[Senate Hearing 116-360]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 116-360


        OVERSIGHT 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

                             SECOND SESSION

                                   ON

 EXAMINING THE EXPORT-IMPORT BANK'S RECENT ACTIVITIES AND OPERATIONS, 
     THE 7-YEAR REAUTHORIZATION LEGISLATION, AND THE EFFECT OF THE 
DISRUPTION COVID-19 HAS HAD ON THE U.S. ECONOMY AND ITS IMPACT ON U.S. 
                               EXPORTERS

                               __________

                             JUNE 23, 2020

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs
                                
                                
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                                


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

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
42-492 PDF                  WASHINGTON : 2021                     
          
--------------------------------------------------------------------------------------


            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

                 Sarah Brown, Professional Staff Member

          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

                              ----------                              

                         TUESDAY, JUNE 23, 2020

                                                                   Page

Opening statement of Chairman Crapo..............................     1
    Prepared statement...........................................    26

Opening statements, comments, or prepared statements of:
    Senator Brown................................................     3
        Prepared statement.......................................    27

                                WITNESS

Kimberly Reed, President and Chairman, Board of Directors, 
  Export-Import Bank of the United States........................     5
    Prepared statement...........................................    28
    Responses to written questions of:
        Chairman Crapo...........................................    36
        Senator Brown............................................    37
        Senator McSally..........................................    40
        Senator Menendez.........................................    41
        Senator Warren...........................................    44
        Senator Cortez Masto.....................................    48
        Senator Jones............................................    58

                                 (iii)

 
        OVERSIGHT OF THE EXPORT-IMPORT BANK OF THE UNITED STATES

                              ----------                              


                         TUESDAY, JUNE 23, 2020

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 2:30 p.m., in room SD-562, Dirksen 
Senate Office Building, Hon. Mike Crapo, Chairman of the 
Committee, presiding.

            OPENING STATEMENT OF CHAIRMAN MIKE CRAPO

    Chairman Crapo. This hearing will come to order.
    As is our custom recently, this hearing room has been 
configured to maintain the recommended 6-foot social distancing 
between Senators, witnesses, and other individuals in the room 
necessary to operate the hearing, which we have kept to a 
minimum.
    A few videoconferencing reminders: Once you start speaking, 
there will be a slight delay before you are displayed on the 
screen. To minimize background noise, please click the mute 
button until it is your turn to speak or ask questions. If 
there is a technology issue, we will move to the next Senator 
until it is resolved. I remind all Senators and our witness 
that the 5-minute clock still applies. You should have a box on 
your screen labeled ``Clock'' that will show how much time is 
remaining.
    Unfortunately, in the last couple of hearings, we have had 
a number of Senators who have either not had the box or have 
not been able to locate it on their screens, and so I will do 
my very best to rap the gavel at about 15 seconds before your 
time is up point.
    To simplify the speaking order process, Senator Brown and I 
have again agreed to go by seniority for this hearing.
    With that, we welcome our witness, the Honorable Kimberly 
Reed, President and Chairman of the Board of the Export-Import 
Bank of the United States. We welcome you back, Chairman Reed. 
It has been almost exactly a year since your last appearance 
before this Committee.
    Today we will receive testimony on Ex-Im's recent 
activities and operations, including your efforts to implement 
the 7-year reauthorization legislation we enacted last 
December, as well as your efforts to continue to process 
through the transactions and other matters in your pipeline at 
Ex-Im, and to increase your outreach and efforts to bring new 
U.S. export opportunities into the pipeline.
    In addition, we know the disruption of COVID-19 on the U.S. 
economy has had an impact on U.S. exporters as well, and we 
will be interested to hear of any efforts and initiatives you 
are undertaking to deal with these challenges.
    Chairman Reed, you have been on the job for a little over a 
year now.
    When you came before us for your nomination hearing, and 
when you met individually with me and my colleagues on both 
sides of the aisle, you made a commitment that, if confirmed, 
you would move forward on implementing any outstanding 
congressionally initiated reforms, as well as bring your own 
commitment to greater transparency and accountability for the 
Ex-Im Bank.
    As I have since noted in other Ex-Im-related hearings in 
this Committee, your efforts to follow through on your 
commitment to transparency, accountability, and reform have not 
gone unnoticed by me and by my colleagues on this Committee.
    I commend you for those efforts and encourage you to 
continue them.
    In December 2019, this Congress enacted a 7-year 
reauthorization of the Ex-Im Bank, the longest authorization 
period in the Bank's history.
    This extension provides much-needed certainty for U.S. 
exporters and strengthens an important tool for the U.S. to 
compete directly with China and others in the global 
marketplace.
    Included in the legislation is a new initiative focusing on 
China and Transformational Exports, which will reserve a 
significant portion of Ex-Im's exposure authority for 
transactions that will put U.S. exporters in direct competition 
with China.
    This program will particularly focus on U.S. exports of 
innovative technologies, like semiconductor manufacturing, 
artificial intelligence, biotechnology, wireless 
communications, renewable energy, and energy efficiency and 
storage, as well as emerging financial technologies.
    The new law also includes a requirement that, in addition 
to its existing notification obligations to Congress, Ex-Im 
shall consult with the State Department as part of the efforts 
to assess any risk to the national interest for any proposed 
transaction above $25 million involving any business entity 
that is controlled by the Chinese Government.
    Our reauthorization legislation also had an important focus 
on increasing the participation of American small businesses in 
Ex-Im projects, by raising the target from 25 percent to 30 
percent for small business participation in Ex-Im-supported 
exports.
    Chairman Reed, we look forward to any update you can 
provide on Ex-Im's implementation of these important 
initiatives and all provisions included in the December 
reauthorization.
    We have discussed in previous Committee hearings you and 
your Board colleagues faced a number of pending transactions 
and other matters to address upon taking office.
    Now that you all have had some time at Ex-Im, we would like 
to hear an update on those efforts as well to address those 
transactions and matters that had already been in the pipeline, 
as well as your outreach efforts to bring new American 
businesses and export and job creation opportunities into the 
pipeline.
    Finally, with regard to the COVID-19 global pandemic, we 
know business and Government operations all over the world have 
been impacted.
    For an agency such as Ex-Im, with such a global scope to 
its mission and operations, we would be interested in hearing 
your thoughts about the challenges that you and your team have 
faced, as well as those faced by the American businesses and 
other stakeholders you work with on a daily basis.
    And we ask that you share with us any initiatives Ex-Im has 
commenced to assist U.S. exporters in dealing with the 
challenges of COVID, while remaining competitive, creating 
jobs, and growing our economy.
    Chairman Reed, thank you again for your considerable 
efforts, and I look forward to your and our continued work 
together on these important efforts.
    Senator Brown.

           OPENING STATEMENT OF SENATOR SHERROD BROWN

    Senator Brown. Thank you, Mr. Chairman, for calling today's 
hearing. President Reed, thank you very much for joining us and 
for the work you do at Ex-Im. This is a critical time for--am I 
muted? I am OK, right? This is a critical time for Ex-Im.
    Last year we finally provided certainty to American 
exporters and their workers by enacting a 7-year extension of 
the Ex-Im charter, as the Chairman said. This is a big victory 
after years of obstruction by some of my Republican colleagues, 
on this Committee and off this Committee.
    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, they decided to block all nominees 
to the Bank's Board, denying it the quorum needed to approve 
transactions greater than $10 million. Ex-Im supported some 
160,000 jobs before it shut down, and Ex-Im was an essential 
tool for creating manufacturing jobs with good salaries. Their 
obstruction cost us some 130,000 jobs a year by 2018.
    Today the economic damage from COVID-19 builds, and Mitch 
McConnell refuses to let us do our jobs and pass additional 
help for families and communities and small businesses. Ex-Im 
will be called on to help ensure the survival of our 
manufacturing base and its thousands of small businesses and 
their workers.
    Ex-Im during the last crisis added 515 new small business 
clients in 2009 alone; the stakes are even higher today.
    There are more than 100 export credit agencies and credit 
programs around the word that support foreign manufacturers, 
but we know our greatest challenge is China.
    China's export finance activity is larger than all of the 
export credit provided by the G7 countries combined. We can 
expect China to continue using export credit as a weapon to win 
manufacturing business in critical industrial sectors.
    The President and many of my Republican colleagues want to 
blame China for everything, including the virus that has taken 
the lives of nearly 120,000 of our brothers and sisters and 
parents and sons and daughters. That is in our Nation 30 
percent of the world's deaths. China has not been a model of 
responsibility, to be sure, but President Trump needs to stop 
blaming China for his own failures to do more at home to 
prevent the spread of COVID-19.
    For my Republican colleagues who profess concern about 
China, I wish they had shown the same concern with standing up 
to China during our 4-year fight to support American 
manufacturers.
    And if you say you are concerned about China, then you 
should support filling Ex-Im's board so our manufacturers can 
better compete with China.
    President Reed, I look forward to hearing how Ex-Im is 
working both to assist American companies during this crisis 
and to help them respond to China's efforts to use export 
financing to gain market share. The Bank has an important role 
to play during this crisis.
    Sadly, we must also discuss Ex-Im's response to a tragic 
incident in April at a power plant in India. The Sasan power 
plant received significant financing from the Bank, and yet it 
has a terrible safety record.
    Finally, we must talk about the Senate's unfinished work. I 
urge Members of this Committee to ask Leader McConnell to allow 
the Senate to consider the long-delayed nominations of Paul 
Shmotolokha and Claudia Slacik.
    If we believe Ex-Im should be helping U.S. small businesses 
during these difficult economic times and helping manufacturers 
compete against State-backed Chinese companies, there is no 
excuse for delaying the confirmation of Shmotolokha and Slacik. 
It needs a full Board of Directors.
    A core role of Ex-Im board members is educating the 
business community about how to use the Bank's export financing 
to expand sales abroad and to create more jobs in our country.
    Many small businesses are just trying to survive right now. 
We know that. Some of them do not know that Ex-Im is a tool 
that can help. We need a full board that can be proactive about 
offering support.
    Mr. Shmotolokha, the Republican nominee as First Vice 
President, was reported out of this Committee more than a year 
ago. Ms. Slacik was first nominated nearly 4 years ago. Neither 
is controversial.
    Mr. Shmotolokha, the Republican, has deep experience in the 
telecom industry and decades of experience in international 
business. Ms. Slacik, the Democrat, previously served at Ex-Im 
and has some 30 years of commercial banking experience.
    I think Ex-Im has an effective management team. Thank you 
for that, Ms. Reed, but you should be able to operate at full 
capacity during an unprecedented crisis, not still missing two 
members with critical expertise.
    We have two nominees who can provide important expertise at 
a critical time when we must help American businesses compete 
against China. Somehow these noncontroversial nominees are 
mysteriously blocked.
    We also have a qualified Inspector General nominee, Peter 
Coniglio, who is waiting for confirmation also.
    Congress must take up these nominations immediately.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you, Senator Brown.
    As I indicated, we are joined today by the Honorable 
Kimberly A. Reed, President and Chairman of the Board of the 
Ex-Im Bank, or Chairman of the Ex-Im Bank of the United States. 
Thank you for joining us today in the Committee.
    Chairman Reed, you may proceed.

