to prove that they cannot get financed 
elsewhere. Should that be a required reform?
    Mr. Kamphausen. I don't have any expertise, Congressman, on 
that question. I am afraid I can't answer it.
    Mr. Posey. Would anybody else like to comment?
    Ms. Dempsey. Congressman, there have been studies and 
reports by the GAO and perhaps the OIG, the Inspector General, 
that have looked at this issue of additionality and have found 
that Ex-Im is complying with the rules, that it is not entering 
into areas where there is a commercial source of funding, 
financing, or other export activity.
    I believe that this activity is already being dealt with 
very properly by the Ex-Im Bank, and I urge you to talk to the 
new chairman, Chairman Reed, about this. But I don't believe 
that there needs to be additional work over the restrictions 
that the Bank already has as a lender of last resort.
    Mr. Posey. Another reform that was also mentioned would be 
to raise the requirement for the Bank to target loan support to 
small businesses. Part of that has been a recommendation to 
redefine a small business to exclude many firms that most 
observers wouldn't consider to be a small business. Should we 
take steps to put more emphasis on bank loan support to small 
businesses, Commissioner?
    Mr. Kamphausen. Again, sir, that falls outside the 
parameters of the work that the Commission does, so I don't 
have an answer for you.
    Ms. Dempsey. Congressman, as we have discussed earlier, 
even our large business exporters actually support hundreds, if 
not tens of thousands of small businesses in their supply 
chain. Right now, there is a target percentage that Ex-Im is 
trying to meet. Over 90 percent of the transactions last year 
were with small businesses directly, but many more small 
businesses win and participate when there are these large 
business exporters. So I do not believe that there needs to be 
any change in that rule.
    Mr. Posey. Question three, the Bank often provides loan 
support to state-owned enterprises that ought to be able to 
find financing within their own countries or from their own 
governments. I mentioned the Mexican state-owned oil company as 
an example earlier. Why is it appropriate to provide finance 
support to state-owned companies? And, Commissioner, I will 
give you first chance.
    Mr. Kamphausen. As I mentioned earlier, this is perhaps an 
area that requires fundamental reassessment, especially in 
light of the very opaque ways in which China uses its own 
export support agencies, export credit agencies, as well as 
policy and development banks to serve that very function but in 
a kind of unsupervised or unaccountable way. So I think it 
merits reevaluation.
    Ms. Dempsey. Congressman, if I could, if we restrict the 
ability of Ex-Im to finance sales to state-owned enterprises, 
be it in China, be it in Mexico, what we will be doing is 
telling China and other countries, buy your own products. Do 
not by U.S.A. products. I think that would be the wrong path to 
take.
    Are there ways that we should look at this? Should we do 
some more analysis? I absolutely agree. But I do believe that 
most of the exports that we have seen that have been financed 
by Ex-Im are the difference between whether it is a U.S. worker 
who benefits or a Chinese worker who benefits, or a U.S. worker 
or a Mexican worker. We need to be working to advantage our 
small businesses.
    Mr. Posey. My time has expired. I yield back.
    Chairwoman Waters. Thank you.
    The gentleman from Washington, Mr. Heck, who is a leader on 
this particular issue and an expert for this committee, is 
recognized for 5 minutes.
    Mr. Heck. Thank you. And I thank the panel very much for 
being here.
    In particular, Ms. Sharma, I found your story incredibly 
inspiring.
    And, Mr. Wilburn, welcome back. Thank you, sir, for your 
service to our country, and semper fi.
    Mr. Wilburn. Semper fi.
    Mr. Heck. What I have heard from the panel thus far is they 
uniformly support increased overall capacity in growth in a 
responsible way for the Bank. They do not support concentration 
caps. And if there are to be carveouts, they cannot be 
deductive against the overall capacity. And the panel 
additionally supports longer-term life for the Bank. Me too.
    I have been a strong supporter of this Bank for two 
reasons, the first of which is the competition on the action 
here. Every industrialized nation on the face of the Earth has 
an expert credit authority, and I believe every single one has 
export credit authority activity as a percentage of GDP larger 
than the United States.
    And to assert a variation of what Ms. Dempsey said earlier, 
in the last 2 years, China has extended more export credit 
authority to businesses than the United States Ex-Im Bank in 
its entire life--in 2 years China, more than our Ex-Im Bank in 
its entire life.
    The second reason I support it is that markets fail. Now, 
Mr. Williams often asks, ``Are you a capitalist or a socialist? 
I am a capitalist. But markets aren't perfect. Markets don't 
always help small businesses trying to get into this. Ms. 
Sharma's story is a perfect example of this. Markets don't 
always support sales into developing countries. The reference 
to Angola is perfect. Markets don't always provide support for 
long-lived, large dollar capital goods, and the Ex-Im Bank 
does.
    And they have done this, by the way, in a spectacularly 
good fashion. In the last generation-and-a-half, if not 2 
generations, they have generated billions of dollars and 
created hundreds of thousands of jobs. They have done their job 
well since 1990, without question.
    One of the proposals under considerations is to provide a 
concentration cap. I have heard everybody here oppose that. I 
want to drill down on it, Ms. Dempsey. The most common reason 
offered for this is risk management. But I read the data 
differently. I was looking at your testimony where it indicated 
that the default rate was less than .2 percent at the end of 
2014 when we had large business activity, and it has increased 
to .44 something percent; the default rate doubled.
    Now, the truth of the matter is that the statutory cap is 2 
percent default. They are still the envy of the private sector 
for their management of risk. But what that data suggests to 
me, Ms. Dempsey, is that these large items--long live capital 
goods--are, in fact, the gold standard of their 
creditworthiness, and taking them out of the portfolio would be 
a little bit like an individual removing Treasury bills from 
their portfolio. Do you agree or disagree?
    Ms. Dempsey. I absolutely agree, Congressman. What we have 
seen is that the larger exports, the capital goods are the more 
secure, less risky. The aviation sector in particular has a 
default rate of .009, I think in the last year, and back in 
2015, it was .007 percent. That is far lower than the .235 
percent.
    Mr. Heck. So it would be counterproductive from a risk 
management standpoint?
    Ms. Dempsey. It would be absolutely counterproductive from 
a risk management--
    Mr. Heck. There is no business case whatsoever to be made 
for doing that?
    Ms. Dempsey. There is no business case. And I will tell 
you, we have seen what other, let's say the French export 
credit agency has done and how they have operated when they 
have tried to put these concentration caps in. You have French 
government officials trying to pick winners and losers. This is 
absolutely antithetical to the rules put in, in 2015, that we 
shouldn't be discriminating against particular exporters.
    Mr. Heck. So in my time left, I just want to say to my 
friends on the other side of the aisle, and they are my 
friends, stop saying this is taxpayer-subsidized. It isn't. It 
hasn't been for decades. This is a job-generating, revenue-
creating entity. It creates jobs. It transfers revenue in the 
billions of dollars to the Treasury.
    It is not taxpayer-subsidized. Stop saying that. It is not 
true. This helps America's economy. This helps us be strong. 
This helps us compete with China and other competitors. That is 
why I am so glad to hear your testimony here today and the 
consensus of your high points. Thank you again very much for 
being here.
    Chairwoman Waters. Thank you very much.
    The gentleman from Colorado, Mr. Tipton, is recognized for 
5 minutes.
    Mr. Tipton. Thank you, Madam Chairwoman. I appreciate you 
all taking the time to be able to be here.
    Ms. Dempsey, you had mentioned a little bit ago in regards 
to the GAO and the Export-Import Bank, in regards to the 
Export-Import Bank being the lender of last resort, both 
studies out of the GAO and the Export-Import Bank's inspector 
general have pointed out that the Bank doesn't always 
demonstrate that it is, indeed, the lender of last resort.
    Can you explain the discrepancy between the Bank's mandate 
and its function, given that the Bank is statutorily required 
to not compete with the private sector?
    Ms. Dempsey. Thank you, Congressman.
