[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
  
  
  
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                Available at: https: //www.govinfo.gov /
                
                
                
                
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             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.
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     \5\ 12 U.S.C. 635i-5(a)(2)
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    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.
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     \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/.
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    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.
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     \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.
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    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.
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     \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.
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    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.
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     \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.
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    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\
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     \11\ See: OIG-INS-15-02, Recommendations 3A and 3B.
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    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
       
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          STATEMENT OF THE REINSURANCE ASSOCIATION OF AMERICA
          
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