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

    Ms. Reed. Chairman Crapo, Ranking Member Brown, and Members 
of the Committee, thank you for this opportunity. I hope 
everyone is staying safe and healthy. Many of us have lost 
loved ones, and I offer heartfelt thanks to our Nation's health 
care professionals and essential workers.
    The Export-Import Bank of the United States has the mission 
of supporting American jobs by facilitating U.S. exports. Our 
vision is ``Keeping America Strong: Empowering U.S. Businesses 
and Workers to Compete Globally.'' I love this mission and 
vision, as the U.S. worker is at the heart of everything we do. 
And our mission has never been more important than it is today.
    It has been nearly 1 year since I last appeared before this 
Committee. At that hearing I shared with you my priorities that 
I conveyed to my Ex-Im colleagues on my first day of work: 
fully reopening, reforming, and reauthorizing Ex-Im, thereby 
providing positive results for America's workers and 
businesses, while protecting America's taxpayers. I want to 
thank the Members of this Committee for your support and 
engagement as we have worked hard to deliver on these 
commitments over the past year.
    Given time constraints, I make most of my remarks in my 
written testimony. Today I will highlight areas of particular 
interest to this Committee: Ex-Im's transaction pipeline 
reforms, historic reauthorization, and COVID-19 response.
    Last year I committed to you that Ex-Im would work through 
its financing applications in a prudent way. In fiscal year 
2019, Ex-Im authorized $8.2 billion in financing that is 
estimated to support 34,000 U.S. jobs. We now have more than 
$39 billion in pending Board-level transactions undergoing 
various stages of due diligence and underwriting. We also are 
in many preapplication stage conversations. I want to recognize 
Board members Bachus and Pryor and our Ex-Im colleagues for 
their efforts.
    I pledged to this Committee that I would work to reform Ex-
Im by increasing transparency, strengthening taxpayer 
protections, improving protections for domestic companies, 
ensuring Ex-Im does not crowd out private financing options, 
cracking down on bad actors, and working to reduce the reliance 
on export credit agencies globally.
    I am pleased to report we have made significant progress on 
these six commitments. Most notably, after an 11-month public 
review process, Ex-Im's Board in May unanimously adopted 
reforms to the agency's economic impact and additionality 
procedures. Specifically, Ex-Im sought public comment in the 
Federal Register; held two public Ex-Im Advisory Committee 
meetings, chaired by former Congressman Stevan Pearce and 
featuring experts with diverse views; solicited independent 
third-party review; and considered other Government agency 
input. Collectively, the reforms to both sets of procedures 
enhanced transparency and accountability while strengthening 
taxpayer protections.
    We achieved a major success for America's workers when 
Congress passed and President Trump signed into law on December 
20, 2019, a historic 7-year reauthorization of Ex-Im, the 
longest in Ex-Im's 86-year history. Thank you.
    Over the past 6 months, we have been implementing the 
provisions of this reauthorization. I want to highlight two key 
efforts.
    To set the stage, I will preview Ex-Im's to-be-released 
annual report on global export credit competition that we will 
submit to Congress at the end of June. The world now has 115 
known official export credit providers, up from 85 just 4 years 
ago. When it comes to export credit financing, China is 
fundamentally changing the nature of competition. China is very 
aggressive, strategically focused, and unlike the United States 
and many other countries, not subject to the same international 
rules and agreements. From 2015 to 2019, China's official 
medium- and long-term export credit activity alone was at least 
equal to 90 percent of that provided by all G7 countries 
combined.
    Accordingly, Ex-Im is pleased to have the new congressional 
mandate to compete with China and counter its opaque and 
exploitative model of economic development and finance. We are 
actively establishing the Program on China and Transformational 
Exports, which is one of Ex-Im's most significant efforts in 
its 86-year history and vital to help level the playing field 
so our Nation's businesses and workers can succeed against the 
fierce Chinese competition around the world. We are 
expeditiously addressing policy and legal issues necessary to 
compete successfully and working through a resource assessment 
to ensure this program is fit for purpose.
    Another focus is boosting Ex-Im's small business engagement 
to achieve our new 30 percent small business mandate set by 
Congress. We have launched initiatives focused on outreach and 
education, resources for underserved markets, working with 
private sector partners, increasing ease of doing business, and 
improving transparency. I am confident we can reach and equip 
more businesses with tools to reach new markets.
    When it comes to COVID-19, Ex-Im swiftly responded 
operationally and programmatically. On the operations side, Ex-
Im's workforce, 515 Federal civil servants and contractors 
quickly transformed into a temporarily fully teleworking 
agency. We are a family--I know they are watching right now--
and I am so proud of their commitment to our mission.
    Ex-Im also responded programmatically. On March 12th, Ex-Im 
announced temporary relief measures for current customers, and 
in April, Ex-Im announced four temporary initiatives to address 
targeted needs experienced by exporters and private sector 
lenders.
    The stress for Ex-Im borrowers appears primarily to be one 
of short-term liquidity and not long-term solvency.
    Thank you. I am pleased to answer any questions.
    Chairman Crapo. Thank you, Chairman Reed.
    I want to talk first about reforms and then second about 
China. That will probably use up my time. Shortly after you 
were sworn in as Ex-Im Chairman 13 months ago, you launched a 
broad reform initiative that you referenced in your testimony. 
Could you just speak a little more, maybe a couple minutes 
more, about the details of the reforms of those six commitments 
that you made, the types of reforms you have accomplished so 
far?
    Ms. Reed. Absolutely. From day one, at my nomination 
hearing Senator Toomey asked me to commit to six promises under 
oath in front of this Committee, and I want to thank my 
colleagues at Ex-Im for helping us move this forward in 
substantial ways over the past year.
    When it comes to increasing transparency, every day I am 
looking at what we are doing and how we can be sharing it with 
you and with the American taxpayer so you will see more 
transcripts posted online. If you look at our press releases, 
you will be able to follow all of our activity, and I am 
pushing to share more information about every transaction that 
we support.
    When it comes to strengthening taxpayer protections, we 
have a full gamut of efforts that we are doing with our 
approved Chief Risk Officer and Chief Ethics Officer. We want 
to do everything we can to protect the taxpayer.
    When it comes to improving protection for domestic 
companies, as I mentioned, we revised our economic impact 
procedures. And not to crowd out private financing, we have new 
additionality procedures that we have just put into place.
    I had a very nice conversation with Senator Toomey this 
morning in his office, and we went through these in detail. I 
have a sheet, and, sir, I would be happy to walk through any of 
these efforts at length with any Member of this Committee. But 
I want to say that we are really being sure that we are 
cracking down on bad actors. We have not only increased our 
focus domestically to ensure that bad actors do not act, but 
also we are focused around the world, and with that we created 
a new position at Ex-Im, our Senior Adviser for National 
Security, and also we will be talking more about the China 
Program, I am sure, in a little bit.
    And then, finally, we are required by law to do what we can 
to reduce reliance on ECAs. As I mentioned when I testified 
here a year ago, we will be hosting the G12 here in Washington, 
and that had to be postponed from April, but we look forward to 
having a very robust conversation then. But many actions have 
taken place from last year until now, including when I have 
conversations directly with my colleagues, with Ambassadors, 
and with Government officials at Treasury and with other 
agencies in our Government and around the world. Thank you.
    Chairman Crapo. Well, thank you. And as you know, those 
reforms are very important to our getting the political support 
that we need to continue to expand the base of support for the 
Bank's operations, and I think you have done a great job in 
moving forward on those, and I encourage you to continue to do 
so.
    My last question, we just have about a minute or two--well, 
I have 2 minutes left--is on Chinese competitiveness. Last year 
Congress mandated the establishment of a Program on China and 
Transformational Exports at Ex-Im Bank to combat actions by 
China that are preventing U.S. businesses from being able to 
compete on a level playing field. Could you just provide us 
with an update on your efforts to implement that program?
    Ms. Reed. Absolutely. So we were delighted to get this new 
mission. As you know, in law, it charges Ex-Im with focusing 20 
percent of its $135 billion portfolio, or $27 billion, up to 
that amount, to neutralize China and advance the United States' 
comparative leadership in the world. And that program obviously 
takes a lot of effort and a lot of focus to do it the correct 
way. We have recruited from the Pentagon a Senior Counselor and 
Senior Vice President for this new program, Dave Trulio. He is 
currently assessing our resource needs. We are working 
throughout our agency to see how our legal requirements and 
other procedural requirements need to be addressed. We are 
engaging already with applicants, potential applicants. We do 
not want the program to be delayed in any way if there is a 
need.
    You will see that earlier this year we approved a deal in 
the country of Mozambique that actually displaced China and 
Russia, and it was the largest deal in the history of the 
Export-Import Bank of the United States, and we are very 
pleased that we have workers in our country now that get to 
provide $5 billion of materials and services to Mozambique as 
they take on this transformational effort.
    But there is a lot of work to be done. Resource allocation 
needs to be addressed because this program came forward after 
our budget was set, and you can imagine that this has lots of 
different issues. And I really want to thank our interagency 
partners as well, as we work with the State Department and the 
NSC and others to ensure we are doing everything we can.
    I would be pleased to have a further briefing with you and 
the Committee in detail at any time.
    Chairman Crapo. Well, thank you. And thank you again for 
your efforts in this area as well.
    Senator Brown.
    Senator Brown. Thank you, Mr. Chairman. And, Chairman Reed, 
thank you to you and the Board for working to ensure Ex-Im is 
doing the most it can for American exporters and workers during 
this pandemic.
    I noted earlier and you noted in your opening testimony 
that China provides more exporting credit than the rest of the 
G7 combined. Do you expect China or other Nations with 
aggressive export credit programs to dial back their efforts at 
all during this economic crisis?
    Ms. Reed. Senator, China is not transparent with what they 
do, so I am so glad that we have this new mandate to set up 
this Program on China and Transformational Exports. We are 
communicating directly with people in the countries where China 
is advancing its Belt and Road Initiative and China 2025 
Initiative. And we are sounding the drum as loud as we can 
because we want the world to know they need to come to us, and 
we in our country and our workers need to stand a chance to be 
able to sell our great products to the world.
    So because China is not transparent, this new program will 
help us deliver more information to you over the next months to 
come.
    Senator Brown. Thank you, and thanks for your focus on 
China. At Ex-Im we know how critical it is to America's 
response.
    The Board will soon consider a transaction to assist 
aircraft engine exports that support some 11,000 jobs, 
including more than 1,100 jobs at GE Aviation and its partners 
across Indiana, North Carolina, and my State of Ohio. It is a 
good example of a major transaction that can continue to make 
American manufacturing competitive across the globe while 
helping thousands of small business suppliers. It is difficult 
to predict when or if the default rate will tick up toward the 
2-percent cutoff threshold that Congress instituted, the 2-
percent requirement to appease Ex-Im critics in 2015, despite 
the Bank's strong record of managing default risk. The damage 
of delayed financing would be bad for large companies and their 
small business suppliers. But would you succinctly explain what 
happens to small businesses if Ex-Im financing is cutoff?
    Ms. Reed. Senator, I had a great opportunity--and I was 
sorry to miss you--when I was out in Columbus, Ohio, last 
August at an event at Ohio State University's Business School, 
where I met with a lot of key constituents that focus on small 
business and success in Ohio. If Ex-Im--as you know, it was put 
into law if we hit a 2-percent default rate--and I am pleased 
to say we continue to maintain an under 0.5-percent default 
rate. But as you get into unprecedented times, if we hit that 
2-percent cap, of course, we are going to consult with you, but 
it is pencils down. And just as we were faced when Ex-Im was on 
the brink of expiring, when pencils down happened for small 
businesses that are trying to export, especially at this time 
of COVID, they need us now. They need that export credit 
insurance. They need that working capital loan guarantee. They 
need these products, and we are doing all we can to help our 
small businesses. But this would be something that could be 
alleviated if the default cap were reviewed again.
    Senator Brown. Thank you, and some of us did not think that 
cap was necessary or necessarily even wise, but thank you. You 
again said it is under 0.5 percent. Please continue to update 
our Committee on your efforts to monitor and manage the Ex-Im 
portfolio.
    My last question is about the Sasan power plant. I 
mentioned in my opening statement the tragic loss of life at 
that power plant in India. A dam holding fly ash from the coal-
fired power plant burst. A flood of contaminated sludge 
traveled 3 miles resulting in six fatalities, including a 
couple children. These are not the first fatalities, as you 
know, at this plant. A 2015 report from Ex-Im's IG identified 
at least 19 worker fatalities in prior monitoring of this 
project. Understanding COVID-19 affects the ability of Ex-Im to 
learn more about what is happening on the ground at Sasan after 
the dam collapse and to ensure accountability for that, explain 
what more Ex-Im can be doing and should be doing when a project 
the Bank has financed has developed just an abhorrent safety 
record like that has.
    Ms. Reed. Absolutely, sir. As I took on this job a year 
ago, I inherited a portfolio, and this project that you speak 
about was one that the Board approved in 2010, and so I have 
reviewed news articles that others can review as to why that 
transaction came about. And I note that Senators from the State 
of Wisconsin at the time showed their support for that deal, 
but that was the Board's vote back then, and we take life 
seriously. And so this particular project, even though we 
financed some equipment that went to it, we are responsible as 
Americans and as Ex-Im. And so there was a breach, and there 
was a loss of life, and this is unacceptable. This happened 
while COVID was happening; otherwise, I would have had our team 
and our consultants on the ground immediately. But we continue 
to communicate directly with people who are there in India, and 
we will go as soon as we can.
    But we sat down with Friends of the Earth. I would be 
pleased to provide our response if you would like that we 
provided to them. We also hosted a call with them and the 
Sierra Club. We are doing all we can, and we take this very 
seriously, and I am so glad that after this deal was originally 
approved in 2010, the IG did a review of it, and from that we 
had heightened environmental and social standards and processes 
put in place at Ex-Im. And we have a great team, and they are 
on top of it. But any loss of life is distressing to me.
    Senator Brown. Thank you, Madam President.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    Senator Toomey.
    Senator Toomey. Thank you very much, Mr. Chairman. Chairman 
Reed, thank you for joining us today. Thanks for stopping by my 
office earlier for our discussion. And I want to thank you for 
your sincere efforts to advance the cause of the reforms that 
you and I have discussed.
    Several of my colleagues have asked the question, you know, 
what would happen if the Ex-Im Bank were not in business? What 
would happen to exports? What would happen to our economy? Of 
course, we have recent history to tell us exactly what happens. 
The Ex-Im Bank's total volume of loans hit a recent peak back 
in 2012, almost $40 billion in loans and loan guarantees. And 
then for a variety of reasons, including the fact that we did 
not confirm a quorum on the Board, the volume of Ex-Im Bank 
financing dropped very, very precipitously to the point where 
in 2018 it was less than $5 billion. So it was like a 90-
percent reduction in Ex-Im financing.
    So what happened to U.S. exports during this time when Ex-
Im Bank financing was not available to U.S. exports, certainly 
not to large-ticket transactions? Well, the answer is U.S. 
exports continued to grow, and in 2018 hit an all-time record 
high, while our economy was on our way to strong growth, record 
low unemployment, and just doing remarkably well. So that is 
the control experiment that we have witnessed.
    Nevertheless, Madam Chairman, I understand it is your 
responsibility to implement the law that was passed, the 
reauthorization bill, and that is what you are working on. Let 
me ask a couple questions about that.
    My recollection is that in the reauthorization--and I think 
you have alluded to a specific requirement that the Ex-Im Bank 
counter and really compete with China in the subsidization of 
exports. That is what the Ex-Im Bank does. That is what the 
Chinese export agency does. And so knowing that, previously 
when the Ex-Im Bank was fully operational, one of the biggest 
customers was, in fact, the Industrial Commercial Bank of 
China, getting guarantees to finance acquisitions for aircraft.
    Given the new mandate with respect to China, is the Ex-Im 
Bank still doing business with the Industrial Commercial Bank 
of China?
    Ms. Reed. Thank you, sir, and thank you for our visit this 
morning. Currently in our portfolio we have very little when it 
comes to China on our portfolio, but I am very pleased that the 
new reauthorization law requires us to notify the State 
Department and Congress whenever we have any application that 
comes in involving China of $25 million or more. And so a lot 
of scrutiny goes into every transaction, and it is a new day at 
Ex-Im. National security is economic security. I care about 
what we do. I also, as you mentioned, have to uphold the law, 
and that asks us to not pick winners and losers, judge every 
application based on reasonable assurance of repayment. So it 
is a very fine line, but I will assure you that I look forward 
to Congress' comments if we ever do get an application dealing 
with China that you will be notified of.
    Senator Toomey. OK. Thanks.
    A second question I has is in regard to the additionality 
guideline, as it is called. Additionality, of course, is the 
Ex-Im Bank phrase for not crowding out private sources of 
capital, as I understand it. And the guideline says that a 
borrower, in order to qualify, would have to demonstrate, among 
other things, that a foreign export credit agency is providing 
readily available financing to a competitor, and that 
commercial financing would not be available at rates and terms 
that make the U.S. export competitive. It does not say 
commercial financing is not available. It says it is not 
available at terms that would make the U.S. export competitive.
    So, obviously, if a foreign export agency is subsidizing a 
foreign country's exports, then private commercial financing 
may not be competitive. How far do you go in matching the terms 
of another credit agency? How big a subsidy is too big if a 
foreign export agency is subsidizing a competitor?
    Ms. Reed. So we went through a very substantial public 
process over 11 months to address additionality and economic 
impact procedures, and I would like to note that this will go 
under further scrutiny by an outside reviewer in the years to 
come. So this was a very important first step to ensure that we 
supplement and not compete with private capital. We have, as 
you have mentioned, this new role when it comes to neutralizing 
China, and the language in the statute is pretty clear. We 
need----
    Senator Toomey. Madam Chairman, I am asking more broadly, 
not just with respect to China. The question is: When do you 
decide that a foreign export agency is just providing too big a 
subsidy and we are simply not going to match the terms? It is 
not clear from these guidelines.
    Ms. Reed. Yes, so I would say that we will review every 
application based on the merit, and it is hard to predict until 
those actual case scenarios through actual transactions appear 
to us. Every action is based on reasonable assurance of 
repayment and assuring us that we are not crowding out. It is a 
more rigorous process now, and we will be posting summaries of 
our analyses online, and we will also be reporting now for the 
first time our financings when it comes to additionality to the 
Congress on an annual basis. I look forward to further 
engagement with you on this.
    Senator Toomey. Thanks, Madam Chairman.
    Thank you, Chairman.
    Chairman Crapo. Thank you.
    Senator Reed.
    Senator Reed. Thank you very much, Mr. Chairman. And 
welcome, Chairman Reed. I must say that that term has a sort of 
ring to it. Maybe it is just me. But, anyway, welcome.
    I want to join Senator Brown in suggesting that we 
absolutely have to fill out the Board of the Ex-Im Bank. This 
is a time of incredible crisis across the world, and having 
talented additional hands on board can only help you and help 
your colleagues. And I hope you would agree with that, Madam 
Chairman.
    Ms. Reed. Yes, we want to----
    Senator Reed. Well, thank you very much.
    Ms. Reed. ----increase our portfolio to 30 percent small 
business, and that takes a lot of boots on the ground and a lot 
of work.
    Senator Reed. Well, you led me right to my next question, 
which is: Small business and veterans' business are a big part 
of the Rhode Island economy, and the efforts that the Ex-Im 
Bank has to extend to these smaller companies takes sometimes a 
little more work, a little more recruiting, a little more 
effort. And you are committed to doing that. Can you give us 
just an idea of how you are going to pursue that and what 
additional resources you may need?
    Ms. Reed. Absolutely. Well, right as we speak, sir, I am 
missing the Women's Veteran Alliance webinar that we are 
hosting at Ex-Im. So if I finish by 3 o'clock today, I will be 
able to join them. So I send my best wishes to them. But we 
have done a lot of unprecedented outreach through a variety of 
organizations that I know you know so well, including the 
National Veteran Business Development Council, National 
Veterans Small Business Coalition, et cetera.
    I also have made it a specific focus of mine, and my fellow 
Board member, Spencer Bachus, is a veteran, and so he is 
spearheading this for us. So we are doing a lot of outreach, 
and last year we attended four veteran business-focused 
conferences and, of course, are doing the webinars and look 
forward to engagement. The Veterans Administration is directly 
across the street from us, and I look forward to doing even 
more, and even with you, sir. And you do have the best last 
name in the world.
    Senator Reed. Thank you very much. I agree, and 
congratulations to you also.
    Let me turn, as my colleagues have turned to a degree, to 
China. You have been basically tasked with engaging with them 
in a significant way to disrupt what for many years was 
becoming a monopoly in terms of assistance to export-import 
operations around the globe. Have you been given a particular 
sector focus, for example, micro-electronics? How do you sort 
out from all the different companies where you are going to put 
your emphasis and your activity?
    Ms. Reed. Yes, so this reauthorization legislation 
identifies 10 specific sectors that we need to be focused on, 
including 5G, water treatment and sanitation, biotechnology, 
biomedical sciences. So there are 10 very specific sectors that 
are innovative for our country, and so we are doing a lot of 
outreach just standing this program up, and we are doing that 
through strengthening America's competitiveness initiative. And 
so we have been hosting webinars. We have had hundreds of 
participants from all of these sectors to talk about what we 
need to be doing, what they are understanding about China, how 
we can be of help to them, and how we mesh that with our charge 
going forward. And I cannot wait until we get our very first 
application as the lender of last resort and where do we need 
to be helpful to support exports that do compete with and 
displace China in the world.
    Senator Reed. Let me ask a follow-up question. That is, 
this must be a governmentwide effort. You could do 
extraordinarily good work, but if you are not being 
coordinated, your efforts could be less than efficient.
    Is there a coordinating mechanism within the Government to 
help you, to give you direction? Is it the State Department? Is 
it the Department of Commerce? Just quickly, because I have a 
few seconds.
    Ms. Reed. So I have recruited someone from the Pentagon to 
lead this program, and we are putting our outreach everywhere, 
because we were not authorized for 4 years, and this 
Administration has come on board, and thankfully we are now up 
and running. So it is doing a lot of outreach, and I would say 
the commercial service over at the Commerce Department, we have 
done a lot of outreach with them, with the State Department, 
and with others. There is engagement also on the national 
security front when you talk about something like 5G and how we 
actually help make a difference when it comes to Huawei. So 
lots of engagement, and more to be done.
    Senator Reed. Thank you, Chairman Reed.
    Ms. Reed. Thank you.
    Chairman Crapo. Thank you.
    Senator Rounds.
    Senator Rounds. Thank you, Mr. Chairman. Chairman Reed, 
thank you very much for your service and for joining us today. 
Congratulations on your recent 1-year anniversary as Chairman. 
I do appreciate your dedication to Ex-Im after what was a very 
long and difficult confirmation process.
    I would like to begin by asking about the landscape for 
export credit agencies throughout the globe. Part of the reason 
why I had an interest in seeing Ex-Im with a Board quorum was 
to make our manufacturers more competitive against companies 
and countries like Germany and China, whose Governments are 
very aggressive when it comes to promoting exports. Can you 
tell us how you have seen the landscape change for export 
credit during your tenure? And then how do you see the activity 
changing as we continue to work and work around the COVID-19 
pandemic and what it has done right now with business activity 
throughout the globe?
    Ms. Reed. Absolutely. So as I mentioned in my opening 
statement, you will be receiving our annual Competitiveness 
Report at month's end, and I did a little preview of that. So 
this year, looking back at the year 2019, this year's report 
will indicate the volume of all of the other ECAs. And so 
number one on the list is China, followed by Italy, Germany, 
India, United Kingdom, France, Korea, and then the United 
States. And how the landscape will change, obviously each 
country is handling the COVID crisis in their own way. 
President Trump has asked us and actually issued a memorandum 
ordering Ex-Im to be helpful to Italy, and I have engaged with 
Ambassador Eisenberg as well as the Italian ambassador to the 
United States to let them know that we are there for them at 
the President's direction in every way.
    But as far as export credit agencies, we are there to be 
helpful to our U.S. workers and businesses to compete, so we 
have got a very robust program that we immediately stood up as 
soon as COVID-19 happened to provide more flexibility and 
provide those programs to help our country do what we can. So I 
look forward as we reopen Ex-Im to help us do all we can in 
every way to support workers and businesses in States across 
the country, including yours.
    Senator Rounds. When you talk about making improvements for 
small businesses and our goal being to have perhaps 30 percent 
of the business be from small businesses, let us talk about, 
first of all, how we define that. We are not talking about 30 
percent of the loans. We are talking about 30 percent of the 
volume. Correct?
    Ms. Reed. The statute indicates 30 percent of the dollar 
amount of authorizations, and so that is a really wonderful 
goal but very ambitious because we support businesses of all 
size. So you might be a mom-and-pop small business--and I have 
visited several of them now--where what you export is so 
important, but it is not a very expensive export. And then you 
are competing with others around the world who are doing the 
same. So we want to help them through working capital loan 
guarantees, our export credit insurance programs, and it is a 
lot of work to also bring in new startup businesses. How do I 
go from being focused on the United States to this wonderful 
global marketplace outside of our borders? And that takes a lot 
of work, so it might be a small-dollar amount that they need us 
to come in and fill the gap, but we are doing thousands and 
thousands of these small business transactions on a regular 
basis. I think it is 2,000 transactions that we have done with 
small business since our quorum was stood up. So dollar amount 
might be small, and we are going to work to do all we can to 
get that to the 30 percent.
    Senator Rounds. One of the leading criticisms of Ex-Im--and 
I think it is very important we have Ex-Im because of that 
outreach to small businesses as well, and it does take a lot 
more work. And if your emphasis is on it, you are going to have 
your work cut out for you. But at the same time, one of the 
leading criticisms of Ex-Im is that the Bank competes against 
other institutions that would otherwise provide export credit 
to American companies operating abroad.
    Have you found that to be the case in starting your 
position, particularly in light of the COVID-19 pandemic?
    Ms. Reed. No, sir. So I have done engagement with thousands 
of people now, every type of stakeholder possible in the United 
States and around the world, and I cannot tell you how relieved 
people are that we are back. And it is not just showing up and 
turning on the switch after being shut for 4 years. It is doing 
it in a thoughtful way but also building the confidence when it 
comes to multinational companies, that they should not take 
their supply chains to other countries, which is what happened 
in some cases when we were shut. They need to bring them back--
thank you for giving us the certainty of 7 years. Of those 115 
export credit agencies, I venture to say that we are the only 
one that expires from time to time, and I am coming in with the 
support of Senator Toomey and others in doing reforms. We do 
not want to make it harder. We just want to be protecting the 
taxpayer and really showing our very specific limited role to 
help businesses succeed in our country and level the playing 
field for them. We want them to win, not other countries' 
workers to win.
    Senator Rounds. Thank you.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman. And welcome back 
to the Committee, President Reed, and let me just briefly echo 
Ranking Member Brown's comments and state that it is 
unacceptable that you should have to wait so long for a full 
Board, so I hope the Senate moves these forward soon.
    Ex-Im's 2018 Competitiveness Report states that a 
significant number of foreign export credit agencies have 
changed their mission from leveling the playing field for their 
exporters to proactively seeking to create transactions for 
them and ``advancing their strategic interests over the long 
term.''
    According to one survey respondent in your report, ``Other 
ECAs are actively seeking exporters to move production to their 
country to fill the void Ex-Im Bank has left.''
    President Reed, have American exporters lost production 
opportunities to other countries who have adopted a more 
aggressive strategy?
    Ms. Reed. Yes, sir. We have heard definite reports of that, 
and I found one report in a news article that a lot of times 
companies are private about how they do their business. But I 
have definitely heard that we have lost several deals, many 
deals, millions of dollars of deals, while we were closed. And 
who really loses out when that happens, when a multinational 
company chooses to move their supply chain to a foreign country 
that provides export credit financing? Our own supply chains, 
