    [Senate Hearing 116-73]
    [From the U.S. Government Publishing Office]

                                                             S. Hrg. 116-73

     OVERSIGHT AND REAUTHORIZATION OF THE EXPORT	IMPORT BANK OF THE UNITED
                                     STATES

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

                                    HEARING

                                   before the

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

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 FIRST SESSION

                                       ON

       EXAMINING WHAT CHANGES SHOULD BE CONSIDERED TO PROMOTE SMALL- AND
     MEDIUM-SIZED BUSINESSES, WHILE CONTINUING TO ENSURE THAT ANY RISK TO
                        AMERICAN TAXPAYERS IS MINIMIZED

                                   __________

                                 JUNE 27, 2019

                                   __________

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

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                    Available at: https: //www.govinfo.gov /

                                ______

                 U.S. GOVERNMENT PUBLISHING OFFICE
     37-922 PDF          WASHINGTON : 2019

                COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                          MIKE CRAPO, Idaho, Chairman

    RICHARD C. SHELBY, Alabama           SHERROD BROWN, Ohio
    PATRICK J. TOOMEY, Pennsylvania      JACK REED, Rhode Island
    TIM SCOTT, South Carolina            ROBERT MENENDEZ, New Jersey
    BEN SASSE, Nebraska                  JON TESTER, Montana
    TOM COTTON, Arkansas                 MARK R. WARNER, Virginia
    MIKE ROUNDS, South Dakota            ELIZABETH WARREN, Massachusetts
    DAVID PERDUE, Georgia                BRIAN SCHATZ, Hawaii
    THOM TILLIS, North Carolina          CHRIS VAN HOLLEN, Maryland
    JOHN KENNEDY, Louisiana              CATHERINE CORTEZ MASTO, Nevada
    MARTHA MCSALLY, Arizona              DOUG JONES, Alabama
    JERRY MORAN, Kansas                  TINA SMITH, Minnesota
    KEVIN CRAMER, North Dakota           KYRSTEN SINEMA, Arizona

                         Gregg Richard, Staff Director

                    Laura Swanson, Democratic Staff Director

                         Mike Quickel, Policy Director

              Homer Carlisle, Democratic Professional Staff Member

                          Cameron Ricker, Chief Clerk

                          Shelvin Simmons, IT Director

                        Charles J. Moffat, Hearing Clerk

                              Jim Crowell, Editor

                                      (ii)

                                C O N T E N T S

                                  ----------

                            THURSDAY, JUNE 27, 2019

                                                                       Page

    Opening statement of Chairman Crapo..............................     1
        Prepared statement...........................................    28

    Opening statements, comments, or prepared statements of:
        Senator Brown................................................     2
            Prepared statement.......................................    28

                                    WITNESS

    Kimberly Reed, President and Chairman of the Board of Directors,
      Export-Import Bank of the United States........................     4
        Prepared statement...........................................    30
        Responses to written questions of:
            Senator Scott............................................    38
            Senator Sasse............................................    41
            Senator Warren...........................................    45
            Senator Cortez Masto.....................................    51

                  Additional Material Supplied for the Record

    Statement of the Bankers Association for Finance and Trade.......    65
    Statement of the Reinsurance Association of America..............    67

                                     (iii)

     OVERSIGHT AND REAUTHORIZATION OF THE EXPORT-IMPORT BANK OF THE UNITED
                                     STATES

                                  ----------

                            THURSDAY, JUNE 27, 2019

                                           U.S. Senate,
              Committee on Banking, Housing, and Urban Affairs,
                                                        Washington, DC.
        The Committee met at 10:02 a.m., in room SD-538, Dirksen
    Senate Office Building, Hon. Mike Crapo, Chairman of the
    Committee, presiding.

                OPENING STATEMENT OF CHAIRMAN MIKE CRAPO

        Chairman Crapo. The Committee will come to order.
        Today the Committee turns its focus to the Export-Import
    Bank of the United States.
        Just last month, the Senate confirmed Kimberly Reed to be
    President and Chairman of the Export-Import Bank, along with
    board members Spencer Bachus and Judith Pryor.
        The nominations of Claudia Slacik and Paul Shmotolokha to
    be board members have been approved by this Committee and are
    pending before the full Senate floor.
        United States exporters are able to compete very
    effectively in international markets on the basis of price and
    quality. However, when aggressive foreign Governments provide
    subsidies as a matter of policy or general practice to their
    exporters, U.S. exporters are placed at a competitive
    disadvantage purely because of such financing arrangements.
        According to the 2017 EXIM Bank Competitiveness Report,
    Chinese export credit agencies provided more medium- and long-
    term investment support than the rest of the world combined.
        As President Trump and other senior officials in his
    Administration have noted, a fully functioning Export-Import
    Bank has the ability to provide financing and level the playing
    field in response to Governments like China, which can provide
    almost limitless subsidies from its treasury and place the U.S.
    exporters at a disadvantage.
        Director of the National Economic Council Larry Kudlow
    recently noted that the EXIM Bank is vitally necessary in the
    current trade environment in order for the United States to
    compete and succeed in international markets, calling it ``a
    financial tool and a national security weapon.''
        During her confirmation process, Chairman Reed committed to
    focusing on strong standards of conduct, increased
    transparency, sound risk management practices, and eliminating
    waste, fraud, and abuse at the Bank.
        Now that she has been confirmed, I look forward to hearing
    about the work that she is doing and that which still needs to
    be done to process the backlog of pending export deals and how
    the reforms that Congress initiated in the 2015 reauthorization
    are being implemented.
        In addition, we will begin the debate about what changes,
    if any, should be included in the reauthorization for the EXIM
    Bank's charter, which is set to expire at the end of September.
        We have been seeking feedback from stakeholders, our
    colleagues, and the Administration as part of the
    reauthorization process.
        In the 2006 reauthorization, I worked on a number of
    provisions to make sure that small business communities have
    advocates to help address their needs and concerns.
        However, the Bank historically has had trouble meeting its
    20 percent small business mandate in terms of authorizations,
    as opposed to sheer number of transactions.
        I look forward to discussing what changes should be
    considered to promote small- and medium-sized businesses, while
    continuing to ensure that any risk to American taxpayers is
    minimized.
        Despite only being on the job a short time, Chairman Reed's
    perspective is very valuable to this process, and she will be a
    critical partner throughout the reauthorization.
        Senator Brown.

               OPENING STATEMENT OF SENATOR SHERROD BROWN

        Senator Brown. Thank you, Mr. Chairman, for calling this
    important hearing.
        Welcome. I am so glad you are here for a whole lot of
    reasons, so thank you.
        I want to thank the Chairman for his work to advance EXIM's
    board nominees. We have restored, finally, EXIM's board quorum,
    but the full Senate, as the Chairman said, needs to consider
    the nominations of Paul Shmotolokha and Claudia Slacik so they
    can provide their expertise as the bank resumes full
    operations.
        Today we will hear from the bank's new President, Kimberly
    Reed, been at work for 7 weeks. She has hit the ground--I do
    not use cliches, so I would say she has hit the ground
    sprinting. Thank you for that, traveling the world promoting
    U.S. economic interests.
        I am grateful that the full Senate confirmed Ms. Reed last
    month. Every single Democrat in the Senate voted for you, and I
    could see the gratitude as each of us arrived and you walked up
    here. Thank you for that.
        She was confirmed 79-17. I especially want to call out
    Senator Rounds--he could not be here today for this hearing,
    but for his support and work on all that he has done on
    reauthorizing and getting these nominees through.
        These overwhelming votes make it clear, we have strong
    bipartisan support for the bank's mission of helping American
    businesses and American workers compete. Look around the world.
    There are now 109--109--export credit agencies and credit
    programs that support foreign, non-U.S. manufacturers. Every
    other major Nation has been aggressively helping their
    companies win sales and the jobs that come with them, jobs that
    could be in the United States if EXIM had been functioning the
    past 4 years. And it was not functioning because of this
    President and this Vice President and this Republican Majority
    not wanting to move forward.
        China has multiple, massive export credit agencies. In
    2017, China's two official export credit agencies provided one-
    third of the world's medium- and long-term export credit, and
    their broader medium- and long-term investment support for
    Chinese exports is greater than the rest of the world combined.
        Chinese export credit agency activity is key to their plans
    to sell Chinese-made infrastructure throughout Asia, Africa,
    and Europe, under their Belt and Road Initiative. Senators or
    anyone else who travels in any of those continents see the
    Chinese presence. China has provided more than $500 billion in
    insurance to Belt and Road projects just in the last 5 or 6
    years.
        China is far from alone. The term ``weaponization'' is used
    to describe what European and Asian Nations are doing to make
    their export credit agencies more aggressive, more flexible,
    and more proactive. If Congress is serious about ensuring
    American businesses and workers stay competitive, we must have
    a robust export credit agency.
        We all know what happened here in Congress. In 2015, during
    the last debate on reauthorizing the bank, a small group of
    opponents supported by far-right special interests tried to
    kill the bank altogether. When that did not work--I thank
    Chairman Crapo for his work on this. When that did not work,
    they decided to block all nominees to the bank's board and
    block all transactions greater than $10 million dollars,
    essentially straitjacketing, handcuffing American companies and
    American workers.
        That had real consequences for our businesses and for our
    workers. The amount of jobs EXIM supported dropped from--think
    about this--164,000 to just 34,000 while the bank was hobbled.
    I had dozens of Ohio companies--they were not Boeing. They were
    not the large companies. They were supply chain companies, many
    of whom I had never heard of--dozens of Ohio companies come to
    me, representing thousands and thousands of jobs that could not
    deliver because of our inability to pass this. That obstruction
    hurt Ohio manufacturers. Ohio companies exported $400 million a
    year in products using EXIM credit assistance. That amount has
    been cut roughly in half.
        We know, Ms. Reed, the work that you have to do to make up
    for that.
        We can turn the page. We need to provide the Bank a long-
    term reauthorization of 7 years or longer, as the House has
    done.
        American exporters, particularly small businesses, need a
    reliable partner. EXIM steps in when private banks and insurers
    cannot assist or complete a transaction. If Congress lets EXIM
    lapse again, the greatest pain will be felt not by Boeing and
    the big guys, but by small businesses, including the small
    businesses that form the supply chain for these larger
    companies.
        Last year, EXIM initiated $2.2 billion in authorizations
    that support small businesses. Three-hundred-and-fifteen small
    business exporters used EXIM small business products for the
    first time.
        Congress must also increase the bank's authorization limit
    or exposure cap, which is currently set at $135 billion. EXIM
    must be ready to assist new transactions.
        Finally, Mr. Chairman, a renewed bank must be dedicated to
    transparency and accountability. EXIM has carefully managed
    risks associated with its transactions, as we see from its
    extremely low default rate.
        The bank must continue to be vigilant in monitoring risks
    and preventing fraud. The bank must also be vigorous in
    complying with requirements set out for the bank to monitor and
    mitigate environmental and social impacts of projects that
    receive financing.
        President Reed and the new board have taken the long-
    overdue steps of finishing the implementation of reforms from
    the 2015 export reauthorization. Thank you for that. I look
    forward, Madam President, to hearing about that.
        If President Trump and Republicans in Congress are serious
    about helping American manufacturers after years of
    obstruction, they need to work with us to reauthorize the bank
    before the end of September 30th.
        I would urge my colleagues to visit some of the businesses
    in Ohio or in Montana or Rhode Island or Minnesota or Georgia
    or Pennsylvania or Idaho and see the work around the country
    that EXIM is doing.
        We have a choice. Do we care about these businesses? Do we
    want to promote American manufacturing and American workers, or
    do you care more about extreme special interests? The choice is
    ours.
        Thank you.
        Chairman Crapo. Thank you.
        As I indicated, we are joined today by the Honorable
    Kimberly A. Reed, President and Chairman of the Export-Import
    Bank of the United States.
        I thank you for joining the Committee this morning, and,
    Chairman Reed, you may proceed.

    STATEMENT OF KIMBERLY REED, PRESIDENT AND CHAIRMAN OF THE BOARD
         OF DIRECTORS, EXPORT-IMPORT BANK OF THE UNITED STATES

