[Congressional Record Volume 140, Number 108 (Monday, August 8, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: August 8, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]


                              {time}  1520
 
                    EXPORT-IMPORT BANK AUTHORIZATION

  Mr. FRANK of Massachusetts. Mr. Speaker, I move to suspend the rules 
and pass the bill (H.R. 4455) to authorize the Export-Import Bank of 
the United States to provide financing for the export of nonlethal 
defense articles and defense services the primary end use of which will 
be for civilian purposes, as amended.
  The Clerk read as follows:

                               H.R. 4455

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. AUTHORITY TO PROVIDE FINANCING FOR THE EXPORT OF 
                   NONLETHAL DEFENSE ARTICLES OR SERVICES THE 
                   PRIMARY END USE OF WHICH WILL BE FOR CIVILIAN 
                   PURPOSES.

       Section 2(b)(6) of the Export-Import Bank Act of 1945 (12 
     U.S.C. 635(b)(6)) is amended by adding at the end the 
     following:
       ``(I)(i) Subparagraph (A) shall not apply to a transaction 
     involving defense articles or services if--
       ``(I) the Bank determines that--
       ``(aa) the defense articles or services are nonlethal; and
       ``(bb) the primary end use of the defense articles or 
     services will be for civilian purposes; and
       ``(II) at least 15 calendar days before the date the Board 
     of Directors of the Bank gives final approval to Bank 
     participation in the transaction, the Bank provides notice of 
     the transaction to the Committees on Banking, Finance and 
     Urban Affairs and on Appropriations of the House of 
     Representatives and the Committees on Banking, Housing, and 
     Urban Affairs and on Appropriations of the Senate.

     The preceding sentence shall not apply after September 30, 
     1997.
       ``(ii) Not more than 10 percent of the loan, guarantee, and 
     insurance authority available to the Bank for a fiscal year 
     may be used by the Bank to support the sale of defense 
     articles or services to which subparagraph (A) does not apply 
     by reason of clause (i) of this subparagraph.
       ``(iii) Not later than September 1 of each fiscal year, the 
     Comptroller General of the United States, in consultation 
     with the Bank, shall submit to the Committees on Banking, 
     Finance and Urban Affairs and on Appropriations of the House 
     of Representatives and the Committees on Banking, Housing, 
     and Urban Affairs and on Appropriations of the Senate a 
     report on the end uses of any defense articles or services 
     described in clause (i) with respect to which the Bank 
     provided support during the 2nd preceding fiscal year.''.

     SEC. 2. REPORT TO THE CONGRESS.

       Section 2(b)(6)(H) of the Export-Import Bank Act of 1945 
     (12 U.S.C. 635(b)(6)(H)) is amended by inserting ``or 
     described in subparagraph (I)(i)'' before the period at the 
     end of the 1st sentence.

     SEC. 3. PROMOTION OF EXPORTS OF ENVIRONMENTALLY BENEFICIAL 
                   GOODS AND SERVICES.

       (a) In General.--The 1st section 11(b) of the Export-Import 
     Bank Act of 1945 (12 U.S.C. 635i-5(b)) is amended--
       (1) by inserting before ``The Bank shall'' the following:
       ``(1) In general.--'';
       (2) by inserting ``(such as by encouraging environmentally 
     sustainable development, promoting efficient use of 
     resources, and promoting energy efficiency)'' before the 
     period at the end of the 1st sentence; and
       (3) by adding after and below the end the following:
       ``(2) Limitations on authorization of appropriations.--In 
     addition to other funds available to support the export of 
     goods and services described in paragraph (1), there are 
     authorized to be appropriated to the Bank not more than 
     $35,000,000 for the cost (as defined in section 502(5) of the 
     Federal Credit Reform Act of 1990) of supporting such 
     exports.''.
       (b) Technical Correction.--Such Act is amended by 
     redesignating the 2nd section 11 (12 U.S.C. 635i-8) as 
     section 14.