our own small businesses who roll up their great small business 
products into these larger multinational computers. Those are 
who lose in our country.
    So we are doing all we can, especially with this new 
mandate on China, to say, world, we are here, and we want to be 
exporting our great goods and services. And we welcome to 
review any application. We do not pick winners and losers. We 
have a set-out criteria based in law, and we want to be as 
flexible as we can.
    Senator Menendez. Let me ask you this. I appreciate that, 
but--welcoming people to apply, I appreciate that. But how are 
you responding to the shift, especially in times like these 
when we and most of our economic competitors are looking to 
strengthen supply chains and invigorate domestic manufacturing?
    Ms. Reed. We are getting----
    Senator Menendez. Do you need any additional authority from 
Congress to respond to this shift and ensure that Ex-Im is 
still able to advance its goal of supporting U.S. jobs and 
exports?
    Ms. Reed. So I am now actively working with my colleagues 
to stand up this very targeted, aggressive authority with our 
new Program on China and Transformational Exports. When you 
look at the list of those 10 targeted categories, including 5G 
and quantum computing, I believe that as we focus on that, that 
will be a good program for us to ensure that we are competing 
around the world the best we can. And what I mean by welcoming 
is we support--we do not pick winners and losers, but it is 
oftentimes raising awareness that we are back.
    What we can do? I was so delighted to recently sign, for 
example, a memorandum of understanding with my good friend 
Chairman Rodney Hood of the National Credit Union 
Administration to help credit unions even know when you have 
one of their members go in to look for a small business loan 
and support, that Ex-Im's resources are there, millions of 
members, and that had really never been done before in a robust 
way. So there is lots of work to be done.
    Senator Menendez. Since you are talking about China, let me 
ask you, according to Ex-Im's 2018 Competitiveness Report, 
China extended $39 billion in medium- and long-term export 
financing, hitting its highest point since 2014. In comparison, 
the U.S. extended $0.3 billion, making it the third consecutive 
year that the U.S. provided one of the lowest volumes among the 
28 countries with noteworthy levels of export credit.
    Last year we discussed this issue, and you noted that some 
companies were setting up manufacturing plants outside of the 
United States so that they could be eligible for other 
countries' export financing. Have you seen any changes to that 
trend in the past year? What impact does having one of the 
lowest volumes of export credit in comparison to other 
countries have on U.S. exporters and Ex-Im's ability to stay 
competitive?
    Ms. Reed. We will be sending to Congress at the end of the 
month our annual Competitiveness Report, so you will see as a 
preview in this year's report China was at $33.5 billion. In 
the United States last year, remember, we came online with our 
confirmation in May, and so last year we increased that amount 
of exports to $5.3 billion. So we are number eight on the list 
for 2019. So working up, but it is restoring that confidence in 
people that Ex-Im is certain--it takes sometimes years to put 
together an application and go through the whole process. And 
when you are a company where you are beholden to your 
shareholders, you have got the world to choose from. And so I 
think that this new robust reauthorization will help us bring 
back more of the supply chain, and I have talked with some of 
those companies who have moved their operations to other 
countries, and I am pleased that they are focused again on the 
United States. So more to do, and I look forward to hopefully 
celebrating some job successes in New Jersey.
    Senator Menendez. Thank you. Well, we will look forward to 
following up with you.
    Ms. Reed. Thank you.
    Chairman Crapo. Thank you.
    Senator Tester.
    Senator Tester. Thank you, Mr. Chairman. And I want to 
thank you for being here, Kimberly. I appreciate what you are 
doing.
    I am going to explain a situation to you, and you tell me 
what we can do to fix it. Right now, if I were to ship some 
agricultural products to a foreign importer, the title needs to 
first go to a foreign bank. The title is then held until an 
importer formally receives it and pays for the shipment. But 
here is the issue: If an importer decides they do not want it, 
there is no legal obligation for them to pick up the title, and 
in a time of extreme market volatility, this is not uncommon.
    Now, Export-Import offers insurance for exporters so they 
have a safety net if something goes wrong. However, this 
insurance does not extend to cases where the title is left at 
the bank and the importer never receives the shipment. So the 
shipment is abandoned in a foreign port. The exporter has no 
access to the title or the shipment.
    First of all, are you aware of this situation? Is there 
anything Ex-Im has in its policies to cover this kind of 
situation?
    Ms. Reed. Sir, I apologize, but I am having a really hard 
time hearing you. I am happy to answer that in writing or have 
our staff talk with you. But I did hear you say the word 
``agriculture,'' so----
    Senator Tester. Yeah, so let me back up just a second. I 
should have hollered louder. I am sorry. But I send 
agricultural products; the title goes to a bank. If the 
importer decides they do not want it, there is no obligation to 
pick the title up. The insurance for exporters does not work 
when a title is left at a foreign bank, and the importer never 
receives the shipment. The exporter never gets paid. And it 
happens with some regularity.
    Do you know of this situation? Is there anything Ex-Im can 
do about it? Or is it something Congress needs to take up? Or 
are we just hosed?
    Ms. Reed. So I would say I have not heard the specific 
instances that you are referring to, but our export credit 
insurance program, that is exactly why it exists. We provide 
that----
    Senator Tester. Yeah, but it does not work if they do not 
pick up the title. It just does not apply.
    Ms. Reed. Sir, I would be happy to follow up with you on 
this. Very committed to agriculture.
    Senator Tester. Thank you very much.
    So you talked a little bit about this with Senator Rounds, 
but, number one, do you think your outreach to rural businesses 
is adequate, particularly agricultural businesses? And if it 
is, could you give me an idea--you have not been in this 
position all that long, but how much of your time is spent on 
rural outreach versus the big guys?
    Ms. Reed. Absolutely. Well, sir, I remember your question 
to me last year that kind of got at this issue. I am from rural 
West Virginia to your home State, very committed to rural 
America. It is a chief initiative. You quizzed me last year 
about our regional offices, so I want you to know I took a 
strong stand, and we are backfilling all of the positions and 
fully reopening all of our 12 regional offices. And then, of 
course, doing the outreach the best we can, 65 webinars in the 
past 3 months alone, 160 email blasts. And if you would go to 
our website, I put the hyperlink in my written testimony, but 
we have done a new video that I welcome you to share with your 
constituents, because we want to be helpful. We are doing all 
we can to do small business leads as well.
    After averaging 500 a month immediately before COVID, I 
will say it hit a high of 1,387 in May, and we are on track to 
pass that in June. So I want to do even more.
    Senator Tester. Thank you. Do you like your job? You appear 
to.
    Ms. Reed. What did he say?
    Senator Tester. Do you like your job?
    Ms. Reed. I love my job. This is the best job I have ever 
had, but it is so important and a lot of hard work.
    Senator Tester. It shows. It shows, OK? So the question is: 
As you look at this agency that you have been running for the 
last--not all that long, what tools do you not have that you 
need?
    Ms. Reed. So we are transforming, sir, because of COVID--
and we are fully teleworking from home, 515 of us. I am so 
proud of everyone. We will see how the workplace transforms as 
we get further into the response on COVID. But I would say that 
I am so proud that we have a COVID task force leading and 
advising us all along the way.
    The one thing is our new Program on China and 
Transformational Exports. So in that December 20th legislation, 
we were asked to do a deep dive, focus 20 percent of our 
portfolio to neutralize China and advance America's comparative 
leadership around the world. So that is one of the most 
significant programs we have ever been asked to do, I would 
say, in the 86-year history of the Bank, and our budget came 
out before that program was mandated by law. And so I look 
forward to further discussions on what resources we may need to 
fully optimize that to fulfill the mandate that you set for us 
to fulfill.
    Senator Tester. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    Senator Cramer.
    Senator Cramer. Thank you, Mr. Chairman. Thank you, 
Chairman Reed, for attending and for the good work you are 
doing. I am sorry that we have not been able to do more things 
through this timeframe. However, the year is not over, and lots 
of good things are happening.
    I am going to follow up on both Senator Tester and Senator 
Rounds. There is no need for you to answer again what you have 
been doing to reach out to small and rural businesses, but I 
will just throw in an invitation, since Senator Rounds and 
Senator Tester and I all live in the same neighborhood. Perhaps 
it is an opportunity when the weather becomes unbearable in 
Washington, D.C., for existence, you could make a trip to the 
Midwest and the West and come and meet some of the--both the 
Bank's current borrowers that are small rural manufacturers and 
neighbor businesses as well as use it as an opportunity to 
solicit and invite and maybe inspire some more. So I would just 
throw that invitation out. We would love to host you in our 
part of the world.
    Ms. Reed. Sir, may I comment?
    Senator Cramer. Please.
    Ms. Reed. So I was a nominee for this position for 2\1/2\ 
years, had two Senate confirmation hearings, and after one of 
the confirmation hearings, the first one, I immediately walked 
over to Union Station and got on a train and went cross-
country. My experience was great, and I had the pleasure--I 
have never set foot in North Dakota. Does going past the State 
on a train count? So I cannot wait to come. I know that you 
invited me. I saw the sun rise, and I cannot wait to come and 
do a field hearing or roundtables with you. You kindly invited 
me, and we were getting ready to do that just as COVID struck 
us. So as soon as we can get on a train or a plane or I can 
drive, I am ready to do that with you.
    Senator Cramer. Well, just so you know, once you get to 
North Dakota, it is a long ways across North Dakota and South 
Dakota and Montana before you get to Senator Tester, but it is 
worth the drive or the train ride or the airplane ride. I would 
just tell you that as we head now into late summer, even with 
COVID-19, it might not be a bad time to do it in a responsible 
way.
    So, with that, Mr. Chairman, I yield the rest of my time 
and just say I am grateful for your good work, Chairman Reed.
    Chairman Crapo. Thank you, Senator Cramer.
    Senator Van Hollen. Thank you, Mr. Chairman, Ranking Member 
Brown. And, President Reed, welcome. Thank you for your 
service.
    I listened as you said that Ex-Im Bank ensures that its 
investments are consistent with U.S. national security goals. 
That is the right thing to do. One of those goals, of course, 
is to prevent the proliferation of nuclear weapons. And I 
wanted to ask you if you were aware of the provision in the 
2020 appropriations bills that prohibits Ex-Im Bank from 
extending any financing or benefits to nuclear technology 
projects in Saudi Arabia unless they meet certain stringent 
nonproliferation conditions. Are you aware of that language?
    Ms. Reed. Yes, sir.
    Senator Van Hollen. And have you had any discussions, 
conversations, regarding the exports of nuclear technology to 
Saudi Arabia since you were confirmed?
    Ms. Reed. So Ex-Im is not involved in negotiations of 123 
agreements, and I would say that any pending applications are 
under review, and totally focused on what you are saying, and 
we want to be fulfilling all legal requirements, including the 
legislation in our appropriations language.
    Senator Van Hollen. Are there any such pending applications 
under review currently at the Ex-Im?
    Ms. Reed. So we get many applications at any time, and I am 
going to look to my counsel.
    Senator Van Hollen. I am just asking if there are any 
regarding nuclear technologies to Saudi Arabia.
    Ms. Reed. We have one application, but it is not active.
    Senator Van Hollen. OK. Again, I just want to provide that 
admonition regarding the current appropriations bill, and, you 
know, I think you can expect to see that extended.
    Let me ask you about your efforts in the area of renewable 
energy. I believe that was one of the 10 categories in the 
Program on China and Transformational Exports. I appreciate the 
fact that you held a teleconference meeting on renewable energy 
recently, but can you give us the breakdown on the financing of 
renewable energy projects versus fossil projects since you got 
the quorum?
    Ms. Reed. Sir, I would be pleased to give you that 
breakdown with specificity. I do not have all the transaction 
numbers of our deals that have taken place over the past year 
with me, but I would say that we are very, very focused on 
renewable energy, and I have tasked Director Judith Pryor with 
leading that effort and look forward to doing even more deals 
that we can.
    Senator Van Hollen. OK. If you could get us that 
information and breakdown as soon as possible, that would be 
great.
    Ms. Reed. Thank you.
    Senator Van Hollen. Now, one of the other changes that 
Congress has made recently in some of our efforts to finance 
and support U.S. businesses overseas, making investments 
overseas, was the change from OPIC to the Development Finance 
Corporation, providing the Development Finance Corporation with 
additional authorities. This was a bipartisan congressional 
initiative.
    Can you talk about whether and how Ex-Im is collaborating 
with the Development Finance Corporation?
    Ms. Reed. So Adam Boehler, the head of DFC, a wonderful 
colleague, and since we have both been confirmed, our agencies 
are aligning. We are complementary tools in the trade toolbox, 
and so we provide that financing. But our focus is supporting 
U.S. jobs. That is what we are required to do under law, and 
that is a great mission, and DFC has their role as well as 
being a development finance agency. And I will say Judith 
Pryor, because she previously worked at OPIC, now DFC, brings a 
lot of insight as well. But we want to be a whole-of-Government 
approach to help our U.S. businesses win and succeed, and each 
of us have our role to play.
    Senator Van Hollen. Right. I just want to make sure that 
you are all rowing in the same direction and not working at 
cross-purposes. As you well know, and you have talked about it, 
we provided this mandate to Ex-Im Bank with respect to making 
sure our companies can compete with very aggressive Chinese 
financing, and one of the goals of the Development Finance 
Corporation is also to make sure that the United States does 
not fall behind in certain parts of the world with respect to 
the Belt and Road Initiative.
    So I am hoping if you can just provide for the record some 
examples of how you are collaborating, because these are two 
taxpayer-funded U.S. agencies, and you do have slightly 
different missions, but I think they are consistent. And it 
would be helpful to know the extent to which you are 
collaborating.
    Ms. Reed. Absolutely, and look forward to standing up our 
China Program in great ways to deliver victories for our 
American businesses. Thank you.
    Senator Van Hollen. Thank you.
    Chairman Crapo. Thank you.
    Senator Cortez Masto.
    Senator Cortez Masto. Thank you, Mr. Chairman. Chairman 
Reed, welcome. It is good to hear and see you again. Thank you 
so much for joining us again. We really appreciate it.
    Let me start off by talking a little bit about Nevada. The 
Export-Import Bank has helped 24 companies in Nevada like 
Dynamic Gasket and Seal, Geothermal, Development Associates, 
and Fameco Group. They have exported $70 million worth of 
products to countries like Mexico, Turkey, and India. And of 
those 24 Nevada companies, 17 are small businesses. So I want 
to ask you some questions around our small businesses in Nevada 
and across the country.
    Before I get to that, I do want to stress I also am 
interested in whatever data and information that you provide to 
Senator Van Hollen around the financing for renewable energy. I 
would be interested in seeing that as well.
    But let me start with last year, after you testified, I 
asked for an update on how you were going to promote the Ex-Im 
Bank products to Native American businesses, and I know that 
you worked with the American Indian Procurement Technical 
Assistance Center, and you participated in events like the 
Reservation Economic Summit and the Navajo Nation Economic 
Summit. I am curious. What has been the impact? How many Native 
American-owned businesses have participated since you became 
the Chairman?
    Ms. Reed. Absolutely. I am very committed to supporting 
Native American communities, and that is a big charge as we 
look at increasing our U.S. small business number to 30 
percent. And as you mentioned, we have been in regular touch 
with the National Center for American Indian Enterprise 
Development, the American Indian Chamber, and the Native 
American Development Corporation.
    In my prior Federal Government service, I headed the 
Community Development Financial Institutions Fund where I also 
spent a lot of time in Indian country and worked really hard 
through our Native American awards. And so I was so pleased 
when we were able to participate in the Reservation Economic 
Summit in Las Vegas this past March.
    So we have very targeted outreach that is going on. 
Currently Ex-Im requests that businesses self-identify whether 
they are minority- or women-owned. However, I am directing our 
agency to revise our export credit insurance applications 
because I have been frustrated by this lack of data as well. It 
is one of my reforms. How can we get better information to 
allow business owners to voluntarily identify themselves? And 
so that will enable us to do an even better outreach and 
engagement strategy.
    In addition, we are engaging with the Department of 
Commerce's Minority Business Development Agency to facilitate 
greater information sharing and support.
    So I look forward to working with you, and I am happy to do 
more outreach in Nevada and beyond over the months to come.
    Senator Cortez Masto. Thank you, and I welcome you to 
Nevada as well when we have the opportunity to no longer 
shelter in place and safely travel again.
    Let me ask you this: The focus for me and working with a 
lot of the chambers in my State is not just our women- and 
minority-owned, Native-owned businesses, but veteran-owned 
businesses as well. So whatever metrics and whatever outreach 
you are doing to make sure that financing is available for our 
veteran-owned business and working within our underserved 
communities, I am interested in that space as well. So I 
appreciate that.
    Let me ask you, you touched a little bit earlier with one 
of my colleagues--you made the announcement a few weeks ago 
that the Ex-Im Bank and the National Credit Union 
Administration announced its collaborative to promote the 
export financing products among federally insured credit unions 
and their clients. Can you talk a little bit about the impact 
of this initiative and what has happened so far and your goals?
    Ms. Reed. So I am very excited. When I was at the Community 
Development Financial Institutions Fund, I worked regularly 
with credit unions. So when I showed up as head of Ex-Im, I 
said we really need to have our credit unions engaged. They are 
key to so many of our small businesses. So this MOU signing 
happened 2 weeks ago with Chairman Rodney Hood as the start of 
a 3-year educational campaign. I have also engaged with folks 
like Dan Berger and Jim Nussle at the various trade 
associations to ensure their members know that Ex-Im exists and 
its millions of customers and members who could be using our 
products if they need them. It is very daunting for a small 
exporter--and I am sure you have met some of them--to say, ``I 
want to be focused on succeeding outside of our borders.'' And 
we need that first place of business, such as a small bank, a 
small community bank, or a credit union, where a business owner 
will go in to say, ``How do I export? And how can I get the 
support to do this?'' We need not only for them to provide 
services, but if Ex-Im can be a tool helpful to them such as 
through our export credit insurance product or our working 
capital loan guarantee, that they share that with them.
    So I look forward to just launching this, and perhaps that 
is something that we can do together, if I am able to join you 
in Nevada or at a larger event.
    Senator Cortez Masto. Chairman Reed, thank you.
    Ms. Reed. Thank you.
    Chairman Crapo. Thank you.
    Senator Sinema.
    Senator Sinema. Thank you, Mr. Chairman. And thank you to 
Chairwoman Reed for being here today. It is good to see you 
again.
    I am so proud to have worked across the aisle with Senator 
Cramer, my Republican colleague from North Dakota, to 
successfully deliver a 7-year reauthorization of the Export-
Import Bank. It helps finance billions in Arizona exports and 
create thousands of jobs in my State.
    I am also very grateful to Chairman Crapo and Ranking 
Member Brown for their leadership on this vital issue.
    I know you need a full team over at the Ex-Im Bank, which 
is why the Senate should consider the nominations of Paul 
Shmotolokha and Claudia Slacik to the Ex-Im Board. They are 
qualified nominees, and they should be considered sooner rather 
than later. The Ex-Im Bank is too critical to Arizona's economy 
to be left without a full team.
    Chairwoman Reed, I want to thank you for joining me in 
Arizona last summer when we visited Copper State Bolt and Nut, 
a second-generation, family owned, women-owned Arizona business 
that manufactures construction products and industrial 
supplies. When it is safe to do so, I hope to be able to host 
you again in Arizona for another visit with other innovative 
Arizona exporters who make us globally competitive and close 
our trade deficit.
    So my first question for you, Chairman Reed, is: As you 
know, especially during this recession, smaller exporters need 
the certainty that the Ex-Im Bank provides. How has Ex-Im 
stepped up and adapted small business outreach during the 
coronavirus?
    Ms. Reed. Thank you, Senator Sinema, and it was so nice to 
join you in Arizona. It was a very meaningful time to sit down 
with the Arizona Chamber, and since that time, I actually did 
another webinar with the Phoenix Chamber to help them know 
about our new mandate, and I really appreciate your and Senator 
Cramer's and this full Committee's leadership on that 
reauthorization.
    When it comes to small business, that is something that 
drives me every day. And over the past 3 months alone, since 
COVID has happened, we have done 65 webinars, 160 email blasts; 
we created a special video message on our website, and if you 
look at my written testimony, I purposely embedded the 
hyperlink there so that each of you could share that with your 
constituencies. And we are seeing a significant increase in 
small business leads because of this engagement, more than 
1,300 in May, and we know that that is going to happen more in 
June.
    So it is a lot of boots on the ground. We have re-staffed 
our field offices across the country, lots of engagement, and 
during this time it is through the Internet and webinars, but 
look forward to, through initiatives, through our multipliers, 
getting out there such as through the credit unions that I just 
discussed with Senator Cortez Masto, but looking forward to 
doing even more.
    Senator Sinema. Thank you.
    As you know, in May the Ex-Im Bank's Board adopted 
additional measures to provide transparency and accountability 
to the process. One of the key reforms was to provide--or to 
make the process of determining additionality more detailed and 
more transparent, with the goal of ensuring that the Bank is 
creating new value instead of supplanting private sector 
investment.
    So my interest here is ensuring the reforms make the Ex-Im 
Bank more transparent and precise in its actions without 
imposing undue burden on U.S. exporters.
    So, Chairwoman Reed, can you report briefly on the progress 
of these reforms? And do you feel that you have struck this 
important balance?
    Ms. Reed. Absolutely, Senator. I had a very lengthy 
discussion this morning with Senator Toomey in his office on 
the actions that you mentioned there, and in my testimony you 
will see, when it comes to economic impact and additionality, 
we went through a very lengthy 11-month process, transparent 
process, held two Ex-Im Advisory Board meetings, open to the 
public, invited in diverse views, because everyone has a stake 
in ensuring that we protect the taxpayer but we do not want to 
unduly burden our businesses; but we also want to ensure that 
we are not crowding out the private marketplace and not doing 
harm to other businesses.
    So this was a very thorough, thoughtful process. Even other 
Government agencies commented on our processes. So what you see 
that we did just a few weeks ago, in May our Board unanimously 
approved these measures.
    I am doing a lot under all six reforms, but I know, again, 
we do not want to overburden our small businesses with more red 
tape. We want to fulfill our legal duty, and we want to uphold 
the law, and it is striking that right balance.
    Senator Sinema. Well, thank you. I see that my time is 
rapidly expiring, so I will go very quickly. My last question 
concerns credit risk transfers and the ongoing reinsurance 
pilot program at Ex-Im. I want to ensure the Ex-Im Bank can 
serve as many small businesses as possible and reduce risk to 
taxpayers. Did you find the ability to transfer credit risk via 
the reinsurance pilot program useful in accomplishing both of 
these goals?
    Ms. Reed. Yes, Senator, it was a very successful pilot 
program that we did, which was in our last reauthorization, and 
we will be expanding that in a further way in the near term. It 
was a good first step, and, of course, we want to do all we can 
to protect the taxpayer and so stay tuned for more details on 
this effort.
    Senator Sinema. Thank you.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you, Senator Sinema.
    That concludes our questioning. Senator Brown has asked to 
make a statement, and then we will conclude the hearing. 
Senator Brown.
    Senator Brown. Thank you, Mr. Chairman. A brief statement. 
Thanks for your indulgence.
    President Reed, you and your fellow Board members--and you 
remember this well, of course--were first nominated in October 
2017 but were not confirmed until May 2019. You talked about 
your cross-country train trip. Claudia Slacik, as you also 
know, has waited nearly--she is the Democrat and has waited 
nearly 4 years. Paul Shmotolokha, the Republican nominee, has 
waited more than a year. I have never heard--and I assume you 
have not either--any criticism of their fitness to serve.
    On a personal level, I know how anxious you were--we talked 
about it personally, and it was obvious how anxious you were to 
begin your work to help Ex-Im and its customers. Thank you for 
putting your life on hold for a year-and-a-half while waiting 
for the Senate to act.
    Mr. Chairman, as President Reed said earlier, we need a 
full Board--she used the term ``with more boots on the 
ground''--reaching out to small businesses to help them use Ex-
Im. We have great nominees. They should not be delayed any 
further.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you, Senator Brown. And as you know, 
I agree with you that we need to fill the entire Board, and I 
would like to see us move as quickly as we can on these 
nominees. There is a significant amount of obstruction on the 
floor of the Senate these days, but I will continue to push for 
these nominees to be moved forward.
    With that, the hearing is concluded. For Senators who wish 
to submit questions for the record, those questions are due 
Tuesday, June 30th, and I ask that, Chairman Reed, you respond 
to those questions as quickly as possible. Again, I thank you 
for joining the Committee today.
    The hearing is adjourned.
    Ms. Reed. Thank you.
    [Whereupon, at 3:50 p.m., the hearing was adjourned.]
    [Prepared statements and responses to written questions 
supplied for the record follow:]
               PREPARED STATEMENT OF CHAIRMAN MIKE CRAPO
    Welcome to our witness, the Honorable Kimberly Reed, President and 
Chairman of the Board of the Export-Import Bank of the United States.
    We welcome you back, Chairman Reed. It has been almost exactly a 
year since your last appearance before this Committee.
    Today, we will receive testimony on Ex-Im's recent activities and 
operations, including your efforts to implement the 7-year 
reauthorization legislation we enacted last December, as well as your 
efforts to continue to process through the transactions and other 
matters in the pipeline at Ex-Im, and to increase your outreach and 
efforts to bring new U.S. export opportunities into the pipeline.
    In addition, we know the disruption of COVID-19 on the U.S. economy 
has had an impact on U.S. exporters as well, and we will be interested 
to hear of any efforts and initiatives you are undertaking to address 
these challenges.
    Chairman Reed, you have been on the job for a little over a year 
now.
    When you came before us for your nomination hearing, and when you 
met individually with me and with my colleagues on both sides of the 
aisle, you made a commitment that, if confirmed, you would move forward 
on implementing any outstanding congressionally initiated reforms, as 
well as bring your own commitment to greater transparency and 
accountability for the Ex-Im bank.
    As I have since noted in other Ex-Im-related hearings in this 
Committee, your efforts to follow through on your commitment to 
transparency, accountability, and reform have not gone unnoticed by me 
and by my colleagues on this Committee.
    I commend you for those efforts and encourage you to continue them.
    In December 2019, this Congress enacted a 7-year reauthorization of 
the Ex-Im Bank, the longest authorization period in the Bank's history.
    This extension provides much-needed certainty for U.S. exporters 
and strengthens an important tool for the U.S. to compete directly with 
China and others in the global marketplace.
    Included in the legislation is a new initiative, focusing on China 
and transformational exports, which will reserve a significant portion 
of Ex-Im's exposure authority for transactions that will put U.S. 
exporters in direct competition with China.
    This program will particularly focus on U.S. exports of innovative 
technologies, like semiconductor manufacturing, artificial 
intelligence, biotechnology, wireless communications, renewable energy, 
and energy efficiency and storage, as well as emerging financial 
technologies.
    The new law also includes a requirement that, in addition to its 
existing notification obligations to Congress, Ex-Im shall consult with 
the State Department as part of efforts to assess any risk to the 
national interest for any proposed transaction above $25 million 
involving any business entity that is controlled by the Chinese 
Government.
    Our reauthorization legislation also had an important focus on 
increasing the participation of American small businesses in Ex-Im 
projects, by raising the target from 25 percent to 30 percent for small 
business participation in Ex-Im-supported exports.
    Chairman Reed, we look forward to any update you can provide on Ex-
Im's implementation of these important initiatives, and all provisions 
included in the December reauthorization.
    We have discussed in previous Committee hearings, you and your 
board colleagues faced a number of pending transactions and other 
matters to address upon taking office.
    Now that you all have had some time at Ex-Im, we would like to hear 
an update on those efforts to address those transactions and matters 
that had already been in the pipeline, as well as your outreach efforts 
to bring new American businesses and export and job creation 
opportunities into the pipeline.
    Finally, with regard to the COVID-19 global pandemic, we know 
business and Government operations all over the world have been 
impacted.
    For an agency such as Ex-Im, with such a global scope to its 
mission and operations, we would be interested to hear about the 
challenges that you and your team have faced, as well as those faced by 
the American businesses and other stakeholders you work with on a daily 
basis as part of your mission.
    And we would ask you to share with us any initiatives Ex-Im has 
commenced to assist U.S. exporters in dealing with the challenges of 
COVID, while remaining competitive, creating jobs, and growing our 
economy.
    Chairman Reed, thank you again for your considerable efforts, and I 
look forward to our continued work together on these important efforts.
                                 ______
                                 