        Ms. Reed. Good morning. Chairman Crapo, Ranking Member
    Brown, Members of the Committee, thank you for inviting me to
    testify exactly 7 weeks after I was sworn in as President and
    Chairman of the Export-Import Bank of the United States.
        This is my third time to come before this Committee. I have
    taken our conversations over the past 2 years to heart. Under
    my leadership, it is a new day for EXIM. I am committed to
    working with you to transform this agency.
        Let me set the stage by sharing my priorities that I
    relayed to my nearly 400 dedicated EXIM colleagues on day one.
    I am committed to fully reopening, reforming, reauthorizing
    EXIM, and providing positive results for America's workers and
    businesses while protecting taxpayers, so that we can better
    compete with countries like China.
        As I have testified, I am prioritizing small business.
    Since my first day, we have approved 260 small business
    authorizations, and again, that was just 49 days ago. We will
    build on this success, such as with agricultural exports in
    collaboration with the U.S. Department of Agriculture.
        President Trump understands that EXIM supports his agenda
    of creating jobs and bringing manufacturing back to the U.S.A.
    He asked me to fight to give American workers a level playing
    field and to expand foreign markets for American-made goods.
        He also knows that EXIM advances U.S. strategic interests
    around the world. It is a tool in our economic and national
    security toolbox at a time when global competition has never
    been more intense.
        Today EXIM offers a full range of financing but only as the
    lender of last resort. EXIM is self-financing because of the
    fees that interests it charges to its international customers.
        After covering costs, EXIM has been able to send nearly $10
    billion to the U.S. Treasury since 1992. EXIM has had an
    average default rate of less than .5 percent over the past
    decade because of the diligence that goes into the review and
    structuring of these transactions.
        With nearly $40 billion in the pipeline and more
    applications on the way, EXIM staff estimate that $20 billion
    in transactions will be presented to the board for
    consideration in our first year of full functionality, but we
    must be responsible and protect taxpayers. That is why I am
    focused on reform.
        During my confirmation hearing here, I committed to
    increased transparency, strengthen taxpayer protections,
    improve protection for domestic companies, ensure EXIM does not
    crowd out private financing options, crackdown on bad actors,
    and work to the reliance on export credit agencies globally.
        Under my leadership, we have made progress on these efforts
    over the past 49 days. Immediately after being sworn in, I went
    to China for the annual G12 Export Credit Agency meeting. I
    made clear to my foreign counterparts, my commitment to
    boosting transparency, leveling the playing field, and reducing
    the reliance on financing by export agencies globally.
        As an outcome, I secured support for the United States to
    host the 2020 G12 here in Washington so that we can make our
    case more directly, and we will be in a lot of discussions with
    our G12 colleagues between now and then.
        We also held our first board meeting at EXIM in nearly 4
    years and satisfied the outstanding 2015 reauthorization
    reforms, including approving a chief risk officer and a chief
    ethics officer, and I have begun discussions to strengthen our
    additionality and economic impact procedures.
        I also value diverse external feedback and advice. As such,
    we are reestablishing and seeking nominations for our Advisory
    and our Sub-Saharan Africa Advisory Committees.
        This is just a glimpse of all that has been happening. One
    of the major challenges facing our U.S. exporters will be
    highlighted in EXIM's soon-to-be-released Competitiveness
    Report, which examines how deeply and widely foreign export
    financing has changed over the past decade.
        Competition is fierce. There are now, as you will see in
    the report that you will receive tomorrow, 112 export credit
    agencies in other countries, up from 95 when I testified before
    you in 2017.
        Today China is the largest provider of official export
    credit, providing an estimated $39 billion in medium- and long-
    term export credit financing, more than the next top three
    export credit agencies combined.
        The Administration looks forward to working with this
    Committee and Congress to reauthorize EXIM so that the United
    States is fully able to act as a market-oriented counterweight
    to China and other Nations that use export and trade-related
    financing in increasingly strategic and predatory ways, with
    long-term consequences to U.S. economic and national security.
        As I previously testified, the United States will not
    unilaterally disarm.
        In closing, I again want to thank President Trump for his
    support. The President told me that the world needs to--and I
    quote--see more products stamped with those four beautiful
    words ``Made in the U.S.A.'', close quote. America's workers
    need Congress to reauthorize EXIM to help make this happen.
        I look forward to your questions.
        Chairman Crapo. Thank you very much, Chairman Reed.
        As we already both mentioned, we have heard a lot about
    China. We have heard from the President, members of his senior
    team, and from many in Congress about the opportunity to make
    better use of EXIM to combat actions by China that are
    preventing U.S. businesses form being able to compete on a
    level playing field.
        Many see the reauthorization of the bank as an opportunity
    for Congress to strengthen EXIM's role. You discussed some
    aspects of this in your testimony, and I just want you to
    further describe, if you will, how you see--what role you see
    EXIM being able to play in helping U.S. businesses level this
    playing field.
        Ms. Reed. Thank you.
        It has been a very intense 49 days but a great 49 days, and
    I again want to thank this Committee for your vote in support
    of me and the full Senate.
        We have had a lot of discussions internally, and I have had
    a lot of discussions externally. I spent time with 20 financial
    institutions, back-to-back half-hour meetings, where I heard
    over and over again, the U.S. is back in business, but the
    paradigm has changed. And that paradigm includes, as we know,
    China.
        The world is looking for the U.S. to be part of what is
    happening with now, and so certainty through reauthorization is
    the number one key thing that we can do to ensure that we are
    having U.S. businesses of all sizes--and I know there are
    constituents in every single State who benefit from EXIM--so
    that they can make products and provide services that go
    everywhere in the world where there is a need. And, again, EXIM
    provides a very special tool in that tool box when there is a
    gap of financing. We want to see the world buying U.S. products
    not only for economic security but also for national security.
        And China is there right now, and I know many of you have
    traveled all over there world. They are everywhere, and we do
    not want to fall behind anymore, so we need to be there.
        Chairman Crapo. Thank you.
        Again, you touched on this as well in your full submitted
    testimony, but during your nomination process, you suggested to
    this Committee that your priorities included providing greater
    transparency and accountability as well as other reforms at the
    bank. Can you update us on your agenda in this area, including
    which matters you believe you can accomplish without further
    congressional direction and which agenda items Congress may
    need to first address in reauthorization before you are able to
    proceed?
        Ms. Reed. Absolutely. I am committed to transparency. As
    you know, I worked on Capitol Hill for 7 years doing oversight
    and reform of the Federal agencies, and so from day one, as
    Chairman now, I am meeting with staff and learning what we are
    doing. It is a lot of work to come up to speed very quickly,
    but I am constantly asking questions internally about what more
    we can be doing to be transparent and ensure that taxpayers are
    being protected.
        So I have announced that we are going to be reviewing two
    key provisions--our economic impact analyses and other analyses
    that look at competition from around the world. We want to
    ensure that we are that addition; we fill that special gap when
    there is a need. And there are things we can do to help make
    some of these documents that we receive internally perhaps more
    public.
        So, as a thoughtful process, I want to be smart about it,
    but we also want to protect the taxpayers. So I will be looking
    for input, and I will also work with you. And we will be coming
    back to you with more on that, but I know that those are key
    things.
        I also want to say we are looking at what those 113 other
    export credit agencies are doing, and I want to point out a
    fine fellow here, Jim Cruse. He has been at the Export-Import
    Bank for 49 years. He started and is the godfather of ECA
    Competitiveness Report that you will be receiving tomorrow, and
    we are the only country that even begins to look at what is
    happening around the world through a report like this.
        So while we want to be more transparent, we also do not
    want to hurt our U.S. businesses by revealing information that
    is proprietary. So, again, I look forward to working with you.
        And our Chief Ethics Officer and our Chief Risk Officer are
    now confirmed, appointed, at the helm, and we are working with
    them.
        Chairman Crapo. All right. Thank you, and we look forward
    to input from you as we move forward in the reauthorization as
    to whatever you feel we may need to statutorily include in
    assisting in this process.
        Senator Brown.
        Senator Brown. Thank you.
        President Reed--I hesitate to say ``President Reed'' rather
    than ``Chair Reed'' because, if I do, Jack might show up at the
    Presidential debates tonight.
        [Laughter.]
        Senator Brown. Madam Chair, nice to have--oh, the Chairman,
    he kind of likes that too, but anyway, I will stick to you, so
    thank you.
        Mr. Cruse, thank you for your decades of service to our
    Country and to American jobs. Thank you so much.
        You talked in your confirmation about your familiarity with
    small- and medium-sized businesses in places like your home
    State, West Virginia; mine, Ohio; bordering each other. If you
    were a small business owner who relies on EXIM financing or
    small businesses that sells components to a larger exporter who
    needs EXIM for the deal, what happens if Congress lets EXIM's
    charter lapse at the end of September? How immediately would
    small businesses be hurt, and how many small businesses would
    be harmed?
        Ms. Reed. I am committed to small business. One of my first
    meetings that I held at EXIM was a roundtable with small
    businesses from West Virginia, Maryland, and Pennsylvania,
    because I wanted to hear firsthand the value that we provided
    to them, and thousands of small businesses, not only directly
    through them, making widgets and providing services to foreign
    countries, but also through the supply chain benefit from EXIM.
        Without a quorum, EXIM was able to approve the $10-million-
    and-under deals. If EXIM expires, it is pencils down on
    September 30th for every business in our Country.
        Senator Brown. And that will have a very tangible impact if
    we do not do our jobs?
        Ms. Reed. Absolutely.
        Senator Brown. The House Financial Services Committee, as
    you know, is continuing to work on a 7-year reauthorization.
    The Administration has not made its own proposal, but does a
    longer reauthorization, 7 years, 10 years, is that a better
    climate? I mean, I understand there is more certainty. Is that
    a better climate for companies to effectively use EXIM
    financing?
        Ms. Reed. I heard loud and clear, the world is looking for
    certainty. So a long reauthorization would be a good thing.
        Senator Brown. OK, thanks.
        The House is also looking at changes in the charter to
    allow for the U.S. Trade Rep, Secretary of the Treasury, and
    Secretary of Commerce to serve as temporary voting board
    members when the bank's board lacks a quorum. I would assume
    you do not want to comment on specific legislative proposals,
    but would you agree that if the bank had maintained that quorum
    for the past 4 years, EXIM could have supported an additional,
    up to, 130,000 jobs each year?
        Ms. Reed. I think a quorum is very important.
        Senator Brown. That was not my question. I know you think
    it is important.
        Do you think if we had had that quorum for the last 4 years
    that we would have seen at least 130,000 jobs each of those
    years?
        Ms. Reed. I assume, given what is in the pipeline right
    now, that some of those transactions would have been approved
    and supporting U.S. jobs.
        I also know that we lost $20 billion in applications over
    the past 4 years in the workers associated with those because
    the bank has been not fully functional.
        Senator Brown. And if it was that number, that multiple
    billion dollars, it certainly would have been tens of thousands
    of jobs, correct?
        Ms. Reed. Yes, sir.
        Senator Brown. I am all for stopping Chinese State-owned
    enterprises. I made it clear dismantling them should be one of
    the Administration's primary objectives.
        In the China talks, if we really want to get tough on
    Chinese State-owned enterprises, I would urge my colleagues and
    urge the Senate to look at my bill with Chairman Grassley, the
    Foreign Investment Review Act. That bill would screen foreign
    investment in the U.S., particularly Chinese State-owned
    enterprise investment to make sure it is good for our economy
    long term.
        Do you have any thoughts, Madam Chair, about instances in
    which we should limit EXIM financing, depending on who the
    purchaser is?
        Ms. Reed. Thank you, sir.
        I know that the House and the Senate are looking at
    legislation right now, and it can be contentious discussion.
    And so I am going to leave that to the legislative branch.
        Senator Brown. OK, fair enough.
        Last question. What does EXIM need to do? What changes
    should Congress consider to ensure that EXIM is able to match
    financing offered by other export credit programs around the
    world?
        Ms. Reed. Right now, we have our charter that allows us to
    do that.
        Senator Brown. You do not need additional language?
        Ms. Reed. I believe that the charter allows for us to do
    that right now.
        Senator Brown [presiding]. OK, thank you.
        Senator Toomey.
        Senator Toomey. Thank you very much, and congratulations,
    Madam President. Thanks for coming by my office yesterday. I
    enjoyed our discussion. More importantly, I appreciate your
    continued public commitment to the reforms that we discussed
    and that you committed to in your confirmation hearings.
        I fully recognize that given the very brief period that you
    have been in office thus far, you would not have had a chance
    to implement these yet, but I do want to underscore why I
    continue to believe that these are important and why I look
    forward to working with you on these reforms.
        One of them that is in your testimony--and you alluded to
    it during your comments--is the fact that EXIM financing is not
    supposed to crowd out private financing and in fact is supposed
    to be the lender of last resort, and I think that is well
    established. That is the way it is supposed to work.
        So, interestingly, we have a kind of controlled experiment,
    I think, in EXIM's role in whether or not it had been a lender
    of last resort and what the consequences might be for a lack of
    EXIM financing because we just went through several years when
    EXIM was not able to do large transactions.
        Specifically, if you think about it, you would assume that
    EXIM's largest customers would presumably run into some
    headwinds in the sudden absence of EXIM financing.
        In 2014, the last year for which EXIM was fully functional,
    Boeing accounted for about 40 percent of EXIM's book of
    business by dollar value, and as we all know, the next year,
    EXIM basically went out of business. The charter lapsed, and
    then even after it was reauthorized, EXIM lacked a quorum, so
    could not approve a single financing of an aircraft.
        So it begs the question: What was the result? How badly did
    EXIM's largest customer suffer when it was no longer able to
    obtain any EXIM financing?
        Well, the answer is, of course, they thrived. In September
    of 2018--but this is before the 737 MAX design flaws were
    discovered--the Wall Street Journal ran an article. The
    headline was ``Boeing Factory Unfinished 737s Pile Up'', end
    quote. What was the big problem that caused these jets to be
    piling up? The problem was suppliers could not keep up with the
    record pace at which Boeing was selling their planes, without a
    dime of EXIM financing for the buyers.
        Or think about Boeing's January 2019 press release that
    announced that it had set a new annual record for deliveries in
    2018, a year in which there was not a time of EXIM financing
    for buyers of Boeing jets.
        And by the way, the 2018 record exceeded the previous
    record, which was 2017, another year in which there was not a
    dime available from EXIM financing.
        So what it suggests to me and what I just want to
    underscore, Madam President, is it does not look to me like
    EXIM was actually the lender of last resort. It looks to me
    like they may have even been the lender of first resort, and in
    fact, when EXIM was not functioning in this marketplace,
    private creditors came along and financed the acquisition of
    Boeing jets all around the world, so much so that Boeing set
    all-time records in the volume of their sales.
        So I would just ask you to keep that in mind when you think
    about the obligation for EXIM to serve only as a lender of last
    resort.
        The other point I would make, as we all know, China does
    not have a competitor to Boeing. Really, Airbus is the only
    competitor to Boeing in the wide-bodied jet category, and so it
    seems to me that this could be a great moment to prioritize
    another obligation that is in statute with respect to EXIM. And
    that is to work toward a mutual and reciprocal phasing out of
    these credit export agencies that distort markets and risk
    taxpayer money.
        Here we have only one other competitor. It is not China; it
    is Airbus. And their sales are strong. Boeing sales have been
    through the roof. It strikes me as a good moment to pursue a
    mutual reduction in reliance on export financing at least for
    wide-bodied jets, and I am just wondering if you have a
    reaction to that.
        Ms. Reed. It is a new day at Export-Import Bank under my
    leadership. As I mentioned, we are going to be taking a look at
    the economic impact and additionality tests.
        I will also say, though, that I am not going to comment on
    specific companies, and those companies can comment for
    themselves.
        My job is to support our mission, which is U.S. jobs, and
    do all we can to ensure that we have a level playing field and
    can compete all around the world.
        Senator Toomey. If I could just--I am going to run out of
    time, so I want to make one other point. There is another
    element to reform that we have talked about, and that is to
    ensure that when we finance an overseas purchaser that we not
    unwittingly or unintentionally facilitate a competitor to a
    domestic industry.
        So case in point, I believe that it was announced last year
    that EXIM may have been considering, may still be considering
    financing a very large natural gas liquefaction and export
    facility in Mozambique. All kinds of problems in Mozambique,
    financial, corruption, and otherwise, which I am sure you will
    consider.
        But I would ask you to also consider the fact that we have
    become--Pennsylvania and the United States recently have become
    really significant natural gas exporters for the first time,
    and this is a new market for us. We are thriving in this
    market. We have virtually unlimited supply of natural gas, and
    I would hope that you would seriously consider the impact on
    this young, new, but tremendously--industry with tremendous
    potential as we consider whether to finance a competitor on a
    very large-scale project in Mozambique.
        Ms. Reed. Thank you.
        Chairman Crapo [presiding]. Senator Reed.
        Senator Reed. Well, thank you very much, Mr. Chairman, and
    welcome, Chairman Reed. That has a nice ring to it, by the way.
        [Laughter.]
        Senator Reed. The topic has been broached a number of
    times; that is, we are in a major international competition
    with the Chinese, their Belt and Road projects.
        I was in Djibouti. That is where they have their
    significant investments, an actual military post there, but
    also throughout the coast of Africa and other ports, and the
    question I think we have to come up with is how EXIM Bank will
    be part of an overall strategy to help U.S. companies compete
    not just in China, but with Chinese interests around the globe.
    And your comments would be appreciated.
        Ms. Reed. Absolutely. I have already had detailed
    conversations with my colleagues in the Administrations. We
    have two ex officio members of EXIM, USTR Representative
    Ambassador Lighthizer and Commerce Secretary Wilbur Ross. I
    have talked with them. I have talked with our Labor Secretary,
    Alex Acosta, and many others, including those in the White
    House.
        EXIM is a special tool in that toolbox, and we want to be
    there and offer this tool when it is needed.
        Ambassador Bolton, even before he began in this
    Administration, he wrote an op-ed in 2015 on the importance of
    EXIM and national security.
        So we are there. We are going to make ourselves be more
    known. The world is excited that we are back open for business,
    and American workers are too.
        Senator Reed. I think one of your comments suggests--and
    let me hone in on it--is the need for a national strategy, not
    just an EXIM strategy, but a national strategy which gives
    alternatives to these countries, particularly developing
    countries, to the Chinese, blandishments of easy loans under
    very vague terms.
        Again, I think you are, but let me for the record--you are
    pursuing or helping pursue this national strategy, and who
    might be the lead element in the strategy?
        Ms. Reed. Absolutely. I went to Africa, to South Africa.
    The President asked me to head his Presidential delegation to
    the inauguration of President Ramaphosa, and on that delegation
    trip were representatives from USAID, NSC, NEC, and I cannot
    tell you how honored I was to be on stage with presidents of
    Africa and heads of State and then have a roundtable discussion
    with our embassy staff there, with businesses, not only from
    South Africa, but Sub-Saharan Africa.
        And I have heard firsthand how important it is for us to
    get our products and services into Africa because China is
    there, and so we work with all of our Administration colleagues
    to make that happen. We will continue to do so. Economic
    security is national security.
        Senator Reed. I concur.
        One issue--and it was raised by several comments, including
    Senator Toomey's comments--is we are really very much
    interested in small business thriving. As Senator Toomey
    pointed out, big enterprises, if they are denied this, usually
    have alternative ways. What are you going to do proactively to
    get the word out to small businesses throughout the country in
    conjunction with this strategy of trying to be a competitor to
    China in the world market? Do you have an active plan to do
    that?
        Ms. Reed. We absolutely do, Senator, and I am so delighted
    that my fellow board members, Judith Pryor and Spencer Bachus,
    are here with us today. Spencer has been charged with getting
    out on small businesses, and he has many stories to already
    tell you.
        Judith used to work at OPIC, and she is so smart on
    interagency process and how we can be an effective tool in the
    world of development around the world.
        Small business is my priority. I come from rural West
    Virginia, Buckhannon, West Virginia. I have the endorsement of
    the Community Bankers Association. We want to work with small
    businesses. We are doing workshops. We are doing webcasts.
        I made a video that is going to be shared with the 3
    million members internationally of the Chamber of Commerce.
        We are getting the word out, and we will be doing more. I
    really want to come to your States, if you would have us there,
    to do workshops together.
        Senator Reed. You have an open invitation to come to
    Providence, and whatever you see, please buy it.
        [Laughter.]
        Ms. Reed. And we will export.
        Senator Reed. Yeah, export.
        And let me recognize my former colleague, Spencer Bachus.
    Thank you, Spencer.
        Thank you, Mr. Chairman.
        Chairman Crapo. Thank you.
        Senator Cotton.
        Senator Cotton. Thank you, Ms. Reed, for your appearance
    this morning.
        The EXIM Bank recently released a report on global export
    credit competition. That report said that since the financial
    crisis of the last decade that foreign versions, other
    countries' versions of the Export-Import Bank, other countries'
    export credit facilities are being weaponized--that was the
    term the report used--``weaponized'' to support those Nations'
    strategic interests. Do you believe that to be true?
        Ms. Reed. I do.
        Senator Cotton. Which countries are weaponizing their
    export credit facilities?
        Ms. Reed. China, many other countries. And I have met with
    a lot of my colleagues who head their export credit agencies
    around the world.
        The first act I did after being sworn in was get on a plane
    and go to China and attend our annual G12 meeting.
        You will receive tomorrow, as mandated by Congress, the
    update to that report. It is the 2019 Competitiveness Report,
    and you are going to see even more clearly what is going on in
    the world.
        Senator Cotton. Thank you for that. I look forward to
    seeing it.
        You said China twice and other countries twice as well. Is
    that because China's use of its export credit facilities dwarfs
    all other countries in this strategic global competition?
        Ms. Reed. Absolutely. China does more than the next three
    countries combined.
        Senator Cotton. What are the next three countries combined?
        Ms. Reed. Italy, Germany, and Korea.
        Senator Cotton. Well, they ought to do a little bit less,
    but they are all American allies. And one of them is a treaty
    ally--two of them are treaty allies as well.
        What can we do to counter China's use of its versions of
    EXIM through our own EXIM?
        Ms. Reed. We have a very specific role, and that is to fill
    the gap where there are financing needs, and so we are letting
    the world know that we are back open for business.
        The best thing we can do is reauthorize EXIM without a
    break, without a gap. I know that that happened during the 2015
    reauthorization. That is the most important thing we can do. I
    have had everyone tell me. The world is looking at us. The
    paradigm has changed, and we need to be there. So that is the
    most important thing we can do.
        Also, the U.S.A. makes the best goods in the world, and I
    would say that many countries prefer our goods over other
    goods. So let us be sure that our workers have a chance to
    compete in a level playing field with all the other workers and
    products around the world. I believe that U.S.A. will be number
    one when it comes to quality and everything else that we care
    about, especially national security.
        We want our things: power, energy, satellites. We want the
    world buying U.S.A.
        Senator Cotton. What is the dollar value of exports that
    EXIM underwrites into China, American exports into China?
        Ms. Reed. I do not have that number readily available, but
    I will tell you that our authorization is $135 billion, and
    Congress is looking to increase that cap.
        I also know that China is a very sensitive subject, and as
    we go through reauthorization, we will be pleased to work with
    you and the House of Representatives to find good solutions to
    what makes sense.
        China is everywhere through its Belt and Road Initiative,
    and we need to be there as well.
        Senator Cotton. Do you have any sense of scale of that $135
    billion cap, how much would be going into China? A lot? A
    little?
        Ms. Reed. Not a lot. But again----
        Senator Cotton. Would the main thing be the sale of
    aircraft and airline like Air China?
        Ms. Reed. And energy things.
        Senator Cotton. Energy things.
        Ms. Reed. And energy products.
        But also, I want to say our mission at EXIM is U.S. goods.
    Our charter does not allow us to discriminate. We look at the
    application that comes in, and we have a very good underwriting
    staff that evaluates everything. And Congress has set out the
    charter of what we can do and cannot do.
        There are only a very few reasons why we can deny
    applications right now. So we cannot pick winners and losers.
    We evaluate it on the merits, on the risk, and so if Congress
    wants to look at that again, we fully understand. I care about
    China, and I care about the United States.
        Senator Cotton. Air China is a State-supported firm in
    China. The energy business we do in China, do you know if those
    are State-supported or even State-owned firms as well?
        Ms. Reed. Some are, yes.
        Senator Cotton. OK.
        Ms. Reed. And again, this is a new day under my leadership.
        Senator Cotton. I do understand it is a new day, and I
    appreciate that. I think the President has brought some needed
    clarity about the risk China poses to this Country. I think
    that maybe we should think about EXIM in the future and the
    role it plays in supporting Chinese State-owned or State-
    supported industries. We live in a world of Nations. There are
    not that many of them, 220 or so. We do not have to write
    abstract rules to try to apply to every single one of them. We
    can write rules that apply to individual Nations that are
    allies, like Korea. We do not have to try to write
    individualized rules for every single country when we have
    China that poses a unique threat, given their size, their
    community, their military capabilities, and their leader's
    Stated intention.
        Thanks for your testimony this morning.
        Chairman Crapo. Thank you.
        Senator Menendez.
        Senator Menendez. Thank you.
        Madam President--I thought I was going to get to use that
    term more often, but in any event, I like to use it when I can.
    I was struck by some of the statistics in EXIM's 2017
    Competitiveness Report.
        As I think has been said here, China extended $36.3 billion
    in medium- and long-term export financing, while the United
    States provided just $0.2 billion. That is an enormous
    difference. And even smaller countries like Finland, Denmark,
    and Hungary provided several times more export financing than
    the EXIM Bank. As a matter of fact, I think we are listed 25th
    among all countries in this regard.
        You touched on this in your testimony, but can you discuss
    in more details the trends you are seeing in export credit
    finance globally?
        Ms. Reed. As you will see in the report that is going to be
    delivered to you in the morning, other countries are starting
    to weaponize their export credit agencies and being very
    aggressive.
        We have very rigorous tests, standards, unlike any other
    export credit agency in the world, and we look at a lot of
    things, such as U.S. content, U.S. flagships, things like that.
    Other countries pay no attention to things like this.
        So in the report that you receive tomorrow, you will see
    that the world is going like this, and we are just now back in
    business. We want to be good to American workers. I want to see
    very worker in our country having an opportunity, not being
    denied to them because EXIM is not there, and look forward to
    working with you on the reauthorization.
        Senator Menendez. What effects have those trends had on
    U.S. exporters and EXIM's ability to stay competitive?
        Ms. Reed. I am not going to comment on specific companies,
    but I have heard that some multinational companies actually are
    taking some of their supply chain to other countries that
    provide export credit agency financing. And those are jobs that
    our workers are losing out on.
        So, again, those companies can talk to you directly about
    hits, but that pains me.
        And the thing that keeps me up the most at night is the
    September 30th expiration of EXIM, and the best thing we can do
    is to provide that certainty.
        Senator Menendez. Let me ask you this. As we consider
    reauthorizing the bank, which I strongly support, how important
    is it that we increase the bank's lending cap so it can try to
    go more competitively with the global context in which we are
    in?
        Ms. Reed. I believe a modest increase would be welcome.
        Senator Menendez. What is the definition of ``modest''?
        Ms. Reed. I know that there are discussions in the House
    bill and here in the Senate, and those are appropriate.
        Senator Menendez. Have you had training at the State
    Department?
        Ms. Reed. No.
        Senator Menendez. Because that answer is very diplomatic.
        [Laughter.]
        Ms. Reed. I just know that the legislative branch is very
    important.
        Senator Menendez. Well, sometimes those of us who are
    looking for expertise are looking for insight. So it would be
    helpful. Maybe we will do that offline.
        Let me ask you this. You mentioned the challenge. I think
    sometimes people think about this as corporate largess, when in
    fact we create jobs here in America.
        In my home State of New Jersey, dozens of New Jersey
    businesses export to new markets around the world. One of those
    success stories is Lund's Fisheries in Cape May, New Jersey.
    They worked with EXIM to develop an export strategy for their
    American-made seafood products and get export credit insurance
    to mitigate the risk of selling overseas. As a result, they
    have been able to grow their international sales very
    significantly. They hire more American workers in New Jersey to
    do that, and they continue to use EXIM services to expand its
    global business.
        But everything they have just done to expand their global
    business and to create jobs in New Jersey is at risk if we fail
    to reauthorize the bank.
        So what would the impact be on your efforts to communicate
    to U.S. exporters and foreign buyers that EXIM is now, after
    years of waiting for a quorum, at the board, fully operational
    and ready to move forward with larger transactions if the date
    comes and goes and there is not a reauthorization?
        Ms. Reed. So, as I mentioned, on September 30th, it will be
    pencils down, and we will send notification, as we have now
    that we are back in business. We sent notification to all of
    those in the pipeline, but we will send notification, very
    sadly, to those who are in the pipeline that we are closed.
        Of course, if the lapse happens, we are going to do all we
    can to work with you. This is the priority of the President,
    and he has charged me with making sure we do not have a lapse.
    So I am going to be working with you, if there would be a
    lapse, to ensure that it is as short as possible.
        Senator Menendez. Well, I hope there is not a lapse
    because, at the end of the day, it is tough to generate an
    expectation, eliminate the expectation, generate the
    expectation again, and keep the competitive cycle together.
        Chairman Crapo. Senator McSally.
        Senator McSally. Thank you, Mr. Chairman.
        Arizona's economy is dependent on trade. According to
    statistics from the International Trade Administration, Arizona
    exported $20.9 billion worth of goods in 2017. Being a part of
    the border trade is our DNA, especially with Mexico, who is
    Arizona's largest trading partner. And the U.S. exports more
    goods and services to Mexico than any other country, other than
    Canada.
        How does the bank assist U.S. companies export their goods
    and services to Mexico specifically?
        Ms. Reed. Again, our charter does not allow us to
    discriminate. We base each application on our mission, which is
    U.S. jobs, and the merits of those applications. So we provide
    services where there is a unique demand, and as the lender of
    last resort, we have done business with Mexico and many other
    countries. And I know that the Congress is looking at our
    legislation.
        Again, our mission is U.S. jobs, so we want to be helpful
    and fill those gaps wherever we can because I want every worker
    to have the opportunity in our Country to create a good or a
    service that is acquired or purchased by a foreign purchaser.
        Senator McSally. Great. Thanks.
        Like many of my colleagues, I am concerned about China and
    their multiple forms of cheating. Not only do they have a
    similar mechanism with their Government-owned bank, but they
    have--which is unlike ours, obviously, but they also have
    Government-owned companies and Government subsidies that really
    do not allow for a level playing field for American companies.
        Particularly, I am interested if you have any perspective
    on how China is playing in Mexico and Central America, again,
    using their unfair practices in order to beat out American
    companies trading in those arenas.
        Ms. Reed. Absolutely. As I mentioned previously, we are
    sending the Congress our annual Competitiveness Report
    tomorrow. Because EXIM was not functional for the past few
    years at our full capacity, it actually does a look back of how
    the world of ECAs has changed over the past decade, and China
    is front and center in that report.
        And we know that China is at our doorstep, and we want to
    be sure that we are at our doorstep with our goods and our
    services as well.
        Senator McSally. Great. Thanks.
        According to the International Trade Administration, small-
    and medium-size businesses make up 87 percent of Arizona's
    goods that are exported but account for only 23 percent of the
    value of exported goods.
        I have met many small businesses--often the people have a
    thought that these are all about larger businesses--many small
    businesses that benefit from the opportunity to compete using
    EXIM products. And so what is the bank doing to increase small-
    and medium-size businesses that can actually take advantage of
    this?
        Ms. Reed. Absolutely. My top priority is small business,
    and so we have a great team at EXIM who are very energized.
        I know that we provided to Arizona between 2014 and 2018,
    $2 billion in EXIM financing, and $117 million of that was to
    small business.
        In my prior life, I was the director of the Community
    Development Financial Institutions Fund at the Treasury
    Department, and I spent a lot of time in Arizona. I did
    roundtables. I met with your chamber of commerce, did a lot of
    things, and I know that you are very engaged in Arizona right
    now as well through those opportunities.
        And so the best way that we can help our small businesses
    is to make them know about us but also make it easy for them,
    and so I hosted a roundtable at EXIM my first few days on the
    job, where we brought in small businesses and want to listen to
    them.
        So we look forward to reporting back to you, all the good
    things that we are going to be doing. Community banks are also
    an important part of that equation.
        Senator McSally. Absolutely. I think there are two elements
    to it. One is ensuring small banks understand and have access
    to your financing, but the other is those who are already using
    it, are there any initiatives to be able to increase their
    value and increase their opportunities for exports?
        Ms. Reed. I think that the world is huge. It is really
    huge, and we need to just really be working together.
        And that is why I also want to work with your offices and
    help equip offices as well as local governments. I am going to
    be making a video for the annual Conference of Mayors meeting
    to let them know about what we are doing as well.
        We are also going to revamp our website and have more
    materials available that way, but I look forward to your input
    as well of what we could be doing, and our staff do as well.
        Senator McSally. I look forward to following up with you.
    Thanks.
        Ms. Reed. Thank you.
        Senator McSally. Thank you, Mr. Chairman.
        Chairman Crapo. Senator Tester.
        Senator Tester. Thank you, Mr. Chairman and Ranking Member
    Brown.
        I want to thank you for being here, Kimberly. I appreciate
    your enthusiasm for the job.
        Let me just ask a few questions here. I do not have the
    answers, so I have got no political agenda behind them. I just
    need to know.
        You touched on this, but is your confirmed leadership team
    in place, or are there more people to be confirmed?
        Ms. Reed. We have three of the five board members,
    including myself, Judith Pryor and Spencer Bachus. We are
    confirmed. We have two that are waiting for final Senate votes,
    Claudia Slacik and Paul Shmotolokha.
        Senator Tester. OK. How about within the office itself? You
    talked about a couple people that----
        Ms. Reed. We approved our Chief Ethics Officer and our
    Chief Risk Officer.
        Senator Tester. Anybody else that you need, or are you
    fully staffed up?
        Ms. Reed. Oh, I am having to staff up from day one. I have
    been on the job 49 days. We have had----
        Senator Tester. I got you. I am just trying to figure out
    where we are at. Are you half staffed, three-quarters staffed,
    90 percent staffed?
        Ms. Reed. I am doing a full review of the organization. I
    have a brand-new Senior Advisor, brand-new Chief of Staff. My
    scheduler and my exec sec started this week.
        Senator Tester. I got you. You do not need to go down the
    list. Just tell me where you are at.
        Ms. Reed. Probably, as far as staffing, halfway there.
        Senator Tester. OK. When do you anticipate you will be
    fully staffed?
        Ms. Reed. The interview process is something that takes
    some time.
        Senator Tester. I got you. By the first of the year?
        Ms. Reed. Oh, absolutely.
        Senator Tester. OK. Maybe by the time that we vote on
    reauthorization?
        Ms. Reed. I am working hard.
        Senator Tester. OK, good.
        You talked about the default rate being at half-a-percent
    over the last 10 years; is that correct?
        Ms. Reed. Yes, yes.
        Senator Tester. OK. And so is that about what it was for
    the last year?
        Ms. Reed. It increased slightly to half-a-percent over the
    past year, and the reason for that is a lot of small
    businesses, they are the more risky deals that we do.
        Senator Tester. OK. Look, unless you got a team that is
    beyond my imagination, you are going to have some default.
        How much money is a half-a-percent? Is it a half percent of
    $135 billion or half percent of what?
        Ms. Reed. Right now, our book is $60 billion.
        Senator Tester. $60 billion.
        Can you tell me--because quite frankly, we have heard a lot
    about this, that this is being the bank for Boeing. Can you
    tell me how much does go to Boeing?
        Ms. Reed. So I know that a lot of Boeing financing that we
    have done over the years is rolling off our books.
        Senator Tester. Yeah.
        Ms. Reed. I am not going to speak to the exact numbers at
    this moment.
        Senator Tester. OK.
        Ms. Reed. We have staff that would be happy to give you
    those answers.
        Senator Tester. OK. I just think it is important for me to
    know from a transparency standpoint, which is one of your goals
    to achieve. We just need to know. I mean, that is all.
        And I get it is their business, but it is our business too
    because, truthfully, this is taxpayer dollars.
        You touched on it a little bit with Senator McSally, but do
    you have a plan to encourage more small businesses--and I will
    even take it a step further--more small businesses in rural
    America to be able to have access to you, or are you working on
    that plan?
        Ms. Reed. Absolutely. As I said in my testimony, we have
    announced applications are open for our Advisory Committee and
    our Sub-Saharan Africa Advisory Committee.
        Senator Tester. OK. That is good, but I will just point
    something out to you. We have this challenge with the VA hiring
    people in rural America, and they say, ``We just put it up on
    the USDA website.'' Nobody in Montana is going to look at a
    USDA website that wants to work there. So how are you
    approaching rural America?
        Ms. Reed. So I am from rural America. I am working with
    USDA because I care about our farmers and ranchers.
        Senator Tester. Sure, sure, sure. But how are you getting
    the word out? Because that is critical. I think you want to do
    it. I want to do it. The question is, How are we doing it?
        Ms. Reed. We are going to be doing it through our local
    chambers of commerce, through our local community banks,
    through working with your offices----
        Senator Tester. OK, good.
        Ms. Reed ----and any other suggestions you have.
        Senator Tester. I would love to know how many folks you are
    looking for and if it is a regional split on where you are
    looking for folks and all that stuff because we can help you,
    hopefully, get some good people there.
        Can I ask on ag exports? Because you mentioned that you are
    working on a project on ag exports.
        Ms. Reed. Yes.
        Senator Tester. Were those ag exports to China, or did I
    mishear you?
        Ms. Reed. So we are the backstop to USDA's Community Credit
    Corporation, where we fill those needed gaps, and so we are
    going to see----
        Senator Tester. Are you the backstop for the Commodity
    Credit Corporation?
        Ms. Reed. Yes.
        So they are only allowed to lend up a certain amount, and
    then we come in to fill that very targeted gap.
        Senator Tester. So let us touch on that just for a second.
    If you go away, CCC potentially goes away?
        Ms. Reed. No, no. We come in, and we help them when we can,
    when they are not fulfilling their role.
        Senator Tester. OK. That is fine.
        Look, I have got a bevy of other questions to ask you. I
    intend to vote for reauthorization.
        I want to just touch--and I am going to go, but Senator
    Menendez did touch on something that I think is really
    important for us to know. We do not know what the demand is. I
    do not know what the demand is. You know what the demand is. If
    it is not $135 billion, is it $100 billion? Is it $150 billion?
    Is it $200 billion? And you are not going to get what you ask
    for probably, but we would like to know, OK?
        Ms. Reed. OK. Thank you.
        Senator Tester. Thank you much.
        Ms. Reed. Thank you.
        Chairman Crapo. Senator Kennedy.
        Senator Kennedy. Thank you, Mr. Chairman.
        Thank you, President Reed.
        I understand that 25 percent of your beneficiaries are
    supposed to be small businesses; is that right?
        Ms. Reed. That is a target that was set in the last
    reauthorization charter.
        Senator Kennedy. What is the smallest business EXIM has
    ever helped?
        Ms. Reed. Well, I have met a pet food company recently that
    was pretty small.
        Senator Kennedy. How small?
        Ms. Reed. I believe it had less than 15 employees.
        Senator Kennedy. OK. And you helped them?
        Ms. Reed. Before my time, we had been providing them
    financing, other types of companies as well. I know there are a
    lot of small businesses, and I want to be helping every single
    one export, either directly or through the supply chain.
        Senator Kennedy. OK. Do you have a formal definition at
    EXIM of a small business?
        Ms. Reed. We follow SBA's definition.
        Senator Kennedy. OK. I want to talk to you a second about
    LNG. As you know, the President wants us to become independent,
    energy independent. He is correct, of course. One way of doing
    that is through the shale revolution, which produces a lot of
    natural gas. We cannot use all of the natural gas, so we
    liquefy it and sell it to our friends across the world.
        LNG plants are very expensive. To get the financing, you
    have got to generally sign contracts, take-or-pay contracts, up
    front with foreign buyers, and then take that to the bank to
    get financing. If you cannot get the contract, you are not
    going to get the financing, and the LNG plant will not be
    built.
        Do you support the LNG industry in America?
        Ms. Reed. I support all industries and all workers in our
    country, yes.
        Senator Kennedy. OK. Well, you are helping companies to the
    detriment of Louisiana and American companies. I mean, you are
    financing at EXIM, I think, the export of parts and equipment
    to places like Mozambique that are building LNG plants that
    compete with ours. How does that help America?
        Ms. Reed. Our mission at EXIM is U.S. jobs. We are not
    allowed to discriminate on applications that come in to us.
        So if an application comes in for U.S. workers to create
    U.S. equipment to be exported to a foreign country, we judge
    that on that application's merits.
        We also have, though, some economic tests that we do, and I
    announced in my testimony that we are going to be taking a hard
    look at that additionality and economic impact, those tests.
        I hear you loud and clear. I want to support every job that
    we can support in this country.
        Senator Kennedy. OK. I believe you do.
        Between Fiscal Years 15 and 17, EXIM pretty much came to a
    halt, did it not?
        Ms. Reed. For everything except under $10 million, yes.
        Senator Kennedy. Yeah. You did not have a quorum.
        Do you think the EXIM Bank is essential to America's export
    system?
        Ms. Reed. I do, sir. I know--again, it is a new day for me,
    and I want to work to transform the agency. But over the past
    few years, we now have $40 billion in applications, and again,
    this is to support U.S. jobs.
        Senator Kennedy. What do you think would happen to our
    exports if we did not have EXIM Bank?
        Ms. Reed. I have met with our competitor export creditor
    agencies around the world, and I had one tell me, ``We love
    when you are not in business because we get your deals and your
    jobs,'' so----
        Senator Kennedy. So do you think our exports would tank?
        Ms. Reed. I think that EXIM fills a very specific role, and
    I want----
        Senator Kennedy. Do you think our exports would tank?
        Ms. Reed. I do not think that they would tank, but I want
    to be sure we are doing all we can.
        Senator Kennedy. Do you think they would go down
    substantially?
        Ms. Reed. Excuse me?
        Senator Kennedy. Do you think they would go down
    substantially?
        Ms. Reed. I think that EXIM has a very specific role to
    play, and I want to help every worker get a job through us.
        Senator Kennedy. Well, how come--I am sorry to cut you off,
    Madam President, but I have run out of time here. If it is so
    essential, how come between Fiscal years 15 and 17, when you
    were pretty much shut down, nobody noticed? I mean, exports
    just rocked right along. I cannot see an impact.
        Ms. Reed. I attended the annual Export-Import Bank
    conference 2 years as a guest because I was not confirmed yet,
    and I heard loud and clear, the jobs that we are losing or have
    lost because we were not functional----
        Senator Kennedy. Yes, ma'am. And that is anecdotal.
        I am just asking you--you were not in operation from 17 to
    18. So a fair-minded person would say, ``OK. Let us go look and
    see what happened to exports.'' Nothing happened to them, ergo
    you may not be essential.
        Ms. Reed. I have heard loud and clear from around the world
    that we are essential. We are a very specific tool, and the
    President has charged me with making sure that we have this
    available.
        Again, we have received $40 billion worth of desired
    applications.
        Senator Kennedy. Oh, I know you have got plenty of people
    that want the money. I get that.
        Ms. Reed. And that supports U.S. jobs and U.S. workers.
        Senator Kennedy. Right
        OK. Thanks, Mr. Chairman.
        Chairman Crapo. Senator Van Hollen.
        Senator Van Hollen. Thank you, Mr. Chairman, and to the
    Ranking Member Brown.
        Madam President, thank you for being here.
        And I do believe the EXIM Bank plays an important role,
    especially in certain sectors of manufacturing and job creation
    in the United States, and so I support those efforts.
        As you probably know, yesterday the House Financial
    Services Committee postponed its markup of EXIM reauthorization
    because of concerns specifically with respect to China, and how
    EXIM could, if not properly structured, be used to subsidize
    some of China's State-owned enterprises.
        Last year, in this Committee, we modernized CFIUS, and my
    question to you is, Will you work with us during this
    reauthorization process to make sure that any EXIM
    reauthorization effort addresses the need to protect American
    national security interests, protect American competitiveness,
    and comply with both CFIUS and FIRRMA?
        Ms. Reed. Absolutely.
        Senator Van Hollen. Thank you.
        Now, there is one ongoing effort that I have great concern
    about with respect to civilian nuclear sales and the threat of
    nuclear proliferation, and that is specifically the current
    Administration's plans, their efforts to export civilian
    nuclear technology to Saudi Arabia, which in addition to all
    the human rights issues and the murder of Khashoggi has also
    expressed an interest in obtaining a nuclear weapon and has not
    implemented or indicated that it will implement the gold-
    standard safeguards against nuclear proliferation.
        Now, I know EXIM Bank does not have responsibility for
    negotiating the Section 123 Nuclear Cooperation Agreements, but
    my question to you is, has EXIM, to your knowledge, been
    involved in any discussions with U.S. Government agencies,
    officials, or U.S. companies or Saudi entities with respect to
    transferring U.S. nuclear technology or services to Saudi
    Arabia?
        Ms. Reed. I am 49 days on the job. So I am not aware of
    that.
        Senator Van Hollen. So you are not aware of any discussions
    that anyone at EXIM Bank has had with respect to such a deal?
        Ms. Reed. I am not aware of that, sir.
        Senator Van Hollen. If you could, Mr. Chairman, since you
    are new, but if you could talk to your team about it, and will
    you let me know what the answer to that question is?
        Ms. Reed. I would be happy to get back to you.
        Senator Van Hollen. I appreciate that because I think, at
    least speaking for myself, as we look at the EXIM authorization
    bill, I am going to want to make sure that the EXIM Bank is not
    used in a way that would undermine our nuclear nonproliferation
    goals, and as of right now, it looks like that is where we are
    headed with Saudi Arabia. So I am going to want to make sure we
    tighten that down very well. Will you work with us on that
    effort?
        Ms. Reed. Happy to work with you.
        Senator Van Hollen. All right.
        There are also issues regarding the transactions with
    respect to Saudi Arabia that the House Oversight Committee has
    raised regarding particular entanglements between U.S.
    Government officials and U.S. nuclear companies. You have
    probably seen some mention of Jared Kushner's interest in some
    of these transactions.
        So my question is what process does the bank go through
    when it reviews applications for credit to ensure that any
    export transaction is not--that your financing does not pose
    conflict of interest?
        Ms. Reed. So we have a very detailed review process. We
    have a brand-new approved Chief Ethics Officer and Chief Risk
    Officer. I look forward to working with the Congress to ensure
    that we have everything in place to relieve any concern that
    you may have on such a front, and I would not stand as the new
    Chairman of the Export-Import Bank conflict of interest.
        Senator Van Hollen. I appreciate that.
        So just to be clear, if one of the U.S. nuclear companies
    cited in the House Oversight Whistleblower Report or Saudi
    Arabia applies for credit finance in the transfer of nuclear
    equipment or services to Saudi Arabia, you will work with us to
    make sure that there is due diligence and no violation of U.S.
    conflict-of-interest law?
        Ms. Reed. Absolutely.
        Senator Van Hollen. Thank you.
        Thank you, Mr. Chairman.
        Chairman Crapo. Senator Tillis.
        Senator Tillis. Thank you, Mr. Chairman.
        Ms. Reed, thank you for being here.
        I try to use the analogy of the work that I did when I was
    Speaker of the House in North Carolina in terms of why EXIM is
    an important part making global transactions work.
        In my case, it is economic incentives, and actually, if you
    take a look at--I would love for there to be--in fact, it is
    not going to happen, but I would love for there to be Federal
    law that says no States can provide economic incentives. So
    then we simply compete on the basis of our regulatory policy,
    our tax policy, our quality of life, or universities. But the
    fact of the matter is most States are actively involved in
    putting together economic incentives to--at the end of the day,
    at the bottom line, it is either a transaction that works or
    not.
        And I was actually hurt because I lost an economic
    incentive deal to Louisiana because the fine legislators in
    Louisiana are happy to put that in there to make the bottom
    line work for those transactions.
        The fact of the matter is these export credit agencies
    across this world would love to see us get out of business in
    the same way I would love to see Louisiana get out of the
    economic incentives business because then we would own the film
    production industry in the Southeast. Get Georgia out of it
    too.
        If we unilaterally disarm and not provide--there clearly
    has to be a ``but for'' test. Clearly, we need to do, I
    believe, reform within the EXIM Bank--I said this back in 2013,
    14--so that we can be very clear that it is not one of the
    first choices for working on financing. It is the last choice
    that makes the deal work.
        And I hope that you will commit to producing some--what I
    think some reforms that will stop making this the political
    football that it is, much like economic incentives are in State
    legislatures and Governors' mansions across this country.
        We need the EXIM Bank to be competitive. China would love
    for us to get out of business. Of course, we need reforms to
    make sure we have transparency to address the issues that
    Senator Van Hollen raised and that Senator Kennedy raised, but
    if we unilaterally disarm, there will be an impact.
        One of the things you do need to do, though, is create a
    framework so you can give a crisp answer to Senator Kennedy's
    questions about why is this a big deal if you were not
    functioning for a couple of years.
        I think if you looked at the pipeline that may have gone
    through, it may not be that the run rate of exports dipped
    much. There are a lot of reasons for that because of tax reform
    and a number of other policies that were going on at the same
    time that obfuscated the impact that it may have had.
        But I do believe if you look at the deal flow and maybe
    transactions that did move through, because we simply were not
    competitive, you could have answered to him this many employees
    in the Southeast would have been employed, these businesses
    would have been a part of the supply chain, this looks like
    Boeing transaction, but in fact, it is a transaction that
    involves the entire supply chain, which we know are a number of
    small businesses that are linked to it.
        So I think if you focus on answering a lot of the
    fundamental questions, as Senator Kennedy asked, that we have
    all been asking for, if you take a look at some of the reforms,
    we are suddenly going to get out of this mode of preventing a
    quorum, preventing you to operate, providing certainty on the
    part of our competitors that we cannot give the best possible
    deal in ``but for'' scenarios where you have to be involved in
    the financing of the underlying deal.
        So I hope that we can actually get to those kinds of
    reforms. Then I believe that we will no longer be in this
    scenario of the cessation of this being an opportunity, and it
    will make us more competitive. And it will create a lot more
    American jobs. I know of a lot of jobs that are created in
    North Carolina because of these transactions.
        So I would like your commitment, as you are ramping up your
    staff, to simply put a reform--not just ``Yeah, we are going to
    tweak around the edges,'' but think about a real reform
    initiative that will give us greater transparency, that will as
    a part of the process--you will be able to come back to Senator
    Kennedy and say, ``In and around Louisiana, this flow of
    transactions had this economic impact.'' And I believe if you
    do that, reasonable people on this Committee and in the Senate
    will support you, and we will keep it functioning. And it will
    make us more globally competitive.
        Incidentally, I do not have a question. Thank you.
        [Laughter.]
        Ms. Reed. Thank you, and we will do that.
        Senator Kennedy. You need to write that down.
        [Laughter.]
        Ms. Reed. Thank you, sir.
        Chairman Crapo. Senator Sinema.
        Senator Sinema. Thank you, Mr. Chairman, and thank you to
    our witness for being here today.
        The Export-Import Bank ensures Arizona businesses can
    compete and win in global markets by helping finance and ensure
    U.S. exports to international buyers. EXIM levels the playing
    field for our American businesses, including American
    manufacturing. It supports good jobs for hardworking families,
    and it strengthens our States' economies.
        In the past 5 years, EXIM green-lighted $2 billion in
    Arizona exports, thousands of good Arizona jobs. As we all
    know, the bank's authorization expires at the end of September,
    and one of my top priorities is to build a bipartisan coalition
    to provide for a long-term renewal of EXIM.
        Recently, the U.S. Senate restored a quorum at the bank,
    ensuring that the bank can consider and approve bigger deals as
    well as implement the reforms that we passed in 2015 to
    modernize the bank's operations and improve transparency and
    accountability to taxpayers.
        Chairman Reed, congratulations, and thank you for being
    here today.
        Ms. Reed. Thank you.
        Senator Sinema. You got a lot of work ahead of you.
        As you know, EXIM lacked a quorum for nearly 4 years. Do
    you know how much in U.S. exports, EXIM was unable to consider
    for financing insurance during that time?
        Ms. Reed. We have received $40 billion in applications that
    are now in our pipeline. I also know that we lost $20 billion
    in deals.
        Senator Sinema. Well, that is a large amount of money and a
    large amount of uncertainty for U.S. businesses, not to account
    the missed opportunities.
        Whether it is a lack of a quorum at EXIM or a lapse in the
    authorization, is it fair to say that this type of business
    uncertainty gives foreign competitors like the Chinese an
    unfair advantage over our country?
        Ms. Reed. Yes.
        Senator Sinema. So we are not the only country that has
    EXIM. Do not China and all the biggest competitors globally
    also have their own version of EXIM?
        Ms. Reed. Absolutely. And you will receive a report
    tomorrow, our annual Competitiveness Report, that will show
    that there are now 113 foreign export credit agencies around
    the world.
        When I testified at my very first confirmation hearing
    before this Committee in 2017, there were 95. So more and more
    countries are using it in weaponized ways, and more and more
    countries are creating them. And I have been told firsthand,
    ``We love that EXIM was out of business because got your deals
    and your jobs.''
        Senator Sinema. Considering China specifically, would you
    say that China's multiple export credit agencies constitute a
    larger or smaller footprint than the U.S.'s EXIM Bank?
        Ms. Reed. Much larger, larger than the next three export
    credit agencies combined, which are Italy an Korea and Germany.
        Senator Sinema. So that is important, I think, for members
    of the Senate to understand. Some critics of the EXIM Bank have
    said that export credit agencies distort markets, and that we
    should therefore unilaterally disarm ours.
        I appreciate that we do not want to skew the market, but I
    am a practical person, as are Arizonans and Arizona businesses,
    because export credit agencies exist. Other countries have
    them. They are real, and in business, we should deal in
    reality. And the reality is that if we get rid of our Export-
    Import Bank and China keeps theirs, then U.S. businesses and
    workers will suffer the consequences and be at a disadvantage.
        Do you have any reason to believe that if we got rid of
    EXIM today, the Chinese would then dissolve theirs or reduce
    the size of their EXIM?
        Ms. Reed. I do not believe so.
        Senator Sinema. I do not think so either.
        Mr. Chairman and Ranking Member Brown, we cannot keep good
    American jobs, innovation, and economic opportunity captive to
    the whims of Government gridlock and this body's own
    dysfunction. We have got to renew EXIM and do it now.
        I hear from Arizonans every single day who are sick of
    Congress that lurches from one manufacturer crisis to the next,
    because in our State, folks work hard. And they take care of
    business, and frankly, they wonder why Congress cannot do the
    same.
        So I hope that we as a Committee and the Senate can work
    together to provide a long-term renewal of EXIM so that
    businesses in my State and all of our States can compete, win,
    and grow.
        So, Mr. Chairman, thank you for this time.
        Thank you, Director Reed.
        And I yield back.
        Chairman Crapo. Thank you, Senator Sinema.
        That concludes our questioning for today's hearing. Again,
    Chairman Reed, we appreciate you being here with us and the
    work that you are doing at the EXIM bank. We understand the
    importance of a timely reauthorization, and we are both
    committed--all of us are committed to assuring that that
    happens.
        We certainly have some hurdles. The politics are still
    strong here in the Senate, but we understand the importance of
    this objective. And we appreciate your attention to it.
        For Senators who wish to submit questions for the record,
    those questions are due to the Committee by Tuesday, July 9th.
    We ask that you respond as promptly as you can to those
    questions, Chairman, when you can, and again, we thank you for
    being here.
        This Committee is adjourned.
        [Whereupon, 11:20 a.m., the hearing was adjourned.]
        [Prepared statements and responses to written questions
    supplied for the record follow:]
                   PREPARED STATEMENT OF CHAIRMAN MIKE CRAPO
        Today, the Committee turns its focus to the Export-Import (EXIM)
    Bank of the United States.
        Just last month, the Senate confirmed Kimberly Reed to be President
    and Chairman of the Export-Import Bank, along with board members
    Spencer Bachus and Judith Pryor.
        The nominations of Claudia Slacik and Paul Shmotolokha to be Board
    members have been approved by this Committee and are pending before the
    full Senate.
        United States exporters are able to compete very effectively in
    international markets on the basis of price and quality.
        However, when aggressive foreign Governments provide subsidies as a
    matter of policy or general practice to their exporters, U.S. exporters
    are placed at a competitive disadvantage purely because of such
    financing arrangements.
        According to the 2017 EXIM Bank Competitiveness Report, Chinese
    export credit agencies provided more medium- and long-term investment
    support than the rest of the world combined.
        As President Trump and other senior officials in his Administration
    have noted, a fully functioning Export-Import Bank has the ability to
    provide financing and level the playing field in response to
    Governments, like China, which can provide almost limitless subsidies
    from its Treasury, which places U.S. exporters at a disadvantage.
        Director of the National Economic Council Larry Kudlow recently
    noted that the EXIM Bank is vitally necessary in the current trade
    environment in order for the United States to compete and succeed in
    international markets, calling it ``a financial tool and a national
    security weapon.''
        During her confirmation process, Chairman Reed committed to
    focusing on strong standards of conduct, increased transparency, sound
    risk management practices, and eliminating waste, fraud, and abuse at
    the Bank.
        Now that she has been confirmed, I look forward to hearing about
    the work that has been done, and that which still needs to be done, to
    process the backlog of pending export deals, and how the reforms that
    Congress initiated in the 2015 reauthorization are being implemented.
        In addition, we will begin the debate about what changes, if any,
    should be included in the reauthorization for the EXIM Bank's charter,
    which is set to expire at the end of September.
        We have been seeking feedback from stakeholders, our colleagues,
    and the Administration as part of the reauthorization process.
        In the 2006 reauthorization, I worked on a number of provisions to
    make sure the small business community has an advocate to help address
    its needs and concerns.
        However, the Bank historically has had trouble meeting its 20
    percent small business mandate in terms of authorizations, as opposed
    to sheer number of transactions.
        I look forward to discussing what changes should be considered to
    promote small- and medium-sized businesses, while continuing to ensure
    that any risk to the American taxpayer is minimized.
        Despite only being on the job a short time, Chairman Reed's
    perspective is very valuable to this process and she will be a critical
    partner throughout reauthorization.
                                     ______