    As I read the last OIG's last report, dated November 27, 
2018, what it said is, ``We found the Ex-Im can generally 
conduct its sufficient due diligence and adequately interpreted 
the need for additionality when authorizing transactions. The 
Bank generally complied with the additionality policy and 
procedures.''
    The OIG went on to make several recommendations to the Bank 
to strengthen those procedures. And the executive chairman--or 
the vice president confirmed in writing to the OIG that the 
Bank was going to undertake to take all of those reforms. We 
have just had a new board finally installed, and I urge you to 
have those conversations with the Bank.
    But as I read the last report, the work that the Bank is 
doing is ensuring that it is the lender of last resort, and 
that the Bank is willing and able to take other actions to 
reconfirm that.
    Mr. Tipton. Okay. Could you maybe explain, and I am just 
trying to make sure I fully understand this, how does the Bank 
know when U.S. banks are unable or unwilling to be able to 
provide financing?
    Ms. Dempsey. All of the applications that come into the Ex-
Im Bank are required to provide that information to the Bank, 
and then the Bank puts that in their decision memos going 
forward, that this information has been collected from the 
exporter seeking information--
    Mr. Tipton. So the exporter actually tried to get it in the 
private sector, they have been denied, and that is put into 
their request? Is that what you are saying?
    Ms. Dempsey. Yes. All of the applications require the 
reason for Ex-Im support, which goes to the fact that they have 
been in the private sector. And I have seen this directly, and 
I am sure my small business colleagues at the end of the table 
could speak to this. Companies try to go and--to a commercial 
bank. They don't want to. They are unable to. Bank lending 
requirements, in some cases, prevent them from financing a deal 
to parts of Sub-Saharan Africa or other parts of the world. 
Companies are unable to use exports as collateral when they are 
getting a loan, so our companies have no choice but to either 
put out a second mortgage or go to the Ex-Im Bank. And that is 
the important role that the Ex-Im Bank plays to fill gaps.
    Mr. Tipton. Great.
    Can you maybe clarify for me--Mr. Heck is a good friend of 
mine, and I appreciated his comments--but he was talking about 
the default rate. And, obviously, as he had noted, the default 
rate of Ex-Im Bank is low compared to the private sector. So 
that does beg the question. You just cited some regulations, 
but it is not across-the-board in terms of all of the loans 
going on.
    Why is the private sector not stepping up and taking those 
loans, given the great risk management that we have seen coming 
out of the Ex-Im Bank given the statistics that are available?
    Ms. Dempsey. Thank you.
    There are a number of reasons that we don't see the gap 
being filled, and I lay these out in some specificity in my 
testimony.
    Certainly, emerging markets are a big problem. Your local 
community banks are unwilling and unable to finance those types 
of deals. When you have longer transactions, longer-term 
transactions, larger transactions, banks alone are unable to 
take that risk on by themselves. In some cases, they do partner 
with the Ex-Im Bank to work together.
    But acting alone, the Bank is unable to take on that risk. 
I talked about the small business collateral. Exports can't be 
collateral, which is normally the way that small businesses get 
loans. That operation does not work in the private sector. And 
then we were all discussing with state-owned enterprises. In a 
number of energy deals and other deals, you absolutely need a 
government at the other end of the table, and that is the 
important role that the Ex-Im Bank serves.
    Mr. Tipton. Great. My time has expired.
    I yield back, Madam Chairwoman.
    Chairwoman Waters. Thank you.
    The gentlewoman from North Carolina, Ms. Adams, is 
recognized for 5 minutes.
    Ms. Adams. Thank you, Madam Chairwoman, for convening this 
hearing today. And to the witnesses, thank you very much for 
sharing your testimony.
    The Export-Import Bank has been critically important in 
boosting North Carolina's economy and creating good-paying 
jobs. In my district, since 2014, it has supported 142 North 
Carolina small businesses and larger companies generating more 
than $4 billion in sales for our State, all without adding a 
dime to our national deficit.
    In Charlotte and Mecklenburg, which is my district, the Ex-
Im Bank currently supports 17 businesses engaged in exporting 
which generate sales of $60 million and thousands of jobs. So 
it is my hope that we can strengthen and reauthorize the Bank 
well in advance of the September expiration date.
    I do have a few questions for Ms. Dempsey.
    First of all, when the Ex-Im Bank lapsed between July 1, 
2015, and December 2015, the statutory authority of the Bank 
was significantly limited. The Bank could not approve new 
transactions, was prohibited from engaging in business 
development, and so on.
    So could you paint a picture for us of what those 5 months 
were like for existing clients of the Bank as well as new 
perspective manufacturers relying on this affordable financing 
to grow and expand their businesses?
    Ms. Dempsey. Thank you, Congresswoman.
    They were devastating. Our phones were lighting up 
constantly with companies who had deals pending who couldn't 
make those deals. We had small businesses worried about making 
payroll because they couldn't complete an export transaction 
that was a significant part of their deal. And new users of the 
Bank were questioning, well, why should I even try to export 
and do this when this Bank is not in operation?
    We saw our foreign competitors being able to complete tens 
of thousands of deals during that period and through the period 
where it was not fully functioning, all, I think, to the loss 
of American workers.
    Ms. Adams. Thank you.
    Mr. Wilburn did you want to add something too?
    Mr. Wilburn. I would just say this, that small businesses, 
just like any other business, need certainty. There is very 
little certainty in the process today. My clients overseas have 
gone to my competitors reluctantly. And that cost jobs in your 
district and other districts. I think that is really what we 
need to focus on.
    You talk about free enterprise. We engage in free 
enterprise at FirmGreen and these other businesses. What the 
detrimental effect, is the government policies surrounding Ex-
Im Bank heard us and heard our clients overseas.
    Ms. Adams. Thank you.
    What would American manufacturing and small business 
engagement with the international marketplace look like without 
Ex-Im Bank? Ms. Dempsey and Ms. Sharma?
    Ms. Sharma. I would like to say, we support a number of 
businesses in North Carolina also. And those businesses--we do 
the exporting, but they do the work. So, we send them cotton 
yarn. They knit it for us. They finish it. They dye it. So, 
businesses like us support a number of other small businesses 
that don't have access to exports.
    Ms. Adams. Okay.
    Ms. Sharma. So without Ex-Im Bank, that kind of activity is 
not possible. Supporting those kinds of businesses that are 
really not up front exporting by themselves.
    Ms. Adams. Thank you. Yes, ma'am?
    Ms. Dempsey. We would see thousands of businesses each 
year, particularly small and medium-sized, lose anywhere from 
10 or 20 or 30 or 40 or 60 percent of their business if we 
didn't have Ex-Im. That would put at risk hundreds of thousands 
of American jobs. And if we stopped doing this, we would 
continually lose out in bigger and bigger numbers, because when 
we lose a sale overseas and our competitors get it, that may 
not just be that one sale. That may be a sale for years, for 
generations to come. And so, we are putting ourselves at risk.
    Ms. Adams. So before you turned to the Ex-Im Bank for 
financing assistance, did you attempt to get financing from 
more traditional banks?
    Yes, sir?
    Mr. Wilburn. Always, Congresswoman. Always. First of all, I 
would like to help my local bank, and they would like to help 
me. But they are precluded by the rules of their own banking 
charter from lending, especially the collaterization issue you 
mentioned on the overseas materials.
    Ms. Adams. Okay.
    Ms. Sharma, did you?
    Ms. Sharma. Well, we haven't--it has been very difficult to 
get loans from local banks.
    Ms. Adams. But you did try.
    Ms. Sharma. We have not yet used Ex-Im Bank for taking a 
loan, but we will be.
    Ms. Adams. All right. I am out of time.
    Thank you very much.
    Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you.
    The gentleman from Texas, Mr. Williams, is recognized for 5 
minutes.
    Mr. Williams. Thank you, Madam Chairwoman. Mr. Wilburn, I 
would like to start by thanking you for your service. As a 
Marine in Vietnam, our country called you, and you answered the 
call. And for that we owe you a huge debt of gratitude.