              PREPARED STATEMENT OF SENATOR SHERROD BROWN
    Mr. Chairman, thank you for calling today's hearing. President 
Reed, thank you for joining us. This is a critical time for Ex-Im.
    Last year we finally provided certainty to American exporters and 
their workers by enacting a 7-year extension of the Ex-Im charter. This 
is a big victory after years of obstruction by some of my Republican 
colleagues.
    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 denying it the quorum needed to approve transactions 
greater than $10 million dollars. Ex-Im supported more than 164,000 
jobs before the shut it down, and Ex-Im was an essential tool for 
creating manufacturing jobs with good salaries. Their obstruction cost 
us more than 130,000 jobs a year by 2018.
    Today, as the economic damage from COVID-19 builds and Mitch 
McConnell refuses to let us do our jobs and pass additional help for 
families and communities and small businesses, Ex-Im will be called on 
to help ensure the survival of our manufacturing base, and its 
thousands of small businesses and their workers.
    Ex-Im during the last crisis added 515 new, small-business clients 
in 2009 alone, the stakes are even higher today.
    There are more than 100 export credit agencies and credit programs 
around the world that support foreign manufacturers, but the greatest 
challenge is China.
    China's export finance activity is larger than all of the export 
credit provided by the G7 countries combined, and we can expect China 
to continue using export credit as a weapon to win manufacturing 
business in critical industrial sectors.
    The President and many of my Republican colleagues want to blame 
China for everything, including the virus that has taken the lives of 
nearly 120,000 of our brothers and sisters and parents and sons and 
daughters--that's 30 percent of the world's deaths. China has not been 
a model of responsibility, but President Trump needs to stop blaming 
China for his own failures to do more at home to prevent the spread of 
COVID-19.
    For my Republican colleagues who profess concern about China, I 
wish they had shown the same concern with standing up to China during 
our 4-year fight to support American manufacturers.
    And if you say you are concerned about China, then you should 
support filling Ex-Im's board so our manufacturers can better compete 
with China.
    President Reed, I look forward to hearing how Ex-Im is working both 
to assist American companies during this crisis, and to help them 
respond to China's efforts to use export financing to gain market 
share. The Bank has an important role to play during this crisis.
    Sadly, we must also discuss Ex-Im's response to a tragic incident 
in April at a power plant in India. The Sasan power plant received 
significant financing from the Bank, and it has a terrible safety 
record.
    Finally, we must talk about the Senate's unfinished work. I urge 
Members of this Committee to ask Leader McConnell to allow the Senate 
to consider the long-delayed nominations of Paul Shmotolokha and 
Claudia Slacik.
    If we believe Ex-Im should be helping U.S. small businesses during 
these difficult economic times, and helping manufacturers compete 
against State-backed Chinese companies, there is no excuse for delaying 
the confirmation of Shmotolokha and Slacik. It needs a full Board of 
Directors.
    A core role of Ex-Im board members is educating the business 
community about how to use the Bank's export financing to expand sales 
abroad and create more jobs in the U.S. Many small businesses are just 
trying to survive right now, and some of them don't know that Ex-Im is 
a tool that can help. We need a full board that can be proactive about 
offering support.
    Mr. Shmotolokha, the Republican nominee as First Vice President, 
was reported out of the Banking Committee more than a year ago, and Ms. 
Slacik was first nominated nearly 4 years ago. Neither is 
controversial.
    Mr. Shmotolokha has deep experience in the telecom industry and 
decades of experience in international business. Ms. Slacik previously 
served at Ex-Im and has more than 30 years of commercial banking 
experience.
    I think Ex-Im has an effective management team. Thank you for that 
Ms. Reed--but you should be able to operate at full capacity during an 
unprecedented crisis, not missing two members with critical expertise.
    We have two nominees who can provide important expertise at a 
critical time when we must help American businesses compete against 
China. Yet somehow these noncontroversial nominees are mysteriously 
blocked.
    We also have a qualified Inspector General nominee, Peter Coniglio, 
who is waiting for confirmation.
    Congress must take up these nominations immediately.
    Thank you, Mr. Chairman.
                  PREPARED STATEMENT OF KIMBERLY REED
President and Chairman of the Board of Directors, Export-Import Bank of 
                           the United States
                             June 23, 2020
    Chairman Crapo, Ranking Member Brown, and Members of the Committee, 
thank you for the opportunity to appear before you today to report on 
the progress we have made in reopening and reforming the Export-Import 
Bank of the United States (Ex-Im), as well as on the implementation of 
Ex-Im's December 2019 Congressional reauthorization.
    The past several months have been a challenging time for our Nation 
and the world because of the COVID-19 (coronavirus) pandemic. I hope 
that you, your staff, and all your loved ones are staying safe and 
healthy as we work together to reopen our Nation safely and 
responsibly. On behalf of my colleagues--515 Federal employees and 
contractors--at Ex-Im, I want to offer heartfelt thanks to our Nation's 
health care professionals--doctors, nurses and others--as well as the 
many essential workers in other fields on whom millions of Americans 
continue to depend during this unprecedented crisis. They have 
heroically placed their health and even their lives at risk, and they 
are a daily inspiration to me.
    Ex-Im, the official export credit agency (ECA) of the United 
States, has the important mission of supporting American jobs by 
facilitating U.S. exports. Our vision is ``Keeping America Strong: 
Empowering U.S. Businesses and Workers to Compete Globally.'' As the 
President and Chairman of the Board of Directors of Ex-Im, I am proud 
to lead a team of talented professionals who, even before this health 
crisis unfolded, were working hard to expand the export of ``Made in 
the USA'' products and services to the world and, in so doing, support 
tens of thousands of jobs here at home.
    It has been nearly 1 year since I last had the honor of appearing 
before this Committee. At that hearing, I shared with you my priorities 
that I also conveyed to my colleagues on my first day of work at Ex-Im: 
Being committed to fully reopening, reforming, and reauthorizing Ex-Im, 
thereby providing positive results for America's workers and 
businesses, while protecting America's taxpayers. I want to thank the 
Members of this Committee for your support and engagement as we have 
worked hard to deliver on these commitments over the past year.
    We achieved a major success for our Nation's businesses and workers 
when Congress passed, and President Trump signed into law on December 
20, 2019, a historic 7-year reauthorization of Ex-Im--the longest in 
Ex-Im's 86-year history. I am grateful for the strong support of the 
President, our bipartisan leaders in Congress--including Members of 
this Committee, Ex-Im's dedicated workforce, my fellow Ex-Im Board 
Members Spencer Bachus and Judith Pryor, and ex officio Board Members 
Secretary of Commerce Wilbur Ross and U.S. Trade Representative 
Ambassador Robert Lighthizer in achieving this historic effort.
    Ex-Im's reauthorization provides long-term certainty to American 
businesses that need Ex-Im's help to compete and win in the ever-
fiercer global marketplace. Over the past 6 months, we have been very 
focused on implementing this legislation while also taking swift and 
prudent actions to support U.S. jobs in response to COVID-19. We are 
pleased to continue working with you as we move forward.
Reopening Ex-Im: Supporting American Jobs by Facilitating U.S. Exports
    On May 8, 2019, the United States Senate voted on an overwhelming, 
bipartisan basis to confirm my fellow Board Members and me. The 
Senate's action restored a quorum on Ex-Im's Board of Directors and 
enabled the agency to return to full functionality.
    Ex-Im's major financing solutions to support American exports and 
jobs include providing support for the purchase of U.S. exports through 
loan guarantees and direct loans, insuring U.S. exporters from the risk 
of nonpayment by foreign buyers, and extending working capital loan 
guarantees to enable American businesses to fill export orders.
    Ex-Im offers financing at rates and on terms that are competitive 
with Government-backed export financing available from other countries. 
The goal of Ex-Im 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 due to foreign Government-backed 
export financing.
    With Ex-Im back in full operation, we have been very focused on 
communicating to all of our stakeholders--including exporters and 
potential exporters especially in the small business community, private 
sector lenders whose loans Ex-Im can guarantee, and prospective foreign 
buyers--that the agency is now able to offer all of its financing 
options to support U.S. exports.
    Last year, when I testified before this Committee, I committed to 
you that Ex-Im would work through its financing applications in a 
prudent and thoughtful way that fulfills our obligation to protect the 
interests of U.S. taxpayers and complies with relevant statutory 
requirements. We have done exactly that.
    In Fiscal Year (FY) 2019, Ex-Im authorized a total of $8.2 billion 
in financing that is estimated to support 34,000 U.S. jobs, more than 
double its financing in the previous fiscal year. While the numbers are 
still preliminary, I am pleased to report that, in FY2020, Ex-Im has 
authorized $1.7 billion in financing that is estimated to support 
10,900 U.S. jobs and there are additional transactions in various 
stages of review that Ex-Im staff expect to present to the Board for 
consideration and potential final approval this fiscal year.
    Alongside these authorizations, over the past year, Ex-Im's Board 
also approved four preliminary commitments totaling $1.1 billion in 
financing. A preliminary commitment, which is a nonbinding offer of Ex-
Im financing subject to the award of the export contract and Board 
approval of an application for a final commitment, sends a strong 
signal to potential foreign buyers that the agency has conducted 
significant due diligence of the proposed transaction. It also 
indicates the likelihood of providing financing upon receipt of an 
application for a final commitment that meets all of Ex-Im's 
requirements and the Board's review and approval.
    Ex-Im has also seen significant demand for Letters of Interest, 
which are a preexport tool to help U.S. exporters compete during the 
bidding or negotiating of an export sale. This increase is an 
indication of heightened interest by exporters for Ex-Im financing.
    Today, we have more than $39 billion in Board-level transactions 
that are undergoing various stages of due diligence and underwriting 
and are estimated to support 147,000 U.S. jobs. Additionally, we are in 
preapplication stage conversations with many companies that are 
exploring what Ex-Im potentially can do for them. This period of 
conversation can go on for varying amounts of time as companies assess 
the unique Ex-Im value proposition.
    Once a Board-level application is filed, which is a serious 
commitment of time and resources by the company and its lender, Ex-Im 
takes on a thorough analysis of the application to ensure that the 
transaction meets all applicable statutory and agency requirements. 
That means carefully reviewing the background 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. 
Based on those reviews, Ex-Im 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.
    At the same time, Ex-Im considers how the Board-level transaction 
supplements--but does not compete with--private capital. This includes 
a review of why the parties to a transaction are seeking Ex-Im 
financing, what limitations exist in the availability or terms of 
private capital, and the availability and terms of competing financing 
offered by a foreign ECA. All transactions are processed in accordance 
with Ex-Im policies and applicable law, such as those on U.S. content, 
U.S. flag shipping requirements, and economic and environmental 
impacts. All of this is then carefully documented as part of Ex-Im's 
legal review of the transaction. This preserves Ex-Im's legal rights, 
ensures Ex-Im is not creating distortions in capital markets, and 
protects the U.S. Government from the risk of default.
    This process is highly variable and heavily influenced by the 
complexity of transactions, as well as legal and commercial 
considerations that are outside of Ex-Im's control. Some of these 
Board-level transactions may go from application to approval in months, 
while others may take several years. Furthermore, some transactions may 
not come to fruition for a variety of reasons. A Board-level 
transaction may be withdrawn (and thus removed from the pipeline) due 
to the availability of another source of financing; the buyer may alter 
sourcing needs; or the parties may be unable to reach agreement on a 
final transaction.
    As Chairman, I am committed to educating exporters, lenders, 
buyers, diverse stakeholders, and multiplier networks on the 
opportunities available to them through Ex-Im financing. At the same 
time, Ex-Im staff, my Board colleagues, and I are doing what we can to 
help build the pipeline through increased outreach.
    We are strengthening our relationship with key interagency 
partners, including the U.S. Trade and Development Agency, U.S. 
Department of State, USAID, U.S. International Development Finance 
Corporation, and the U.S. Department of Commerce, including its Foreign 
Commercial Service. For example, in recent months, Ex-Im staff 
participated in numerous engagements in coordination with the 
Commercial Service, including presentations in Italy, the Gulf States, 
and Southeast Asia. Together, we are solidifying this enhanced 
cooperative relationship through an interactive outreach and training 
series.
    My fellow Board Members and I also have tremendously valued the 
opportunity to visit many of your States and look forward to resuming 
this engagement in the near future. In the meantime, Ex-Im's outreach 
continues virtually, reaching thousands of stakeholders both in the 
United States and around the world.
    While the results of these and other efforts will not be immediate, 
they help position U.S. exporters to better compete in markets around 
the world and will help support U.S. jobs for years to come.
    When Ex-Im is fully operational, it is a self-financing agency due 
to the fees and interest it charges to foreign buyers for the use of 
its programs. After paying all of its operating and program costs, Ex-
Im has contributed a net of $9.4 billion to the U.S. Treasury since 
1992. When it comes to protecting the taxpayer, Ex-Im has averaged a 
default rate of less than one-half of 1 percent over the past decade as 
a result of the strong underwriting and due diligence exercised during 
the authorization process and postauthorization management of 
transactions. Ex-Im's most recent quarterly default rate, as of March 
31, 2020, is 0.473 percent.
Reforming Ex-Im: Transforming the United States' Official Export Credit 
        Agency
    Before I was confirmed as Ex-Im's President and Chairman, I 
committed to this Committee that I would work to reform--and, in fact, 
transform--our agency in six different ways by: (1) Increasing 
transparency; (2) Strengthening taxpayer protections; (3) Improving 
protections for domestic companies; (4) Ensuring Ex-Im does not ``crowd 
out'' private financing options; (5) Cracking down on bad actors; and 
(6) Working to reduce the reliance on ECAs globally.
    We are dedicated to these six reforms and ensuring that America and 
the world can rely on a robust and principled ECA. A strong and 
transformed Ex-Im also is critical to U.S. economic and national 
security. As such, Ex-Im is committed to collaboratively working with 
other Federal agencies towards our mutual goals.
    I am pleased to report we have made significant progress on each of 
these six commitments. Most notably, after an 11-month public and 
transparent review process, Ex-Im's Board of Directors unanimously 
adopted reforms to the agency's economic impact and additionality 
policies and procedures. In undertaking these efforts, Ex-Im sought 
public comment in the Federal Register; held two public Ex-Im Advisory 
Committee meetings, chaired by former Congressman Stevan Pearce and 
featured experts with diverse views about the role of Ex-Im; solicited 
independent third-party review; and considered input from other U.S. 
Government agencies.
    With the economic impact reforms, we have increased the 
transparency surrounding Ex-Im's detailed economic impact analyses and 
streamlined the screening procedures surrounding the review of 
commercial aircraft transactions.
    Through new guidelines to strengthen the agency's determination of 
``additionality''--the reason why a transaction could not go forward 
without Ex-Im financing--Ex-Im bolstered its processes and 
documentation of the reasons why Ex-Im financing is needed in a given 
transaction, calling out the need for Ex-Im financing in its 
application certifications, surveying private lenders, producing an 
annual report on the additionality of its financing in the previous 
fiscal year, and subjecting its additionality procedures to periodic 
independent review. The Board also adopted a resolution that 
underscores ``the importance of ensuring that Ex-Im provides 
competitive financing to U.S. exporters while supplementing, not 
competing with, private capital.'' And, to further ensure that Ex-Im 
does not ``crowd out'' private financing options, we have instituted a 
practice of requesting financial institutions to notify me, as 
President and Chairman of Ex-Im, immediately if Ex-Im ever competes 
with the private sector.
    Ex-Im also implemented numerous initiatives to increase our 
transparency and stakeholder engagement. This includes reestablishing, 
as required by law, Ex-Im's Advisory Committee and Sub-Saharan Africa 
Advisory Committee and releasing transcripts of the committee meetings, 
boosting our public and Congressional engagement efforts, improving our 
publicly available data, providing regular updates on Ex-Im's 
authorizations, and increasing visibility into Ex-Im's operations by 
building a more detailed public record of agency activity.
    An organization's culture is critical in determining how well an 
agency can perform a variety of work outcomes in order to drive 
transformational change. As such, Ex-Im's revised Strategic Plan for 
FY2020-2022 includes an important new goal of recruiting and retaining 
top talent and emphasizes Ex-Im's collaboratively developed ``Shared 
Values''--Integrity, Stewardship, Accountability, Inclusivity, and 
Leadership.
    In order to ensure Ex-Im is successful at fulfilling its mission 
and becomes one of the best places to work in the Federal Government, 
we also launched Ex-Im's Transformation Initiative--a sweeping 
initiative formulated through extensive employee feedback and led by a 
small team of dedicated civil servants with a singular focus: improve 
the collective employee experience at Ex-Im.
    Our Chief Management Officer (CMO) is making significant strides to 
identify efficiencies, and enhance the workforce and work culture from 
a strategic and operational standpoint. The CMO Team furthers Ex-Im's 
mission by promoting good governance through improved policies and 
processes, cultivating a high-performance workforce which garners 
measurable results, providing excellent internal customer service in a 
manner consistent with Ex-Im's core values, and improving internal 
communication.
    The Ex-Im Board showed our commitment to strengthening protections 
for taxpayers and cracking down on bad actors by approving Ex-Im's 
Chief Risk Officer and Chief Ethics Officer, as required by law, and 
supporting other key initiatives. To underscore expectations to 
employees, customers, and other stakeholders, we adopted Ex-Im's very 
first Code of Business Conduct and Ethics, strengthened Ex-Im's 
Financial Conflict of Interest and Recusal Policy, doubled the Office 
of Ethics staff resulting in quicker review and certification of public 
financial disclosure forms and enhanced transparency, and implemented 
the U.S. Government Accountability Office's Fraud Risk Management 
Framework. Finally, as required by law, we hired a Director of Data 
Governance and implemented an Enterprise Data Management program to 
foster innovation, strengthen best practices and ensure access to and 
trust of shared data.
    We also value the role of our Ex-Im Office of Inspector General, 
which, through its independent and objective reviews, serves as an 
agent for positive change at our agency.
    I have been very clear with our global counterparts that Congress 
has put a priority on reducing the reliance on export credit agencies 
globally. I wholeheartedly agree with those who argue that, ideally, 
economic freedom and prosperity are greater in a world without 
Government-sponsored export credit agencies. Indeed, the agency's 
Charter \1\ encourages an end to all ``predatory export financing 
programs and other forms of export subsidies.'' \2\ The Charter further 
requires Ex-Im, ``in cooperation with the export financing 
instrumentalities of other Governments, seek to minimize competition in 
Government-supported export financing and shall, in cooperation with 
other appropriate United States Government agencies, seek to reach 
international agreements to reduce Government subsidized export 
financing.'' \3\
---------------------------------------------------------------------------
     \1\ The Export-Import Bank Act of 1945, as amended, serves as the 
agency's Charter and is codified at 12 U.S.C. 635 et seq.
     \2\ 12 U.S.C. 635a-1(a); see also 12 U.S.C. 635a-5(a)(1). 
Additionally, 12 U.S.C. 635a-5 provides that the President of the 
United States is to initiate and pursue negotiations with other major 
exporting countries ``to substantially reduce, with the goal of 
eliminating [ . . . ] subsidized export financing programs and other 
forms of export subsidies.'' This mandate has been delegated to the 
Secretary of the Treasury. Memorandum of President of the United States 
for the Secretary of the Treasury, 81 FR 14,367 (Mar. 11, 2016).
     \3\ 12 U.S.C. 635(b)(1)(A).
---------------------------------------------------------------------------
    As one of my first official actions in 2019, I met with the G12 
Heads of Export Credit Agencies to make clear to them our expectations 
around transparency and a level playing field. Working with my 
international colleagues, we secured the opportunity to host the 2020 
meeting here in the U.S. I look forward to furthering this discussion 
about the importance of transparency and a level playing field as part 
of the G12 meeting of export credit agencies that we will host later 
this year.
    In the meantime, as I previously testified to this Committee, the 
United States cannot unilaterally disarm and turn its back on America's 
workers in an ever-fiercer global marketplace fueled by ECAs. It is 
imperative for the competitiveness of our Nation, when private sector 
financing is not available, that Ex-Im help level the global playing 
field for our U.S. businesses--especially America's small businesses--
and workers. I also welcome the participation of Members of this 
Committee if they are interested in directly engaging our global 
counterparts on this important topic.
Implementing Ex-Im's Reauthorization: Strengthening America's 
        Competitiveness in the World
    As we continue to make major progress in these areas, Ex-Im also is 
hard at work to implement its historic December 20, 2019, 
reauthorization requirements (P.L. 116-94, Division I, Title IV). I 
specifically want to highlight the progress we have made on two major 
elements of our reauthorization.
Program on China and Transformational Exports
    First and foremost, we are very pleased to have the new 
Congressional mandate to establish a program to compete with China and 
counter its opaque and exploitative model of economic development and 
finance.
    Specifically, Congress directed Ex-Im to establish a new ``Program 
on China and Transformational Exports'' (Program). The Program's 
purpose is ``to support the extension of loans, guarantees, and 
insurance, at rates and on terms and other conditions, to the extent 
practicable, that are fully competitive with rates, terms, and other 
conditions established by the People's Republic of China'' \4\ or by 
other covered countries (as designated by the Secretary of the 
Treasury). The law charges Ex-Im with a goal of reserving not less than 
20 percent of the agency's total financing authority--$27 billion out 
of a total of $135 billion--for support made pursuant to the Program.
---------------------------------------------------------------------------
     \4\ 12 U.S.C. 635(l)(1).
---------------------------------------------------------------------------
    The Program has two legislative aims. The first is to ``directly 
neutralize export subsidies for competing goods and services financed 
by official export credit, tied aid, or blended financing provided by 
the People's Republic of China'' or by other covered countries. \5\ The 
second is to ``advance the comparative leadership of the United States 
with respect to the People's Republic of China, or support United 
States innovation, employment, and technological standards, through 
direct exports'' in 10 areas key to America's future: \6\
---------------------------------------------------------------------------
     \5\ 12 U.S.C. 635(l)(1)(A).
     \6\ 12 U.S.C. 635(l)(1)(B).