                  PREPARED STATEMENT OF SENATOR SHERROD BROWN
        Thank you, Mr. Chairman, for calling this important hearing to
    discuss the future of the Export-Import Bank.
        I also want to thank the Chairman for his work to advance EXIM's
    board nominees. We have restored EXIM's board quorum, but the full
    Senate needs to consider the nominations of Paul Shmotolokha and
    Claudia Slacik so they can provide their expertise as the Bank resumes
    full operations.
        Today we will hear from the Bank's new President, Kimberly Reed,
    who has been at work for just 7 weeks, and has already hit the ground
    running, traveling the world promoting U.S. economic interests. I am
    grateful that the full Senate confirmed Ms. Reed last month by a vote
    of 79 to 17. Her fellow board members Spencer Bachus and Judith Pryor
    were confirmed by similar margins.
        These overwhelming votes make it clear that we have strong
    bipartisan support for the Bank's mission of helping American
    businesses and American workers compete across the globe.
        Look around the world. There are now 109 export credit agencies and
    credit programs that support foreign, non-U.S. manufacturers.
        Every other major Nation has been aggressively helping their
    companies win sales and the jobs that come with them--jobs that could
    be in the United States if EXIM had been functioning for the past 4
    years.
        China has multiple, massive export credit agencies, or E-C-As.
        In 2017, China's two official export credit agencies provided one-
    third of the world's medium- and long-term export credit, and their
    broader medium- and long-term investment support for Chinese exports is
    greater than the rest of the world combined.
        Chinese ECA activity is key to their plans to sell Chinese-made
    infrastructure throughout Asia, Africa, and Europe, under their Belt
    and Road Initiative. China has provided more than $510 billion in
    insurance to ``Belt and Road'' projects since 2013.
        And China is far from alone. The term ``weaponization'' is used to
    describe what European and Asian Nations are doing to make their export
    credit agencies more aggressive, more flexible, and more proactive.
        If Congress is serious about ensuring American businesses and
    American workers stay competitive, we must have a robust export credit
    agency.
        But we all know what happened here in Congress. In 2015, during the
    last debate on reauthorizing the Bank, a small group of opponents
    supported by far-right special interests tried to kill the bank
    altogether.
        When that didn't work, they decided to block all nominees to the
    Bank's board and block all transactions greater than $10 million
    dollars.
        That had real consequences for American businesses and their
    workers--the amount of jobs EXIM supported dropped from 164,000 to just
    34,000 while the Bank was hobbled.
        That obstruction hurt Ohio manufacturers. Before the shutdown, Ohio
    companies exported more than $400 million a year in products using EXIM
    credit assistance. Now that amount has been cut roughly in half.
        We have the opportunity to turn the page. First, we need to provide
    the Bank a long-term reauthorization of 7 years or longer. American
    exporters, particularly small businesses, need a reliable partner.
        EXIM steps in when private banks and insurers can't assist or
    complete a transaction. If Congress lets EXIM lapse again, the greatest
    pain will be felt by small businesses, including the small businesses
    that form the supply chain for large exporters.
        Last year, EXIM initiated $2.2 billion in authorizations that
    support small businesses, and 315 small business exporters used EXIM
    small business products for the first time.
        Congress must also increase the Bank's authorization limit or
    exposure cap, which is currently set at $135 billion. EXIM must be
    ready to assist new transactions.
        Finally, a renewed Bank must be dedicated to transparency and
    accountability. EXIM has carefully managed risks associated with its
    transactions, as we can see from its extremely low default rate. The
    Bank must continue to be vigilant in monitoring risks and preventing
    fraud.
        The Bank must also be vigorous in complying with requirements set
    out for the Bank to monitor and mitigate environmental and social
    impacts of projects that receive financing.
        President Reed and the new Board have taken the long-overdue steps
    of finishing the implementation of reforms from the 2015 EXIM
    reauthorization. I look forward to hearing her plans moving forward.
        If President Trump and Republicans in Congress are serious about
    helping American manufacturers after 4 years of obstruction, they need
    to work with us to reauthorize the Bank before September 30th.
        I would urge my colleagues to visit some of the businesses in Ohio
    and around the country that use EXIM financing.
        My colleagues have a choice--do they care about these businesses,
    and American manufacturing and American workers, or do they care more
    about extreme special interests.
        I stand with our workers.
                                     ______