    Your success in the military and the private sector is an 
encouraging example of hard work and commitment, and I am 
grateful that we are able to hear your story today. I, too, am 
a small business owner, currently for 50 years. So we have seen 
Main Street America and how it works.
    You are an entrepreneur who started multiple successful 
businesses. You took risks and bet on yourself to succeed. That 
is the definition of the American Dream and the beauty of 
capitalism. You seized at opportunities. You didn't seize on 
government guarantees.
    Before I proceed with my question about the Ex-Im Bank, I 
want to ask you a simple question: You are a capitalist, aren't 
you?
    Mr. Wilburn. Yes, sir.
    Mr. Williams. Thank you for that.
    Now, the problem I see with Ex-Im is that the benefits seem 
to disproportionately be going to some of the largest companies 
in the world.
    Could you give us your thoughts on how we can preserve the 
benefits to small and medium-sized businesses like ours around 
the country while not subsidizing multibillion dollar 
corporations?
    Mr. Wilburn. It is a difficult question, sir, and I think 
an important one for this committee, obviously. And I 
appreciate the question.
    I can only speak from the small business perspective and 
the people that I know that are small businesses that have 
worked for these large companies that you are referring to. 
They are indirect jobs. They don't really show in the 
accounting at Ex-Im Bank or the data here.
    In my work at the Trade Finance Advisory Council with the 
Department of Commerce, we tried to articulate that and draw 
attention to that. So I think there is more work that needs to 
be done. But I agree with you that there has to be a hard look 
at the policies behind the loan process, period.
    Mr. Williams. Thank you.
    I personally think the largest companies in the country who 
can afford to arrange their own export financing should do so 
without any assistance of the Federal Government. I would 
prefer a recourse financing system like there is in the private 
sector between two parties, that I deal with all the time.
    Mr. Hinson, do you believe the Ex-Im Bank currently has 
enough flexibility in its charter to innovate and try and shift 
the risk away from the taxpayers and increase private sector 
involvement?
    Mr. Hinson. I would say to that question, from the 
standpoint of the U.S. Chamber, the motivation is to create a 
level playing field to make sure that all businesses of all 
sizes and all scopes have the best opportunity to sell their 
products and services around the world. There is a greater need 
for flexibility, as Ms. Dempsey pointed out in her comments, to 
grow the Ex-Im Bank to make it more available to more 
companies.
    In answer to your question, the U.S. Chamber is supportive 
of more flexibility for companies and greater opportunity for 
businesses, particularly small businesses, because the U.S. 
Chamber--99 percent of the U.S. Chamber's members are small 
businesses so that they can grow and flourish.
    Mr. Williams. Half of the workforce, half of the payroll is 
the small businesses we are talking about. So, thank you for 
that.
    Ms. Dempsey, on page 6 of your testimony, you talk about 
how international competition is receiving subsidized financing 
from their respective export credit agencies. You talked a 
little bit about that today. And that the United States has 
been working to eliminate these market distortions so everyone 
is competing on a level playing field.
    What enforcement tools are at our disposal if we find out 
that another country is violating a negotiated ECA lending 
agreement?
    Ms. Dempsey. At the moment, we don't have those types of 
tools. We have agreements that the United States led the world 
in completing with our member--our fellow members of the OECD, 
the Organization for Economic Cooperation and Development, the 
developed countries, that follow these guidelines. And then we 
are trying to, but we need more leverage in those negotiations 
with the developing countries.
    One of the areas that we are looking at, because we share 
the view that government should not be using subsidized 
financing and do not believe at all that that is what the Ex-Im 
Bank is doing. It is operating on commercial terms as possible.
    But I think in some of these negotiations, we need to look 
at the World Trade Organization, because that is where there is 
an exception for export credit agencies, and that is where the 
disciplines and the type of enforcement tools would actually 
lie. So that is an area that we are looking at.
    I was over in Geneva with my CEO in March. We talked to the 
head of the WTO about this issue. But that is the course that I 
think we need to take on that only after we have fully 
reauthorized, revitalized this agency, because if we don't have 
an operating Ex-Im Bank, no one else is going to listen to us.
    Mr. Williams. Okay. Thank you.
    I yield back.
    Chairwoman Waters. The gentleman from Florida, Mr. Lawson, 
is recognized for 5 minutes.
    Mr. Lawson. Thank you, Madam Chairwoman. And I welcome the 
witnesses to the committee. I was just sitting here 
contemplating and listening to most of the testimony early on. 
And I guess one of the things I would like to comment on again, 
that I don't clearly understand is, in the wake of the numerous 
trade wars that the President has been involved in, how 
important is the reauthorization of the Ex-Im Bank to help 
small businesses that are reeling from these trade wars?
    And so in the news every day it is about the direction that 
the President probably would be going. And then you hear a news 
release earlier from a lot of small businesses saying how this 
is going to really, really affect them. And I was just 
wondering if you all, as we go down the line, care to 
emphasize, does it put you in a bad position to tell us how 
these trade wars are going to affect our small business growth?
    Ms. Dempsey. Congressman, thank you for that question.
    Manufacturers, as I mentioned, export about half of 
everything we produce to our foreign trading partners. And that 
has been a huge source of growth over the last 10 to 20 years. 
So, we need foreign markets to be open. We need a level playing 
field. We very much want to see better rules with China, in 
particular.
    But at the end of the day, what we want is a rules-based 
economy, and no one wins a trade war. Tariffs can be very 
devastating, particularly to small businesses that only have a 
particular export market.
    We are working very strongly with the Administration, and 
with those of you up here, to try to get a trade policy that 
opens markets, that sets fair standards for all of our 
companies and takes away some of these trade-distorting 
tariffs.
    Mr. Lawson. Would anyone else care to comment?
    Mr. Wilburn. I just want to echo her remarks. We want a 
fair and level playing field for trade. I can't opine on all 
the reasons behind a tariff. I am a small business owner. But I 
can tell you this. Our elected officials need to be very 
sensitive when they take these types of actions. They are 
punitive towards us. They hurt our economies. They hurt small 
businesses like ours. So we have to be aware of those.
    Do I have all the answers? Absolutely not. But I know part 
of that answer has to be a look at fair and equitable trade 
policy.
    Mr. Lawson. Yes? Go ahead.
    Mr. Herrnstadt. Thank you.
    We have always insisted that a fair trade policy be 
comprehensive. It has many different components to it. You 
mentioned tariffs. That is one. The Export-Import Bank is 
another. We want to make sure that American workers can compete 
on a fair and level playing field. And that involves many 
different aspects and many different factors.
    Mr. Lawson. All right.
    Ms. Sharma. Can I add one thing?
    Mr. Lawson. Yes, please.
    Ms. Sharma. When you talk about a level playing field, in 
the fabric and the textiles field, we do not have a level 
playing field, because the fabrics that we make follow all EPA 
standards, and OSHA standards. We follow a lot of rules that 
make our fabrics safe and easy to use. We cannot compete with 
overseas imports that are not made following the same rules and 
regulations that we use in the United States of America.
    So by that standard, our fabrics become more expensive. We 
keep our cost, our overheads low. We don't use agents and 
distributors just so that we are able to compete with low-cost 
imports into the country. So the tariffs really don't affect 
our business in that manner, because our manufacturing supply 
chain is completely 100 percent U.S.-owned and operated.
    Mr. Lawson. And quickly, Mr. Hinson, before I run out of 
time, when you say that we like to have all of our businesses, 
small, medium-sized, and large, on a level playing field, is 
that really achievable?
    Mr. Hinson. Yes, it is. It is achievable. We have to put 
measures in place to ensure that it is possible. But, frankly, 
one step is to have a large, robust, consistent Ex-Im Bank to 
make that possible. I believe it is.
    Mr. Lawson. Okay. And really quickly, has Congress been 
providing the resources that are needed to keep us in a 
competitive situation?