---------------------------------------------------------------------------
  1.  Artificial intelligence.

  2.  Biotechnology.

  3.  Biomedical sciences.

  4.  Wireless communications equipment (including 5G or subsequent 
        wireless technologies).

  5.  Quantum computing.

  6.  Renewable energy, energy efficiency, and energy storage.

  7.  Semiconductor and semiconductor machinery manufacturing.

  8.  Emerging financial technologies (including technologies that 
        facilitate financial inclusion through increased access to 
        capital and financial services; data security and privacy; 
        payments, the transfer of funds, and associated messaging 
        services; and efforts to combat money laundering and the 
        financing of terrorism).

  9.  Water treatment and sanitation (including technologies and 
        infrastructure to reduce contaminants and improve water 
        quality).

  10.  High-performance computing.

    Accordingly, we are actively working to establish the Program, 
which is one of the agency's most significant efforts in the 86-year 
history of Ex-Im and vital to help level the playing field so our 
Nation's businesses and workers can succeed against fierce Chinese 
competition around the world. When it comes to Chinese competition, I 
also would like to preview a few points that will be included in the 
upcoming June 2020 ``Report on Global Export Credit Competition of the 
Export-Import Bank of the United States'' (Competitiveness Report) for 
Calendar Year 2019 that we will submit to Congress at the end of June. 
The to-be-released ``Competitiveness Report'' will show that the world 
now has 115 known official export credit providers, up from 85 just 4 
years earlier--a 35-percent increase from 2015 to 2019. This 
significant expansion occurred at the same time Ex-Im--an important 
tool in the United States' trade toolbox for America's companies and 
workers--was not able to consider medium- and long-term transactions 
exceeding $10 million because it lacked a Board quorum.
    Over this same period, China's official financing activity 
continued to dominate the market. In fact, when it comes to export 
credit financing, China is fundamentally changing the nature of 
competition. China is very aggressive, strategically focused, and, 
unlike the United States and many other countries, not subject to the 
same international rules and agreements. From 2015 to 2019, China's 
official medium- and long-term export credit activity alone was at 
least equal to 90 percent of that provided by all G7 countries 
combined. In addition, it is important to note, as this 
``Competitiveness Report'' describes, that beyond its official ECAs, 
China uses several other Government entities to finance its exports and 
trade practices through a variety of means, including export credits.
    Chinese State-backed unfair competition undermines our exporters 
and even puts America at a disadvantage in key sectors critical to our 
long-term economic and national security. As such, in April, I hired a 
seasoned leader with extensive international business and national 
security experience to Ex-Im from the Department of Defense to stand up 
our new Program on China and Transformational Exports. In addition, we 
are expeditiously addressing the underlying policy and legal issues 
necessary to compete successfully, and we are working through a 
resource assessment to ensure this Program is fit for purpose.
    In support of the Program, we also launched our ``Strengthening 
American Competitiveness Initiative,'' a series of engagements with 
companies and related stakeholders that is a key platform for ensuring 
that the Program--and Ex-Im generally--is optimally positioned to 
support American jobs by facilitating U.S. exports. We are having 
focused and substantive discussions with counterparts from each of the 
10 statutory transformational export sectors noted above and making 
sure their insights shape the Program in a way that has maximum impact 
for our exporters. We also are encouraging leads on potential deals for 
America's exporters.
    Beyond this Program, I also was pleased that Congress included an 
important notice and consultation provision regarding China, whereby 
Ex-Im transactions greater than $25 million that involve Chinese State-
owned enterprises must be sent to the U.S. Department of State ``to 
assess any risks posed by the entity or the transaction to the national 
interests of the United States,'' with a subsequent notice to Congress 
reporting on the consultation. \7\ Ex-Im is finalizing the procedures 
required by law, and, in the meantime, has already been consulting with 
the State Department about any such transaction as appropriate.
---------------------------------------------------------------------------
     \7\ Section 408 of the Export-Import Bank Extension, Further 
Consolidated Appropriations Act, 2020, P.L. 116-94, Division I, Title 
IV.
---------------------------------------------------------------------------
    Recognizing that ``economic security is national security,'' we 
also established the first position ever within Ex-Im whose duties are 
devoted to national security. Through this position, Ex-Im began more 
active participation in the policy coordination process led by the 
National Security Council and expanded its involvement in interagency 
engagements.
Increasing U.S. Small Business
    In a parallel Ex-Im reauthorization implementation effort, we are 
also very focused on boosting our small business outreach and 
engagement. In FY2019, Ex-Im authorized 2,091 small business 
transactions for a total of $2.3 billion. This represented 89 percent 
of Ex-Im's total authorizations and 27.5 percent of the total dollar 
value of authorizations. Thus far in FY2020, Ex-Im has authorized 1,159 
small business transactions for a total of $985 million. This 
represents 89 percent of Ex-Im's total authorizations and 53.7 percent 
of the total dollar value of authorizations fiscal year to date.
    Ex-Im has the capacity to do much more and I invite small 
businesses exporting their products around the world to consider how 
Ex-Im can support their growth and competitiveness. Accordingly, I have 
directed our staff to embark on five initiatives that seek to drive 
increased support for our small businesses.
    We are enhancing our outreach and education by restoring and 
boosting our Ex-Im field office staff--as they are one of Ex-Im's most 
important assets and our ``boots on the ground''--to better assist 
small businesses, increasing our engagement in local business 
development events, and leveraging our investments in digital marketing 
resources to reach businesses looking to export their products 
overseas.
    Ex-Im is increasing our focus on historically underserved business 
owners and start-up businesses. As part of this effort, we are trying 
to better reach minority- women-, and veteran-owned businesses, rural 
and agricultural businesses, businesses owned by persons with 
disabilities, and other businesses in underserved communities. In 
addition to a robust and well-funded digital media strategy, we are 
developing targeted webinars, materials, and promotional support 
designed to more effectively reach and educate these constituencies 
about how to export goods using Ex-Im. We want to ensure all eligible 
and appropriate companies have access to Ex-Im financing.
    We have been working to develop new private sector partnerships 
that can help amplify our message to thousands of member companies, 
many of which are small businesses. For example, Ex-Im recently signed 
a Memorandum of Understanding with the National Credit Union 
Administration (NCUA) to launch the first-ever targeted Ex-Im outreach 
to, and partnership with, private sector credit unions through a 3-year 
educational initiative to promote Ex-Im financing products among 
federally insured credit unions and their members--more than 5,000 
institutions having total membership reaching 120.4 million. I was so 
pleased to work with NCUA Chairman Rodney E. Hood on this effort. 
Together, we will look to boost expanded opportunities for U.S. 
businesses--particularly small businesses--and their American 
workforce.
    Ex-Im has looked at how we can make it easier for small businesses 
to access financing. We have undergone an organizational realignment to 
better allocate our resources to support our working capital guarantee 
lenders, participating insurance brokers, and exporters. We have also 
expanded and enhanced our product offerings, providing greater 
flexibility and choice to exporters.
    Finally, we have increased our transparency and reporting of small 
business authorizations, priorities, and initiatives, which you can 
find on Ex-Im's website.
    With these efforts and more, I am confident we can reach more small 
businesses and equip them with the tools they need to reach new markets 
and support American workers.
Reopening America: Ex-Im's Swift Response to the Economic Challenges of 
        COVID-19
    This has been a very challenging time for our country as we deal 
with the consequences associated with the COVID-19 global pandemic. As 
we focus on saving lives and protecting livelihoods, I want to 
recognize and thank my Ex-Im colleagues who took swift action and 
continue to respond to the global financial disruptions and 
instabilities. Our Ex-Im workforce quickly transformed into a 
temporarily fully teleworking agency, in order to better assist 
American exporters and financial institutions dealing with the painful 
financial pressures brought on by the pandemic.
    Ex-Im tends to be needed most during periods of stress in global 
financial markets. Ex-Im experienced this following the 2008 financial 
crisis when the agency's authorizations increased by 80 percent.
    With unprecedented speed, Ex-Im implemented emergency measures in 
response to COVID-19. On March 12, Ex-Im announced temporary relief 
measures for current customers including extended waivers, deadline 
extensions, streamlined processing, and flexibility due to the 
anticipated effects of the COVID-19 outbreak. These measures allow 
businesses to return to their operations, focus on the safety of their 
families and employees, and fulfill their Ex-Im-related obligations at 
an appropriate time, without penalty. This relief currently remains in 
effect through August 31, 2020, subject to future extensions.
    In April, Ex-Im announced four temporary initiatives to address the 
targeted needs experienced by exporters and private sector lenders. The 
Bridge Financing Program supports short-term liquidity needs faced by 
foreign buyers seeking to purchase U.S. goods and services. The Pre-
Export Financing Program supports progress delivery payments from 
foreign buyers using long-term financing to purchase U.S. manufactured 
goods. Ex-Im enhanced both its Supply Chain Financing Guarantee Program 
and Working Capital Guarantee Program by increasing the level of its 
guarantee and program flexibilities. Today, Ex-Im is working through 
more than $870 million of financing requests from U.S. businesses 
looking to take advantage of the flexibilities in these two programs 
alone.
    Finally, our Ex-Im Board of Directors temporarily suspended the 
availability of its financing for certain medical supplies and 
equipment necessary to treat and prevent the spread of COVID-19 that 
are in short supply in the United States. We are continuously 
monitoring the situation and working closely with our interagency 
partners to ensure Ex-Im financing does not detract from our Nation's 
domestic response to the COVID-19 crisis.
    Like many financial institutions, COVID-19 also is affecting the 
outstanding exposure on our robust Ex-Im portfolio. As of May 31, Ex-
Im's total exposure is $46.8 billion. Ex-Im has extensive experience on 
how to structure transactions in a way that minimizes risk and protects 
the U.S. Government--and the U.S. taxpayer--from the risk of default. 
After transaction approval, Ex-Im takes a proactive approach toward 
managing the transaction through regular reviews of the debt service 
repayment capacity of the primary source of repayment.
    As COVID-19 began to affect our customers, Ex-Im quickly reached 
out to them to identify repayment risks and work directly with the 
parties to the transaction to implement solutions to strengthen the 
credit. This is an ongoing process we continue to diligently undertake. 
And, of course, I invite any of your constituents or companies 
experiencing payment issues or difficulty accessing liquidity to reach 
out to Ex-Im.
    While Ex-Im's portfolio remains sound, there is stress among three 
specific types of transactions: asset-backed transportation, 
commodities, and sovereign. Among our transportation portfolio, Ex-Im 
expects to be fully repaid on all aircraft transactions. While 
passenger air travel has dropped significantly, cargo aircraft have 
continued to fly without issue. Furthermore, Ex-Im maintains 
significant excess collateral in the case of nonpayment. When it comes 
to commodities, the sharp drop in oil and gas prices has affected many 
producers around the world. After a careful review of Ex-Im's exposure 
in this sector, we do not project any significant repayment issues in 
the near future. Finally, for those transactions in which foreign 
Governments are the primary source of repayment, Ex-Im has received 
several requests for short-term liquidity relief.
    In sum, Ex-Im recognizes the importance that borrowers are placing 
on maintaining liquidity to offset sharp declines in revenue. As of 
this time, the nature of the stress for Ex-Im borrowers appears 
primarily to be one of short-term liquidity and not long-term solvency. 
We continue to work proactively with borrowers to protect the long-term 
financial interests of the U.S. taxpayer.
    I also would like to underscore that the Ex-Im Office of Small 
Business has been working diligently to meet the needs of the 
communities we serve in this unprecedented business climate.
    We quickly implemented relief measures for our customers and 
partners, offering the financial flexibility they need to weather this 
crisis.
    As part of that effort, we created a one-minute video (https://
www.exim.gov/coronavirus-response) on how Ex-Im can support American 
businesses at this time. This is an example of how we are focusing our 
digital marketing efforts on remaining connected and offering solutions 
during this challenging time. We encourage your offices to share this 
video, along with information about our COVID-19 relief measures, with 
your constituents.
    The longer the COVID-19 pandemic depresses global economic 
activity, the greater the risk that Ex-Im will experience an uptick in 
its default rate. By law, if Ex-Im's default rate were to exceed 2 
percent, its total aggregate outstanding exposure would freeze, \8\ 
significantly limiting the agency's ability to support U.S. exporters, 
small businesses, and American workers at a time when such assistance 
may be most needed. We will keep this Committee fully informed as this 
situation continues to develop.
---------------------------------------------------------------------------
     \8\ 12 U.S.C. 635e(a)(3).
---------------------------------------------------------------------------
Conclusion
    As I conclude my remarks, I note that these are difficult times for 
many American businesses, workers, and their families. As we focus on 
America's economic comeback, Ex-Im remains committed to our mission of 
supporting American jobs by facilitating U.S. exports.
    It is a point of pride for Ex-Im's diverse and talented colleagues 
that we are a rare civilian agency within the Federal Government that 
both supports large numbers of private sector American jobs and plays a 
critical role in advancing U.S. leadership around the world.
    It is an immense honor to be a part of and continue to further this 
historic effort to advance our Nation's prosperity, support U.S. jobs 
by serving American businesses of all sizes, and keep America strong 
for years to come.
    Thank you for the opportunity to address this Committee. I am 
pleased to answer any questions you may have.
        RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN CRAPO
                       FROM KIMBERLY REED

Q.1. Nuclear Energy Exports--Chairman Reed, Section 402 of the 
recent reauthorization empowers the Ex-Im to counter China in 
transformational exports. Would you favorably consider using 
this program to support nuclear energy exports in markets where 
Chinese or Russian supply is the probable alternative to U.S. 
supply?

A.1. Yes, to the extent permitted by law, Ex-Im will consider 
nuclear energy-related exports under the Ex-Im Program on China 
and Transformational Exports (the ``Program''), which was 
mandated by Congress as part of Ex-Im's 2019 Congressional 
reauthorization legislation. \1\
---------------------------------------------------------------------------
     \1\ Further Consolidated Appropriations Act, 2020, P.L. 116-94, 
Division I, Title IV,  402, December 20, 2019, codified at 12 U.S.C.  
635(l).
---------------------------------------------------------------------------
    Ex-Im has a critical role to play in supporting the 
competitiveness of the U.S. nuclear energy industry in markets 
around the world.
    In July 2019, President Trump established the United States 
Nuclear Fuel Working Group, which was charged with undertaking 
``a fuller analysis of national security considerations with 
respect to the entire nuclear fuel supply chain.'' \2\ In a 
report issued earlier this year, the Working Group found that 
``it is in the Nation's national security interests to preserve 
the assets and investments of the entire U.S. nuclear 
enterprise and to revitalize the sector to regain U.S. global 
nuclear leadership.'' \3\
---------------------------------------------------------------------------
     \2\ Memorandum of President of the United States on the Effect of 
Uranium Imports on the National Security and Establishment of the 
United States Nuclear Fuel Working Group, (July 12, 2019). Available at 
https://www.whitehouse.gov/presidential-actions/memorandum-effect-
uranium-imports-national-security-establishment-united-states-nuclear-
fuel-working-group/.
     \3\ United States Nuclear Fuel Working Group. (2020) ``Restoring 
America's Competitive Nuclear Energy Advantage: A Strategy To Assure 
U.S. National Security''. U.S. Department of Energy. Available at 
https://www.energy.gov/downloads/restoring-americas-competitive-
nuclear-energy-advantage.
---------------------------------------------------------------------------
    The Working Group found that foreign State-owned 
enterprises are engaging in predatory export financing tactics 
and that Ex-Im is an essential component of the U.S. 
Government's efforts to offer competitive financing to 
facilitate U.S. exports of nuclear energy-related goods and 
services.
    Ex-Im recognizes that competitive financing is one of the 
biggest challenges U.S. commercial nuclear exporters face. As 
U.S. Department of Energy Secretary Dan Brouillette recently 
stated at Ex-Im's 2020 Annual Conference, ``America must regain 
its leadership in nuclear technologies . . . and we want 
[potential customer countries] to choose American nuclear 
technology.'' \4\ The United States therefore needs to bring a 
comprehensive package to potential customers that includes 
technology, expertise, and of course, financial options.
---------------------------------------------------------------------------
     \4\ ``Department of Energy and Export-Import Bank Fireside Chat'', 
2020 Ex-Im Annual Conference, September 11, 2020. Excerpts available at 
https://www.energy.gov/articles/department-energy-and-export-import-
bank-fireside-chat.
---------------------------------------------------------------------------
    With regard to the Program, statute provides that its first 
aim is to ``directly neutralize export subsidies'' financed by 
the People's Republic of China (PRC). \5\ Therefore, under the 
Program, Ex-Im will offer financing to support U.S. exports of 
nuclear energy-related goods or services that are competing 
directly against goods and services that benefit from Chinese 
Government-backed export financing.
---------------------------------------------------------------------------
     \5\ 12 U.S.C.  635(l)(1)(A).
---------------------------------------------------------------------------
    The statute also provides that the Program may be used to 
directly neutralize export subsidies financed by any other 
country that meets specified criteria and that is designated a 
``covered country'' by the Secretary of the Treasury in a 
report to certain congressional committees. \6\ In the event 
that Russia were deemed a ``covered country,'' the Program 
could similarly be used to counter export subsidies financed by 
Russia in the nuclear sector.
---------------------------------------------------------------------------
     \6\ 12 U.S.C.  635(l)(2).
---------------------------------------------------------------------------
    The second statutory aim of the Program is to ``advance the 
comparative leadership of the United States'' with respect to 
the PRC, or ``support United States innovation, employment, and 
technological standards'' with respect to direct exports in 
specified areas. \7\ Since nuclear energy exports are not 
listed as one of these areas \8\ and there are no other 
countries designated as ``covered countries,'' financing under 
the Program for nuclear energy exports is currently limited to 
direct competition with PRC-backed export financing.
---------------------------------------------------------------------------
     \7\ 12 U.S.C.  635(l)(1)(B).
     \8\ Statute provides that ``renewable energy, energy efficiency, 
and energy storage'' are one of the 10 areas covered under the China 
and Transformational Exports Program. Ex-Im interprets ``renewable 
energy'' consistent with the Organization for Economic Co-operation and 
Development's Arrangement on Officially Supported Export Credits. 
Nuclear energy is not among the listed sectors. Annex IV, Appendix I, 
p. 97 (January 15, 2020). Available at http://www.oecd.org/trade/
topics/export-credits/arrangement-and-sector-understandings/.
---------------------------------------------------------------------------
    Applications that do not otherwise qualify under the terms 
of the Program are still eligible for consideration through Ex-
Im's standard financing options, which include extended terms 
for exports related to nuclear power projects. \9\ Ex-Im will 
continue to put a high priority on offering competitive 
financing in order to support U.S. exports, including nuclear 
energy and related products and services.
---------------------------------------------------------------------------
     \9\ The Arrangement allows for enhanced financial terms and 
conditions for nuclear power projects under Annex II: Sector 
Understanding on Export Credits for Nuclear Power Plants. Separately, 
the Arrangement also provides Participants to the Arrangement with the 
ability to ``match . . . financial terms and conditions offered by a 
Participant or a non-Participant.''
---------------------------------------------------------------------------
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN
                       FROM KIMBERLY REED

Q.1. Sasan power plant in Madhya Pradesh, India--Chairman Reed, 
thank you for your assurances during the hearing that Ex-Im 
takes very seriously the six fatalities that occurred in April 
at the Sasan power plant when a fly ash dam failed. How will 
Ex-Im work to ensure that the plant's owner, Reliance Power, is 
held accountable and further fatalities and safety-related 
incidents are prevented? In addition to any general response to 
the preceding question, will Ex-Im commit to the each of the 
following actions in response to the April incident? If not, 
please explain why such action is not possible or should not be 
pursued.

A.1. In order to facilitate U.S. exports and support U.S. jobs 
associated with this transaction, Ex-Im authorized a direct 
loan on October 21, 2010 to Sasan Power Limited (Sasan), which 
is a subsidiary of Reliance Power. Under the structure of this 
transaction, Sasan is contractually obligated to construct, 
operate, and monitor the project site with due diligence in 
accordance with ``Good Industry Practice''; \1\ generally 
accepted construction and engineering practices; all applicable 
laws and regulations; Ex-Im's Environmental & Social Due 
Diligence Procedures and Guidelines; the International Finance 
Corporation (IFC) Performance Standards on Social and 
Environmental Sustainability; and the project-relevant IFC 
Environmental, Health and Safety Guidelines in force on the 
execution date of the financing documents (September 2011).
---------------------------------------------------------------------------
     \1\ Defined in the Sasan credit agreement as ``standards, 
practices, methods and procedures complying with Applicable Law and all 
Clearances, and with that degree of skill, diligence, judgment, 
prudence and foresight which would ordinarily be expected from (as 
applicable) an international skilled and experienced owner and operator 
engaged in designing, engineering, constructing, developing, 
commissioning, operating, insuring and maintaining power facilities, 
mining facilities and/or the other facilities included within the 
Project.''
---------------------------------------------------------------------------
    Reliance Power is not a party to the Sasan credit 
agreement, which includes borrower operational covenants. 
Reliance Power has no contractual obligation to ensure full and 
timely compliance by Sasan with its contractual undertakings. 
Therefore, Ex-Im works directly with Sasan and other project 
lenders regarding Sasan's adherence to its contractual 
obligations.
    Ex-Im takes very seriously the recent tragic breach of the 
fly ash pond. The loss of life that occurred is completely 
unacceptable. Ex-Im has strongly urged Sasan to take immediate 
action to address the needs of local affected communities and 
comply with all applicable legal directives.
    Since learning of the incident, Ex-Im has been in regular 
communication with Sasan, the independent engineer, and the 
independent environmental and social consultant to obtain 
additional information about the incident, its effects on the 
local community, and actions being taken to mitigate those 
effects. Currently, much of India remains under lockdown in 
response to the COVID-19 pandemic, limiting the ability of Ex-
Im and the independent consultants to directly assess these 
matters. Despite the current limitations, Ex-Im continues to 
monitor local developments as much as possible.
    On May 21, 2020, Ex-Im held a teleconference meeting with 
community and other stakeholder representatives shortly after 
the ash dam failure to hear directly their accounts of the 
incident and their recommendations on compensation and clean-
up. These stakeholders have assisted Ex-Im's review by 
providing additional background information and documents from 
local sources.
    Ex-Im is assessing the circumstances that led to the 
incident and, once pandemic mitigation measures have been 
lifted to a degree that permits, Ex-Im will expand its 
assessment of the ash dam failure and contributing 
circumstances, including use of a suitable independent party to 
investigate and recommend remediation measures.
    Following the independent investigation and 
recommendations, Ex-Im will work with Sasan and the other 
project lenders to facilitate further improvements in safety at 
the project, consistent with the standards in the financial 
documents, including Good Industry Practice. In accordance with 
the applicable requirements, Sasan is expected to place a high 
priority on remediating the effects of the incident and 
mitigating the potential for future adverse effects.
    Ex-Im has been and will continue to be a strong force 
pushing for improvements in the project safety and adherence to 
high environmental and social standards.
    Further responses are provided for the question related to 
each of the following suggested actions. In each instance, note 
that Ex-Im's response references working with Sasan directly. 
As described above, Reliance Power has no contractual 
obligation to ensure full and timely compliance by Sasan with 
its contractual undertakings.

Q.2. Ensure Reliance Power provides sufficient compensation and 
remediation for the loss of life, land, crops, and homes, 
including clean up and restoration related to the flood of coal 
ash.

A.2. Following the incident, Indian governmental authorities 
issued directives to Sasan, imposing certain requirements 
regarding compensation and remediation for the loss of life, 
damages to the affected communities, and clean up and 
restoration related to the flood of coal ash. Ex-Im and the 
independent consultants will monitor compliance by Sasan with 
these regulatory directives through engagement with Sasan and 
the local community.