                      PREPARED STATEMENT OF KIMBERLY REED
    President and Chairman of the Board of Directors, Export-Import Bank of
                               the United States
                                 June 27, 2019
        Chairman Crapo, Ranking Member Brown, and distinguished Members of
    the Committee, thank you for inviting me to testify before you today.
    It is an honor to be here again with you exactly 7 weeks after I was
    sworn in as President and Chairman of the Board of Directors of the
    Export-Import Bank of the United States (EXIM).
        This is my third time to come before this Committee. In 2017 and
    2018, I testified before you as an EXIM nominee. I thank you for your
    three favorable bipartisan votes in support of my nomination to be the
    first woman and first West Virginian to lead EXIM.
        I also thank you for your leadership when I came before the full
    United States Senate on May 8, where I was confirmed by the United
    States Senate with an overwhelming bipartisan majority vote. I was
    especially struck by the gracious comments that several of you and
    other Senators made on the Senate floor. It has been a long 2\1/2\ year
    journey towards Senate confirmation and I am now honored to be leading
    EXIM.
        My two fellow Board Members, Spencer Bachus and Judith Pryor, also
    thank the Chairman, the Ranking Member, and the other Members of this
    Committee for your support. We look forward to welcoming the
    President's final two Board nominees pending Senate action: First Vice
    President and Vice Chairman designee Paul Shmotolokha and Board Member
    designee Claudia Slacik.
        The Chairman has specifically asked that I update the Committee on
    matters that have been awaiting the consideration of the Board, my
    priorities for EXIM going forward, the reforms that we have previously
    discussed, as well as my views relating to the Committee's
    consideration of EXIM's reauthorization. I am pleased to do just this.
        Let me first set the stage by sharing with you the priorities that
    I shared with the nearly 400 talented and dedicated EXIM employees on
    my first day of work exactly 49 days ago: I am committed to fully
    reopening, reforming, and reauthorizing EXIM, thereby providing
    positive results for America's workers and businesses, while protecting
    America's taxpayers.
    Restoring a Fully Functioning EXIM
        EXIM is the official export credit agency (ECA) of the United
    States with the mission, as mandated by Congress, of promoting and
    supporting American jobs and growing the U.S. economy. EXIM provides
    competitive export credit to support U.S. exports and U.S. workers.
    EXIM achieves this primarily by providing financing for the purchase of
    U.S. exports, insuring U.S. exporters from the risk of nonpayment by
    foreign buyers, and extending working capital loan guarantees that
    enable U.S. businesses to fill export orders. All transactions are
    required to meet the statutory threshold of a reasonable assurance of
    repayment.
        As mandated by Congress, EXIM offers financing at rates and on
    terms that are competitive with Government-backed export financing
    available from other countries. The goal of EXIM financing is to ensure
    U.S. exporters and workers can compete on the quality and price of
    their goods and services--and not lose business to foreign competitors
    because of their Government-backed financing.
        When it is fully functioning with a board quorum, EXIM is self-
    sustaining because of the fees and interest it charges to foreign
    buyers for the use of its programs. Since 1992, when the Federal Credit
    Reform Act became effective, EXIM has generated $9.6 billion in
    revenues above what the Bank has received after providing for all
    expenses, loan-loss reserves, and administrative costs.
        In the last 10 years, EXIM has supported more than one-and-a-half
    million private-sector American jobs. As you might imagine, EXIM has a
    backlog of applications that need Board consideration. Today, EXIM has
    approximately $40 billion worth of transactions at various stages in
    its pipeline for Board-level review that would support an estimated
    230,000 U.S. jobs. EXIM staff is working diligently through the reviews
    of these applications with respect to EXIM policies and all applicable
    statutory requirements.
        But as we fully reopen, EXIM is reemerging to a dramatically more
    competitive environment in officially supported export credit as
    compared to when it was last fully functional. There are now 113
    foreign ECAs in other countries--up from 96 when I testified before you
    in 2017, and I know first-hand that more Nations are in the process of
    establishing their own ECAs.
        Over the past 4 years, the U.S. exporting community has reported
    that while EXIM's foreign buyer financing programs remained essentially
    dormant, foreign ECAs have become more flexible, agile, and responsive
    as they seek to sell their own country's goods to support their
    workers, manufacturers, and economies. The Administration--including
    the President's National Economic Council Chairman Larry Kudlow--has
    underscored that economic security is national security, and that EXIM
    plays an important role in promoting U.S. exports.
        One of my top priorities is ensuring that we are clearly
    communicating to U.S. exporters and foreign buyers that EXIM is fully
    operational and ready to begin moving board-level transactions forward.
    After nearly 4 years awaiting EXIM to be restored to full
    functionality, I am pleased to say that EXIM staff is working very hard
    with the applicants to finalize applications and conduct the necessary
    due diligence to bring these transactions before the EXIM Board.
        Among the core requirements in EXIM's analysis of transactions is a
    review of the ``Five C's'' of credit: Character, Capacity, Capital,
    Collateral, and Conditions. EXIM must evaluate the trustworthiness and
    reliability of the parties to a transaction; the cash-flow, debt
    burden, and financial stability of those parties; the source of the
    downpayment; the quality of the collateral; and the limitations on the
    use of the requested financing. This analysis is critical to how EXIM
    conducts its determination that a transaction adheres to the statutory
    requirement of a reasonable assurance of repayment. Based on those
    reviews, EXIM considers what additional risk mitigants may be necessary
    to enhance the quality of the credit and to better protect the U.S.
    Government from the risk of default.
        EXIM is mandated by its Charter to supplement and not compete with
    private capital in its transactions. As part of its review, EXIM looks
    at why the parties to a transaction are seeking EXIM financing, what
    limitations exist in the availability or terms of private capital, and
    the availability and terms of competing financing offered by a foreign
    export credit agency. All transactions are processed in accordance with
    EXIM policies, such as those on U.S. content, U.S. flag shipping
    requirements, and economic and environmental impacts.
        EXIM's Environmental and Social Due Diligence Procedures and
    Guidelines require heightened reviews for certain transactions with the
    potential for adverse effects. EXIM reviews environmental and social
    impact assessments, analyses of alternatives, and proposed mitigation
    plans to determine their sufficiency and identify what additional steps
    may be necessary to address potential shortcomings. These assessments
    are readily available on EXIM's website for public review. Transactions
    are further reviewed for compliance with the Organization for Economic
    Cooperation and Development's (OECD) Common Approaches for Officially
    Supported Export Credits and Environmental and Social Due Diligence,
    and the Equator Principles, as well as guidelines based on the
    International Finance Corporation's Performance Standards and the
    Environmental, Health and Safety Guidelines of the World Bank Group.
        Certain transactions further require EXIM to undertake more in-
    depth economic impact assessments, which involve both an interagency
    review process and a public comment period. All applications for
    financing that equal or exceed $100 million also require congressional
    notifications and Federal Register postings before EXIM is able to make
    a final commitment.
        Like any pipeline or deal funnel, not all transactions may come to
    fruition for reasons outside of EXIM's control. These are highly
    complex transactions and legal and commercial considerations are not
    always finalized at the time EXIM receives an application. New issues
    may arise that require further negotiation before a transaction is
    ready for Board consideration. In fact, U.S. exporters lost
    approximately $13.3 billion of sales during the 4 years in which EXIM
    lacked a quorum.
        At this point, EXIM staff estimate that transactions worth more
    than $20 billion will be ready for consideration by the Board in the
    first year of full functionality. We expect the Board will vote on some
    of these applications this summer.
        The plan is to work through the applications at a reasonable and
    prudent pace. Though we want to make our way through the pipeline, we
    take our obligation to protect the interests of U.S. taxpayers very
    seriously. EXIM has averaged a default rate of less than half-of-a-
    percent over the past decade because of the care and thoughtfulness
    that goes into the review and structuring of these transactions. EXIM
    also takes seriously its responsibility to ensure we're only supporting
    transactions that cannot obtain a volume or tenor of financing in the
    market sufficient to realize economic viability. While we are anxious
    to move transactions forward, we cannot rush through the necessary
    reviews. Moving through the applications in a responsible way will be a
    huge victory in our collective efforts to support American exporters,
    businesses, and workers. EXIM also expects an influx of new
    applications to support foreign purchases of U.S. goods and services.
    As I underscored at my two confirmation hearings, EXIM can and must
    support businesses of all sizes that the private sector will not
    adequately finance, especially small- and medium-sized businesses, and
    I will comment more on small business later in my testimony. No matter
    the size or type of transaction, EXIM must be guided by the
    requirements of its Charter and ensure it is carrying out its
    Congressionally mandated mission in a thoughtful and responsible way.
    Instituting Reforms and Other Priorities at EXIM
        I am committed to working with this Committee and the Congress to
    transform EXIM, which is particularly important as we head into
    reauthorization.
        During my July 19, 2018, confirmation hearing before this
    Committee, we discussed the future direction of EXIM. I was asked six
    specific questions:

        Will you work with me and other Members of this Committee
            and the Senate to increase transparency at the Bank to the
            greatest extent that is practicable without divulging
            confidential business information?

        Will you work with me and the Committee to strengthen
            taxpayer protections against losses from deals that go badly?

        Will you work with me and Members of the Committee to
            improve protection for domestic companies from economic harm
            that might arise from EXIM Bank financings with foreign
            competitors?

        Will you work with us to ensure that EXIM Bank is not
            crowding out private financing options that would otherwise be
            available but for EXIM Bank's involvement?

        Will you work with me and the Committee to crack down on
            bad actors, whether they are employees of the Bank or its
            customers who should not be dealing with the Bank?

        Will you work with all of us and the Administration to meet
            the statutory requirement that we work to reduce the reliance
            on ECAs globally?