    Mr. Hinson. I'm sorry, say again, sir?
    Mr. Lawson. Has Congress been providing the resources to 
keep us in a competitive situation? I know things are going on 
with China and so forth. But are we providing the resources 
that keep us in a competitive situation?
    Ms. Dempsey?
    Ms. Dempsey. I certainly think that this hearing and the 
work that Chairwoman Waters and Ranking Member McHenry and all 
of you are going to do on this reauthorization is part of that. 
I think as you look at this reauthorization, the extent of it, 
the caps and all of these issues to make Ex-Im more robust, 
that is going to be of great importance and great urgency to 
the manufacturing and broader business sector.
    Mr. Lawson. Okay. Thank you.
    Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you.
    The gentleman from Arkansas, Mr. Hill, is recognized for 5 
minutes.
    Mr. Hill. Chairwoman Waters, thank you for hosting this 
hearing. I appreciate you and the ranking member working 
together to put this panel together.
    First, I want to congratulate Ms. Sharma and Mr. Wilburn 
for being here today and bringing your hands-on practical 
experience in using the Bank's programs compared to all of 
these very smart people over here who also are advocating. But 
it is nice to have your perspective of hands-on working.
    Mr. Wilburn, I note that in your testimony--you talk a lot 
about--that you are pitted against other companies that are 
exclusively using their country's ECA facility. And so whether 
that is relevant or not to the transaction, it becomes 
important.
    Can you touch on that for a minute? In other words, whether 
it is really needed or not is sort of irrelevant to you because 
it appears to almost be a requirement by the buyer.
    Mr. Wilburn. More and more, in the last 5 years, I can tell 
you that there are very few projects that we can bid on without 
demonstration of either a letter of interest or some type of 
indication that we have ECA financing available from our United 
States Export-Import Bank.
    Mr. Hill. Thank you.
    And, Ms. Sharma, in your case, congratulations on the 
incredible growth you have. You must not sleep at night in 
order to go from 6 customers to 800 customers, from 4 countries 
to 60 countries. I know you are working your children to death, 
it sounds like.
    There is the emerging market risk, because you have a 
mixture of entities you are selling to. Do you use the Ex-Im 
Bank primarily in the emerging economies, or do you use it 
across-the-board because you yourself are a small company that 
doesn't have a ``big reputation'' with the buyer?
    Ms. Sharma. We have--no. It is different, actually. We have 
a great reputation with the buyers, because our fabrics are 
unparalleled anywhere. We just don't have any marketing or 
advertising. It is all organic growth. People who use our 
fabrics, they love them and they want to order more. But they 
are limited again by credit terms, et cetera.
    So we use Ex-Im's credit terms mainly in different markets 
like Europe, and Australia even, and in emerging markets too.
    Mr. Hill. Okay. Thank you for that.
    Ms. Dempsey, in your testimony, you talk a little bit and 
outline some of the structural issues in finance that are 
troubling that, again, are not ideal. And one thing you cite 
are Basel III standards and by--also, Dodd-Frank had 
discouraged the private sector from making long-term financial 
commitments here.
    Can you explain that?
    Ms. Dempsey. I can provide a little bit more on that.
    What we are hearing from our companies is, when they go to 
their local lender or even larger commercial banks, as the 
project gets bigger, as the project is in emerging parts of the 
world, be it in Asia or Africa or South America, what they are 
being told by their banks is they cannot, because of the 
regulations, both U.S. Government and the Basel III that 
reduced the amount of risk that banks can take on, that reduce 
their ability and their exposure limits.
    We have seen in several cases the ability of Ex-Im to 
partner with a commercial bank where the commercial bank is 
taking part of that risk. And that works. But if you took Ex-Im 
out of the equation, the deal would not happen, the exporter 
would lose the sale, the jobs would be put at risk.
    I would also point out that Ex-Im is looking at, is there 
more to do in the reinsurance area? I think that is promising 
for some parts of the portfolio. But it is certainly not a 
silver bullet. Ex-Im, I think, is taking very seriously now its 
mandate to be the lender of last resort. It has the flexibility 
to look at these other options going forward, and we support 
them doing so.
    Mr. Hill. Would you say that the Bank is more of a lender 
now than an insurer of a transaction?
    Ms. Dempsey. I would have to look at the numbers. Because 
of the problem with the quorum and the lack of the quorum, Ex-
Im's activity was cut by at least a third. A lot of small 
businesses use working capital guarantees, insurance 
guarantees, receivables insurance, things like that as opposed 
to the lending. And so that activity was reduced during that 
whole 4-year period when Ex-Im was not operational.
    Mr. Hill. Thank you. I appreciate that.
    Mr. Kamphausen, just a quick comment. Do you think--yes-or-
no answer--that the World Bank should treat China as a 
developed nation now instead of an undeveloped nation?
    Mr. Kamphausen. It is a very complicated question.
    Mr. Hill. Give me an uncomplicated answer.
    Do you think it should or should not?
    Mr. Kamphausen. Yes.
    Mr. Hill. Thank you.
    I yield back.
    Chairwoman Waters. The gentleman from Utah, Mr. McAdams, is 
recognized for 5 minutes.
    Mr. McAdams. Thank you, Madam Chairwoman. I want to thank 
the witnesses for being here today.
    In my home State of Utah, roughly 86 percent of Utah 
exporters in recent years were small businesses. So, supporting 
exports means supporting small business in my State. And the 
Export-Import Bank is a critically important tool to help our 
nation's exporters. Stated another way, the Export-Import Bank 
is a critically important job creation tool right here in the 
United States.
    While I wasn't in Congress during the last reauthorization, 
I was the mayor of Salt Lake County at the time, and I 
frequently dealt with our small business partners and the 
broader business community working toward reauthorization. And 
all of these stakeholders were strong supporters of the Export-
Import Bank due to its help in leveling the playing field for 
U.S. companies to compete overseas.
    As we enter this reauthorization, a key focus of mine is to 
strengthen the Bank and to strengthen the ability of our small 
business exporters to compete in foreign markets. So, a few 
questions.
    This is, I guess, for the panel. Do small businesses and 
large exporters utilize Ex-Im in similar or different ways? And 
do you believe that promoting small business usage of Ex-Im has 
to come at the expense of our larger exporters? Or in other 
words, can a strong Ex-Im Bank better support small businesses 
while also still providing appropriate support for large 
exporters?
    Ms. Dempsey. Maybe I will take the technical question to 
start out, but I know my small business colleagues have a lot 
of expertise here.
    There are certain tools that the Ex-Im Bank provides that 
are really just for the small and medium-sized businesses, and 
those are what they need: working capital guarantees; and some 
of the insurance payment guarantees. Some of those are ones 
that are largely used by small businesses. And the Ex-Im Bank 
has put into place activities for first-time small businesses 
to help ease them into it to attract more small businesses to 
use the Bank.
    Then, there are the financing tools that I will say small 
businesses use as well as medium and large businesses. We have 
small businesses that export big things like school buses, like 
fire trucks, family-owned small businesses that do these types 
of things as well as the small businesses here on this panel. 
They use those same lending resources.
    I believe very firmly that the Ex-Im Bank can and should do 
all of the above, because as we discussed earlier, these large 
exporters support hundreds, tens, thousands of small 
businesses, as well as their communities. We are talking about 
suppliers, component manufacturers. But we are also talking 
about coffee shops. We are talking about local stores and other 
things that are parts of these communities. That is what Ex-Im 
can and should be doing.
    Mr. Wilburn. Really quickly, I also feel very strongly that 
if it comes down to big companies, small companies, due to a 
lack of resources and proper attention, increase the resources 
of the Export-Import Bank of the United States. They need more 
staff. They need more help. That is my opinion.
    Ms. Sharma. I don't believe small businesses and large 
businesses have to compete with each other. The resources 
should be increased in order to have both. Because, again, like 
Ms. Dempsey just said, the big businesses also support so many 
small businesses and local communities and stores and 
everything, the economy. So I don't think there should be a 
competition between them.