Q.3. Provide transparency in commitments made by Reliance Power 
following the April dam collapse concerning compensation, clean 
up, restoration.

A.3. Ex-Im is fully committed to transparency and 
accountability, including with regard to this incident.

Q.4. Require that regular safety audits are conducted at Sasan, 
including audits of the ash disposal site, and ensure property 
safety measures are implemented.

A.4. Sasan is required to adhere to the applicable requirements 
referenced above, including those related to workforce safety, 
and the health and safety of project-affected people. As is 
standard practice with project finance transactions, Ex-Im has 
also retained independent consultants to conduct ongoing 
independent monitoring and to conduct focused investigations of 
individual incidents since the transaction became operative. 
The independent consultants and advisors assess compliance with 
the environmental and social standards mentioned above, 
including those related to workforce safety, and the health and 
safety of project-affected people. The independent consultants 
perform their assessments through on-the-ground inspection 
audits, engagement with affected communities, engagement with 
local Government representatives and document reviews. The 
consultants then report to Ex-Im on the degree of compliance 
and identified risks. The scope of the consultants' mandates 
includes monitoring of all known project infrastructure 
elements where their failure could result in injury to the 
community, including the ash disposal facilities. The 
monitoring and incident investigations will continue as 
required by the Sasan contractual agreements and will apply 
particular attention to the conditions that led to the ash dam 
failure.

Q.5. Ensure a new, thorough, and impartial independent 
investigation is conducted that reviews the April disaster and 
reports of corruption, human rights and labor violations since 
the last Ex-Im OIG report.

A.5. Indian governmental authorities mandated that Sasan hire 
an independent technical consultant to investigate the 
structural safety and stability of the ash dike and an 
environmental consultant to investigate the impact of the 
spill, including an assessment of the cost of the environmental 
damage, and the cleanup and restoration activities. The 
technical consultant hired by Sasan has visited the Sasan site, 
but the environmental consultant has been unable to visit the 
site due to COVID travel restrictions.
    In addition, Ex-Im's independent consultants will undertake 
their own, separate review of the incident as described above.
    Ex-Im takes allegations of corruption, human rights abuses, 
and labor violations very seriously. Anyone with information 
about such actions is asked to report them directly to Ex-Im or 
Ex-Im's Office of the Inspector General for immediate 
investigation.

Q.6. Require that Reliance Power cooperates with any criminal 
or civil investigations conducted by Indian governmental 
entities concerning the April fly ash dam collapse or 
Reliance's safety practices.

A.6. As a condition of Ex-Im financing, Sasan is contractually 
required to comply with all applicable laws, including any 
Indian laws that require cooperation in civil and criminal 
investigations. Ex-Im and its independent consultants will 
continue to monitor Sasan's compliance with legal directives 
and investigations.
                                ------                                


       RESPONSES TO WRITTEN QUESTIONS OF SENATOR McSALLY
                       FROM KIMBERLY REED

Q.1. A large group of national security experts wrote to 
Congress last year \1\ to underscore the importance of the 
[Export-Import Bank] to U.S. nuclear exports and multiple 
security interests inherent in nuclear energy supply. Today, 
those interests are threatened. Would you support using the Ex-
Im Bank to promote U.S. nuclear energy engagement abroad?
---------------------------------------------------------------------------
     \1\ https://www.americansecurityproject.org/asp-sends-letter-to-
congress-regarding-ex-im-bank/

A.1. Yes, Ex-Im has a critical role to play in supporting the 
competitiveness of the U.S. nuclear energy industry in markets 
around the world.
    In July 2019, President Trump established the United States 
Nuclear Fuel Working Group, which was charged with undertaking 
``a fuller analysis of national security considerations with 
respect to the entire nuclear fuel supply chain.'' \2\ In a 
report issued earlier this year, the Working Group found that 
``it is in the Nation's national security interests to preserve 
the assets and investments of the entire U.S. nuclear 
enterprise and to revitalize the sector to regain U.S. global 
nuclear leadership.'' \3\
---------------------------------------------------------------------------
     \2\ Memorandum of President of the United States on the Effect of 
Uranium Imports on the National Security and Establishment of the 
United States Nuclear Fuel Working Group, (July 12, 2019). Available at 
https://www.whitehouse.gov/presidential-actions/memorandum-effect-
uranium-imports-national-security-establishment-united-states-nuclear-
fuel-working-group/.
     \3\ United States Nuclear Fuel Working Group. (2020) ``Restoring 
America's Competitive Nuclear Energy Advantage: A Strategy To Assure 
U.S. National Security''. U.S. Department of Energy. Available at 
https://www.energy.gov/downloads/restoring-americas-competitive-
nuclear-energy-advantage.
---------------------------------------------------------------------------
    The Working Group found that foreign State-owned 
enterprises are engaging in predatory export financing tactics 
and that Ex-Im is an essential component of the U.S. 
Government's efforts to enable the U.S. private sector to offer 
competitive financing for nuclear technologies.
    Ex-Im is mandated to offer financing at rates and on terms 
and conditions that are fully competitive with foreign 
Government-backed financing. \4\ Ex-Im does not discriminate 
against applications on the basis of their industry, sector, or 
business. \5\
---------------------------------------------------------------------------
     \4\ 12 U.S.C.  635(b)(1)(A).
     \5\ See also 12 U.S.C.  635(k).
---------------------------------------------------------------------------
    Any Ex-Im direct or guaranteed credit financing of a 
foreign civil nuclear power project or civil nuclear-related 
exports is subject to Ex-Im's legal and policy requirements. 
\6\ In addition, all such financings are also subject to 
compliance with relevant laws, including general requirements 
of U.S. law that need to be satisfied by U.S. exporters, the 
host country, and the project company. \7\ As a condition of 
financing, Ex-Im also mandates compliance with relevant laws 
and regulations of nuclear project host countries (and any 
other relevant countries).
---------------------------------------------------------------------------
     \6\ Including but not limited to 12 U.S.C.  635(b)(4); 12 U.S.C. 
 635(b)(5); the Further Consolidated Appropriations Act, 2020, P.L. 
116-94, Division G, Title VI, December 20, 2019.
     \7\ Such as the Atomic Energy Act, as amended (codified at 42 
U.S.C.  2011-2259) and all applicable regulations.
---------------------------------------------------------------------------
    As Ex-Im receives qualified nuclear export-related 
applications, the agency will continue to give a full and fair 
review and work to process them in a timely fashion. Please 
note, however, that nuclear projects tend to be highly complex 
and may take a long time for all the parties to reach an 
agreement on all of the various technical, legal, and financial 
matters.
    Additionally, nuclear-related applications in which U.S. 
exporters are competing against People's Republic of China-
backed export financing may qualify for financing under Ex-Im's 
Program on China and Transformational Exports, which is 
currently under development. \8\
---------------------------------------------------------------------------
     \8\ 12 U.S.C.  635(l)(1)(A).
---------------------------------------------------------------------------
    Finally, Ex-Im notes that legislative provisions that 
impose greater limitations on the availability of its financing 
for nuclear-related exports may result in foreign countries 
choosing nuclear cooperation partners that have significantly 
lower nonproliferation standards. \9\ Such an outcome may 
adversely affect the U.S. Government's ability to support the 
adoption of the highest standards of safety, security, and 
nonproliferation in civil nuclear programs by countries that 
are seeking to acquire civil nuclear technology.
---------------------------------------------------------------------------
     \9\ For example, Further Consolidated Appropriations Act, 2020, 
P.L. 116-94, Division G, Title VII,  7041(h)(2), December 20, 2019.
---------------------------------------------------------------------------
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
              SENATOR MENENDEZ FROM KIMBERLY REED

Q.1. In past recessions, Ex-Im has typically expanded its 
support as private commercial banks scale back their trade 
financing. For example in fiscal year 2009, during the Great 
Recession, Ex-Im's credit assistance grew 46 percent over the 
prior year, and much of that new assistance was in support of 
American small businesses.
    What changes are you seeing in the private sector's 
willingness or capacity to continue to lend to small exporters?

A.1. Ex-Im has put a priority on outreach and engagement with 
small businesses throughout the COVID-19 crisis to better 
understand exactly what they are facing as they look to export 
their products and support their workforce. As part of this 
effort, Chairman Kimberly Reed recently visited Wilmington 
Paper Corporation, a small business in Pine Brook, New Jersey, 
that exports scrap paper for recycling and was recently named 
Ex-Im's Exporter of the Year. They discussed how the events of 
the past year have affected their ability to access the 
financing tools they need to successfully compete overseas.
    Based on conversations like these with exporters and 
lenders, Ex-Im has found that the private sector's capacity to 
lend has been significantly reduced as lenders are reallocating 
their funds to shore up their balance sheets. Lenders have 
increasingly sought Ex-Im loan guarantees in order to maintain 
existing credit lines.
    For syndicated credit facilities that involve multiple 
financial institutions, some lenders have dropped out 
indicating that they will not continue to participate without 
Ex-Im support. As a result, the lead banks in these facilities 
have engaged with Ex-Im in order to supplement their financing 
with guarantees that will enable the banks to maintain the 
credit facility.
    For new business opportunities, banks are seeking increased 
guarantee coverage from Ex-Im in order to manage their balance 
sheets by reducing capital reserve requirements for risk 
weighted assets. Some banks are taking advantage of Ex-Im's 
temporary expansion of its Working Capital Loan Guarantee and 
Supply Chain Finance Guarantee programs. In response to the 
pressures facing lenders, Ex-Im's Board of Directors approved a 
temporary increase of its guarantee coverage (from 90 percent 
to 95 percent). The temporary measure took effect in May and 
will remain until at least April 30, 2021. \1\
---------------------------------------------------------------------------
     \1\ For more information, see https://www.exim.gov/coronavirus-
response.

Q.2. Is Ex-Im prepared to respond now like it did after the 
---------------------------------------------------------------------------
global financial crisis, if needed?

A.2. Yes, Ex-Im is similarly prepared to respond during the 
current crisis and expand support if private commercial banks 
scale back their trade financing. On March 25, Ex-Im's Board of 
Directors underscored its strong support for new initiatives to 
inject liquidity into the market and give maximum financing 
flexibility to facilitate sales of U.S. goods and services 
abroad.
    Specifically, Ex-Im's Board of Directors, through its 
unanimous adoption of a resolution during an open board meeting 
with the public via teleconference, affirmed its support of the 
following temporary Ex-Im programs \2\ to provide relief to 
U.S. businesses, their buyers, financial institutions, and 
American workers negatively impacted by COVID-19:
---------------------------------------------------------------------------
     \2\ Ibid.

---------------------------------------------------------------------------
    Bridge Financing Program;

    Pre-Delivery / Pre-Export Financing Program;

    Supply Chain Financing Guarantee Program; and

    Working Capital Guarantee Program

    Ex-Im also extended certain relief measures for U.S. 
exporters and financial institutions that may have been 
affected by COVID-19. These measures include waivers, deadline 
extensions, streamlined processing, and flexibilities that will 
enable participating businesses and financial institutions to 
return to their business concerns and Ex-Im-related obligations 
at an appropriate time without penalty. \3\
---------------------------------------------------------------------------
     \3\ More information available at https://www.exim.gov/fact-sheet-
exim-covid-19-assistance.
---------------------------------------------------------------------------
    As events continue to develop, Ex-Im is in regular contact 
with exporters, lenders, international buyers, and other 
stakeholders to determine what additional measures, if any, are 
needed to better facilitate U.S. exports during this time of 
significant stress in global markets. Should any additional 
measures require legislative action, Ex-Im is pleased to work 
with this Committee to ensure it has the authority and 
resources it needs to effectively meet the needs of U.S. 
exporters.

Q.3. In contrast to many international financial institutions 
and some U.S. entities like the U.S. Development Finance 
Corporation, Ex-Im does not have a fully independent 
accountability mechanism to address complaints from communities 
harmed by Ex-Im's projects. If we want to present developing 
countries with a better economic model than the one offered by 
China, we should be doing everything we can to make sure that 
U.S.-led projects are transparent and truly deliver economic 
benefits to local communities. In light of the standards 
adopted at the U.S. Development Finance Corporation and 
elsewhere, how does the Bank plan to improve upon its 
accountability framework?

A.3. Among global export credit agencies, Ex-Im is generally 
recognized as among the most transparent. Ex-Im goes beyond 
international standards and best practices in publicly 
disclosing information about pending and approved transactions 
and soliciting feedback and input from potentially affected 
communities.
    Ex-Im has adopted and applies the internationally 
recognized Performance Standards on Environmental & Social 
Sustainability of the World Bank Group's International Finance 
Corporation and the OECD's Recommendation of the Council on 
Common Approaches for Officially Supported Export Credits and 
Environmental and Social Due Diligence. These standards and 
principles are applied by most export credit agencies financing 
major projects, and many of the commercial lenders that 
participate in transactions with Ex-Im. In Ex-Im's experience, 
multilateral development banks and development financial 
institutions, such as the U.S. Development Finance Corporation, 
also apply these same international standards.
    These international standards and best practices require 
projects with the potential for ongoing risks and impacts on 
surrounding communities to publish information about the 
project publicly, proactively engage with the community, and to 
establish a grievance mechanism to receive and facilitate 
resolution of the affected community's concerns and complaints 
about the project's environmental and social performance 
throughout the life of the project. Ex-Im implements these 
requirements.
    Furthermore, since 2016, Ex-Im has hosted its publicly 
available Environmental and Social Project Information and 
Concerns web portal, which allows any stakeholder to request 
project information, provide information regarding a project, 
or submit project-related complaints or concerns directly to 
Ex-Im. \4\ All submissions are reviewed by a cross-divisional 
committee chaired by Ex-Im's Chief Risk Officer, who reports 
directly to Ex-Im's President and Chairman. Based on the 
submissions received through this portal, the committee engages 
in regular discussions to ensure that project-related concerns 
and complaints are brought to the attention of senior 
management across divisions and project-related information is 
made publicly available in a timely fashion.
---------------------------------------------------------------------------
     \4\ Available at https://www.exim.gov/policies/ex-im-bank-and-the-
environment/environmental-and-social-project-information-and-concerns.
---------------------------------------------------------------------------
    Ex-Im also maintains a public registry of project-related 
complaints, including compliance with environmental and/or 
social compliance, either during the construction or 
operational phase of a project. \5\
---------------------------------------------------------------------------
     \5\ Available at https://www.exim.gov/policies/exim-bank-and-
environment/registry.
---------------------------------------------------------------------------
    Additionally, Ex-Im has an independent Office of the 
Inspector General (OIG) that reviews Ex-Im's implementation of 
its policies and procedures, including those relating to 
environmental and social effects of projects.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN
                       FROM KIMBERLY REED

Q.1. Please describe how the Export-Import bank is supporting 
small businesses during the COVID-19 pandemic, including 
outreach efforts to lenders and businesses, as well as the 
steps Ex-Im is taking to ensure that its default rate does not 
go [above] the 2 percent maximum default rate.

A.1. Digital outreach and education tools are uniquely 
positioned to respond to the needs of small businesses during 
the present crisis.
    In the past, an important component of educating businesses 
on Ex-Im support for exporting relied in part on 
individualized, high-touch communications meeting and speaking 
to company representatives one-on-one or in groups, often in 
collaboration with other Federal Government agencies; public-
private partnerships, such as District Export Councils; and 
State and local economic development agencies.
    Under the current circumstances, in-person interactions are 
not an option, so Ex-Im has increased its use of automated 
digital platforms to stay connected with small businesses 
during this time of social distancing.
    The Outreach and Education team in Ex-Im's Office of Small 
Business is driving digital communications strategies and 
tactics forward with three goals in mind:

    Be proactive to the needs of the community of small 
        business exporters (customers and prospects)

    Drive as much normalcy and ``business as usual'' as 
        possible

    Maintain a robust pipeline of actions to provide 
        continuity; keep moving forward so the agency is 
        prepared to address financing needs in a stressed and 
        volatile market.

    Some of the specific actions Ex-Im has taken since social 
distancing guidelines went into effect include an increased 
focus on webinars with exporters, lenders, brokers, and partner 
organizations; enhanced outreach through email communications 
targeted to small businesses concern about nonpayment by 
foreign buyers due to the effects of COVID-19; and recording 
and making available an audio series on receivables financing, 
insuring receivables against the risk of nonpayment, and 
negotiating repayment terms in uncertain times. \1\
---------------------------------------------------------------------------
     \1\ Available at https://www.exim.gov/what-we-do/export-credit-
insurance. A Spanish language version is under development.
---------------------------------------------------------------------------
    Ex-Im tracks the risk involved with any particular 
transaction by proactively managing the credit through all 
parts of the transaction lifecycle, extending from disbursement 
to repayment. Ex-Im monitors the credit-rating of obligors' 
debt service repayment capacity, considering all factors that 
directly impact ability and willingness to repay its debt in a 
timely manner. These ongoing reviews strengthen staff's 
familiarity and working relationships with obligors and allow 
the agency to identify vulnerabilities in the credits.
    Given the current economic uncertainty, these reviews are 
happening rapidly and the risk of any particular transaction 
being in default is fluid based upon these reviews. The 
monitoring groups seek to achieve this goal through ongoing 
assessments of the operating environment and financial 
condition of the borrower and guarantors to determine whether 
there have been changes that suggest an increase or decrease in 
the risk associated with any of the key variables considered at 
origination. Given the frequent communication between Ex-Im, 
its borrowers, and guaranteed lenders, the ability to develop 
and implement remediation action is strengthened and provides 
Ex-Im with additional notice prior to default.
    Accordingly, in order to provide flexibility and to 
minimize defaults, Ex-Im is providing short-term liquidity 
relief to its borrowers by:

    Working with lenders to restructure debt

    Waiving certain covenant requirements

    Allowing the use of reserve accounts and applying 
        security deposits to current obligations

    Waiving payments in advance and applying payments 
        in advance to current obligations

    Paying out claims on defaulted installments 
        associated with guaranteed loans

    As of this time, the nature of the stress for Ex-Im 
borrowers is primarily one of short-term liquidity, not long-
term solvency. Therefore, Ex-Im expects its borrowers will 
focus on maintaining sufficient liquidity over the short term. 
Currently, with these liquidity relief efforts Ex-Im's 
portfolio is stable and performing.
    The COVID-19 pandemic is a highly fluid and dynamic 
situation, and as more time elapses, a protracted crisis could 
result in increased defaults, impede recovery efforts, and 
thereby cause Ex-Im's default rate to rise. Ex-Im will continue 
to provide relief as necessary and appropriate to its borrowers 
in order to protect the long-term financial interest of the 
U.S. taxpayer.

Q.2. Ex-Im and the National Credit Union Administration (NCUA) 
recently signed a Memorandum of Understanding (MOU) to engage 
in a collaborative effort to promote Ex-Im among federally 
insured credit unions.
    When will the outreach programs described in the MOU start 
to take affect?

A.2. Planning for outreach to credit union associations began 
shortly after the MOU signing. Four webinars have been 
completed with the following organizations:

    National Association of Credit Union Service 
        Organizations (NACUSO), July 15, 2020

    Credit Union National Association (CUNA), July 22, 
        2020

    National Association of Federally Insured Credit 
        Unions (NAFCU), August 5, 2020

    National Credit Union Administration (NCUA) August 
        19, 2020

    Ex-Im looks forward to considering additional outreach 
activities with these organizations. Ex-Im also is working with 
these partners on enhancing communications through other 
channels, including association newsletters. \2\
---------------------------------------------------------------------------
     \2\ For example: Reed, Kimberly A., ``Credit Union Customers Can 
Export Confidently With Ex-Im Support'', The NAFCU Journal, September 
2020: pp. 38-39. Available at https://www.nxtbook.com/ygsreprints/
NAFCU/nafcu_SeptOct2020/index.php#/p/38.

Q.3. Has Ex-Im been conducting outreach to community banks to 
reach more small businesses? What steps is Ex-Im taking to 
ensure this outreach is effective and reaches businesses in 
---------------------------------------------------------------------------
underserved communities?

A.3. Currently, there are 54 private sector lenders actively 
participating in Ex-Im's delegated authority program for 
working capital loan guarantees. \3\ Ex-Im welcomes 
applications from additional private sector lenders interested 
in participating in this program.
---------------------------------------------------------------------------
     \3\ A full list of all approved working capital lenders is 
available at https://www.exim.gov/tools-for-exporters/delegated-
authority-lenders.
---------------------------------------------------------------------------
    Ex-Im is currently realigning its field operations to 
increase its focus on supporting the insurance brokers and 
commercial lenders that connect small businesses with Ex-Im 
financing. The purpose of this wholesale strategy is to provide 
assistance and resources to partners, in both a way that they 
see as valuable and will significantly increases the number of 
exporters they can identify, originate, and onboard. This 
increased attention on community lenders, combined with the 
activities of Ex-Im's Minority and Woman-Owned Business team 
across the country, including in rural communities, will help 
expand outreach to underserved communities.

Q.4. Has Ex-Im been conducting outreach to community 
development financial institutions (CDFIs) and minority 
depository institutions (MDIs) to support community-based and 
minority-owned small businesses?

A.4. Historically, Ex-Im has not been able to identify many 
minority-owned banks that offer asset-based lending. Previous 
efforts to invite minority-owned banks to participate in Ex-
Im's programs were unsuccessful as these lenders did not see 
the value of the Working Capital Loan Guarantee Program for 
their institutions.
    However, Ex-Im does continue to engage with minority 
lenders as they consider expanding their financing options for 
their customers. In March, Ex-Im obtained an updated list of 
CDFIs from Treasury and is reviewing the list for asset-based 
lenders that may want to participate in Ex-Im's Working Capital 
Loan Guarantee Program. This process is ongoing.

Q.5. Describe how the organizational realignment of Ex-Im, in 
addition to the expanded access of product offerings you 
referenced in your written testimony, has made it easier for 
small businesses to access financing. What metrics and targets 
is Ex-Im using?