        I answered each of these questions in the affirmative and am
    following through on these commitments as we work to transform EXIM.
        For example, immediately after being sworn in, I traveled to China
    to participate in the annual Group of 12 Member Nations (G12) Heads of
    Export Credit Agencies Meeting. I had the pleasure of meeting and
    engaging with my counterpart heads of foreign ECAs. I heard from the
    leaders of these organizations on what foreign ECAs having been doing
    while EXIM was not fully operational, including the strategic role that
    they are playing to further their countries' own national interests. I
    sought to revitalize U.S. leadership in negotiations, as Congress has
    specified in the EXIM Charter, to reduce subsidized export financing
    programs, enhance transparency, and level the playing field. While the
    Treasury Department leads these negotiations, under my leadership, EXIM
    will coordinate closely with Congress and Treasury through full and
    frank technical insights. As an outcome of the meeting, we secured the
    support of the G12 for the United States to host the 2020 G12 Meeting
    here in Washington, DC. I would like to thank my ECA counterparts again
    for their commitment to cooperation and collaboration.
        Not long after I returned from China, President Trump designated me
    to lead the United States Presidential Delegation to South Africa to
    attend the inauguration of South Africa's President, Cyril Ramaphosa.
    While there, I was able to help advance another critical Congressional
    mandate with many sub-Saharan Government and business leaders. I made
    it clear that EXIM is fully functional and ready to facilitate greater
    support for trade with sub-Saharan Africa.
        EXIM held its first board meeting just 3 weeks after the board
    quorum was confirmed by the U.S. Senate. This was the first time that
    the EXIM Board has met since July 2015. EXIM ex officio Board Member
    U.S. Secretary of Commerce Wilbur L. Ross, Jr., and Ambassador Jeffrey
    D. Gerrish, Deputy U.S. Trade Representative for Asia, Europe, the
    Middle East, and Industrial Competitiveness, also participated.
        At this meeting, the Board satisfied the remaining legislative
    reforms outstanding from the Export-Import Bank Reform and
    Reauthorization Act of 2015 (P.L. 114-94) that could not be completed
    without a Board quorum. We confirmed the appointments of a Chief Risk
    Officer and a Chief Ethics Officer. These roles are critical to
    carrying out the reforms mandated under the 2015 reauthorization, by
    elevating EXIM's focus on managing risk and adhering to the highest
    ethical standards.
        The Board enhanced EXIM's ability to efficiently and responsibly
    process transactions under $25 million. Specifically, in accordance
    with the intent of Congress as set forth in 2015, the Board delegated
    authority for short- and medium-term transactions up to $25 million to
    senior EXIM officers.
        As we look at our EXIM programs and potential reforms, it is also
    important to receive input from diverse experts outside of Government.
    As such, we have just launched the process to reestablish the
    Congressionally mandated Advisory Committee and the Sub-Saharan Africa
    Advisory Committee. We are currently accepting nominations for members
    to be considered for both committees. Applications will be accepted
    until July 24, 2019, and more details can be found on the EXIM website
    or through the Federal Register. These committees are charged with
    providing feedback to EXIM and to Congress on how to ensure the design
    and operations of EXIM programs are meeting the needs of United States
    exporters for competitive financing.
        EXIM also must supplement and enhance--not compete with--private
    sector financing. As I pledged to you in my 2018 testimony, I have now
    begun internal discussions to review and strengthen the adequacy of
    EXIM's ``additionality'' criteria to ensure that EXIM is playing a
    complementary and necessary role in mobilizing private sector financing
    to assist U.S. companies operating in an increasingly competitive
    global marketplace.
        I also am committed to improving EXIM's transparency to the
    greatest extent that is practicable without divulging confidential
    business information. EXIM has made important progress in recent years
    in the area of transparency, but we always can do more. Greater
    transparency will increase the confidence of EXIM's stakeholders that
    we are pursuing our mission appropriately while protecting taxpayers.
    As just one part of this commitment, I will seek to improve EXIM's
    documentation of its additionality determinations and publish these
    determinations so that the bases for these decisions are available to
    all of our stakeholders.
        Supporting small business is vital to EXIM's mission and I am
    committed to doing even more. Twenty-five years ago, EXIM established
    its Small Business Division focused entirely on ensuring that small
    businesses have access to the trade finance tools they need to succeed
    in markets around the world. Since that time, the global market for
    U.S. exporters has changed dramatically. Throughout the global
    financial crisis and its aftermath, EXIM stood by small businesses,
    helping to fill the gap in private sector financing.
        While the loss of a Board quorum affected businesses of all sizes,
    EXIM's dedicated staff continued to work with small businesses, their
    lenders, and brokers, on how EXIM's working capital loan guarantee and
    export credit insurance programs could help these companies grow their
    sales globally. Between Fiscal Years 2016 and 2018, EXIM approved more
    than 7,000 transactions in direct support of small businesses.
        The first event I hosted at EXIM was a small business roundtable
    with business leaders from Pennsylvania, Maryland, and West Virginia
    who also are EXIM small business customers. Their concerns are top-of-
    mind for me and the other members of EXIM's new Board. No transaction
    is too small. We know how important every sale is for businesses that
    operate on thin margins and how a single sale can affect an owner's
    ability to make payroll or bring a new employee on board.
        Still, I want to make it clear that we can and must revitalize
    EXIM's commitment to small businesses. For that to happen, we must
    strengthen EXIM's ability to meet U.S. small businesses that cannot
    access adequate commercial financing where they are with the tools they
    need.
        Among our first priorities will be to dramatically strengthen our
    relationship with private sector lenders and brokers--as well as with
    Federal, State, and local government agencies that regularly
    communicate with U.S. businesses large and small--through a forward-
    leaning, proactive strategy focused on providing improved resources
    that will help them more effectively communicate to small businesses
    about how EXIM financing solutions can make a difference in boosting
    their sales while protecting their bottom line.
        We will develop new opportunities to better track how EXIM works
    with individual small businesses, making sure that they are taking full
    advantage of their EXIM policies to maximize sales, and helping to
    answer any questions they have about how EXIM--or other Federal
    resources--can help them boost their competitiveness.
        When small businesses look beyond our shores to reach new global
    markets that commercial lenders tend to avoid, EXIM can help reduce the
    risk of selling products in emerging and frontier markets. Yet, too
    many people today simply do not know what EXIM is or how our products
    can work for them. That is why I am committed to dedicating new
    resources to help EXIM reach more small businesses across various
    channels, whether it is through the internet, social media, trade
    associations, industry publications, chambers of commerce, or trade
    shows. We are currently developing outreach strategies that will
    improve EXIM's outreach to small businesses in underserved communities,
    rural and urban areas, tribal communities, and the territories.
        Another key issue that I am focusing on is identifying new ways
    EXIM can support the agricultural sector. EXIM already provides
    enhanced coverage and payment terms for exports of bulk agricultural
    commodities under its export credit insurance policy. For the many
    farmers who may not directly export themselves, but instead sell their
    goods to a buyer who then serves as the exporter, EXIM's working
    capital program supports these indirect exporters to increase their
    access to credit.
        I am committed to building on EXIM's outreach efforts to amplify
    our message to rural communities so that more farmers and ranchers can
    learn about how EXIM can work for them. We are also looking at better
    aligning our underwriting teams to enhance our industry expertise. This
    will help facilitate improved processing times that will benefit
    agricultural exporters.
        As we continue our efforts to strengthen our programs for this
    important sector, I will work with my colleagues in the U.S. Department
    of Agriculture, including Secretary of Agriculture Sonny Perdue and
    Under Secretary for Trade Ted McKinney, to ensure that we are
    complementing, not duplicating, their efforts and delivering effective
    solutions for our farmers and ranchers.
        In addition, I take seriously the statutory and overarching mandate
    of EXIM's Inspector General to improve the efficiency and effectiveness
    of EXIM's programs and operations while preventing and detecting fraud,
    waste, and abuse. The Inspector General accomplishes its mission
    through the conduct of audits, investigations, inspections, and
    evaluations. I believe a strong Inspector General is key to protecting
    the American taxpayers.
        While EXIM's mission has always been helping to grow the U.S.
    economy and American jobs through exports, it is increasingly clear
    that EXIM has a role to play in supporting U.S. strategic interests and
    critical industries. My recent conversation with Iraq's Ambassador to
    the United States underscored yet again the importance of EXIM in
    advancing broader policy objectives. The Ambassador told me that
    increasing the involvement of the U.S. private sector in rebuilding
    Iraq through EXIM support would not only accelerate technological
    advancement, but also would improve security in Iraq and in the region.
        This is just a glimpse of all that has been going on at EXIM in
    just the past 7 weeks. These developments would not be possible without
    our exceptional EXIM staff. In addition to seeing EXIM brought to full
    capacity, one of my immediate priorities is to improve the employee
    experience. To assist with developing a plan of action, I have brought
    on board an expert with many years of experience in employee
    engagement, change management, and organizational development to
    identify opportunities and address employee concerns. We are
    collaborating with several employee-driven task forces that convened
    over the last several years to analyze EXIM's annual Federal Employee
    Viewpoint Survey (FEVS) results. The FEVS survey that looks back over
    the past year was launched as I arrived and will serve as a benchmark
    for us to work from as we go forward to make EXIM one of the best
    places to work in the Federal Government.
    Reauthorizing EXIM
        As I previously testified before this Committee, I believe that
    free-market principles are the best way to foster economic opportunity
    for all Americans. Throughout my 23 year career, I have embraced these
    principles to make a positive difference for our Nation's businesses
    and workers while also protecting the American taxpayer. Still, there
    is room for improvement to keep America on this road to prosperity, and
    EXIM is no exception. The global competitive landscape facing our
    Nation's economy and U.S. exporters has changed dramatically since EXIM
    was first established, and our stakeholders have reported to us that
    competition has intensified during EXIM's 4 years of limited
    operations, but the critically important EXIM mission has not. EXIM
    still supports American jobs through exports.
        The Administration looks forward to working with this Committee and
    the Congress to advance reauthorization legislation that ensures that
    EXIM is fully able to continue its vital mission, as a reliable partner
    to exporters' efforts to secure foreign customers. A robust and
    reformed EXIM can help the world to ``Buy U.S.A.'', preserve domestic
    manufacturing supply chains, combat what our stakeholders have reported
    as increasingly aggressive efforts by foreign Governments to undercut
    the competitiveness of U.S. exporters, further America's national and
    economic security objectives by facilitating U.S. exports to markets
    around the world, and protect the U.S. taxpayer.
    Intensifying Global Competition
        For decades, the United States has worked through the OECD to
    establish a level playing field, a framework--the OECD Arrangement on
    Officially Supported Export Credits (the Arrangement)--for the
    provision of official export credit, including risk-based pricing. The
    focus of the Arrangement has been to restrict foreign export credit
    subsidies and encourage global export competition based on the quality
    and price of goods and services exported, rather than predatory
    financing terms. The Arrangement is a living document. Over the years
    EXIM has contributed its technical expertise and experience to support
    the U.S. in establishing market-oriented rules based on best--not trade
    distorting--export credit practices. The Arrangement is also a
    ``gentleman's agreement,'' and is only as good as the commitment of the
    Participants to its guidelines.
        As required under its Charter, EXIM submits an annual
    Competitiveness Report to Congress by June 30 of each year. The report
    reviews the actions of EXIM in providing financing on terms and
    conditions ``which are fully competitive'' with those offered by other
    Governments, and the progress of efforts to minimize competition in
    Government-supported export financing. It also includes a survey of all
    other major export-financing facilities available from other
    Governments and Government-related agencies through which foreign
    exporters compete with the United States. For many years, this was
    largely done by looking at how EXIM's programs compared with that of
    other Participants to the Arrangement and the extent to which the
    Arrangement was succeeding in achieving its goals of minimizing market
    distortions and fostering transparency.
        EXIM's soon-to-be released annual Competitiveness Report examines
    how deeply, widely, and fundamentally officially supported export
    financing has changed over the last 10 to 15 years. The most
    significant development has been the loss of a level playing field.
    Emerging markets now import fewer goods and services and instead have
    their own robust ECAs to promote their exports onto global markets. The
    ECAs of China, India, and other countries that do not participate in
    the OECD Arrangement operate without regard to the basic standards of
    transparency and fairness established among Arrangement Participants.
        Today, China is the largest provider of official export credit,
    which it uses to increase the scale, technology, and market position of
    its manufacturers as global leaders. In 2018 alone, EXIM estimates
    China provided more than $39 billion in medium- and long-term export
    credit financing--more than the next top three ECAs combined. While
    this number is very large, it is dwarfed by the $481.4 billion of
    short-term export credit China provided in 2018. \1\ This helps China
    penetrate the complex supply chains of global manufacturing.
    ---------------------------------------------------------------------------
         \1\ EXIM Report to the U.S. Congress on Global Export Credit
    Competition, June 2019.
    ---------------------------------------------------------------------------
        Since 2012, the United States has been trying to work with China
    and other Governments through the International Working Group on Export
    Credits to establish a new international framework for a level playing
    field among all major providers of medium- and long-term official
    export finance.
        While those discussions continue, OECD members are taking practical
    actions to address the very real threat that China poses to their
    overall industrial competitiveness. OECD ECAs have reported introducing
    and expanding programs and capabilities outside of the scope of the
    Arrangement that are focused on achieving strategic goals and forging
    business partnerships to establish a long-term footprint in key
    markets.
        A growing number of ECAs and their Governments have chosen a
    proactive approach that puts export finance at the center of trade
    policy. No longer reactive or the lender of last resort, foreign ECAs
    have reported that they are increasingly seeking out transactions,
    putting financing packages in place, and identifying ways to maximize
    the number of domestic suppliers or exporters involved in the global
    supply chain of strategic sectors, often engaging in ``match-making''
    efforts between their suppliers and foreign buyers. They report that
    they are using official export credit to support robust domestic supply
    chains, enhance efficient shipping and logistics, open the door to
    follow-on exports, deepen economic ties, and develop engineering and
    technological expertise in key sectors.
        Consequently, financing provided under the terms of the Arrangement
    represented just 36 percent of total Government-backed export and
    trade-related financing in 2018, including development financing. \2\
    ---------------------------------------------------------------------------
         \2\ EXIM Report to the U.S. Congress on Global Export Credit
    Competition, June 2019.
    ---------------------------------------------------------------------------
        China has been very explicit in its efforts to extend its economic
    influence through its export credit and investment support for the Belt
    and Road Initiative. More than 60 countries are discussing or
    developing projects with China now. Estimates show China could spend as
    much as $1.3 trillion by 2027 on investments throughout the Belt and
    Road Initiative region. \3\
    ---------------------------------------------------------------------------
         \3\ Chatzky, Andrew and James McBride. ``China's Massive Belt and
    Road Initiative'', Council on Foreign Relations, 21 February 2019,
    https://www.cfr.org/backgrounder/chinas-massive-belt-and-road-
    initiative.
    ---------------------------------------------------------------------------
        At the same time, China has outlined its ``Made in China 2025''
    strategy--a strategy designed to transform China into a manufacturing
    superpower and in which China's ECAs play an important role \4\--to
    develop domestic industries in sectors of key strategic importance. By
    developing critical infrastructure expertise, China can establish
    footholds in strategic geographic regions, control power generation,
    the electrical grid, and telecommunications networks, and reshape its
    economic footprint to align with its global ambitions.
    ---------------------------------------------------------------------------
         \4\ For example, on its website, Sinosure says that it ``has taken
    an active role in fulfilling the Made in China 2025 Initiative'',
    http://www.sinosure.com.cn/en/Responsibility/smic/index.shtml.
    ---------------------------------------------------------------------------
        China is known to provide export and trade-related financing
    through at least three different entities to turn these aspirations
    into reality. China Export and Credit Insurance Corporation (also known
    as Sinosure), the Export-Import Bank of China, and the China
    Development Bank all provide export credits and, in doing so, have
    played central roles in helping Chinese companies gain international
    strength and move up global value supply chains. Through this whole-of-
    Government approach, these Chinese entities are boosting projects
    throughout Asia and Africa that primarily utilize Chinese technology,
    engineering, and services.
        In addition to the rise in export credit products and providers,
    exporters have reported that, today, some foreign buyers include ECA
    financing as a condition of a bid in their requests for proposals
    (RFPs). Some RFPs not only clearly state a requirement or preference
    for ECA financing specifically, but also that the exporter's financing
    proposal is equal in importance to the technical proposal.
        In the face of these changes, the U.S. export community has
    strongly expressed the need for a fully functioning EXIM that is
    empowered to level the playing field for American companies in this
    increasingly competitive international marketplace. In fulfilling its
    mission and in accordance with Charter requirements, EXIM can ensure
    U.S. exporters have the opportunity to win export sales, including in
    strategically important projects in key markets around the world, while
    serving as a market-oriented counterweight to China. As President Trump
    often says, ``economic security equals national security.''
    Conclusion
        Over the past 2 years, this Administration has ensured EXIM is
    adhering to its statutory mandates and has addressed and closed many
    recommendations from the Office of the Inspector General and the
    Government Accountability Office, elevated its deterrent efforts to
    stop third parties seeking to defraud the U.S. Government, and improved
    the data analytics and risk management of its portfolio.
        EXIM has demonstrated responsible portfolio management, with an
    average default rate of less than half-of-a-percent over the past
    decade--a period of significant market turbulence, including the global
    financial crisis and the European debt crisis. As I previously
    underscored, since 1992, EXIM has generated $9.6 billion after covering
    its administrative and program expenses and setting aside reserves.
        EXIM has enabled thousands of businesses across the country to
    pursue new opportunities in reaching customers around the world. As we
    all know, 95 percent of potential customers are outside of the U.S.
    Yet, today, it is estimated that fewer than 1 percent of America's 30
    million small businesses export. Many of those exporters only export to
    one country.
        To remain truly competitive in today's global markets, we have to
    do better. EXIM must work with its partners at the Federal, State, and
    local levels to provide coordinated support for U.S. businesses that
    have the potential to tap new markets but cannot access adequate
    commercial financing. While the largest transactions may receive the
    most attention, EXIM cannot lose sight of the critical role that small-
    and medium-sized businesses play in communities across this country.
        Over the course of the past 4 years, export credit agencies report
    that they are using the availability of export credit financing to
    entice U.S. businesses to shift their supply chains outside of the
    United States and increase the foreign content of their exports. These
    efforts might potentially negatively affect the largest U.S. exporters
    as well as the thousands of small- and medium-sized American
    businesses, as well as many American workers throughout our Nation,
    that make up their supply chains.
        I look forward to working closely with Congress on how the U.S. can
    best combat the aggressive tactics of foreign ECAs, provide certainty
    to U.S. exporters and the thousands of companies that make up their
    supply chains, and help more businesses grow their global market share
    and support U.S. workers.
        In closing, I again want to thank President Trump for his support
    of EXIM and me. On May 30, I was fortunate enough to have a ceremonial
    swearing-in at the Oval Office--and while I was there, the President
    asked me to ``do great things.'' He asked me to ``fight to give
    American workers a level playing field and to expand foreign markets
    for American-made goods'' and reinvigorate EXIM to ``help create even
    more great-paying jobs.'' That is exactly what I intend to do:
    transform EXIM to deliver results for America's workers and businesses,
    while also protecting the United States taxpayer.
        The President also said that the world needs to ``see more products
    stamped with those four beautiful words: MADE IN THE U.S.A.''. Now,
    more than ever, our Nation and our workers need the United States
    Congress to reauthorize EXIM to help make this happen, and I stand
    ready to assist you in this process.
        Thank you for this opportunity to testify and I look forward to
    your questions.
            RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
                           FROM KIMBERLY REED

    Q.1. There's no denying the Export-Import Bank's importance to
    the South Carolina economy. There's a reason that the Port of
    Charleston continues to be the fastest-growing major port in
    the United States. EXIM's lending supports high-paying jobs for
    thousands of South Carolinians and lets our businesses contend
    on a level playing field with international competitors. That
    said, the Bank isn't without its faults. But hopefully we are
    on a productive path to realizing many of the reforms that have
    been dormant since 2015.
        Please answer the following with specificity:
        The National Association of Manufacturers estimates that
    manufacturers have forfeited billions of dollars in sales in
    the 4 years (2015-2019) that the EXIM Bank was not fully
    functional, which they anticipate translated to approximately
    80,000 fewer jobs in 2016 and 2017 and the loss of at least
    $119 billion in output. At the same time, foreign Export Credit
    Agencies (ECAs) were ramping up activity. Is it fair to assume
    other countries with active and competitive ECAs saw export
    sales as a direct result of our decline?

    A.1. Yes. As Chairman Reed described in her written testimony,
    among applications in EXIM's pipeline for consideration by the
    Board of Directors, approximately $13.3 billion in U.S. exports
    were lost to foreign competition during the period when EXIM
    was not fully functional.
        These transactions would have financed the sales of U.S.
    exports to the following regions:

    ------------------------------------------------------------------------
                                                           LOST U.S. EXPORTS
                           REGION                            ($ MILLIONS)
    ------------------------------------------------------------------------
    ASIA................................................           2,348.50
    EUROPE..............................................           2,946.00
    LATIN AMERICA/CARIBBEAN.............................           1,125.90
    MIDDLE EAST/NORTH AFRICA............................           5,438.00
    MULTIPLE REGIONS....................................             125.00
    SUB-SAHARAN AFRICA..................................           1,356.60
    ------------------------------------------------------------------------
        TOTAL...........................................          13,340.00
    ------------------------------------------------------------------------

        Some of these export sales involved satellites, power,
    renewable energy, mining, oil and gas, civil works, and
    aircraft, among others.
        There may well be additional potential lost exports in
    which buyers did not submit applications for financing since
    EXIM was not fully functional. For example, U.S. exporters
    reported they were put at a disadvantage when competing for
    export sales that required financing support from export credit
    agencies. As highlighted in the recently released EXIM
    Competitiveness Report, ``Today, some importers are including
    [Export Credit Agency (ECA)] financing as a condition in their
    requests for proposals (RFPs).'' \1\
    ---------------------------------------------------------------------------
         \1\ Report to the U.S. Congress on Global Export Credit
    Competition, Export-Import Bank of the United States, June 2019, p. 35.
    ---------------------------------------------------------------------------
        At the same time, foreign export credit agencies reportedly
    used the availability of export finance to entice U.S.
    exporters to make long-term, strategic decisions to shift their
    supply chains overseas in order to facilitate their global
    sales. \2\
    ---------------------------------------------------------------------------
         \2\ E.g.: Cameron, Doug. ``Boeing Finds Alternative to Export-
    Import Bank'', Marketwatch, May 31, 2017, available at: https://
    www.marketwatch.com/story/boeing-finds-alternative-to-export-import-
    bank-2017-05-31 and ``GE Announces Plan To Build World Class Gas Engine
    Facility in Canada; Move Products From Wisconsin and Other Sites'',
    General Electric Reports. Press Release: Sept. 28, 2015, URL: https://
    www.genewsroom.com/pressreleases/ge-announces-plan-build-world-class-
    gas-engine-facility-canada-move-products.
    ---------------------------------------------------------------------------
        American businesses, U.S. supply chains, and the jobs
    supported by exports were all adversely affected through these
    lost transactions, missed opportunities, and strategic actions
    by foreign export credit agencies.

    Q.2. Ms. Reed, in December of last year, the President launched
    his ``Prosper Africa'' initiative to advance American and
    African prosperity through trade and commercial ties.
    Unfortunately, we see our competitors, like China, voraciously
    investing in infrastructure and telecom throughout African
    countries, while our companies have been forced to compete on
    an unlevel playing field.

    A.2. As reported in EXIM's Competitiveness Report, foreign
    Governments have weaponized policy institutions to gain market
    share around the world, particularly in developing regions such
    as in Africa. As a key participant in the Prosper Africa
    initiative with a mission to support U.S. jobs by financing
    U.S. exports, EXIM is committed to expand financing for U.S.
    exports to African projects over the next few years. EXIM's
    current pipeline of transactions involving projects in Africa
    is approximately $12.5 billion.

    Q.3. In April this year, EXIM Bank signed an MOU with Angola's
    Ministry of Finance in accordance with the President's
    initiative where Angola agreed to exchange information to
    further procurement of U.S. goods. \3\ I applaud the
    Administration and the Bank as this is a step in the right
    direction and I want to see this followed through with. How do
    you envision the Export-Import Bank working to create a similar
    sense of understanding between other African Nations and EXIM
    Bank/the U.S.?
    ---------------------------------------------------------------------------
         \3\ See Report to the U.S. Congress on Global Export Credit
    Competition, Export-Import Bank of the United States, June 2019.

    A.3. EXIM is mandated by law to promote the expansion of its
    financial commitments across sub-Saharan Africa (12 U.S.C.
    635(b)(9)). EXIM recognizes the commercial opportunities that
    an emergent Africa provides for U.S. exporters. In her first
    month at EXIM, Chairman Reed was tapped to head the U.S.
    Presidential Delegation to the inauguration of the president of
    South Africa. While in Pretoria, South Africa, she participated
    in several meetings and roundtables focused on EXIM and Africa.
    She will build upon this understanding at the upcoming United
    Nations General Assembly where she will participate in a U.S.-
    Africa business roundtable focused on expanding trade and
    investment between the U.S. and Africa. EXIM signs Memoranda of
    Understanding (MOUs) with various entities, including foreign
    finance ministries, multilateral financial institutions, and
    agencies (such as the Philippine Energy Department) to help
    advance U.S. business interests in a coordinated matter and
    provide a framework for ensuring the fair consideration of U.S.
    exports. With Prosper Africa's efforts to improve U.S.
    Government coordination, EXIM will strategically leverage
    interagency resources in developing new commercial
    relationships, potentially including additional MOUs, in
    partner countries across the continent.
        Section 54001 of P.L. 114-94 \4\ reestablished EXIM's Sub-
    Saharan Africa Advisory Committee with representatives from
    trade finance, commerce, banking, and small business. The
    Committee, which held its first meeting on September 11, 2019,
    is advising the EXIM Board on how to facilitate greater
    engagement in Africa.
    ---------------------------------------------------------------------------
         \4\ 12 U.S.C. 635(b)(9)(B)

    Q.4. As you mentioned in your testimony, China is now the
    largest provider of official export credit which it welds
    around the world, furthermore there are now 112 other foreign
    export credit agencies. How can EXIM bank be at the forefront
    and assist our businesses and other African Nations with the
    procurement of infrastructure, such as ports and telecom, as
    ---------------------------------------------------------------------------
    players like Huawei expand their influence?

    A.4. U.S. exporters face aggressive competition from
    Government-backed export financing not only from China but also
    from other countries in Asia, Europe, and Latin America. In
    many African countries, financial markets are still
    underdeveloped and there is a greater need for officially
    supported export credit financing. In such areas, EXIM will be
    critical resource to facilitate the purchase of U.S. exports by
    African buyers. As part of the Government-wide Prosper Africa
    Initiative, EXIM will aim to: (1) undertake greater outreach to
    U.S. exporters and foreign buyers, (2) utilize MOUs to promote
    U.S. exporters, (3) identify commercial partners in Africa
    where commercial financing is not available to support U.S.
    exporters, and, (4) offer competitive financing when U.S.
    exporters are disadvantaged due to financing of foreign export
    credit agencies.

    Q.5. A number of manufacturers who use EXIM have a robust
    supply chain that often contain several small businesses, many
    of which are integral to supporting our largest manufacturers
    in South Carolina. Can you tell us the economic benefit to
    those small business suppliers as well as how EXIM is working
    to grow their share of the pie?

    A.5. When EXIM finances transactions that support exports from
    larger U.S. manufacturers, many small businesses in the
    manufacturer's supply chain also benefit. EXIM helps sustain
    the jobs in the supply chain because EXIM financing is directly
    tied to the value that is sourced from the United States.
        As reported by stakeholders, EXIM's absence in the long-
    term financing sphere has disproportionately hurt smaller U.S.
    sub-suppliers that support the supply chains of larger
    manufacturers. These larger manufacturers are more readily able
    to shift production to foreign facilities, often with the help
    of foreign export credit agencies, and still make their sales.
    However, sub-suppliers and their workers often cannot relocate
    and are replaced by their foreign competitors in supply chains.
        EXIM places a high priority on supporting exports from
    small businesses. This is done through extensive outreach and
    coordination with Federal agencies, State and local
    governments, private sector lenders and insurance brokers, and
    trade associations. EXIM has developed a targeted financial
    solution to support small businesses in the supply chain. Using
    an EXIM Supply Chain Loan Guarantee, small businesses can
    increase their access to capital and liquidity when fulfilling
    orders that support U.S. exports.
        Building on the success of its Supply Chain Loan Guarantee
    program, EXIM will continue to look at ways in which it can
    better support small businesses in domestic manufacturing
    supply chains.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR SASSE
                           FROM KIMBERLY REED

    Q.1. Under the Export-Import Bank's statute you are required to
    be a lender of last resort--how do you fulfill that obligation?