    Mr. McAdams. It sounds like they are not necessarily a zero 
sum, right? If we are helping some of the large businesses, 
that will also support small businesses in the space. So it 
doesn't have to come as a zero sum.
    I wanted to move to a different topic. Mr. Hinson, you 
specifically mentioned in your testimony Canadian planes, 
Chinese trains, and Russian nuclear reactors as expensive 
capital goods that are supported by those countries' ECAs.
    For U.S. companies in similar industries, when Ex-Im is 
fully operational, does the Ex-Im Bank provide comparable 
levels of support, or do they compete at a disadvantage against 
their foreign competitors? Or in other words, if Ex-Im didn't 
provide strong support for these industries, would companies be 
incentivized to move jobs overseas?
    Mr. Hinson. That is a very technical question. I would 
rather defer that question to Ms. Dempsey because there is a 
really specific answer to that.
    Mr. McAdams. Okay. Ms. Dempsey?
    Ms. Dempsey. A few answers. One, if we don't have Ex-Im, 
these suppliers of--in these areas, particularly when you are 
talking about nuclear or railcars and things like that, those 
deals won't happen from the U.S. side.
    Do some of these other countries provide more flexible and 
subsidized rates? Yes, absolutely, they do. Certainly, the 
developing world oftentimes subsidizes using noncommercial 
rates of interest, things like that. We are trying to negotiate 
those issues. But we need to do so from a position of strength.
    I would say that, when we look at the whole--all of the 
foreign export credit agencies, many are much more flexible 
than the United States. So, that is an area that we would like 
the Bank to look at.
    Mr. McAdams. Okay. Thank you.
    And, Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you.
    The gentleman from Ohio, Mr. Davidson, is recognized for 5 
minutes.
    Mr. Davidson. Thank you, Madam Chairwoman.
    And I appreciate all of our witnesses today. You all really 
a lot of expertise and some great comments. To our small 
business leaders, I really appreciate that because that is what 
I did just prior to coming here, in the manufacturing space.
    And in preparation for my time in Congress, not only did I 
have this chance to be a small business owner, that you may not 
realize what you are being prepared for as you are going 
through these things. But I had a great education at the United 
States Military Academy. So, thank you all for your 
contribution to my high-quality education.
    One of the key takeaways from that was that you fight the 
battle you are in, not the one you planned on being in or the 
one you wish you were in. But you fight the battle that you 
must in order to win. And the reality is, if we are purists, we 
don't really like tariffs. And if we are purists, we don't 
really like subsidized things.
    What are subsidized things? Things that the market wouldn't 
produce. And the reality is that our regulatory scheme in the 
United States prevents many of our financial institutions from 
taking market risks that they would love to own and hold on 
their balance sheets.
    It is not that the market wouldn't produce this. In some 
ways, this very body is actively working to kill the market 
that would make it possible to extend working capital to small 
businesses. For example, Basel III wanted to treat your 
businesses and mine as if we were using the entire line of 
credit that was available and assign no assets or equity to it, 
which is crazy. Everyone looks more leveraged when you do that.
    The reality is that we are, as Commissioner Kamphausen, you 
have most articulately laid out, in a very competitive space, 
not just with China but even with our nearby allies, the 
Canadians. In my manufacturing business, we look at it, and 
rationally, we would have moved part of our business to Toronto 
to take advantage of their very generous comparable entity to 
the Ex-Im Bank. It put us at a competitive disadvantage. And, 
frankly, the United States hasn't dealt with it. Thankfully, we 
do have a President who has taken on the trade war.
    Ms. Dempsey, you highlighted that no one really wins a 
trade war. The reality is, China has been winning big. They 
have been winning. And they have been recognizing they have 
been involved in trade. They had a grand strategy for how to 
deal with the end of the Cold War. And it goes back to, prior 
to the 30-year anniversary of the events of Tiananmen Square 
where Deng Xiaoping became the leader of China.
    So you look at the way they have used their entire economy 
to engage the world, and they promised to become a market 
economy, but they haven't. You are exactly right. We need to 
use all the leverage of the World Trade Organization to get 
them to do what they already promised to do.
    We need to have a powerful tool like the Ex-Im Bank, or you 
have no leverage. And the reality is, as much as I dislike the 
concept of tariffs, we have seen that this Administration and 
our trade negotiators have used tariffs to improve our trade 
deals and to gain leverage in a negotiation. Because with no 
leverage, you have no deal. And with no options, there is no 
option. There is either get what you get.
    And so I guess, Mr. Wilburn, Ms. Sharma, would you say that 
you would love the theory of, ``I only compete with 
companies,'' but you feel like you are competing against 
countries?
    Ms. Sharma. Yes, we are competing against countries. How 
does it--it is to say we are competing against countries. And 
the fact we do dislike tariffs, absolutely. Only yesterday, we 
were talking about this, that there is a tariff all coming over 
from India, and some of her yarn is coming from there. And they 
said, ``Your price is going to go up by so much.''
    And then we felt bad about it, but then we said, ``India 
did not abide by the agreements about raising--about not 
bringing tariffs on U.S. products.''
    And we said, ``Okay, we are American citizens, so we agree. 
We live by it. That is it.''
    Mr. Davidson. Thank you for that.
    Mr. Wilburn?
    Mr. Wilburn. Just quickly, of course, we compete against 
countries. But, really, we are competing against ideologies. I 
am a patriot. I love my country. And that has to be recognized 
when we are doing trade. They are trading with Americans who 
are engaged in free enterprise.
    Mr. Davidson. Absolutely. And I think it is well said. And 
I hate to cut you short, but I am on a tight clock.
    Look, I never thought I was going to China without a 
rucksack full of ammo, body armor, and night vision goggles. 
But we did a lot of business there. We experienced the 
importance of the working capital. We experienced the 
competitive environment.
    And, Commissioner Kamphausen, if you could briefly 
summarize, how dangerous is the loss of intellectual property 
to China, and how important is it that we get that we get the 
regime that we have put in place last year on CFIUS with FIRRMA 
into Ex-Im controls?
    Chairwoman Waters. The gentlewoman from Michigan, Ms. 
Tlaib, is recognized for 5 minutes.
    Ms. Tlaib. Thank you, Madam Chairwoman.
    According to Ex-Im, 75 percent of Michigan customers are 
small businesses. However, I think only two small businesses in 
my district have been provided with financing from Ex-Im. I 
don't know if anybody can confirm that.
    But one of the things I want to talk about is, in 2015, Ex-
Im reported to have supported over 60,000 jobs in Michigan as a 
result of 9.3 million sales across the State.
    How many jobs has Ex-Im supported nationally? And I 
apologize if that has been asked already.
    Ms. Dempsey. In a typical year, Congresswoman, Ex-Im, when 
it is fully functional, supports hundreds of thousands of jobs. 
Ex-Im's data says about 2.5 million American jobs have been 
supported since about 2000.
    Ms. Tlaib. Has Ex-Im Bank ever put the taxpayers at risk?
    Ms. Dempsey. What we have seen is that Ex-Im every year is 
putting stronger risk controls in place as was authorized by 
the 2015 reauthorization. Its default rate is very low, far 
lower than the statutory mandate. And we believe that it has 
the controls it needs to not put U.S. taxpayer dollars at risk.
    Ms. Tlaib. My friends across the aisle have claimed that 
Ex-Im has put taxpayer dollars at risk.
    What have the highest default rates been for Ex-Im?
    Ms. Dempsey. I would have to go back and look at that. If I 
may, I will respond to you and follow up.
    Ms. Tlaib. Going back to small businesses, for me, many of 
my residents, especially in communities, because I have the 
third poorest congressional district in the country, and about 
60 percent of my residents within the City limits, within the 
urban community City of Detroit, work outside of the City. And 
most of the time, the ones who do work in the City, it is 
because small businesses are hiring, not the major ones.