A.5. Ex-Im's organizational realignment is designed to improve 
the business development model for originating, identifying, 
and onboarding exporters of U.S. made goods and services who 
would benefit from Export Credit Insurance and Working Capital 
Loan Guarantee programs. These programs provide financing and 
insurance coverage directly to U.S. exporters and tend to be 
heavily used by smaller businesses.
    Most exporters access Ex-Im financing through private 
sector broker and lender partners. These partners typically 
serve as the primary point of contact for the exporter 
regarding their utilization of Ex-Im financing. Traditionally, 
Ex-Im's relationships with these partners have been focused on 
``post-application'' support, with very little assistance in 
the ``pre-application'' phase (i.e., business development).
    Given the constraints of personnel, resources, and time, 
Ex-Im's organizational realignment within the Office of Small 
Business will allow it to scale up its outreach efforts by 
adopting a wholesale strategy focused on the exporter-focused 
business development needs of Ex-Ims broker and lender 
networks. The purpose of this wholesale strategy is to provide 
assistance and resources to partners by enhancing their 
capability to identify, originate, and onboard new exporters 
who can take advantage of Ex-Im financing.
    This new strategy was developed based on extensive 
interviews and through consulting with experts in channel 
operations. Ex-Im will provide an account manager to each 
qualifying partner, and that account manager will offer a menu 
of potential resources and services to aid the partner in 
finding and helping more exporters who can benefit from Ex-Im 
financing.
    This effort has a number of defined metrics and targets Ex-
Im will use to evaluate effectiveness. First and foremost, is 
the aggregate number of authorizations originated in Ex-Im's 
Export Credit Insurance and Working Capital Loan Guarantee 
programs. This will be further evaluated on a per partner basis 
to ascertain the value of the enhanced support provided in 
increasing the number of Ex-Im authorizations.
    The second goal is to ensure that the partners continue to 
see value in the program, and that the assistance provided 
continues to be effective in helping them meet their goals. 
This will be measured based on the utilization and 
effectiveness of each type of assistance provided, as well as 
in aggregate on a quarterly basis by spot surveying partner 
participants.
    Lastly, based on how business development leads will be 
provided to partners, Ex-Im will be able to measure both the 
number of Ex-Im authorizations associated with those leads, as 
well as the amount of non-Ex-Im financing these newly 
identified businesses were able to access directly from the 
private sector. This information can help provide better 
insight into how Ex-Im financing supplements the private sector 
and can provide value to partner institutions. These metrics 
also better align Ex-Im's program incentives with those of 
exporters and partners.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
            SENATOR CORTEZ MASTO FROM KIMBERLY REED

Q.1. Have borrowers needed forbearance because of reduced 
revenue? If so, can you explain what forbearance the Export-
Import Bank offered and how those steps are working?

A.1. Yes, some borrowers have needed forbearance due to reduced 
revenue. Forbearance requests have been generally limited to 
airline borrowers--specifically linked to certain passenger 
airlines. The grounding of passenger airlines around the world 
has resulted in significant revenue declines for those 
airlines. Ex-Im is working with these airlines to provide 
short-term liquidity relief in order to protect the long-term 
financial interest of the U.S. taxpayer.
    Ex-Im tracks the risk involved with any particular 
transaction by proactively managing the credit through all 
parts of the transaction lifecycle, extending from disbursement 
to repayment. Ex-Im monitors the credit-rating of obligors' 
debt service repayment capacity, considering all factors that 
directly impact ability and willingness to repay its debt in a 
timely manner. These ongoing reviews strengthen Ex-Im staff's 
familiarity and working relationships with obligors and allow 
the agency to identify credit vulnerabilities.
    Given the current economic uncertainty, these reviews are 
happening rapidly and the risk of any particular transaction 
being in default is fluid based upon these reviews. The 
monitoring groups seek to achieve this goal through ongoing 
assessments of the operating environment and financial 
condition of the borrower and guarantors to determine whether 
there have been changes that suggest an increase or decrease in 
the risk associated with any of the key variables considered at 
origination. Given the frequent communication between Ex-Im, 
its borrowers, and guaranteed lenders, the ability to develop 
and implement remediation action is strengthened and provides 
Ex-Im with additional notice prior to default.
    Accordingly, in order to provide flexibility and to 
minimize defaults, Ex-Im is providing short-term liquidity 
relief to its borrowers by:

    Working with lenders to restructure debt

    Waiving certain covenant requirements

    Allowing the use of reserve accounts and applying 
        security deposits to current obligations

    Waiving payments in advance and applying payments 
        in advance to current obligations

    Paying out claims on defaulted installments 
        associated with guaranteed loans

    As of this time, the nature of the stress for Ex-Im 
borrowers is primarily one of short-term liquidity, not long-
term solvency. Therefore, Ex-Im expects its borrowers will 
focus on maintaining sufficient liquidity over the short term. 
Currently, with these liquidity relief efforts Ex-Im's 
portfolio is stable and performing.

Q.2. What is your estimate of a loan default rate at the end of 
the year? What can Ex-Im do to keep the default rate below 2 
percent?

A.2. Ex-Im regularly performs default rate and stress test 
scenarios to estimate future paths of the default rate given 
the current market and financial conditions. As outlined in the 
``Stress Test Addendum'' section in Ex-Im's latest Default 
Report to Congress (covering the quarter ending in June 2020), 
\1\ Ex-Im utilizes a forward-looking approach for its stress 
testing protocol to develop stress scenarios that simulate 
defaults based on the latest portfolio and internal credit 
ratings for its transactions. \2\ For each scenario, Ex-Im runs 
20,000 Monte Carlo simulations to create a distribution of 
possible losses. Ex-Im reports its stress test results to 
Congress on a semiannual basis and always includes a base case 
scenario that assumes no underlying adverse financial or market 
conditions. As of June 2020, the base case scenario's expected 
default rate (i.e., the median value of the 20,000 Monte Carlo 
simulations) is 0.38 percent with a 95 percent confidence level 
that it would be less than 1.94 percent.
---------------------------------------------------------------------------
     \1\ Pursuant to 12 U.S.C.  635g(g); available at https://
www.exim.gov/who-we-serve/congressional-and-government-stakeholders/
facts-about-exim/default-rate-reports.
     \2\ Ex-Im's internal risk rating system is similar to Moody's or 
S&P's credit rating system.
---------------------------------------------------------------------------
    As part of the June 2020 Default Report, Ex-Im performed a 
specific COVID-19 stress test scenario that covered a 1-2 year 
forward-looking period for the three areas in the portfolio 
that are expected to be most impacted by the fallout of the 
COVID-19 pandemic: Transportation, Commodities, and Sovereign 
risk (non-Transportation). Staff simulated deteriorating 
financial and market conditions by applying risk rating 
downgrades to every transaction in these three sectors. Under 
this highly stressed scenario, Ex-Im's expected median default 
rate would be 0.85 percent with a 95 percent confidence level 
that it would be less than 2.63 percent.
    Ex-Im proactively manages its portfolio and maintains 
continuous contact with its borrowers in order to assess their 
needs and minimize potential defaults in this unprecedented 
crisis. As described in response to Question 1, Ex-Im has 
undertaken a number of measures to provide forbearance to 
borrowers experiencing liquidity needs.
    The COVID-19 pandemic is a highly fluid and dynamic 
situation, and as more time elapses, a protracted crisis could 
result in increased defaults, impede recovery efforts, and 
thereby cause Ex-Im's default rate to rise. Ex-Im will continue 
to provide relief as necessary and appropriate to its borrowers 
in order to protect the long-term financial interest of the 
U.S. taxpayer. Ex-Im will continue to update its default rate 
and stress test scenarios to reassess the impact of COVID-19 on 
its portfolio.

Q.3. How has COVID-19 affected the ability of foreign companies 
to secure financing? Is it easier or more difficult for foreign 
companies that are buying from U.S. companies to obtain 
financing from the private sector?

A.3. COVID-19 has negatively impacted the ability of foreign 
companies to secure financing because of the uncertainty it has 
created in the market. Various reports indicate that lenders in 
multiple jurisdictions are building up their loan-loss reserves 
in anticipation of increased defaults in their current 
portfolios. Every dollar that is held to provision for 
potential losses on existing loans is one that cannot be used 
to extend new credit to customers. With a shrinking amount of 
money to make loans, lenders tend to prioritize their top 
clients, making it difficult for other companies to access 
financing.
    Additionally, if foreign buyers are using their local banks 
(or other banks without U.S. dollar deposits), it is 
difficult--and very expensive--to obtain term financing in U.S. 
dollars. While the Federal Reserve has implemented swap lines 
to central banks in select markets to facilitate short-term 
U.S. dollar liquidity, purchases of U.S. capital equipment 
generally require medium- or long-term financing due to the 
cost and nature of the goods sold. Foreign companies looking to 
buy U.S. exports such as these may find that the private sector 
is unable to provide competitive financing in U.S. dollars to 
facilitate the purchase.
    Ex-Im expects to provide greater detail and insight on the 
measures introduced by foreign export credit agencies to 
mitigate the effects that COVID-19 is having on trade and 
export finance as part of its annual Report to the U.S. 
Congress on Global Export Credit Competition, covering calendar 
year 2020. This report will also incorporate insight and 
analysis based on surveys and interviews with market 
participants and will be released in June 2021.

Q.4. How has the impact of the COVID-19 pandemic affected Ex-
Im's risk management practices?

A.4. The COVID-19 pandemic has resulted in material 
macroeconomic, financial, and political deterioration across a 
number of markets. As a result of the systemic and country-
specific shocks stemming from the COVID-19 pandemic, Ex-Im has 
undertaken a number of actions both with regard to applications 
currently under consideration as well as those transactions 
that are currently in repayment in order to fulfill its mission 
to support U.S. jobs while minimizing the risk of loss to the 
U.S. Government.
    Ex-Im's framework for analyzing transactions begins with an 
assessment of country risk. Ex-Im is the Secretariat for an 
interagency working group, chaired by the Office of Management 
and Budget, that risk rates a country's ability and willingness 
to repay its debt. In its role as Secretariat, Ex-Im's country 
economists prepare the reports containing the assessment of 
country risk for review and approval by the interagency working 
group. This system, known as the Interagency Country Risk 
Assessment System (ICRAS) provides separate risk ratings for 
lending to the sovereign Government and lending to private 
borrowers. The results of these reviews inform Ex-Im's 
determination about whether transactions in a given market may 
meet the statutory requirement for a reasonable assurance of 
repayment, as reflected in the Country Limitation Schedule 
(CLS). The CLS is available on Ex-Im's website and informs of 
the markets in which it is open for business and general terms 
and conditions for considering transactions in each market. \3\ 
Since the COVID-19 pandemic began, the interagency working 
group has modified the ICRAS ratings for a number of countries 
in recognition of the heightened risk brought on by 
deteriorating conditions.
---------------------------------------------------------------------------
     \3\ Available at https://www.exim.gov/tools-for-exporters/country-
limitation-schedule.
---------------------------------------------------------------------------
    Ex-Im supplements the ICRAS reviews with continued 
monitoring of economic conditions both globally and in 
individual countries. This monitoring has been particularly 
important in helping the agency more quickly identify how on 
the ground realities are shifting the risk profile. Based on 
these timely reviews, Ex-Im may further modify its risk ratings 
or CLS when necessary to respond to significant developments on 
the ground, either with regard to an individual transaction or 
for all transactions in a particular country.
    Ex-Im is also considering the effects of COVID-19 when 
reviewing individual transactions to determine whether there is 
a reasonable assurance of repayment. The analysis may include a 
review of the financial and operating conditions pre-COVID-19 
and how COVID-19 is affecting current operations.
    Ex-Im tracks the risk involved with any particular 
transaction by proactively managing the credit through all 
parts of the transaction lifecycle, extending from disbursement 
to repayment. Ex-Im monitors the credit-rating of obligors' 
debt service repayment capacity, considering all factors that 
directly impact ability and willingness to repay its debt in a 
timely manner. These ongoing reviews strengthen staff's 
familiarity and working relationships with obligors and allow 
the agency to identify vulnerabilities in the credits.
    Given the current economic uncertainty, these reviews are 
happening rapidly and the risk of any particular transaction 
being in default is fluid based upon these reviews. The 
monitoring groups seek to achieve this goal through ongoing 
assessments of the operating environment and financial 
condition of the borrower and guarantors to determine whether 
there have been changes that suggest an increase or decrease in 
the risk associated with any of the key variables considered at 
origination. Given the frequent communication between Ex-Im, 
its borrowers, and its guaranteed lenders, the ability to 
develop and implement remediation action is strengthened and 
provides Ex-Im with additional notice prior to default.

Q.5. The Ex-Im Bank's reauthorization included a goal to set 
aside at least 5 percent of annual funds to finance renewable 
energy, energy efficiency, and energy storage technology 
exports.
    What is Ex-Im's plan to ensure 5 percent of funds are being 
set aside to finance renewable energy exports?

A.5. Ex-Im's total outstanding loan, guarantee, and insurance 
exposure is capped at a total of $135 billion. \4\ As of June 
30, 2020, Ex-Im's aggregate outstanding exposure stood at $45.6 
billion, with $89.4 billion (66 percent) available to finance 
U.S. exports for any sector, industry, constituency, or export 
destination, consistent with applicable statutory and policy 
limitations.
---------------------------------------------------------------------------
     \4\ 12 U.S.C.  635e(a)(2).
---------------------------------------------------------------------------
    To the best of Ex-Im's knowledge, the agency has always had 
sufficient financing authority to finance qualified 
applications for renewable energy, energy efficiency, and 
energy storage technology exports.
    Ex-Im's 2019 Congressional reauthorization makes it ``a 
goal of the Bank to ensure that not less than 5 percent of . . 
. '' the aggregate loan, guarantee, and insurance authority 
``is available each fiscal year for the financing of renewable 
energy,'' energy efficiency, and energy storage technology. \5\ 
The statute does not establish a ``set aside'' that would 
require Ex-Im to delay or deny financing for exports that are 
not considered renewable energy, energy efficiency, or energy 
storage technology exports.
---------------------------------------------------------------------------
     \5\ Further Consolidated Appropriations Act, 2020, P.L. 116-94, 
Division I, Title IV,  407, December 20, 2019, codified at 12 U.S.C.  
635(b)(1)(K).

Q.6. Is Ex-Im increasing its outreach to companies in the 
---------------------------------------------------------------------------
energy sector in order to meet this goal?

A.6. Ex-Im places a high priority on supporting renewable 
energy and environmentally beneficial exports, consistent with 
applicable statutory mandates. \6\ Ex-Im seeks to increase the 
amount of its financing for renewable energy, energy 
efficiency, energy storage, and environmentally beneficial 
exports through increased outreach and engagement on Ex-Im's 
value proposition.
---------------------------------------------------------------------------
     \6\ 12 U.S.C.  635(b)(1)(C), 12 U.S.C.  635(b)(1)(K), 12 U.S.C. 
 635i-3(b)(1).
---------------------------------------------------------------------------
    Ex-Im's outreach and engagement strategy for these key 
sectors is centered around identifying U.S. businesses that are 
active in this space and that are looking to export their goods 
and services to foreign buyers. To accomplish this objective, 
Ex-Im participates in a number of events that serve as focal 
points for U.S. renewable energy manufacturers, prospective 
buyers, trade associations, and Government officials. These 
include trade events related to, for example, wind power, 
microgrids, solar power, and energy storage. Ex-Im has also 
participated in reverse trade missions and interagency working 
groups that focus on supporting U.S. renewable energy exports. 
Ex-Im also maintains regular contact with U.S. exporters and 
foreign buyers in the sector who have previously utilized Ex-Im 
financing to identify new financing opportunities.
    Ex-Im featured several conversations related to renewable 
energy, energy storage, and energy efficiency technologies at 
its 2020 Annual Conference, which reached over 1,700 
registrants, the largest conference in the agency's history. 
\7\ During a fireside chat with Chairman Reed on the main 
stage, U.S. Department of Energy Secretary Dan Brouillette 
spoke about energy storage technology, noting: ``Coordinating 
with stakeholders is critical as we work to position the United 
States as a global leader in energy storage technologies of the 
future. While research and development are the foundation of 
advancing these technologies, the Trump Administration 
recognizes global leadership also requires a commitment to 
commercializing technologies from the lab to the marketplace.'' 
\8\ As these technologies become commercially available, Ex-Im 
will continue to work closely with the Department of Energy and 
other Federal agencies to support these exports, consistent 
with applicable statutory requirements.
---------------------------------------------------------------------------
     \7\ For more information, see https://www.exim.gov/events/annual-
conferences/2020/agenda.
     \8\ ``Department of Energy and Export-Import Bank Fireside Chat'', 
2020 Ex-Im Annual Conference, September 11, 2020. Excerpts available at 
https://www.energy.gov/articles/department-energy-and-export-import-
bank-fireside-chat.
---------------------------------------------------------------------------
    In 2019, recognizing the importance of this mandate, 
Chairman Reed tasked Ex-Im Director Judith Pryor with 
supporting Ex-Im's outreach and engagement with major U.S. 
exporters involved in renewable energy and environmentally 
beneficial exports. Director Pryor joined the Commerce 
Department's Renewable Energy and Energy Efficiency Advisory 
Committee for a roundtable last year and, in late August, 
participated in the Energy Storage Association's Annual 
Conference to encourage buyers of U.S. energy storage exports 
to access Ex-Im financing for future capital-intensive hybrid 
and stand-alone energy storage projects. While some of her 
business development travel has been postponed due to COVID 
travel restrictions, Director Pryor has also been meeting with 
a wide range of stakeholders, highlighting how Ex-Im's 
financing solutions can help U.S. business reach and compete in 
new markets.
    More recently, Ex-Im established an interdivisional 
renewable energy working group to strategize additional ways to 
increase Ex-Im's financing of renewable energy, energy 
efficiency, and energy storage exports. The working group meets 
regularly and is focused on enhancing collaboration and 
leveraging resources across divisions and interagency partners 
to improve Ex-Im's outreach and communication to this sector.
    These ongoing efforts have also been supplemented with 
additional outreach and engagement associated with Ex-Im's 
Program on China and Transformational Exports (the 
``Program''), under which the agency has a goal to reserve not 
less than 20 percent of its aggregate loan, guarantee, and 
insurance authority towards financing exports under the 
Program. \9\ Ex-Im is charged with offering financing under the 
Program that, to the extent practicable, is fully competitive 
with the rates, terms, and conditions offered by the People`s 
Republic of China (and other countries as may be designated by 
the Secretary of the Treasury) in order to advance the 
``comparative leadership of the United States'' or support 
``innovation, employment, and technological standards, through 
direct exports'' in 10 specific areas, including renewable 
energy, energy efficiency, and energy storage.
---------------------------------------------------------------------------
     \9\ 12 U.S.C.  635(l)(3)(A).
---------------------------------------------------------------------------
    As Ex-Im works to establish the Program, Chairman Kimberly 
Reed launched the Strengthening American Competitiveness 
Initiative, which seeks to engage stakeholders from the 10 key 
areas identified in statute. On May 7, 2020, Ex-Im convened a 
roundtable discussion via teleconference focused on renewable 
energy exports to discuss how Ex-Im can better position its 
products and policies to further support the renewable energy 
and energy storage sector under the Program. \10\ More than 260 
business owners and stakeholders in the U.S. renewable energy 
sector participated in the call.
---------------------------------------------------------------------------
     \10\ The recorded call can be accessed at https://www.exim.gov/
who-we-serve/external-engagement/strengthening-american-
competitiveness.

Q.7. How can Congress better position U.S. exporters of 
renewable energy products to respond to increasing foreign 
---------------------------------------------------------------------------
demand?

A.7. As described above, Ex-Im is committed to supporting U.S. 
exporters in the renewable energy sector. Based on feedback 
from exporters and other stakeholders, some of the main 
challenges facing exporters revolve around foreign Government 
industrial and trade policies that may put U.S. businesses at a 
competitive disadvantage in global markets. While Ex-Im does 
not have any specific policy recommendations to address these 
matters, the agency is pleased to work with this Committee on 
policy proposals that are related to export finance.

Q.8. Please provide information on renewable energy export 
deals, including types of products exported, number of deals 
made, the dollar value of total insured shipments, guaranteed 
credit, or disbursed loans, total authorizations, and other 
relevant data, made since you were confirmed.

A.8. Since Chairman Reed was confirmed by the Senate on May 8, 
2019, Ex-Im has authorized 18 transactions supporting the 
export of renewable energy technologies, as of September 15. 
The chart below reflects Ex-Im's financial authorizations for 
renewable energy exports since May 8, 2019. These 
authorizations include transactions that are still being 
utilized by U.S. exporters. As a result, the total amount of 
insured shipments, guaranteed credits, and disbursed loans 
associated with these authorizations is not yet available.


    The below chart reflects the amount of insured shipments, 
guaranteed credits, and disbursed loans since May 8, 2019, and 
includes activity associated with transactions that were 
authorized prior to May 8, 2019.



Q.9. What outreach is Ex-Im doing to underserved communities or 
business owners? Does Ex-Im have any initiatives or plans to 
further support businesses in rural communities, especially in 
the wake of the pandemic?