    A.1. Historically, especially over the last 30-plus years, EXIM
    has been referred to as a ``lender of last resort.'' EXIM is,
    more specifically, the lender or guarantor U.S. exporters turn
    to when facing financing gaps within the private sector caused
    by regulatory factors, structural factors, or competition from
    foreign officially supported export credit for a competing
    foreign good or service. A core element of EXIM's policies is
    that its activities promote the development or maintenance of
    U.S. jobs through the export of U.S. goods and services \1\ in
    furtherance of its statutory mandate. \2\ In extending
    financial support for a given transaction, EXIM is also charged
    under 12 U.S.C. 635(b)(1)(B) to ``supplement and encourage,
    and not compete with, private capital.''
    ---------------------------------------------------------------------------
         \1\ Evaluation of EXIM's Additionality Policy and Procedures,
    Export-Import Bank of the United States, Office of the Inspector
    General, Nov. 27, 2018, p. 6, available at: https://www.exim.gov/sites/
    default/files/oig/reports/Final%20Additionality%20Report%2011272018
    %20Redacted.pdf.
         \2\ ``The objects and purposes of the Bank shall be to aid in
    financing and facilitate exports,and in so doing contribute to the
    employment of United States workers.'' 12 U.S.C. 635(a)(1)
    ---------------------------------------------------------------------------
        To achieve these ends, EXIM implements several steps:

    Additionality

        As required by law, EXIM conducts an annual review of the
    private market appetite for export financing and a case-by-case
    establishment of ``additionality'' \3\ (12 U.S.C. 635g, 12
    U.S.C. 635g-1). EXIM focuses on financing transactions where
    the probability or likelihood of a transaction involving U.S.
    exports is unlikely to proceed without Bank support. \4\ In
    addressing additionality, EXIM considers the availability of
    competing private or other export credit agency financing for a
    transaction. \5\
    ---------------------------------------------------------------------------
         \3\ Id. at iv. ``Additionality is defined as the likelihood that a
    transaction would not go forward without EXIM support. The typical
    factors that influence additionality are: (1) the existence of foreign
    officially supported export credit for a competing foreign good or
    service; and/or (2) the existence of financing gaps, where commercial
    financing is not available on economically viable terms, but EXIM can
    still find a reasonable assurance of repayment.''
         \4\ Id. at 6.
         \5\ Id.
    ---------------------------------------------------------------------------
        Recently, the EXIM Office of Inspector General (OIG)
    conducted an evaluation of the EXIM's additionality policies
    and procedures. \6\ The OIG recognized ``EXIM generally
    conducted sufficient due diligence and adequately interpreted
    the need for additionality when authorizing transactions [and]
    generally complied with its additionality policies and
    procedures.'' \7\
    ---------------------------------------------------------------------------
         \6\ Id. at 16.
         \7\ Id.
    ---------------------------------------------------------------------------

    Analysis of Gaps Resulting in Lack of Private Capital

        EXIM engages in regular discussions with commercial banks
    and nonbank lenders about which transactions the private sector
    would be willing to fund, both with and without an EXIM
    guarantee, which supplements its annual review of the private
    market appetite. In aggregate, these discussions outline the
    capacity and risk appetite of the private sector export finance
    market.
        Using this analysis, EXIM has generally found private
    sector lenders often seek an EXIM guarantee to proceed with
    transactions with below investment grade risks, or with a
    repayment term of more than 7 to 10 years, or with a value more
    than $100 million. While the specifics of the need for EXIM may
    shift year to year based on market dynamics, the existence of a
    market gap is structural and has been consistent in the years
    since the 2008 global financial crisis.

    Case-by-Case Review

        EXIM also performs a case-by-case review of the need for
    EXIM in individual transactions by looking at the existence of
    foreign product competition, foreign Government financing
    support, and the offers available for private sector financing
    (and the consistency of these offers with the general pattern
    described above). The case-by-case review includes transaction
    details that affect the availability of financing--for example,
    the type of asset financed, the sector, and noncredit risks,
    such as country risk. By tailoring additionality analysis to
    specific transactions, EXIM is assured it is supplementing and
    not competing with private capital.
        If loan officers and senior management have reason to
    believe there are sufficient financially viable alternatives in
    the private sector, they routinely work with the applicant to
    maximize private sector involvement. At times, EXIM's
    willingness to finance a portion of a project may entice
    private sector lenders to play a larger role in a project or
    transaction. If applicants do not narrow the scope and amount
    of their financing request to meet EXIM's requirement to not
    compete with private capital, staff may recommend the applicant
    withdraw the transaction.

    Delegated Authority

        EXIM has delegated authority to qualified private sector
    lenders to streamline the approval of loan guarantees for
    smaller transactions, generally transactions under $25 million.
        Any bank, provider of commercial credit, or other public or
    private lender may apply to participate as a delegated
    authority lender. Once approved, EXIM trains these lenders on
    how to comply with its policies and legal requirements. EXIM
    authorizes these lenders to commit EXIM's guarantee up to a
    certain amount for an individual loan and an overall amount
    across all covered loans. With delegated authority, lenders can
    underwrite, structure, and issue loans backed by EXIM's
    guarantee. EXIM collects fees for all its guarantees, reviews
    any claims for compliance with EXIM policies, and routinely
    evaluates the performance of delegated authority lenders in the
    program.
        Currently, there are 74 private sector lenders
    participating in EXIM's delegated authority program for working
    capital loan guarantees and five financial institutions
    participating in EXIM's medium-term buyer financing program.
    EXIM works to strengthen its relationship with private sector
    lenders in many ways, including by reviewing and, as
    appropriate, increasing credit lines for existing lender
    partners to allow them to originate more--and larger--working
    capital loans backed by EXIM.
        Since 2018, EXIM has increased the credit lines of nine
    lenders thereby allowing them to originate larger deals. EXIM
    increased the credit lines of these lenders after they have
    demonstrated the standard of care, due diligence, expertise,
    and skill to manage working capital loans under delegated
    authority. It is important to note that these lenders already
    have the capacity to finance international trade and are
    relying on EXIM to cover their foreign risk without which
    lenders would not finance any export working capital deal.
        Ultimately, EXIM reviews its transactions to ensure
    compliance with all statutory mandates, including whether the
    transaction supports U.S. jobs, demonstrates a reasonable
    assurance of repayment, does not compete with private sector
    capital, and is competitive with financing available from
    foreign ECAs. Chairman Reed has committed to reviewing EXIM's
    additionality policies and procedures for medium- and long-term
    transactions and is seeking public comment and input as part of
    this process. \8\
    ---------------------------------------------------------------------------
         \8\ See ``Export-Import Bank [Document Number: 2019-6019] Review
    of Proposed Guidelines for Assessing Additionality Related To Providing
    EXIM's Support for Medium and Long Term Export Transactions'' https://
    www.govinfo.gov/content/pkg/FR-2019-09-09/pdf/FR-2019-09-09.pdf.

    Q.2. Under what circumstances do you believe it is appropriate
    for the Export-Import Bank to lend to a foreign credit agency
    ---------------------------------------------------------------------------
    or a nominally Government-backed company in China?

    A.2. In accordance with the current law set out in EXIM's
    Charter (12 U.S.C. 635 et seq.), there are limited reasons for
    which EXIM can deny a transaction.
        Transactions can be denied if there is no reasonable
    assurance of repayment, \9\ if EXIM financing would compete
    with private capital, \10\ if there would be adverse economic
    impact on U.S. businesses, \11\ if there would be adverse
    environmental impact, \12\ if there is substantial creditable
    evidence of fraud or corruption, \13\ or if there is a
    presidential determination that denial is in the national
    interest. \14\ Congress also has generally prohibited
    discrimination by sector or buyer unless Congress explicitly
    authorizes it. \15\ Chinese State-owned enterprises (SOEs)
    currently are not a category that would allow EXIM to deny
    associated transactions.
    ---------------------------------------------------------------------------
         \9\ 12 U.S.C. 635(b)(1)(B)
         \10\ 12 U.S.C. 635(b)(8)
         \11\ 12 U.S.C. 635(e)
         \12\ 12 U.S.C. 635i-5(a)(2)
         \13\ 12 U.S.C. 635(f)
         \14\ 12 U.S.C. 635(b)(1)(B)
         \15\ 12 U.S.C. 635(k)
    ---------------------------------------------------------------------------
        Congress has directed EXIM to provide financing to U.S.
    companies whose products compete with those of foreign
    businesses backed by financing from their export credit
    agencies. \16\ Over the past decade, many foreign countries
    have used their export credit agencies (ECAs) to promote
    exports as a driver of national growth. \17\ These foreign ECAs
    may offer financing terms not available through the commercial
    market. In general, when a U.S. company is competing for a sale
    with another company backed by a foreign export credit agency,
    EXIM's support is important for making sure the U.S. business
    can compete with the same financing terms, allowing the U.S.
    company and its U.S. workers to win the contract.
    ---------------------------------------------------------------------------
         \16\ 12 U.S.C. 635(b)(1)(A)
         \17\ See Export-Import Bank of the United States, Report to the
    U.S. Congress on Global Export Credit Competition, June 2019. Available
    at: https://www.exim.gov/sites/default/files/reports/
    competitiveness_reports/2018/EXIM2019CompetitivenessReport.pdf.
    ---------------------------------------------------------------------------
        In a scenario in which a U.S. company is facing foreign
    export credit agency competition for a sale to a fully or
    partially owned SOE in China, blocking EXIM support would
    likely leave the U.S. company at a disadvantage. In most cases,
    prohibiting the U.S. company from competing for the sale will
    not affect the Chinese buyer's ability to get similar goods or
    services from other countries with ECAs. Moreover, in a
    scenario where a U.S. company is competing for a sale to a
    project outside China that is fully or partially owned by a SOE
    in China, prohibiting the U.S. company from competing for the
    sale would likely abandon the sale to competing foreign
    countries and their exporters and workers.
        Given EXIM's responsibility to support exports and its
    responsibility to ensure American companies have access to
    competitive financing, the hypothetical described above could
    be an example of a time when it is appropriate to lend to a
    foreign export credit agency or a nominally backed company in
    or owned by China, provided that there were no reasons,
    pursuant to law, that EXIM could reasonably deny the
    transaction.

    Q.3. On July 6th, the Chairwoman of China's Export-Import Bank
    called for ``an acceleration of reforms to internationalize the
    Chinese currency''. \18\ Could you discuss the potential
    impacts--if any--this would have on the Export-Import Bank of
    the United States' operations?
    ---------------------------------------------------------------------------
         \18\ https://www.reuters.com/article/us-china-yuan-exim/citing-
    trade-risks-chinas-exim-bank-chief-urges-faster-yuan-globalization-
    idUSKCN1U1088.pdf

    A.3. As the July 6, 2019, Reuters article notes (the full text
    included below for the record), the internationalization of
    China's renminbi (yuan) has been underway for years. In
    November 2015, the International Monetary Fund (IMF) decided to
    include it among the basket of currencies used to determine the
    value of the Special Drawing Right (SDR), an IMF accounting
    unit and international reserve asset that has been used to
    supplement IMF members' official reserves. The five currencies
    in the SDR basket--the U.S. dollar, Euro, British pound,
    Japanese yen, and Chinese yuan--are widely used to make
    payments for international transactions and are widely traded
    in the principal exchange markets.
        However, designating the yuan as a major world currency
    does not have an impact on EXIM's operations.

         CITING TRADE RISKS, CHINA'S EXIM BANK CHIEF URGES FASTER YUAN
                                 GLOBALIZATION

                 REUTERS, Business News, July 6, 2019, 5:39 AM

           By Yawen Chen and John Ruwitch; Editing by Shri Navaratnam

        BEIJING (Reuters)--The chairwoman of China's Export-Import
    Bank on Saturday called for an acceleration of reforms to
    internationalize the Chinese currency, warning that external
    risks linked to rising global protectionism could harm the
    financial sector. Hu Xiaolian, speaking at a forum in Beijing,
    said some countries have been engaged in ``constant'' efforts
    to undermine globalization.
        ``Some barriers have been erected in terms of trade and
    investment, company cooperation, technological exchange,
    personnel exchanges and so on, which actually makes us worry
    whether the financial sector, as the `blood' of the economy and
    an important support and guarantee for globalization, will also
    be impacted by this countercurrent,'' Hu said.
        China is locked in a bruising trade war with the United
    States, which has led to retaliatory tariffs on hundreds of
    billions of dollars of each others' goods. The U.S.
    Administration has also stepped up scrutiny of Chinese firms,
    including telecommunications giant Huawei, which has been
    banned from accessing the U.S. market and effectively limited
    from purchasing U.S. technology.
        Last week, the Washington Post reported that a U.S. judge
    has found three large Chinese banks in contempt for refusing to
    comply with subpoenas in a probe into North Korean sanctions
    violations, adding one of them could lose access to the U.S.
    financial system.
        ``Can international currencies, as the major global
    reserves for payment, settlement and investment, provide
    security for our global business activities and economic
    activities?'' she asked.
        Hu said a changing environment in trade and investment
    suggests the country needs to plan better for potential
    trouble.
        ``I think the internationalization of the yuan should move
    faster,'' Hu said.
        The internationalization of the Chinese currency suffered a
    setback since 2016 due to more stringent Government controls to
    curb capital outflow as the yuan weakened.
        Hu stressed the need to increase the overall
    competitiveness of China's financial sector as a pre-condition
    for a more international currency, including by boosting
    efforts to modernize its financial institutions, expand
    financial opening and innovation, and remove distortions in
    loan pricing.
        Hu said she was encouraged that China's central bank is
    taking steps to make its interest rates more market-oriented.
        ``More efforts need to be made in interest rate
    liberalization, as only by reducing controls on loan pricing
    through both obvious and non-obvious ways can we better reflect
    real demand and risks,'' Hu said.
        Ma Jun, a central bank adviser, said on Monday that he
    expects China will eventually abolish its benchmark lending
    rate, but did not give a clear timeline.
                                    ------

            RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN
                           FROM KIMBERLY REED

    Q.1. As you know, the Export-Import Bank did not have a quorum
    on its Board of Directors from July 2015 to May 2019 and was
    unable to conduct many of its business functions, including
    many reforms mandated by the 2015 reauthorization.
        How many Export-Import Bank employees left the agency
    during the timeframe that it lacked a quorum? How many were
    hired?

    A.1. According to EXIM's internal records and the Federal
    Personnel and Payroll System, for the period from July 1, 2015,
    to May 31, 2019, 239 employees separated from the agency and
    190 were hired.

    Q.2. In the 2018 Best Places to Work in the Federal Government
    employee survey, the Export-Import Bank ranked last among all
    small Federal agencies in terms of employee satisfaction with
    their job and their organization. \1\ Some of this
    dissatisfaction is likely due to the inability of the agency to
    fulfill its mission absent a quorum. What steps have you taken
    to improve employee morale?
    ---------------------------------------------------------------------------
         \1\ Partnership for Public Service, ``Best Places To Work in the
    Federal Government: Small Agencies'', 2018, https://
    bestplacestowork.org/rankings/overall/small.

    A.2. EXIM takes the Federal Employee Viewpoint Survey (FEVS)
    and its results very seriously. While bringing EXIM back to
    full capacity, one of Chairman Reed's immediate priorities is
    to improve the employee experience. Chairman Reed recently
    announced EXIM will be implementing a ``Transformation
    Initiative'' to address key staff concerns. This effort
    includes five separate tracks to outline a clear vision
    statement for EXIM's culture, implement best practices for
    organizational realignment, improve employee performance
    feedback and review process, enhance leadership effectiveness,
    ---------------------------------------------------------------------------
    and boost internal communications through a unified voice.

    Q.3. How has any attrition and poor morale of Export-Import
    Bank staff in the timeframe the Board lacked a quorum affected
    the bank's functions and operations? Please provide specific
    details.

    A.3. Since Fiscal Year 2018, EXIM has seen an elevated number
    of employees retire from the agency. After averaging eight
    employee retirements per year, in FY2018 EXIM had 16 employees
    retire and another eight employees retire in just the first
    quarter of FY2019. Collectively, these retirements resulted in
    several talented and experienced employees with decades of
    institutional knowledge leaving EXIM.
        Nevertheless, EXIM is diligently working to ensure the next
    generation of agency leaders are trained and prepared should
    vacancies occur. EXIM has and will continue to fill gaps in its
    workforce to ensure it is able to fully support U.S. exporters
    and protect taxpayers.
        Additionally, EXIM's revised strategic plan is emphasizing
    the importance of recruiting and retaining top talent and the
    ``Transformation Initiative'' will be a long-term strategy for
    increasing morale and employee engagement.

    Q.4. In your written testimony, you wrote that ``Like any
    pipeline or deal funnel, not all transactions may come to
    fruition for reasons outside of EXIM's control . . . In fact,
    U.S. exporters lost approximately $13.3 billion of sales during
    the 4 years in which EXIM lacked a quorum.'' \2\
    ---------------------------------------------------------------------------
         \2\ Written testimony of Kimberly Reed to the U.S. Senate
    Committee on Banking, Housing, and Urban Affairs, June 27, 2019,
    https://www.banking.senate.gov/imo/media/doc/Reed%20Testimony%206-27-
    19.pdf.
    ---------------------------------------------------------------------------
        How many deals were left in the pipeline during the time
    the Board lacked a quorum?

    A.4. The number of transactions in the pipeline that required
    action by EXIM's Board of Directors fluctuated over time. In
    July 2015, when EXIM's Board was no longer able to constitute a
    quorum, there were 37 transactions at various stages in the
    pipeline totaling approximately $10 billion. At the time EXIM's
    new Board members were sworn in on May 9, 2019, EXIM had 35
    Board-level transactions totaling approximately $39.2 billion
    of financing in various stages of its pipeline.

    Q.5. What deals, if any, have fallen through in the time that
    the Board lacked a quorum? How has this affected American
    exports? Please provide specific details.

    A.5. The $13.3 billion figure in Chairman Reed's written
    testimony refers to the estimated value of U.S. exports that
    EXIM found were lost to foreign competition during the period
    when EXIM was not fully functional. \3\ There were at least 32
    transactions that would have financed the sales of U.S. exports
    to the following regions:
    ---------------------------------------------------------------------------
         \3\ Information is based on transactions as of May 7, 2019, that
    were lost or withdrawn due to the lack of a quorum on EXIM's Board of
    Directors. The export sales either shifted sourcing outside of the
    United States or were facilitated by foreign Government entities,
    including export credit agencies.

    ------------------------------------------------------------------------
                                                           LOST U.S. EXPORTS
                           REGION                            ($ MILLIONS)
    ------------------------------------------------------------------------
    ASIA................................................           2,348.50
    EUROPE..............................................           2,946.00
    LATIN AMERICA/CARIBBEAN.............................           1,125.90
    MIDDLE EAST/NORTH AFRICA............................           5,438.00
    MULTIPLE REGIONS....................................             125.00
    SUB-SAHARAN AFRICA..................................           1,356.60
    ------------------------------------------------------------------------
        TOTAL...........................................          13,340.00
    ------------------------------------------------------------------------

        These export sales involved satellites, power, renewable
    energy, mining, oil and gas, civil works, and aircraft, among
    others.
        There could be additional potential lost exports in which
    prospective buyers were not able to submit applications for
    financing because EXIM was not fully functional. For example,
    U.S. exporters reported they were put at a disadvantage when
    competing for export sales that required financing support from
    export credit agencies. As highlighted in the recently released
    EXIM Competitiveness Report, ``Today, some importers are
    including [Export Credit Agency (ECA)] financing as a condition
    in their requests for proposals (RFPs).'' \4\
    ---------------------------------------------------------------------------
         \4\ Report to the U.S. Congress on Global Export Credit
    Competition, Export-Import Bank of the United States, June 2019, p. 35.
    ---------------------------------------------------------------------------
        At the same time, foreign export credit agencies reportedly
    used the availability of export finance to entice U.S.
    exporters to make long-term, strategic decisions to shift their
    supply chains overseas in order to facilitate their global
    sales. \5\
    ---------------------------------------------------------------------------
         \5\ E.g.: Cameron, Doug. ``Boeing Finds Alternative to Export-
    Import Bank'', Marketwatch, May 31, 2017, available at: https://
    www.marketwatch.com/story/boeing-finds-alternative-to-export-import-
    bank-2017-05-31 and ``GE Announces Plan To Build World Class Gas Engine
    Facility in Canada; Move Products From Wisconsin and Other Sites'',
    General Electric Reports. Press Release: Sept. 28, 2015, URL: https://
    www.genewsroom.com/pressreleases/ge-announces-plan-build-world-class-
    gas-engine-facility-canada-move-products.
    ---------------------------------------------------------------------------
        American businesses, U.S. supply chains, and the jobs
    supported by exports were all adversely affected through these
    lost transactions and by the strategic actions of foreign
    export credit agencies.

    Q.6. How many American jobs would those the deals have
    supported had they come to fruition?

    A.6. If approved, EXIM estimates these transactions would have
    supported approximately 78,800 jobs.

    Q.7. Last year, the National Climate Assessment found that more
    frequent and intense extreme weather events are already
    damaging ecosystems, agriculture, infrastructure, property, and
    social systems while increasing harm to human health and loss
    of life. One of the biggest causes of the climate crisis is
    increasing greenhouse gas emissions, yet a recent report found
    that from 2013 to 2015, the bank provided an annual average of
    nearly $6 billion, compared with about $100 million for clean
    energy. \6\
    ---------------------------------------------------------------------------
         \6\ Oil Change International, Friends of the Earth U.S., Sierra
    Club, WWF European Policy Office, ``Talk Is Cheap: How G20 Governments
    Are Financing Climate Disaster'', July 2017, http://priceofoil.org/
    content/uploads/2017/07/talk-is-cheap-G20-report-July2017.pdf.
    ---------------------------------------------------------------------------
        Do you support renewed Export-Import Bank financing for
    fossil fuel projects given the findings of the National Climate
    Assessment on the increasing severity of the climate crisis?
    Please explain your reasoning.