    I am curious, if Ex-Im's board quorum is met, are there any 
requirements in place to ensure that small business lending 
targets are met?
    Ms. Dempsey. The Ex-Im reauthorization in 2015 set an Ex-Im 
small business target. I was over Friday with the new Ex-Im 
chairman, Chairman Reed, and a group of small businesses and 
their Office of Small Business. And they are very committed to 
figuring out ways to get more small businesses involved.
    One of the problems we had is, during the lack of a board 
quorum, the gap that we talked about earlier, small businesses 
couldn't devote the resources to this uncertain future. They 
need that certainty to be able to do this. Oftentimes, for a 
small business, it is one or two individuals or their children 
who are out trying to get these foreign sales. And if they 
don't know that Ex-Im is there, they are not going to be 
working on that because they have payrolls to meet; they have 
customers in the United States to service.
    Ms. Tlaib. Okay. That is it, Madam Chairwoman. Thank you so 
much.
    I yield back the rest of my time.
    Chairwoman Waters. Thank you.
    The gentleman from Ohio, Mr. Gonzalez, is recognized for 5 
minutes.
    Mr. Gonzalez of Ohio. Thank you, Madam Chairwoman. And 
thank you to the witnesses for being here today and sharing 
your testimony.
    I want to pay particular acknowledgement to our small 
business owners. Reading your testimonies and hearing you 
today, you are so inspiring. My father immigrated to this 
country in 1960 and started a steel plant. That sounds very 
similar to your experience, Ms. Sharma, where the entire family 
has chipped in throughout the entire life of that business. 
That really resonated with me, so thank you for all that you 
do.
    And, Mr. Wilburn, thank you for your service in the United 
States Military.
    I believe that the value of the Bank should be unquestioned 
at this point. It is exciting to me that we are going to get 
what feels like some bipartisan energy on getting this done. We 
can talk about low default rates. We can talk about the fact 
that it is contributing more than it is taking out from the 
Treasury, the obvious implications with leveling the playing 
field against China, and the impact on small and medium-sized 
businesses. And so, I am excited about the prospects.
    For me, the only question is really one around length of 
time and confidence in the reforms and oversight that we can 
have if we are going to go toward a long-term reauthorization.
    So I guess my first question will be for Ms. Dempsey. Given 
that the Bank now can establish a quorum and has appointed a 
chief risk officer and chief ethics officer, what next steps 
would you recommend that Congress take to ensure these officers 
are completing their mandate successfully?
    Ms. Dempsey. Thank you, Congressman. Look, we absolutely 
are committed, like all of you, to making sure that all of our 
government entities, like the Ex-Im Bank, are operating as 
intended and with that low risk.
    I am not sure that I think that there are specific mandates 
or directions that Congress needs to do right now. The risk 
officer, and the ethics officer were just appointed last week. 
There are reports that are due from the OIG, the GAO to follow 
on that. The committee could certainly undertake hearings with 
the Bank, meet with the new chairman of the Bank and the other 
board members, to hear what they are doing.
    I don't know that I see any specific mandates at this point 
from a legislative perspective.
    Mr. Gonzalez of Ohio. Okay. And then, in the GAO report of 
Ex-Im fraud controls, their survey found that more needs to be 
done to leverage technology to help with preventing and 
monitoring fraud.
    Similar question: What sort of technologies can the Bank 
utilize to improve their fraud risk operations?
    Ms. Dempsey. My understanding is the Bank agreed with the 
recommendations, that it was undertaking that. Again, I don't 
have the specific expertise on that. I don't know if my 
colleagues do.
    But I think that is a question to ask Ex-Im Bank, to 
understand what they are doing, and then perhaps have another 
hearing or discussion.
    Mr. Gonzalez of Ohio. Great.
    And then, if you could expand a little bit more on how we 
can hold China accountable at the WTO and globally. You kind of 
started on that path and ran out of time a little bit, so maybe 
say a little more there.
    Ms. Dempsey. More broadly than Ex-Im, I think we are 
absolutely supportive of Ambassador Lighthizer's work to 
negotiate a new trade deal with China. It is something that we 
have been talking about, our CEO talked about at the beginning 
of last year.
    We have old rules. These rules with China are out of date, 
and they have certainly developed in ways, as several of you 
have talked about, that no one expected. And I know 
Commissioner Kamphausen can talk very specifically about the 
theft of intellectual property as well as many of those things.
    We need to see that agreement come to fruition. Strong new 
rules with China that hold them accountable through an 
enforceable mechanism. But we also need to get our own house in 
order here, and that is where Ex-Im Bank plays such a critical 
role. Is there more adding to the work of Ex-Im Bank, not 
detracting from the support it gives to small businesses that 
have nothing to do with China, but can it do more to provide 
more flexibility? Significant authorizations. Are there other 
things that we can do to speed along that--to undertake that 
countering--
    Mr. Gonzalez of Ohio. Okay. Not to interrupt, but I want to 
give Ms. Sharma the last question. In 30 seconds, how can we 
make small business life easier with respect to the Ex-Im Bank?
    Ms. Sharma. I think there has to be more outreach. I don't 
think many people know about the Ex-Im Bank at all. In the 
community that we are, in the small businesses that we are, 
most people don't have--have not even heard about it. There has 
to be more outreach and education so that Ex-Im Bank can reach 
more people, and definitely they will benefit.
    Mr. Gonzalez of Ohio. You may have covered this, but how 
did you hear about it?
    Ms. Sharma. I was at a trade seminar, and some trade 
representative was there, and he introduced me to Ex-Im.
    Mr. Gonzalez of Ohio. Great. No doubt on one of your 
weekends.
    Ms. Sharma. Yes.
    Mr. Gonzalez of Ohio. Thank you for the time.
    And I yield back.
    Chairwoman Waters. The gentlewoman from Texas, Ms. Garcia, 
is recognized for 5 minutes.
    Ms. Garcia of Texas. Thank you, Madam Chairwoman.
    And thank you to all the witnesses today.
    It is my belief that the Ex-Im Bank plays an irreplaceable 
role in promoting American exports and keeping small businesses 
competitive in the international market. Since 2014, the Bank 
has provided over $450 million worth of export support value in 
my district, Texas 29, which is the Houston area. Among the 53 
total exporters supported in my district, 39 are small 
businesses. The Bank provides targeted credit and export 
support to our small businesses who need it most to stay 
competitive. We know the Bank's programs work, and we should 
not abandon them.
    I fully support the reauthorization. However, I do want to 
add that I am concerned about what may be happening with any of 
the President's tariffs, particularly in regard to Mexico. 
Foreign trade in Mexico is very critical, not only to my area 
in Houston but, in fact, Texas.
    If carried out, how would the proposed general tariffs on 
Mexican imports affect small businesses who specialize in 
exporting value-added products? Would a revitalized Bank be in 
a position to help these types of businesses?
    And this question is for Ms. Dempsey.
    Ms. Dempsey. Thank you, Congresswoman. I appreciate your 
support of the Ex-Im Bank and fully understand and agree that 
Mexico is a valuable trading partner.
    The Administration just recently renegotiated, updated, and 
modernized the original NAFTA agreement and is looking for 
congressional approval. Mexico is the second largest export 
market for our manufactured goods. And when we import from 
Mexico, 40 percent of the value of those imports is actually 
U.S.-made content, whether it is our grains or our energy or 
our steel or other products.
    We have to get this situation moved forward. We are very 
concerned and have communicated directly with the 
Administration on the possibility of tariffs. Immigration is a 
separate issue. We have a plan we have put out on how to move 
forward on immigration. But we should not be moving forward on 
tariffs at this time.
    Ms. Garcia of Texas. So you do believe that a 
reauthorization of the Bank would help those businesses in my 
district that are directly either exporting to or--Mexico, 
importing to their product to them?