A.9. Ex-Im has established a Minority- and Women-Owned Business 
(MWOB) group, which is staffed by a dedicated team of business 
development specialists who work with businesses owned by 
minorities, women, veterans, and persons with disabilities to 
help them access Ex-Im financing.
    This group has established long-standing partnerships with 
organizations that have a minority trade focus and are 
dedicated to working with Ex-Im to educate and raise awareness 
about opportunities for exporters. Some of these organizations 
include the National Minority Supplier Development Council, 
Women's Business Enterprise National Council, U.S. Hispanic 
Chamber of Commerce, National ACE, the Minority Business 
Development Agency, the National Center for American Indian 
Enterprise Development, the American Indian Chamber, and the 
Native American Development Corporation, the Disabled Business 
Association, and the National Veteran Business Council.
    Ex-Im's MWOB team also travels throughout the country to 
collaborate with its partners by hosting export seminars, 
participating in trade shows, and organizing workshops focused 
on trade finance and global business development.
    In FY2019, Ex-Im staff participated in 119 outreach and 
education events across the country engaging minority- and 
women-owned businesses. In FY2019, Ex-Im approved $440.6 
million in support of MWOB businesses.
    Ex-Im's 2019 reauthorization underscored the importance of 
outreach and engagement to small businesses owned by women, 
minorities, veterans, and persons with disabilities, as well as 
those located in rural areas and start-up businesses. \11\ In 
order to strengthen its efforts in this regard, Ex-Im is 
increasing its outreach staff to help more of these targeted 
businesses learn about how its tools can support their ability 
to increase exports and grow their workforce.
---------------------------------------------------------------------------
     \11\ Further Consolidated Appropriations Act, 2020, P.L. 116-94, 
Division I, Title IV,  403, December 20, 2019, codified at 12 U.S.C.  
635(b)(1)(E)(i)(I).
---------------------------------------------------------------------------
    As Chairman Reed described in her testimony, Ex-Im is 
undertaking a number of initiatives that are designed to 
enhance the agency's outreach to small businesses all across 
the country, including those in underserved communities and 
rural areas.
    Throughout FY2020, Ex-Im has embarked on its All America 
Initiative, an outreach effort focused on supporting companies 
of all sizes in the 50 U.S. States, the District of Columbia, 
and five U.S. Territories. To achieve this goal, Ex-Im's Board 
Members and staff participated in numerous events to educate 
businesses, State and local government economic development 
agencies, chambers of commerce, trade associations, and other 
organizations about how Ex-Im can support growth through 
exporting. The Initiative began with in-person events, then 
pivoted to virtual engagements after the onset of the COVID-19 
pandemic. Ex-Im recently released a video highlighting the 
agency's commitment to supporting exporters across the country 
and increasing awareness of its products. \12\
---------------------------------------------------------------------------
     \12\ Available at https://grow.exim.gov/all-america-video.
---------------------------------------------------------------------------
    By boosting field office staff, Ex-Im will have greater 
ability to send staff to meet businesses and exporters 
throughout their designated regions. Field staff are able to 
readily participate in local trade shows, seminars, and 
workshops, as well as give presentations to local chambers of 
commerce.
    Ex-Im is also working on enhancing its private sector 
partnerships. Currently, there are 54 private sector lenders 
actively participating in Ex-Im's delegated authority program 
for working capital loan guarantees. Ex-Im has signed memoranda 
of understanding with both the National Credit Union 
Administration and the National Association of Federally 
Insured Credit Unions to collaborate on educational and 
outreach initiatives. Through these efforts, Ex-Im looks to 
engage credit unions on participating in its Working Capital 
Loan Guarantee program.
    Recognizing the important role that agriculture plays in 
supporting rural economies and jobs, Chairman Reed has also 
sought to increase Ex-Im's outreach to the agricultural sector. 
When Ex-Im reconstituted its advisory committees in 2019, 
Chairman Reed recommended, and the Board of Directors approved, 
the appointments of Georgia Agriculture Commissioner Gary Black 
to serve as a member of the Advisory Committee and North Dakota 
Agriculture Commissioner Doug Goehring to serve on the Sub-
Saharan African Advisory Committee.
    After COVID-19 began to spread earlier this year, Ex-Im has 
participated in teleconferences hosted by the National 
Association of State Departments of Agriculture and the U.S. 
Department of Agriculture (USDA) focused on educating 
participants on how Ex-Im can facilitate agricultural sales in 
new and existing markets and support U.S. jobs.
    In August, Ex-Im signed a Memorandum of Understanding with 
USDA to improve coordination and collaboration as it relates to 
supporting exports related to U.S. agricultural commodities, 
educating small agribusinesses and cooperatives, and analyzing 
market risk.
    Ex-Im has additional outreach efforts targeting rural 
companies and communities through its Regional Export Promotion 
Program (REPP) which brings together State, county, and local 
nonprofit economic development entities with the agency to 
partner to expand export opportunities in rural communities.
    Given social distancing guidelines that have been in effect 
since March, Ex-Im has presented in 135 webinars with 
exporters, lenders, brokers, and partner organizations; 
enhanced outreach through email communications by conducting 
more than 340 email campaigns, reaching more than one million 
inboxes; and released an audio series on receivables financing, 
insuring receivables against the risk of nonpayment, and 
negotiating repayment terms in uncertain times. \13\
---------------------------------------------------------------------------
     \13\ Available at https://www.exim.gov/what-we-do/export-credit-
insurance. A Spanish language version is under development.

Q.10. What process is Ex-Im using to ensure that there is no 
financing of sales to entities that violated the Foreign 
Corrupt Practices Act, are on sanctions lists, or are flagged 
---------------------------------------------------------------------------
as bad actors by the U.S. Government?

A.10. Ex-Im has a multilayered system for performing due 
diligence on the parties involved in its transactions. The 
initial step is screening, which involves running the names of 
buyers, borrowers, exporters, lenders, and others through a 
subscription database clearinghouse that includes the 
Department of Treasury Office of Foreign Assets Control (OFAC) 
sanctions list, State Department and Commerce Department lists, 
the U.S. Government exclusions (i.e., debarment) lists, 
Department of Justice (DOJ) and Federal Bureau of Investigation 
lists, Politically Exposed Persons lists, and the Multilateral 
Institutions exclusions lists, among others. If there is a 
``hit'' on any of these lists, the transaction undergoes 
further legal review to determine whether and under what 
circumstances it can move forward and satisfy all applicable 
statutory requirements. If the entity is on any of the 
foregoing U.S. Government exclusion list, Ex-Im acts 
accordingly.
    With regard to the Foreign Corrupt Practices Act of 1977, 
as amended (15 U.S.C. 78dd-1, et seq.) (FCPA), penalties for 
violations are addressed elsewhere in law and are based on the 
severity of the violation. Ex-Im is not aware of any provision 
of law that denies access to U.S. Government financing for 
entities that have violated the FCPA. Questions about penalties 
associated with FCPA violations should be directed to DOJ. 
When, through the screening process or other due diligence, Ex-
Im becomes aware of a party being convicted for FCPA 
violations, Ex-Im applies enhanced due diligence to such cases 
to assure that the party in question has cooperated with DOJ, 
the Securities and Exchange Commission, or other applicable 
regulators; has removed the bad actors involved in the 
violation; and, most importantly, has remediated or is 
remediating the compliance failures that allowed the violation 
to occur.
    Ex-Im has the authority to deny applications for financing 
if there is ``substantial credible evidence that any party to 
the transaction or any party involved in the transaction has 
committed an act of fraud or corruption in connection with the 
transaction.'' \14\ All reasonable suspicions of a violation of 
law in connection with an Ex-Im application or transaction are 
promptly referred to the Ex-Im Inspector General's Office of 
Investigations, where special agents conduct investigations of 
the matter and communicate their findings to Ex-Im's Office of 
General Counsel. As required by Ex-Im's 2019 reauthorization, 
transactions must be denied if the ``end user, borrower, 
lender, or exporter has been convicted of an act of fraud or 
corruption in connection with an application for support from 
the Bank made in the preceding 5 years.'' \15\ All parties 
subject to this provision are identified through Ex-Im's 
customer due diligence screening procedures.
---------------------------------------------------------------------------
     \14\ 12 U.S.C.  635(f).
     \15\ Ibid; see also: Further Consolidated Appropriations Act, 
2020, P.L. 116-94, Division I, Title IV,  406, December 20, 2019.
---------------------------------------------------------------------------
    In addition to screening and enhanced due diligence, all 
Ex-Im transactions are subjected to varying degrees of credit 
underwriting (depending on the program, financing amount, and 
risk rating). Ex-Im may also review open source information as 
part of its due diligence review.
    Transactions over $25 million are subject to review by the 
State Department and the National Advisory Council on 
International Monetary and Financial Policies, which is chaired 
by the Secretary of the Treasury and includes representatives 
from the State Department, the Commerce Department, and the 
United States Trade Representative. \16\
---------------------------------------------------------------------------
     \16\ Exec. Order No. 11,269, 31 FR 2,813 (Feb. 14, 1966), as 
amended. 22 U.S.C.  286b note.
---------------------------------------------------------------------------
    Ex-Im has recently launched a Customer Due Diligence 
Working Group tasked with an in-depth review of Ex-Im's 
customer due diligence and reporting on ways that Ex-Im's 
customer due diligence can be improved to meet best practices 
standards in the prevention and detection of financial crime, 
including fraud, bribery, money-laundering, and sanctions 
violations.
    As part of this effort, Ex-Im issued a Request for Quote on 
a contract for a Comprehensive Review of Illicit Finance Risks. 
Ex-Im contracted with a small business in September 2020 that 
will complete a comprehensive report by December 31, 2020. \17\
---------------------------------------------------------------------------
     \17\ More information available at https://beta.sam.gov/opp/
d9a82a1080b8466
eb806f3e14d51d319/view.
---------------------------------------------------------------------------
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR JONES
                       FROM KIMBERLY REED

Q.1. Minority and Women Owned Businesses--According the Ex-Im's 
website, 18 Alabama small businesses have used the bank's 
services since 2019. Of those small businesses only 1 is 
minority owned and 7 are women owned. These numbers seem low. 
What is the total number of minority and women owned businesses 
helped across the country since 2019? Bloomberg recently 
reported that African American owned businesses declined by 41 
percent from February to April, representing 440,000 
businesses. I've heard from folks in Alabama's Black Belt that 
they're concerned about the pandemic impacts, but they'd like 
to make sure businesses in their communities are supported. 
What outreach is the Export-Import Bank doing to minority and 
women owned businesses to ensure they're supported and aware of 
your programs?

A.1. Ex-Im's financing is not disbursed on the basis of a 
predetermined amount of financing for an individual sector, 
industry, constituency, or export destination. Rather, it is 
primarily driven by the needs of U.S. businesses and their 
foreign buyers to access Ex-Im financing in order to facilitate 
U.S. exports. Consistent with applicable statutory 
requirements, qualified applicants must agree to pay applicable 
fees, premia, and interest to access Ex-Im financing. \1\ 
Applications must also align with the requirement that the 
private sector was unable to provide viable, competitive 
financing and that Ex-Im financing will supplement, not compete 
with, private capital. \2\
---------------------------------------------------------------------------
     \1\ 12 U.S.C.  635(c)(1).
     \2\ 12 U.S.C.  635(b)(1)(B).
---------------------------------------------------------------------------
    Given statutory requirements for qualifying applications 
described above, Ex-Im seeks to increase the amount of its 
financing for statutorily identified constituencies (including 
minority- and women-owned businesses), sectors, and geographic 
regions through increased outreach and engagement on Ex-Im's 
value proposition. In order to achieve these objectives, Ex-Im 
works to build awareness among the business community and 
stakeholder organizations about how the agency's financing can 
support exports. By improving awareness, Ex-Im encourages more 
qualifying businesses to consider applying for financing.
    Since January 2019, Ex-Im has authorized financing for a 
total of 315 businesses that self-identify as minority-owned 
businesses.
    Ex-Im has established a Minority- and Women-Owned Business 
(MWOB) group, which is staffed by a dedicated team of business 
development specialists who work with businesses owned by 
minorities, women, veterans, and persons with disabilities to 
help them access Ex-Im financing.
    This group has established long-standing partnerships with 
organizations that have a minority trade focus and are 
dedicated to working with Ex-Im to educate and raise awareness 
about opportunities for exporters. Some of these organizations 
include the National Minority Supplier Development Council, 
Women's Business Enterprise National Council, U.S. Hispanic 
Chamber of Commerce, National ACE, the Minority Business 
Development Agency, the Disabled Business Association, and the 
National Veteran Business Council.
    The MWOB team also travels throughout the country to 
collaborate with its partners by hosting export seminars, 
participating in trade shows, and organizing workshops focused 
on trade finance and global business development. As a result 
of the COVID-19 pandemic, this group has increased its focus on 
digital outreach and education tools.
    Ex-Im welcomes congressional feedback on additional 
organizations that could serve as potential partners to enhance 
Ex-Im's outreach, as well as other avenues to better reach 
minority- and women-owned businesses that are interested in 
exporting and could benefit from its financing tools.

Q.2. Healthcare Manufacturing--Relying on other countries, 
namely the People's Republic of China (PRC), for production of 
basic medical necessities has been a public health risk during 
the pandemic. My bill, the Build Health Care Equipment in 
America Act, incentivizes companies to do just that. More 
healthcare manufacturing could grow out of our existing 
manufacturing and biotechnology economies.
    Nidek Medical, a Birmingham company, manufactures high 
quality oxygen concentrators for 110 markets worldwide, 
including the PRC. Its CEO credits Ex-Im for getting him off 
the ground in the early days in part because of the bank's 
support. In fact, U.K. Prime Minister Boris Johnson recovered 
from COVID-19 thanks to an Alabama made machine. As a result, 
the British Royal Air Force sent planes to Alabama to pick up 
thousands more. Mexico's President personally called the CEO of 
Nidek Medical to order 1,000 oxygen concentrators. Would 
expanding Ex-Im financing for the healthcare manufacturing 
sector specifically help more American producers get off the 
ground?

A.2. In the 2019 legislation directing the establishment of the 
China and Transformational Exports Program, Congress explicitly 
charged Ex-Im with advancing ``the comparative leadership of 
the United States'' with respect to China and supporting 
``United States innovation, employment and technological 
standards'' by facilitating exports from among 10 key areas, 
including biomedical sciences. \3\
---------------------------------------------------------------------------
     \3\ Further Consolidated Appropriations Act, 2020, P.L. 116-94, 
Division I, Title IV,  402(a), December 20, 2019, codified at 12 
U.S.C.  635(l).
---------------------------------------------------------------------------
    Ex-Im recognizes that the biomedical sciences sector 
represents a critical area for America's global technological 
leadership and has a direct bearing on our Nation's economic 
and national security. As Ex-Im works to establish the program, 
Chairman Kimberly Reed launched the Strengthening American 
Competitiveness Initiative, which seeks to engage stakeholders 
from these 10 key areas. On July 16, Ex-Im held a 
teleconference with biomedical industry representatives to 
discuss how the agency can support this important sector. \4\
---------------------------------------------------------------------------
     \4\ The recorded call can be accessed at https://www.exim.gov/who-
we-serve/external-engagement/strengthening-american-competitiveness.
---------------------------------------------------------------------------
    Ex-Im has a long history of supporting exports in the 
health care industry, dating at least back to 1945 when it 
provided financing to the Netherlands for the purchase of 
various U.S. goods and services, including medical supplies.
    Some of the exports of medical equipment and supplies 
supported by Ex-Im since 2016 include mobility machinery, 
surgical and orthopedic instruments, prosthetic limbs, dental 
and orthodontic supplies and equipment, optometry and 
ophthalmology equipment, X-ray and ultrasound machines, and 
research laboratory equipment, among other things.
    In FY2019, Ex-Im financed 72 transactions, providing $36.3 
million to facilitate exports in the health care manufacturing 
sector. This included 69 transactions, providing $34.4 million 
that directly supported exports from small businesses.
    As part of our Nation's domestic response to the COVID-19 
crisis, however, Ex-Im has temporarily excluded certain medical 
supplies and equipment that the President of the United States 
and other Federal agencies have designated as being in short 
supply. Ex-Im will continue to monitor developments to continue 
supporting U.S. exporters while not detracting from the need to 
maintain sufficient domestic supplies to address the COVID-19 
crisis. \5\
---------------------------------------------------------------------------
     \5\ More information available at https://www.exim.gov/
coronavirus-response/fact-sheet-exim-response-to-scarce-covid-19-
related-medical-supplies.
---------------------------------------------------------------------------
    More generally, Ex-Im's financing is not disbursed on the 
basis of a predetermined amount of financing for an individual 
sector, industry, constituency, or export destination. Rather, 
it is primarily driven by the needs of U.S. businesses and 
their foreign buyers to access Ex-Im financing in order to 
facilitate U.S. exports. Consistent with applicable statutory 
requirements, qualified applicants must agree to pay applicable 
fees, premia, and interest to access Ex-Im financing. \6\ 
Applications must also align with the requirement that the 
private sector was unable to provide viable, competitive 
financing and that Ex-Im financing will supplement, not compete 
with, private capital. \7\
---------------------------------------------------------------------------
     \6\ 12 U.S.C.  635(c)(1).
     \7\ 12 U.S.C.  635(b)(1)(B).
---------------------------------------------------------------------------
    Demand for Ex-Im financing varies by sector and may change 
over time, based on the capacity of private sector financial 
institutions, the relative competitiveness of U.S. exports, and 
the presence of foreign Government-backed export credit 
financing, among many other variables.
    Due to the statutory requirement of reasonable assurance of 
repayment, Ex-Im is generally not in a position to provide 
export financing related to new businesses. Ex-Im typically 
requires that companies have 3 years of audited financial 
statements to demonstrate that they can fulfill their repayment 
obligations.
    Newer businesses that meet applicable credit standards and 
are looking to expand global sales tend to utilize Ex-Im's 
working capital and export credit insurance programs. These 
programs enable businesses to increase their access to capital 
while offering their foreign buyers competitive repayment 
terms, which enables them to maintain and grow their American 
workforce.

Q.3. Competing with China--Investing in the growth of America's 
biotechnology, AI, telecomm, and quantum computing sectors is 
not only vital to preparing for future growth, but to compete 
against China's State-backed industries.
    These industries also happen to be growth sectors targeted 
by some of Alabama's largest employers like Daimler, Toyota, 
UAB, Redstone Arsenal and Maxwell Air Force Base. For example, 
Huntsville-based Adtran, recently beat out Huawei for a 
significant contract overseas.
    I'd like your assessment on how well the new Ex-Im China 
program has fared to date. How does the bank intend to do 
outreach to potential participants, like the small- and medium-
sized companies affiliated with Alabama's high tech industries 
who could benefit?
    What is your opinion on giving healthcare manufacturing 
financial incentives to help the U.S. compete with China's 
recent medical diplomacy--or ``mask diplomacy''--they have 
attempted to leverage for geopolitical benefit?

A.3. In the 2019 law directing the establishment of the Program 
on China and Transformational Exports (the ``Program''), 
Congress explicitly charged Ex-Im with advancing ``the 
comparative leadership of the United States'' with respect to 
the People's Republic of China (PRC) and supporting ``United 
States innovation, employment and technological standards'' by 
facilitating exports from among 10 key transformational export 
sectors, including biotechnology, artificial intelligence, 
wireless communications equipment, and quantum computing. \8\ 
Ex-Im recognizes that these sectors represent critical areas 
for America's global technological leadership and have a direct 
bearing on our Nation's economic and national security.
---------------------------------------------------------------------------
     \8\ Further Consolidated Appropriations Act, 2020, P.L. 116-94, 
Division I, Title IV,  402(a), December 20, 2019, codified as 12 
U.S.C.  635(l).
---------------------------------------------------------------------------
    Ex-Im is diligently working with exporters, stakeholders, 
and interagency partners to develop a program that will 
effectively meet the mission laid out by Congress. Ex-Im is 
prioritizing actions to address the underlying policy, legal, 
resourcing, and operational issues necessary to implement the 
Program. Despite the fact that the agency did not receive any 
additional funding for implementation, Ex-Im has brought 
onboard two senior detailees to lead the Program and leverage 
support from across the agency. Ex-Im has reallocated and 
prioritized its limited existing resources in order to 
facilitate implementation of the Program.
    As part of this effort, Chairman Kimberly Reed launched the 
Strengthening American Competitiveness initiative, which sought 
to engage stakeholders from the 10 transformational export 
sectors. \9\ Over the course of this initiative, Ex-Im engaged 
with more than 1,100 key stakeholders, including 
representatives from the fields of artificial intelligence, 
high-performance computing, quantum computing, and biomedicine. 
These conversations provided insightful, actionable information 
about challenges that companies in those sectors are 
experiencing, particularly as it relates to PRC-backed 
competition. This feedback is playing a crucial role in 
ensuring Ex-Im is best positioned to deliver on its mission to 
support American jobs by facilitating U.S. exports.
---------------------------------------------------------------------------
     \9\ The recorded calls can be accessed at https://www.exim.gov/
who-we-serve/external-engagement/strengthening-american-
competitiveness.
---------------------------------------------------------------------------
    Additionally, Ex-Im works to identify opportunities for 
Board Members and staff to engage in outreach to educate small- 
and medium-sized businesses on all financing options, including 
the Program on China and Transformational Exports. This can 
occur through speaking engagements, conferences, trade shows, 
webinars, podcasts, District Export Council events, and 
meetings with exporters.
    Ex-Im seeks to ensure broad outreach to businesses across 
the country, leveraging staff resources, technological 
solutions, and regional partners. Ex-Im has field staff 
assigned to support outreach to U.S. exporters in every U.S. 
State and territory, including Alabama. In Alabama alone, Ex-Im 
works with six participating Working Capital Guarantee Program 
Lenders, 36 licensed insurance brokers, and, through its 
Regional Export Promotion Program, the Alabama International 
Trade Center.
    In addition to these efforts, Chairman Kimberly Reed 
assigned Director Spencer Bachus--the former U.S. Congressman 
for Alabama's Sixth Congressional District--a key role in 
supporting direct outreach to small businesses. Director 
Bachus, who lives in Alabama and has significant experience 
working with Alabama's business community, has personally 
participated in a number of small business outreach events 
targeting Alabama businesses with the following partners:

    Mobile Area Chamber of Commerce (September 2019)

    Birmingham Business Alliance (November 2019)

    Huntsville Rotary Club (January 2020)

    North Alabama International Trade Association 
        (September 2020).

    That said, Ex-Im's financing is not disbursed on the basis 
of a predetermined amount of financing for an individual 
sector, industry, constituency, or export destination. Rather, 
it is primarily driven by the needs of U.S. businesses and 
their foreign buyers to access Ex-Im financing in order to 
facilitate U.S. exports. Consistent with applicable statutory 
requirements, qualified applicants must agree to pay applicable 
fees, premia, and interest to access Ex-Im financing. \10\ 
Applications must also align with the requirement that the 
private sector is unable to provide viable, competitive 
financing and that Ex-Im financing will supplement, not compete 
with, private capital. \11\
---------------------------------------------------------------------------
     \10\ 12 U.S.C.  635(c)(1).
     \11\ 12 U.S.C.  635(b)(1)(B).
---------------------------------------------------------------------------
    Demand for Ex-Im financing varies by sector and may change 
over time, based on the capacity of private sector financial 
institutions, the relative competitiveness of U.S. exports, and 
the presence of foreign Government-backed export credit 
financing, among many other variables.
    Regarding the PRC's ``mask diplomacy,'' as noted in the 
National Security Strategy of the United States of America, 
China challenges American power, influence, and interests. \12\ 
The PRC's ``mask diplomacy'' is consistent with its attempt to 
advance its geopolitical aspirations. Ex-Im understands that 
the U.S. is home to some of the most innovative medical device 
companies in the world, many of which are small- and medium-
sized businesses.
---------------------------------------------------------------------------
     \12\ President Donald J. Frump. (2020) ``National Security 
Strategy of the United States of America''. Available at https://
www.whitehouse.gov/articles/new-national-security-strategy-new-era/.
---------------------------------------------------------------------------
    Consistent with applicable legal and policy requirements, 
Ex-Im is committed to supporting U.S. exporters in the 
biomedical sector, including those that compete with the PRC.
    Ex-Im offers financial tools to support U.S. manufacturers 
looking to export their products on competitive export 
financing terms to markets around the world. Ex-Im's main 
financing tools are export credit insurance, working capital 
loan guarantees, and buyer financing programs. More general 
questions about financial incentives that are narrowly targeted 
to support U.S. healthcare manufacturers are outside the scope 
of Ex-Im's mission.

                         [all]