    A.7. EXIM takes its mandate to support environmentally
    beneficial and renewable energy exports seriously. In
    accordance with the law (12 U.S.C. 635 et seq.), EXIM has
    established procedures to consider both the beneficial and
    adverse environmental and social effects of goods and services
    for which support is requested. The law also authorizes the
    Board of Directors, in its judgement, to grant or withhold
    financing support after such consideration. \7\ In accordance
    with 12 USC 635(k), EXIM does not discriminate against
    applications based on industry, sector, or business.
    ---------------------------------------------------------------------------
         \7\ 12 U.S.C. 635i-5(a)(2)
    ---------------------------------------------------------------------------
        Congress has directed EXIM to promote the export of goods
    and services related to renewable energy sources. \8\ EXIM
    offers the most generous terms allowed under the Organisation
    for Economic Cooperation and Development (OECD) Arrangement on
    Officially Supported Export Credits (the OECD Arrangement) to
    renewable energy, climate change mitigation, and climate change
    adaptation projects. Since 2001, EXIM has supported
    approximately $9.1 billion in environmentally beneficial
    exports, including renewable energy exports.
    ---------------------------------------------------------------------------
         \8\ 12 U.S.C. 635(b)(1)(K)
    ---------------------------------------------------------------------------
        All transactions are reviewed in accordance with EXIM's
    Board-approved Environmental and Social Due Diligence
    Procedures and Guidelines (ESPG). The ESPG requires alignment
    with the guidelines set forth in the International Finance
    Corporation's Performance Standards, including Performance
    Standard 3 (PS3): Resource Efficiency and Pollution Prevention.
    PS3 is used by foreign export credit agencies, development
    banks, and Equator Principle financial institutions \9\ when
    considering whether to provide export financing support.
    Through PS3, EXIM and its counterparts attempt to assure that
    projects avoid or minimize pollution from their activities and
    reduce project related greenhouse gas (GHG) emissions to the
    extent possible, by utilizing internationally disseminated
    technologies and practices.
    ---------------------------------------------------------------------------
         \9\ The Equator Principles were adopted by financial institutions
    and export credit agencies, including EXIM, and are a globally
    recognized benchmark for financial institutions to determine, assess,
    and manage the social and environmental risks of international project
    financing.
    ---------------------------------------------------------------------------
        With respect to individual transactions, EXIM posts an
    estimate of the annual GHG emissions of proposed fossil fuel
    and significant GHG emitting Category A project transactions on
    EXIM's website. During the underwriting process, if potentially
    adverse effects are identified, EXIM requires the development
    of mitigation measures, as well as plans to monitor the
    implementation and ongoing effectiveness of those mitigation
    efforts.
        Additionally, EXIM is a participant to the OECD Arrangement
    on Officially Supported Export Credits (the Arrangement) and
    the United States adheres to sector understandings within the
    Arrangement.
        Overall, EXIM acts to maintain U.S. exporters'
    competitiveness in the global marketplace while accounting for
    the environmental effects of the projects it supports. Each
    transaction must be reviewed individually for its compliance
    with the requirements set forth in law, and EXIM's staff and
    Board of Directors will continue to do so.

    Q.8. Some projects that have received Export-Import Bank
    funding, including ExxonMobil's Papua New Guinea Liquid Natural
    gas project, are reported to have led to severe human rights
    abuses. \10\
    ---------------------------------------------------------------------------
         \10\ The Nation, ``ExxonMobil's New Guinea Nightmare'', Ian T.
    Shearn, April 30, 2014, https://www.thenation.com/article/exxonmobils-
    new-guinea-nightmare/.
    ---------------------------------------------------------------------------
        Under your tenure at the Export-Import Bank, what will the
    bank do to prevent financed projects from causing or
    contributing to human rights abuses and what actions will the
    bank take if human rights abuses are found to occur?
        Please provide specific details.

    A.8. EXIM carefully assesses the adverse as well as beneficial
    impacts of proposed projects on people, including project-
    related human rights impacts, and will continue to do so.
    Transactions are reviewed in accordance with EXIM's Board-
    approved Environmental and Social Due Diligence Procedures and
    Guidelines (ESPG), which incorporates the Organisation for
    Economic Cooperation and Development's (OECD) Recommendation of
    the Council on Common Approaches for Officially Supported
    Export Credits and Environmental and Social Due Diligence, the
    International Finance Corporation's (IFC) Performance Standards
    on Social and Environmental Sustainability, and the
    Environmental Health and Safety Guidelines of the World Bank
    Group. The IFC Performance Standards requires an assessment and
    management of:

        Environmental and social risks and impacts;

        Labor and working conditions;

        Resource efficiency and pollution prevention;

        Community health, safety, and security;

        Land acquisition and involuntary resettlement;

        Biodiversity conservation and sustainable
            management of living resources;

        Indigenous peoples; and

        Cultural heritage.

        Pursuant to the ESPG, EXIM requires projects to assess the
    risks and impacts in consultation with affected communities and
    develop robust management plans to avoid, minimize, and
    mitigate adverse impacts, and to monitor and report on the
    implementation and effectiveness of these plans. EXIM conducts
    its own on-site monitoring through site visits and, in many
    cases, with the assistance of independent consultants.
    Additionally, EXIM considers other sources of information,
    including from stakeholders, host country Government agencies,
    the media, and the U.S. Embassy and other U.S. Government
    agencies. EXIM staff documents the results of its due diligence
    review of project-related risks and impacts, and the
    effectiveness of management plans to avoid and mitigate adverse
    impacts on affected communities, which then are provided to the
    EXIM's Board of Directors to inform their decisions on proposed
    financing of U.S. exports.
        As part of its due diligence, EXIM reviews both the host
    country's current social and human rights situation as a whole,
    and potential project-level concerns. EXIM's economists, who
    serve as the U.S. Government's Interagency Country Risk
    Assessment System (ICRAS) \11\ analysts, assess the political
    and social challenges in a country, and works in concert with
    the U.S. Department of State, where appropriate, to examine
    overall human rights and other considerations in their
    assessment of the risks associated with transactions in
    specific countries. EXIM and the Department of State's Bureau
    for Democracy, Human Rights, and Labor have developed
    procedures for regular consultation on project-related human
    rights concerns on Board-level transactions. Any such concerns
    are raised to the Board of Directors for their review prior to
    the approval of a transaction, along with any relevant measures
    considered to mitigate such concerns.
    ---------------------------------------------------------------------------
         \11\ ``The credit ratings of EXIM include a detailed assessment of
    country risks--EXIM staffs the interagency process known as the
    Interagency Country Risk Assessment System (ICRAS) which includes
    agencies such as the Office of Management and Budget and the Department
    of Treasury. This rating system is used by all U.S. Government agencies
    and programs providing cross-border loans, guarantees, or insurance. .
    . . '' See FY2020 Congressional Budget Justification, Export-Import
    Bank of the United States, p. 11, available at: https://www.exim.gov/
    sites/default/files/congressional-resources/budet-justification/FY20-
    EXIM-CBJ-FINAL.pdf.
    ---------------------------------------------------------------------------
        Under 12 U.S.C. 635(b)(1)(B), the law provides for the
    issuance of a Presidential National Interest Determination
    related to human rights concerns and thus specific authority to
    EXIM upon issuance of such determination to deny transactions
    for either project-specific or countrywide human rights
    concerns. The President has delegated this authority to make
    such determinations to the Secretary of State, who must consult
    with the Secretary of Commerce and the heads of other
    interested Executive agencies.
        When presented with a project with potential human rights
    concerns (such as the Papua New Guinea Liquefied Natural Gas
    Project, \12\ which was considered before the current EXIM
    Board of Directors was confirmed), EXIM conducts a thorough
    environmental and social due diligence review of the project.
    This includes a review of the Environmental and Social Impact
    Assessment, and construction phase and operations phase
    environmental, social, health, safety, and security plans (so-
    called ``ESMP'') prepared by the project, including plans to
    avoid, minimize, and mitigate impacts on project-affected
    peoples. The ESMP includes a statement of the project's
    policies, such as a health policy, a human rights policy,
    security policy, and a commitment to use good international
    industry practice, and how they are implemented in this plan of
    action. The construction phase ESMP is required to include
    strategies for addressing project monitoring, biodiversity,
    resource management, pollution prevention, cultural heritage,
    land acquisition and resettlement, community impacts
    management, community engagement and support, and human
    resources. There should be a similar scope of plans covering
    the operations phase of the project.
    ---------------------------------------------------------------------------
         \12\ With respect to PNG LNG specifically, the environmental and
    social management plans, including those addressing social and human
    rights topics, are publicly available via the PNG LNG Project website
    which also includes a statement of commitment to respecting human
    rights. +PNG LNG, ``Environmental and Social Management Plans''
    available at: https://www.pnglng.com/Environment/Environmental-and-
    Social-Management-Plans; PNG LNG, ``Respecting Human Rights'' available
    at: https://www.pnglng.com/Community/Community/Respecting-Human-Rights
    (citing consistency with United Nations' Guiding Principles on Business
    and Human Rights).
    ---------------------------------------------------------------------------
        The project company formally commits to implementing the
    approved ESMP, including monitoring and reporting, in the
    financial agreements it has with EXIM. These agreements include
    enforcement mechanisms, which EXIM can utilize if the project
    is found to be out of compliance with the agreed to ESMP
    commitments. EXIM, together with its independent environmental
    and social consultants, closely monitors the project's
    implementation of these management plans. When reports or
    complaints are received, EXIM investigates these allegations to
    ensure the transaction's approved ESMP is being followed and
    implemented. For example, PNG LNG provides support for the
    training of regional police forces in the requirements of the
    Voluntary Principles for Security and Human Rights, including
    guidance on the use of force.
        EXIM takes project-related human rights concerns seriously
    and will continue to do so. EXIM's Environmental and Social
    Responsibility Committee (ESRC) meets regularly to discus and
    address potential issues on a crossdivisional basis. Through
    the ESRC and periodic reviews of the ESPG, EXIM is committed to
    reducing the risk of severe human rights abuses connected to
    its financing of U.S. goods and services.
                                    ------

                   RESPONSES TO WRITTEN QUESTIONS OF
                SENATOR CORTEZ MASTO FROM KIMBERLY REED

    Q.1. How does the Export-Import Bank reduce the risk of selling
    products in emerging markets?

    A.1. The Export-Import Bank of the United States assumes credit
    and country risks that the private sector is unable or
    unwilling to accept, as is often the case in emerging markets,
    through its export credit insurance, direct loans, and loan
    guarantees. As an example, EXIM equips U.S. businesses with
    export credit insurance to protect against the risk of
    nonpayment due to buyer default or political risk. These
    specific risks tend to be more pronounced when shipping to
    emerging markets. In order to secure insurance coverage, the
    U.S. business pays a premium to cover their shipments to
    approved buyers. With insurance coverage, U.S. businesses are
    more comfortable offering flexible payment terms to their
    international customers. Without access to export credit
    insurance, U.S. businesses would have to choose between
    forgoing export sales to potentially riskier emerging markets
    or taking on greater risk that their international customer
    could default on payment. For smaller businesses operating on
    thin margins, such risks could significantly inhibit their
    willingness to grow their global sales.
        EXIM can further reduce the risk for U.S. businesses
    exporting to emerging markets when financing the sales of
    exports. When underwriting the transaction, EXIM undertakes a
    detailed analysis of risks associated with the project. This
    includes an evaluation of the risk of industry, country, and
    management of the borrower, the project's operating
    performance, liquidity position, leverage, and ability to
    service its existing and prospective debt obligations. EXIM may
    require additional structuring enhancements, such as
    collateral, security deposits, or additional guarantors to
    further reduce the risk in the transaction.
        Following the U.S. Senate's confirmation of the new EXIM
    Board of Directors on May 8, 2019, the Board formally approved
    EXIM's Chief Risk Officer, who reports to EXIM President and
    Chairman and is tasked to oversee all issues related to risk
    within EXIM, as directed by the 2015 reauthorization of EXIM
    and codified as 12 U.S.C. 635a(l) et seq. The 2015 law also
    authorized a pilot program for reinsurance which allows the
    agency to enter into contracts to share risks associated with
    guarantees, insurance, or credit to reduce the risk to U.S.
    taxpayers. In Fiscal Year 2018, EXIM entered into reinsurance
    structure to the Aircraft portfolio with an aggregate total of
    reinsurance of $1.0 billion over a 2-year period.
        Additionally, EXIM requires projects, in consultation with
    affected communities, to assess the risks and impacts to
    project-affected people, develop robust management plans to
    avoid, minimize and mitigate adverse impacts, and monitor and
    report on the implementation and effectiveness of these plans.
    EXIM conducts its own on-site monitoring through site visits
    and, in many cases, with the assistance of independent
    consultants. In its financing agreements with EXIM, the project
    agrees to include enforcement mechanisms that can be triggered
    if a project is found to be out of compliance with their
    environmental, social, health, safety, and security plans.
    Throughout the project lifecycle, EXIM, together with its
    independent environmental and social consultant, closely
    monitors the project's implementation of these management
    plans.
        Through its careful attention to financial, political,
    environmental, and social risks associated with projects--
    particularly those in emerging markets, EXIM further reduces
    risk for U.S. businesses exporting their goods and services and
    protects U.S. taxpayers from losses arising from such risks.

    Q.2. How is the Export-Import Bank strengthening its
    relationship with private sector lenders and brokers?

    A.2. EXIM places a high degree of importance on supplementing
    private sector financial solutions. EXIM has developed its
    financial solutions in response to feedback from lenders and
    brokers about how to better partner with them in addressing the
    needs of U.S. exporters.
        EXIM works directly with private sector lenders through
    guarantees of their loans and lines of credit that facilitate
    U.S. exports. Lenders may apply for EXIM to guarantee their
    working capital loans for U.S. exporters and their U.S.
    suppliers or to guarantee their loans to the international
    buyers of U.S. exports.
        Additionally, EXIM has delegated authority to qualified
    private sector lenders to streamline the approval of loan
    guarantees for smaller transactions, generally transactions
    under $25 million. Any bank, provider of commercial credit, or
    other public or private lender may apply to participate as a
    delegated authority lender. Once approved, EXIM trains these
    lenders on how to comply with its policies and legal
    requirements. EXIM authorizes these lenders to commit EXIM's
    guarantee up to a certain amount for an individual loan and an
    overall amount across all covered loans. With delegated
    authority, lenders can underwrite, structure, and issue loans
    backed by EXIM's guarantee. EXIM collects fees for all its
    guarantees, reviews any claims for compliance with EXIM
    policies, and routinely evaluates the performance of delegated
    authority lenders in the program.
        Currently, there are 74 private sector lenders
    participating in EXIM's delegated authority program for working
    capital loan guarantees and five financial institutions
    participating in EXIM's medium-term buyer financing program.
        EXIM is strengthening relationships with private sector
    lenders by:

      1.  Increasing the number of new lending partners
            participating in its Working Capital Guarantee Program
            (WCGP). Once approved, these delegated authority
            lenders can originate conforming working capital loans
            with EXIM's guarantee. Since 2018, EXIM has added five
            new lending partners to its working capital program.

      2.  Reviewing and, as appropriate, increasing credit lines
            for existing lending partners to allow them to
            originate more--and larger--working capital loans
            backed by EXIM. Since 2016, EXIM has increased the
            credit lines of nine lenders thereby allowing them to
            originate larger deals;

      3.  Enhancing lender training opportunities. In addition to
            quarterly working capital training conducted in
            Washington, DC, EXIM has provided individual working
            capital training sessions at lenders' offices
            throughout the country. This allows EXIM to reduce the
            costs borne by lenders to comply with program
            requirements and enables a greater number of lender
            employees access to training;

      4.  Streamlining the WCGP application process. EXIM recently
            streamlined its working capital program requirements to
            make the program easier for lenders and borrowers to
            use; and

      5.  Assigning each lender an EXIM relationship manager, who
            is responsible for overseeing operational and credit
            issues. This single point-of-contact enhances the
            experience of lenders and ensures transparency and
            accountability.

        With regard to EXIM's insurance products, nearly all EXIM
    export credit insurance policies are purchased through licensed
    insurance brokers. EXIM works closely with insurance brokers,
    particularly those who specialize in trade credit insurance.
    Partnering insurance brokers must be aware of the availability,
    terms, and conditions of EXIM's export credit insurance
    policies. EXIM has a dedicated broker relationship manager who
    is responsible for addressing the questions and concerns of
    insurance brokers. Today, EXIM has registered 115 insurance
    brokerage firms that can help more U.S. businesses learn about
    and access EXIM's export credit insurance. EXIM has
    significantly expanded its outreach to brokers by:

      1.  Soliciting broker input on revisions to EXIM's
            underwriting standards, insurance policy wordings, and
            online platform functionality to promote user- and
            customer-friendly products and services;

      2.  Surveying brokers to get their views on EXIM's
            distribution strategy and understanding how EXIM can
            better meet the needs of U.S. exporters. This survey is
            part of a more comprehensive review of EXIM's overall
            distribution strategy to better align EXIM's outreach
            and engagement efforts with its external partners;

      3.  Publishing a quarterly newsletter, hosting quarterly
            webinars, and regularly providing ad hoc communications
            that keep brokers updated on relevant developments; and

      4.  Developing new training tools and expanding existing
            training programs to enhance education about EXIM
            products and processes.

        Additionally, pursuant to Section 51008 of the Export-
    Import Bank Reform and Reauthorization Act of 2015, P.L. 114-94
    (the ``Act''), in 2017-18, EXIM explored, research, negotiated,
    and executed a return to the Private Reinsurance Market. The
    goal was to establish a pilot program under which EXIM would
    share risks associated with the provision of guarantees,
    insurance, or credit with the private sector. On March 23,
    2018, EXIM entered into a Portfolio Facultative Reinsurance
    Contract, working with the AON Insurance company as broker,
    with ten (10) private sector re-insurance companies. The
    arrangement shares the risk and provides an additional $1
    billion in loss coverage for a significant portion of EXIM's
    existing portfolio of large commercial aircraft financing
    transactions. The program is the largest public-private risk-
    sharing arrangement for a U.S. Government agency included
    within the Federal Credit Reform Act (FCRA). Following the
    successful implementation of this program, EXIM is considering
    an expansion of this type of arrangement to other parts of its
    portfolio in order to reduce the risks of taxpayer liabilities
    for possible losses.
        EXIM works closely with the lender and broker community to
    ensure a strong and collaborative relationship that will
    ultimately lead to better customer service.

    Q.3. In your written testimony, you mention new outreach
    strategies for tribal communities. What are you planning?

    A.3. It is important that tribal communities are aware of and
    have access to EXIM's products and financial assistance. Since
    being confirmed on May 8, 2019, and taking steps to fully
    reopen the agency, the EXIM Board Members and staff have been
    focused on increased rural outreach and rethinking EXIM's
    strategic plan to better include underserved communities,
    including tribal communities and the financial institutions,
    veteran-owned businesses, and often organizations that are the
    first step for new potential exporters.
        EXIM's Office of Minority and Women-Owned Businesses (MWOB)
    is playing a lead role in reaching this underserved business
    community through awareness, education, and collaboration.
    Through its MWOB Office, EXIM works closely with other
    Government agencies and business development associations that
    have a minority trade focus to help spread the word about EXIM
    financing. EXIM regularly engages with various tribal business
    organizations throughout the country to create opportunities
    for export-ready businesses in the United States.
        Over the last decade, EXIM has connected with business
    owners, tribal leaders, and advocates for change at the annual
    Reservation Economic Summit (RES), which brings together
    Members of Congress, Federal agency representatives, and State
    and local officials to build bridges of opportunity for these
    businesses and to further economic development within the
    tribal community.
        Recently, EXIM participated in the 4th Annual Navajo Nation
    Economic Summit for the first time in 2019. In mid-September
    2019, EXIM attended the 21st Annual American Indian Tourism
    Conference as a part of its ongoing efforts to strengthen key
    partnerships and opportunities within the Native American
    Business Community. Additionally, on September 23, 2019,
    Chairman Reed and EXIM staff met with representatives from
    rural and tribal community banks in Washington, DC, to engage
    in dialogue as well as raise awareness of EXIM products
    available to U.S. exporters and local banking partners. Moving
    forward, EXIM plans to continue expanding activities with
    Native American business owners. For example, EXIM has plans to
    work with the American Indian Procurement Technical Assistance
    Center (PTAC) through further participation in events,
    webinars, and symposiums. EXIM looks forward to working closely
    with PTAC to help increase global business opportunities for
    tribal communities.

    Q.4. Some have recommended prohibiting Export-Import Bank
    financing for any U.S. firm selling to a company owned by the
    Chinese Government. What would the impact of such a prohibition
    be on U.S. companies and on China?