    Ms. Dempsey. The Ex-Im Bank is definitely going to be an 
aid to businesses exporting to Mexico. We have already seen its 
use in--Mexico is oftentimes a top market that Ex-Im-supported 
exports go to. So, that is a very important area where we need 
to continue to move forward at this time.
    Ms. Garcia of Texas. Thank you.
    And while I do support the Bank's reauthorization as a 
necessary economic reality, there are also some problems that 
must be addressed. I know some of my colleagues have already 
mentioned about the need for growth in the small business 
sector.
    But I am particularly concerned because of those businesses 
that I mentioned in my district: of 59, only 7 are minority-
owned; and only 4 are female-owned. So the next question is for 
both Ms. Sharma and Mr. Wilburn.
    What can we do specifically to improve outreach to these 
communities? I know, Ms. Sharma, you mentioned that you learned 
about Ex-Im at a trade seminar. What else could they be doing 
for all of our communities that really need help in this area, 
in minority-owned small businesses, veterans' businesses, all 
of our small businesses?
    Ms. Sharma. I was just thinking about that. How do we get 
to them? Because it was a shipping seminar. I had gone to find 
out about shipping to overseas countries, and suddenly I found 
this.
    Ms. Garcia of Texas. You just stumbled on it.
    Mr. Sharma. Yes.
    And so this is a very interesting question. What do they 
use in order to send the message to these people?
    I don't believe the small business owners are part of some 
association--some local chambers of commerce to which Ex-Im 
Bank would work so that they are able to reach and send the 
message out there that this is available because it is just not 
there.
    Ms. Garcia of Texas. Okay. Mr. Wilburn?
    Mr. Wilburn. Really quick, there are local regional offices 
where the SBA and Ex-Im have staff and representatives. We are 
trying to get that word out.
    I mentor veteran-owned businesses, disabled veterans, and 
also other minority groups. And there is some mentoring that 
needs to be taking place, and maybe even enabled more by the 
Bank to allow those of us who have experience, like Ms. Sharma 
and myself and other small businesses owners, to mentor small 
businesses to allow them to fully access the capabilities of 
the Ex-Im Bank.
    Ms. Garcia of Texas. Thank you.
    Thank you, Madam Chairwoman.
    I yield back.
    Chairwoman Waters. Thank you very much.
    The gentleman from Virginia, Mr. Riggleman, is recognized 
for 5 minutes.
    Mr. Riggleman. Thank you, Madam Chairwoman.
    I thank all of you for being here today. I read your bios, 
and they are pretty impressive. My question--my background is 
going to come back. I am a family business owner myself in fine 
liquor. But also, I had two companies before in kinetic and 
nonkinetic warfare. My background is NSA and the Office of the 
Secretary of Defense, United States Air Force. Thank you for 
your service. And we do have better chow halls than the 
Marines.
    As we are looking to reauthorize the Ex-Im Bank, I think it 
is critical that we take a step back and try to understand how 
or why a healthy Ex-Im Bank is important. I believe the 
economic competitiveness is as important as a strong military 
when it comes to national security.
    Now, listening a little bit earlier, we know that China is 
not playing by the OECD rules. I think we all know that. I have 
a question, and this probably isn't fair to Mr. Hinson, but I 
am going to ask it. So if anybody else wants to chime in, you 
can.
    If they are not abiding by any of the international 
standards, Mr. Hinson, and since you are from the Chamber, can 
you tell me, perhaps, what the structure of one of these deals 
might look like? Do they have an MOU or anything of the sort?
    Mr. Hinson. Congressman, thank you for the question.
    Honestly, that is not an area of my expertise. We have two 
people on the panel who know more about China and caps than I 
do, so I would very much prefer to defer that question to them.
    Mr. Riggleman. Fantastic.
    Mr. Kamphausen. I don't think we have a firm answer on 
whether China thinks about caps. I think we can conclude that 
they probably don't because it is not in their interest to 
arbitrarily restrict themselves when they aren't a part of any 
other international bodies. And so, I suspect that they would 
not self-impose such caps.
    Mr. Riggleman. Okay. And earlier, also, I heard you talk 
about, sort of, China executes its economic investment strategy 
through policy. And I sort of remember us doing that right 
after Operation Iraqi Freedom. We did a little bit of that 
ourselves.
    And in saying that--and this is a question for you, and it 
is actually a true question, and I just wrote this listening to 
all of you, by the way, do you think that the U.S. can combine 
policy with free market principles to target certain areas? And 
what I mean by that, the best term I came up with is like 
international opportunity zones and seeing that China is using 
ECAs and supporting funding sources as sort of a strategic 
cudgel--and being former NSA and OSD, I know a little bit about 
Huawei.
    How would you see the United States combining policy and 
international free market opportunities in a streamlined 
regulatory process to utilize Ex-Im almost as our own economic 
cudgel also?
    Mr. Kamphausen. I think we want to be very careful about 
using this sort of tool for those broader purposes. That said, 
I agree with the impulse that we must leverage all of the tools 
available and think up new tools for this competition that we 
are engaged in with China.
    The first part is to understand the nature of the 
challenge, and the second, then, is to join the competition. 
And reauthorizing Ex-Im, I think, is what the committee is 
considering as part of that.
    But then we need to leverage our unique strengths. It is 
not the case that Chinese money is so deeply desired by all of 
these countries that they would look askance at U.S. funding. 
Quite the opposite. And I mentioned earlier, I think before you 
arrived, Congressman, that we actually can do some things that 
can help to undermine Chinese investment. For example, last 
year, in our interaction, a USAID-led effort in Myanmar, we 
actually got the size of the loan scaled back by more than 80 
percent from what China had originally said were its terms. I 
think those are the kind of things we can do that will allow us 
to compete well.
    Mr. Riggleman. That is why I am so fascinated by this, and 
the expertise on this panel. And you just said something about, 
we don't think there are arbitrary caps.
    Do you think Ex-Im should have a cap at all? And anybody 
can answer that question. Ms. Dempsey, should we have caps on 
Ex-Im at all?
    Ms. Dempsey. We at the National Association of 
Manufacturers would strongly advise against any caps. That is 
going to put jobs at risk. It is going to put small and large 
businesses at risk. And it is going to reduce the flexibility 
that we need to counter these foreign export credit agencies.
    Mr. Hinson. I just want to add that The U.S. Chamber of 
Commerce is opposed to caps as well.
    Mr. Riggleman. Fantastic. I might be also.
    And so here is what I want to say about this as we are 
going forward. Do you think we can create--and this is for 
everybody here--our own sort of risk matrix investment 
strategy? Sort of a competitive concept to move forward like a 
business revitalization overseas. Can we have our own sort of 
overarching concept that defines sort of a streamlined, 
technologically cogent way forward in certain geographic areas? 
Is this possible? Do you think we have the capability to do 
some risk investment strategy that combines policy, free 
markets, and technological innovation, and have that matrix, 
and actually sort of streamline where we want to go not only 
just based on free markets but based on policy and geographic, 
sort of, advantages that we might have? And I know I have 8 
seconds, so I am sure you can't answer that in 8 seconds, 
Commissioner. But what do you think about that?
    Mr. Kamphausen. It is well outside my area of expertise. 
But the answer is, it is an American challenge, so, sure, we 
can do it.
    Mr. Riggleman. Yes, sir.
    Thank you all very much. Fantastic.
    Chairwoman Waters. Thank you very much.
    The gentleman from Michigan, Mr. Huizenga, is recognized 
for 5 minutes.
    Mr. Huizenga. Thank you, Madam Chairwoman. And, 
unfortunately, I had been delayed getting here, and so I came 
out of rotation but I felt compelled--I guess every garden 
party needs a skunk. Well, the skunk just showed up at the end 
to ask a couple of questions.
    But I am fascinated by this no-caps notion, that there 
should be no limits as to what Ex-Im can, would, or lend into. 
And China has been cited--I guess one party rule does help 
streamline policy decisions. But we have a responsibility here 
in Congress to limit the exposure of taxpayers to risk. And as 
you look back at the history of the Export-Import Bank, some of 
the original rationale for this was that the Soviet Union 
wasn't going to--they weren't sure we were going to be able to 
pay for the grain purchases. And so the Federal Government 
stepped in to say, okay, we are going to guarantee those.
    And that is a very different situation than lending a 
sovereign wealth fund out of the Middle East money to purchase 
airplanes. We have wandered far afield from this. And to my 
small business friends, I am a small business owner as well, 
third generation involved in construction. And we have been 
battling that side of the equation to survive for a very long 
time ourselves.
    I will just note the fact that there was no quorum actually 
then changed the ratio on the small business lending. It wasn't 
even close to hitting its mandate and did virtually nothing 
as--having been the former Chair of the Monetary Policy and 
Trade Subcommittee, I was intimately involved in the 
discussions surrounding Export-Import Bank's last 
reauthorization. And, unfortunately, there was a kabuki dance 
around this notion of reforms that simply have not come to 
fruition.
    And I am puzzled as to why no one actually from the Bank or 
the inspector general is not a part of this panel. It seems to 
me that, not only we should, but we must have the Bank here to 
answer some of the questions about risk management and 
accountability and exactly how GAO and Ex-Im IG have viewed Ex-
Im's shortcomings in the past on protecting taxpayer resources 
and rectifying the deficiencies in its antifraud measures, 
improving the Bank's compliance with underwriting standards and 
authorization statute.
    One of the main discussions that we had in our last 
reauthorization was actually having a balanced portfolio. If 
you put the Export-Import Bank up against any of our regulators 
of traditional banks, they would not be allowed to do the 
lending that they do.
    So we have to figure a few of these things out. I am afraid 
that the Majority is bound and determined to plow ahead with a 
reauthorization for longer than it should be, potentially with 
no caps at the urging of some folks that not--maybe not 
normally be their comrades in arms when it is coming to these 
kind of policy things.
    I have about a minute left here, but, Commissioner, I do 
want you to be able to answer what had been Congressman 
Davidson's question, along with Mr. Barr's question, about 
CFIUS and FIRRMA controls and the dangers with China 
specifically. And we know about the IP side of things.
    But how are the controls that have recently been put in 
with FIRRMA, is it not possible for Export-Import Bank to 
actually, in effect, go around those? And if so, potentially 
what can we do to make sure that the spirit of FIRRMA and CFIUS 
and those types of security reviews that are very important are 
not laid by the wayside?
    Mr. Kamphausen. I don't think there is a concern with 
FIRRMA, although we are still awaiting the implementing 
regulations.
    With regard to export controls, I am approaching the outer 
limits of not even my knowledge but my imagination. I think 
there has to be some harmonization to ensure that there 
wouldn't be a conflict.
    I think Ms. Dempsey might have a view on this, but I don't 
think it would be insurmountable.
    Ms. Dempsey. The export controls would prohibit Ex-Im from 
authorizing exports of anything that is controlled.
    Chairwoman Waters. The gentleman's time has expired.
    You can answer those questions in writing, if you would 
like.
    The gentleman from Georgia, Mr. Loudermilk, is recognized 
for 5 minutes.
    Mr. Loudermilk. Thank you, Madam Chairwoman.
    Thank you all for your little marathon session here with us 
today. I know that the Export-Import Bank is going to be a hot 
topic this year. It is something that we as a Congress are 
going to need to act upon.
    I have been one of those who has been a little bit of a 
critic on there. I see both sides of the issue. But I also 
believe that government, as our Founders believed, is a 
necessary evil. In its best state, it is a necessary evil; in 
its worst state, it is an intolerable one.
    Therefore, most of what the government does we have to 
narrow down to those things that we think government should be 
doing. And when we do those things, they should be narrow, 
limited, and done at their best. With that said, I am not 
necessarily opposed to the Export-Import Bank, but I do think 
that there are some things that we need to look in reforming it 
as we go forward, and I am hoping that we can do that.
    On the other side of the scale, I do see the need for it, 
especially from a national security stance, from the 
subsidization that is going on by foreign countries, many of 
those that are not friendly to us undercutting the market. So 
with that said, I am eager for the discussion to continue on in 
the direction we are going.
    One thing that I am a proponent of is including as much as 
we can in the private sector, much like we do--that we are 
talking about, at least on this side of the aisle, in flood 
insurance, is including the private sector as much as we can 
and maybe even moving in that direction.
    And I understand that the Bank launched a reinsurance pilot 
program that shares an additional $1 billion in loss coverage 
for the Bank's aircraft financing transactions. I would like to 
see us do more of that type of thing. At a minimum, we should 
at least make that program permanent.
    Question, Ms. Dempsey, why is it important for us to have--
or do you feel that we should be including the private sector 
as much as we can, and why is it important to share the risk?
    Ms. Dempsey. I agree with that. Ex-Im is supposed to be the 
lender of last resort. If commercial banks can participate, if 
they can provide these tools, I think everybody on this panel--
I hope--would agree with me that it would be easier to go to 
your commercial bank. Certainly, our small businesses would 
prefer to go to their community bank where they know the banker 
to get those types of tools. The problem is, as we have 
discussed, there are numerous areas where commercial banks are 
prevented.
    I, too, think the reinsurance issue is an interesting one, 
and we support that activity, but what we are already seeing is 
that commercial banks are limited by their bank regulators, and 
insurers are limited by their regulators in terms of the risk 
and exposure that they can accomplish.
    Reinsurance cannot take the place of the Ex-Im Bank. There 
are certain markets where you cannot use reinsurance. Think 
China, think Angola, think Russia. It can't be used for project 
finance. And so, we need to be very clear that there are these 
tools where Ex-Im can use more to diversify its risk, although, 
again, its default rate is extraordinarily low. It is 0.25 
percent. It got a bit higher without the quorum when it wasn't 
doing these large deals because, in fact, these large deals 
are--have been shown to be less risky.
    Mr. Loudermilk. Okay. Thank you.
    And a quick follow-up on that is, I have some manufacturers 
back in my district that feel that--and service providers--
sometimes Ex-Im, because of just the nature of it, can provide 
an unfair competitive advantage to some other businesses, 
especially when it comes to selling overseas. And so, I am 
bringing that up as some of the issues that we are hearing from 
different folks.
    On another aspect--and, again, I am open, I am listening, I 
do see the need to do this. And I just want to make sure that 
we have cleared some of the hurdles that we have had in the 
past.
    Last Congress, when we were working on reauthorization, the 
Inspector General had a number of active investigations going 
on regarding corruption and fraud at the Bank. The IG's most 
recent semiannual report to Congress in March said that there 
were 25 open investigations of fraud relating to export credit, 
insurance, loan guarantees, and others.
    Mr. Hinson, have these been--can you answer, have these 
been resolved or what is the status of those? Are you aware of 
these or--
    Mr. Hinson. I am not aware of those.
    Mr. Loudermilk. Is anyone on the panel aware?
    Ms. Dempsey. I am not aware of the specifics, but of 
course, the chief ethics officer was just appointed last week 
now that we have the quorum. I was talking to Chairman Reed 
just last week. I know there is a lot of interest and focus on 
making sure that the Bank is following the most ethical 
standards.
    Mr. Loudermilk. Okay.
    Ms. Dempsey. And on the point about favoring particular 
industries, part of the 2015 reform was to prohibit exactly 
that type of discrimination. We agree, and we would urge the 
Congress not to move forward with any concentration caps that 
would, in fact, discriminate.
    Mr. Loudermilk. Okay. Thank you all for what you are doing, 
and I hope we can get to a point that this would be a good 
reauthorization for all of us.
    I yield back.
    Chairwoman Waters. Thank you very much.
    I would like to thank our distinguished witnesses for their 
testimony today.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    This hearing is adjourned.
    [Whereupon, at 1:12 p.m., the hearing was adjourned.]

                            A P P E N D I X



                              June 4, 2019
                              
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