    A.4. When it comes to export credit financing, China is the
    most aggressive. The Export-Import Bank of the United States
    (EXIM) Report to the U.S. Congress on Global Export Credit
    Competition (Competitiveness Report), which was issued in June
    2019 and covers global official export credit activities during
    the calendar year 2018, finds that, over the last 10 to 15
    years, China's export credit system has caused the export
    credit agencies (ECAs) of other countries to change the way
    they do business--or risk their exporters losing access to
    large swaths of key markets. Chinese MLT export credit activity
    has risen almost eightfold, a figure about one-tenth of Group
    of Seven (G7) activity in 2008 to a level equaling the entire
    G7 in 2018. To further underscore this point, China provided
    more export credit financing in 2018 than the next three
    largest ECAs combined--Italy, Germany, and Korea. On September
    23, 2019, the newly constituted EXIM Advisory Committee
    reported to the U.S. Congress that ``[c]ountries including
    China have reshaped the worldwide export market and effectively
    limited U.S. opportunities for major trade and procurement
    around the globe.'' \1\
    ---------------------------------------------------------------------------
         \1\ Available at: https://www.exim.gov/sites/default/files/
    reports/competitiveness-reports/2018/EXIM-2018-CompetitivenessReport-
    508-committees-statements.pdf.
    ---------------------------------------------------------------------------
        Chinese State-owned enterprises (SOEs) play a large role in
    the Chinese economy and its export promotion efforts. While
    there are several well-known Chinese SOEs, sometimes ownership
    of Chinese entities is opaque at best, meaning that there may
    be more Chinese SOEs than are immediately and publicly
    identifiable. Given this information, a prohibition on EXIM
    financing in support of U.S. goods and services involving
    Chinese SOEs potentially could be challenging to implement,
    inhibit the sale of U.S. goods and services, and reduce the
    creation and support of jobs for U.S. workers.
        The exact effects of such a prohibition are difficult to
    estimate with specificity and would, in part, be determined by
    the Congressional legislative language of the prohibition. For
    the purposes of this response, EXIM is providing information
    that reflects the full range of its financing for U.S. exports
    to China.
        If the prohibition were expanded to cover not only exports
    to China, but also exports to companies outside of China, but
    owned fully or partially by the Chinese Government, there could
    be a dramatic increase in adverse effects on U.S. exporters,
    while conferring substantial economic and strategic benefit on
    the Chinese economy. For example, by purchasing minority stakes
    in projects of interest in countries throughout that
    participate in China's Belt and Road Initiative, China could
    effectively block U.S. exporters from participating in those
    markets and preserve these projects for Chinese exporters and
    workers. Not only would this scenario have detrimental economic
    consequences in terms of lost business opportunities for U.S.
    companies and thus potential job losses for U.S. workers, but
    it also presents long-term strategic and national security
    issues for the U.S. when China extends its economic and
    strategic reach around the globe where EXIM is prohibited from
    participating.
        From Fiscal Year 2009 through Fiscal Year 2018, EXIM
    authorized a total of 31,937 export credit insurance policies,
    loan guarantees, and direct loans that provided $186.0 billion
    in financing to support U.S. exports around the world and U.S.
    jobs for workers. Of the above total amount, 268 authorizations
    for direct loans, loan guarantees, and single-buyer export
    credit insurance policies provided an estimated $6.7 billion of
    financing (or 3.6 percent of total financing) that directly
    supported U.S. exports to China. In conducting due diligence to
    ensure a reasonable assurance of repayment, EXIM evaluates the
    primary source of repayment (PSOR) in each of its transactions.
    As part of this process, EXIM identifies whether the PSOR is a
    sovereign (backed by the full faith and credit of the national
    Government), public non-sovereign (e.g., State-owned
    enterprises), or private entity based on the information
    available regarding the entity, including its ownership
    structure. This informs EXIM's analysis of whether there is a
    reasonable assurance of repayment. In many instances, the PSOR
    is the buyer of U.S. exports. However, another entity such as a
    financial institution or governmental entity may agree to serve
    as the PSOR on behalf of the buyer in order to enhance the
    buyer's credit and facilitate the export sale.
        Of the estimated $6.7 billion of financing authorized to
    support exports to China, the Chinese Government served as the
    PSOR for $0.4 billion, Chinese State-owned enterprises were the
    PSOR for $4.9 billion, and Chinese private entities were the
    PSOR for $1.4 billion.
        Additionally, some of EXIM's financial products are
    designed in a way to provide greater flexibility to U.S.
    exporters and are not limited to exports to one buyer. Under
    its multibuyer insurance policies, EXIM authorizes a total
    outstanding amount of an exporter's shipments that EXIM insures
    for all covered buyers. After authorization, EXIM then works
    with the exporter to set limits for individual buyers under the
    overall authorized policy.
        Exporters using EXIM's export credit insurance policies
    report their covered shipments to EXIM. From FY2009 through
    FY2018, EXIM insured a total of $35.7 billion of U.S. exports
    under its multibuyer insurance program. Of this total, EXIM
    insured $2.6 billion of U.S. exports to Chinese buyers (7.3
    percent of total multibuyer insured shipments). Chinese State-
    owned enterprises were the PSORs for $0.4 billion in insured
    shipments under the multibuyer program, while Chinese private
    entities were the PSORs for the remaining $2.2 billion of these
    insured shipments.
        Accordingly, a complete prohibition on EXIM financing
    involving Chinese SOEs would have an effect on EXIM's ability
    to support the sale of U.S. exports to China. Additionally, a
    prohibition could have an indirect impact of discouraging U.S.
    companies from exporting to non-SOE Chinese businesses. For
    example, some U.S. companies might have concerns about future
    claims being denied if a buyer is later determined to be a
    previously unidentified Chinese SOE.
        A prohibition on EXIM financing for transactions involving
    Chinese SOEs may have a limited effect, or no effect, on China.
    There are now 113 ECAs around the world. Chinese firms would
    continue to have access to suppliers from other Nations and may
    be able to secure financing from foreign ECAs for those
    purchases. Moreover, there would not be a substantial
    difference in the cost of financing for Chinese firms if they
    secure financing from another participating country's ECA since
    EXIM financing is offered on terms consistent with the
    Arrangement on Officially Supported Export Credits.
        Foreign competitors could fill the gap and win contracts
    using foreign Government-backed financing that EXIM would be
    prohibited from matching. The consequence may not only be the
    loss of an individual sale or contract, but also lost
    opportunities for follow-on exports such as repairs and
    maintenance, or supplemental goods and services. These lost
    sales for the U.S. exporter could also adversely affect demand
    for goods and services from the U.S. businesses in the
    company's supply chain. In some instances, the decision to
    purchase goods or services from a foreign competitor can affect
    the standards used in certain sectors (e.g.,
    telecommunications, power, transportation) that could create
    long-term barriers to U.S. competitiveness in those markets.
        Furthermore, in some instances, foreign ECAs have
    demonstrated that they are willing to provide financing to
    support sales from U.S. exporters in order to increase their
    respective country's share of the supply chain.
        Additionally, U.S. companies operating in partnership on
    specific projects with firms in China could be affected
    depending on the nature of the prohibition. For example, large
    projects in developing markets (whether power, energy, or
    mining) often have multiple sponsors involved as owners.
    Depending on the structure of the prohibition, should one of
    those owners be a Chinese SOE, U.S. companies could be placed
    at a disadvantage in selling their products overseas to
    companies which happen to work with Chinese SOEs on a specific,
    discrete project.
        EXIM looks forward to continuing to work with Congress as
    it explores this and other issues.

    Q.5. Seventy-five environmental activists sent a letter
    recommending that the EXIM Bank should fully comply with the
    requirements of the Endangered Species Act (ESA). We have heard
    from scientists across the world that one million species
    around the world face extinction in the coming decades due to
    climate change and other human activities.
        Should the Export-Import Bank avoid funding projects that
    could hasten the extinction of the 650 endangered and
    threatened foreign plants and wildlife?

    A.5. EXIM carefully considers the impacts of transactions
    requesting U.S. export financing support on endangered species
    and their habitats. In accordance with its Charter (12 U.S.C.
    635 et seq.), EXIM has established procedures to consider both
    the beneficial and adverse environmental and social effects of
    goods and services for which support is requested.
    Additionally, the EXIM Charter as codified also authorizes the
    Board of Directors, in its judgement, to grant or withhold
    financing support after such consideration. \2\
    ---------------------------------------------------------------------------
         \2\ 12 U.S.C. 635i-5(a)(2)
    ---------------------------------------------------------------------------
        Like all other Federal agencies, EXIM is required to abide
    by the Endangered Species Act \3\ (ESA), as well as the
    National Environmental Policy Act, National Historic
    Preservation Act, and other applicable U.S. environmental laws.
    EXIM implements its ESA requirements through its Board-approved
    Environmental and Social Due Diligence Procedures and
    Guidelines (ESPG). \4\ The ESPG is periodically reviewed to
    ensure that it remains effective in addressing the
    environmental effects of agency-supported projects including
    adherence to all current, applicable U.S. environmental law.
    ---------------------------------------------------------------------------
         \3\ 16 U.S.C. 1531(c)
         \4\ See: Export-Import Bank of the United States, Environmental
    and Social Due Diligence Procedures and Guidelines (Dec. 2013),
    available at: https://www.exim.gov/policies/ex-im-bank-and-the-
    environment/environmental-and-social-due-diligence-procedures-and-
    guidelines.
    ---------------------------------------------------------------------------
        When it is determined a potential project has a possible
    ESA implications, EXIM engages as early as possible with the
    appropriate Federal agencies, including the National Marine
    Fisheries Service and the U.S. Fish and Wildlife Service, to
    determine the proper course of action under the ESA. When it is
    determined that a consultative process should be conducted,
    EXIM works closely with the appropriate agency in an ongoing
    process to identify listed species that may be affected and
    require additional analysis. EXIM also conducts a robust
    assessment of project impacts on internationally listed
    endangered and critically endangered species, and their
    critical habitat, including project plans to avoid, minimize,
    mitigate, and offset impacts.
        Additionally, EXIM's ESPG requires alignment with
    international guidelines including the Equator Principles,
    Organisation for Economic Cooperation and Development's (OECD)
    Common Approaches, International Finance Corporation's
    Performance Standards (including their Performance Standard 6
    on Biodiversity Conservation and Sustainable Management of
    Living Natural Resources), and the World Bank Group's
    Environmental, Health, and Safety Guidelines.
        The ESPG provides for additional assessment of project
    transactions over $10 million that may have potential adverse
    environment and social impacts, and an evaluation of the
    environmental and social impacts is presented to the EXIM Board
    of Directors for their consideration prior to voting on a given
    proposed transaction. An environmental and social screening
    also is conducted for transactions below that threshold as
    prescribed by the OECD's Common Approaches. Accordingly, a
    detailed Environmental and Social review is conducted for
    identified project-related transactions over $10 million, as
    well as rare, special cases where a potential for environmental
    and social issues is identified during the underwriting
    process. Meanwhile, short-term programs, which include
    insurance or working capital guarantees for goods and services
    with a tenor of less than 2 years, are not subject to
    environmental and social screening, given the nature of the
    products and negligible risk posed.
        Meanwhile, short-term programs, which include insurance or
    working capital guarantees for goods and services with a tenor
    of less than 2 years, are not subject to environmental and
    social screening, given the nature of the products and
    negligible risk posed. These short-term products, which number
    in the thousands of export shipments per year and typically
    require speedy approval to be effective. Both, the OECD's
    Common Approaches and the Equator Principles each independently
    and directly exclude short term transactions (those less than 2
    years) from environmental and social screenings.

    Q.6. What can the Export-Import Bank do to reduce the negative
    impact of climate change?
        How can the EXIM avoid financing projects that could lead
    to more frequent and extreme weather events that cause tens of
    billions of dollars in damage to ecosystems, agriculture,
    infrastructure, and personal property?

    A.6. In accordance with its Charter (12 U.S.C. 635 et seq.),
    EXIM has established procedures to consider both the beneficial
    and adverse environmental and social effects of goods and
    services for which support is requested. The law also
    authorizes the EXIM Board of Directors to grant or withhold
    financing support after such consideration. \5\ EXIM acts to
    maintain U.S. exporters' competitiveness in the global
    marketplace while addressing the environmental effects of the
    projects developed with EXIM-financed exports.
    ---------------------------------------------------------------------------
         \5\ 12 U.S.C. 635i-5(a)(2)
    ---------------------------------------------------------------------------
        All transactions are reviewed in accordance with EXIM's
    Board-approved Environmental and Social Due Diligence
    Procedures and Guidelines (ESPG). The ESPG requires alignment
    with the guidelines set forth in the International Finance
    Corporation's Environmental and Social Performance Standards,
    including Performance Standard 3 (PS3): Resource Efficiency and
    Pollution Prevention. PS3 is used by foreign export credit
    agencies, development banks, and Equator Principle financial
    institutions when considering whether to provide export
    financing support. \6\ Through PS3, EXIM assures that projects
    avoid or minimize pollution from their activities. PS3 also
    guides EXIM's efforts to reduce project-related greenhouse gas
    (GHG) emissions, to the extent possible, through the use of
    internationally disseminated technologies and practices.
    ---------------------------------------------------------------------------
         \6\ The Equator Principles were adopted by financial institutions
    and export credit agencies, including EXIM, and are a globally
    recognized benchmark for financial institutions to determine, assess,
    and manage the social and environmental risks of international project
    financing. For more information, see https://equator-principles.com/.
    ---------------------------------------------------------------------------
        For most major projects, EXIM is typically one of multiple
    financing entities and its financing is directly tied to the
    use of U.S. exports. Regardless of the amount of its financing
    involved, EXIM posts an estimate of the total annual GHG
    emissions of proposed fossil fuel and significant GHG-emitting
    Environmental Category A \7\ projects on its website. \8\
    During the underwriting process, if potentially adverse
    environmental or social effects are identified, EXIM requires
    the development of mitigation measures, as well as plans to
    monitor the implementation and ongoing effectiveness of those
    mitigation efforts.
    ---------------------------------------------------------------------------
         \7\ Generally defined as ``large greenfield projects or projects
    located in, or impacting a sensitive site.'' For a more complete
    listing of established guidelines and definitions, see www.exim.gov/
    policies/ex-im-bank-and-theenvironment/environmental-and-social-due-
    diligence-procedures-and-guidelines.
         \8\ See specifically www.exim.gov/policies/ex-im-bank-and-the-
    environment/pending-transactions; See generally www.exim.gov/policies/
    carbon.
    ---------------------------------------------------------------------------
        EXIM is a Participant to the Organisation for Economic
    Cooperation and Development (OECD) Arrangement on Officially
    Supported Export Credits (the Arrangement), and the United
    States adheres to sector understandings within the Arrangement.
    In accordance with 12 U.S.C. 635(k), EXIM does not
    discriminate against applications based on industry, sector, or
    business. Since January 2014, Congress has suspended
    enforcement of EXIM's Supplemental Guidelines for High Carbon
    Intensity Projects for coal-fired power plants in the 77
    International Development Association eligible countries
    annually, which has been maintained in subsequent
    appropriations laws (most recently as Sec. 7062 of P.L. 116-6).
    However, all other environmental reviews, guidelines, and
    requirements remain in place.

    Q.7. Despite the mandate to devote at least 10 percent of
    EXIM's aggregate financing to renewable energy exports, the
    Bank has consistently fallen short of this target. Do you think
    the Bank can meet this target? How?

    A.7. Congress has directed EXIM to promote and support the
    export of goods and services related to renewable energy
    sources (12 U.S.C. 635(b)(1)(K)), as well as U.S. exports of
    goods and services that have beneficial effects on the
    environment or mitigate potential adverse environmental effects
    (12 U.S.C. 635i-5(b)). Regardless of the good or service
    benefitting from EXIM financing, a transaction must meet the
    requirements laid out in statute. As required by 12 U.S.C.
    635(b)(1)(C), EXIM has staff dedicated to increasing awareness
    among U.S. companies of EXIM financing, including small
    businesses, and the incentives it offers for renewable energy
    projects and environmentally beneficial exports.
        In Fiscal Year 2016, Congress removed the explicit
    percentage target for EXIM financing for renewable energy
    exports, but the statutory mandate to promote those exports
    remains. \9\ From FY2009 to FY2018, EXIM has authorized $3.734
    billion in environmentally beneficial exports, including
    renewable energy exports.
    ---------------------------------------------------------------------------
         \9\ Division J, Title VI of the Consolidated and Further
    Continuing Appropriations Act, 2015 (P.L. 113-235) includes the
    following language: ``Provided further, That not less than 10 percent
    of the aggregate loan, guarantee, and insurance authority available to
    the Bank under this act should be used for renewable energy
    technologies or energy efficiency technologies[.]'' Similar language
    was removed from the Consolidated Appropriations Act, 2016 (P.L. 114-
    113) and was not included in subsequent appropriations laws.
    ---------------------------------------------------------------------------
        Some American companies may face challenges in accessing
    needed export credit financing for various reasons, including
    regulatory constraints, limitations in the export finance
    market, or competition from foreign sellers backed by official
    export credit. Consistent with its mandate to supplement and
    not compete with private capital, EXIM is a demand-driven
    institution and responds to the financing needs associated with
    U.S. exports.
        Demand for EXIM financing varies year-to-year based on
    global capital market dynamics, the relative competitiveness of
    U.S. exports, changes to political risk in export markets, and
    other variables. These external factors can make specific
    targets for annual EXIM support challenging to meet. In order
    to increase the percentage or volume of authorizations for a
    specific sector, EXIM would have to receive a greater number of
    applications in that sector. Increases in applications are
    driven primarily by increased foreign demand for certain U.S.
    goods and services, coupled with a lack of supply in private
    sector financing to support those export sales.
        According to data published by the United States
    International Trade Administration, global clean energy
    investment totaled more than $329 billion in 2015 and the
    demand for renewable energy exports was expected to continue to
    rise. However, U.S. exporters were found to be ill-positioned
    to benefit from that increasing demand. \10\ Much of the U.S.
    renewable energy technology export sales are destined for
    countries that do not usually require EXIM financing (e.g.,
    Canada, the United Kingdom, Germany). EXIM also requires that
    companies receiving EXIM financing contain minimum amounts of
    U.S. content. Currently, much of the U.S. manufacturing of
    renewables has moved overseas, making associated products
    ineligible for EXIM support due to a lack of U.S. content.
    Therefore, despite EXIM's focus on supporting renewable energy
    exports, without greater foreign demand for U.S.-manufactured
    renewable energy products, EXIM financing will naturally be
    constrained.
    ---------------------------------------------------------------------------
         \10\ International Trade Administration, ``2016 Top Markets Report
    Renewable Energy: A Market Assessment Tool for U.S. Exporters'', April
    2016 https://www.trade.gov/topmarkets/pdf/Renewable-Energy-Top-Markets-
    Report.pdf.
    ---------------------------------------------------------------------------
        EXIM takes seriously its mandate to support the export of
    renewable energy and environmentally beneficial exports and
    stands ready to provide financing when necessary. EXIM will
    continue to conduct outreach to U.S. companies seeking to
    export these products and ensure U.S. businesses, including
    those providing environmentally beneficial goods and services,
    are able to secure the financing needed to compete and win
    foreign sales.

    Q.8. The Export-Import Bank requires projects have an
    independent contractor monitor the development during and after
    construction. The EXIM Bank also operates an online portal for
    complaints. Some advocates say that the online portal lacks an
    independent accountability mechanism. They say it does not have
    a dispute resolution function that brings the parties together
    to find a mutually agreeable solution to the community's
    grievances.
        Do you think a more effective complaints mechanism is
    needed? If so, what would it entail?

    A.8. EXIM takes project environmental and social due diligence
    and monitoring extremely seriously. EXIM allocates significant
    resources to assessing the environmental and social impacts of
    projects for which EXIM financing has been requested and EXIM
    staff are engaged (typically including in-person site visits)
    with the project during all phases of project development,
    construction, operation, and decommissioning. To supplement
    EXIM's own environmental and social due diligence and
    monitoring, EXIM also uses independent expert consultants. EXIM
    has long been a leader among ECAs in transparency and
    accessibility by stakeholders and has continued to strengthen
    that position over time. In response to a recommendation from
    EXIM's Office of the Inspector General (OIG), EXIM established
    a formal process for receiving and responding to complaints
    about a project's environmental and social performance. \11\
    ---------------------------------------------------------------------------
         \11\ See: OIG-INS-15-02, Recommendations 3A and 3B.
    ---------------------------------------------------------------------------
        Since that time, EXIM has led its global export credit
    agency counterparts with the development of this complaint
    mechanism. EXIM consulted with stakeholders throughout the
    process of creating the Environmental and Social Project
    Information and Concerns (ESPIC) website portal and
    incorporated substantial feedback with the aim of providing a
    predictable, accessible, legitimate, objective, and transparent
    mechanism to register complaints. Over the course of designing
    the ESPIC portal and many discussions with stakeholders, EXIM
    included several specific suggestions, such as:

        Clearly displaying links to the ESPIC portal in
            multiple places on EXIM's website;

        Providing specific contact information for the
            person responding to portal submissions;

        Accepting anonymous submissions;

        Adding a Google plug-in so the page is accessible
            to project-affected peoples who may not know English;
            and

        Providing ample description of the process that
            takes place after a complaint is submitted, including a
            clear timeframe.

        After reviewing the ESPIC portal and associated processes,
    EXIM's OIG closed the recommendation as implemented in
    September 2016.
        Additionally, in 2016, EXIM established the Environmental
    and Social Review Committee (ESRC). The ESRC is chaired by
    EXIM's Chief Risk Officer, a position that reports directly to
    EXIM's Chairman. The ESRC consists of staff from the
    Engineering and Environment Division, the Office of the General
    Counsel, the Office of Policy and International Relations, and
    other relevant divisions within EXIM. The ESRC provides a forum
    for the review of policies, procedures, and project-specific
    issues of interdivisional interest related to environmental and
    social issues. The Committee meets regularly to share
    information and review and respond to ESPIC submissions, and
    has been an effective tool to enhance collaboration,
    coordination, and transparency among divisions to promptly and
    effectively address inquiries and complaints as they arise. The
    ESRC maintains a registry of received environmental and social
    complaints and concerns, as well as action taken by EXIM to
    respond to those submissions, on EXIM's website.
        All transactions are reviewed in accordance with EXIM's
    Board-approved Environmental and Social Due Diligence
    Procedures and Guidelines (ESPG). The ESPG requires alignment
    with the guidelines set forth in the International Finance
    Corporation's Environmental and Social Performance Standards.
    The Performance Standards include a requirement that projects
    establish and maintain appropriate grievance mechanisms to
    ensure resolution of disputes. Projects retain this
    responsibility given their proximity to any issue that may
    arise, but EXIM assesses and monitors the strength and capacity
    of the project-operated grievance mechanism throughout the life
    of the project, requiring it to be a robust system throughout
    all phases of the project. In instances where project-affected
    persons feel underserved by a project's grievance mechanism,
    they are encouraged to raise issues with the project and
    contact EXIM through various channels, including through the
    ESPIC portal. EXIM's leadership in identifying, mitigating, and
    monitoring projects for potentially adverse environmental and
    social effects ensures that the concerns of local communities
    are being addressed throughout the lifecycle of a project.

    Q.9. What role could you add to the Bank's complaint mechanism
    for the Office of Inspector General?

    A.9. As someone who has focused on oversight and reform and has
    worked with Inspectors Generals for her entire career, Chairman
    Reed believes it is very important to set the tone from the
    top. As such, EXIM has a zero-tolerance policy for fraud,
    waste, and abuse and anyone with a complaint or concern is
    urged to raise it with the Office of the Inspector (OIG). It is
    also important to have open lines of communication and a
    culture of responsiveness when it comes to any issues raised by
    the OIG. As such, Chairman Reed regularly meets with the
    Inspector General and is creating a culture at EXIM that put
    taxpayers and transparency first. Yet, these things must be
    done while respecting the independence of the OIG.
        As an independent entity, the OIG receives complaints or
    concerns regarding specific projects or EXIM processes and
    determines whether to investigate those issues independently.
    If the OIG determines further review is needed, they have that
    ability given their independence. EXIM respectfully recommends
    that the OIG be consulted directly if there is a desire to
    explore improving the OIG complaint mechanism process. EXIM
    stands ready to follow up on any recommendations that may come
    from this process.
        EXIM takes seriously its responsibility to review and
    respond to submissions made through the Environmental and
    Social Project Information and Concerns portal. As described in
    the response to QFR8A, EXIM has a robust internal process
    established for reviewing and addressing environmental and
    social concerns.

                  Additional Material Supplied for the Record
           STATEMENT OF THE BANKERS ASSOCIATION FOR FINANCE AND TRADE

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              STATEMENT OF THE REINSURANCE ASSOCIATION OF AMERICA

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]