  The SPEAKER pro tempore (Mr. Kopetski). Pursuant to the rule, the 
gentleman from Massachusetts [Mr. Frank] will be recognized for 20 
minutes, and the gentleman from Nebraska [Mr. Bereuter] will be 
recognized for 20 minutes.
  The Chair recognizes the gentleman from Massachusetts [Mr. Frank].
  Mr. FRANK of Massachusetts. Mr. Speaker, this bill is the amalgam of 
two very good ideas put forward by members of the subcommittee that has 
jurisdiction over the Export-Import Bank.
  I would note, Mr. Speaker, I did this last week, this is a bill that 
comes forward from the House Committee on Banking, Finance and Urban 
Affairs with bipartisan support. It joins a couple other bills that 
passed the House last week with bipartisan support of members of the 
Committee on Banking, Finance and Urban Affairs.
  I just want to stress that while we on the Committee on Banking, 
Finance and Urban Affairs have disagreed about some issues recently, 
that has not in any way interfered with our ability to move forward 
constructively on some very important matters that will advance the 
economic well-being of the country.
  This one makes two changes in the Export-Import Bank operation. 
First, and the sponsor of this was the ranking minority member, the 
gentleman from Nebraska, who has been an ardent and thoughtful advocate 
of sensible export policies for this country, we clarify that nonlethal 
uses are what will govern when we decide what to export and not 
potential uses.
  That is especially important now when we are dealing with the 
question of conversion. We have many Americans who have worked very 
hard at their country's request to produce various items that have been 
used for the national defense. Fortunately, because of benign 
developments in the world, we do not need as much of that as we used 
to. This leaves us with hard-working people who face economic problems.
  It is a universally agreed-upon principles that we have an obligation 
at the Federal Government to help people make the transition from 
producing these defense items into other economic activity.
  To the extent that we can use some of the same people and the same 
skills and the same manufacturing products and the same processes for 
nonmilitary purposes, that is obviously a great advantage. But there 
has been language in the Export-Import statute that called into 
question the ability of that entity to provide financing for what are 
called dual-use products, products which are intended by the recipient 
for nondefense use but which might theoretically have a military 
purpose. Radar is an example.
  This is especially relevant in several areas, transportation, 
surveillance of various sorts. What the gentleman from Nebraska has 
very sensibly done is to draft language which makes it clear that the 
American Government can offer Export-Import Bank financing to American 
companies that are seeking to export material that is intended for 
nonlethal purposes, that is intended for civilian uses, even if it 
might theoretically have some military use. I believe the legislation 
also includes various safeguards that will guarantee that this is the 
case.
  I think the gentleman from Nebraska deserves a great deal of credit 
for this. And I also want to pay tribute to the Export-Import Bank, Mr. 
Brody and his staff, for working with us and helping to reassure people 
that we will be using this for material of a purely non-lethal purpose.
  In addition, the gentleman from Massachusetts [Mr. Kennedy] is the 
author of another part of this bill which deals with an explicitly 
encouragement to the Export-Import Bank to focus on environmental 
control equipment. This is an obvious area for the United States. We 
are among the leaders in the world in environmental controls. It 
benefits our country when others do environmental controlling in their 
countries, both from the standpoint of cleaning up the environmental 
but also from the standpoint of economic competitiveness. The language 
of the gentleman from Massachusetts [Mr. Kennedy] will direct that a 
certain percentage of the Export-Import Bank funds be used to make sure 
that we maximize our ability to export environmental services.
  Taken together, these two provisions sponsored by my two colleagues 
will enhance our Nation's economic position in very sensible ways. I am 
very pleased to present them for passage on behalf of the Committee on 
Banking, Finance and Urban Affairs.

                 Explanation of H.R. 4455 (As Amended)


 export of nonlethal defense articles and services the primary end use 
                of which will be for civilian purposes.

       The bill allows the Export-Import Bank of the United States 
     to provide financing, subject to certain conditions, for the 
     export of nonlethal defense articles and services when their 
     primary end use will be for civilian purposes.
       The bill explicitly restricts the exception to those 
     articles and services which are nonlethal and primarily for 
     civilian use, such as radar for air traffic control systems 
     when the primary use will be civilian. The Committee is 
     opposed to having the Export-Import Bank provide financing 
     for any exports of defense goods and services that are 
     lethal, offensive, or primarily or solely for military use. 
     The Committee's understanding of the term ``end use'' is the 
     intended application or use of an item or service as 
     represented by an applicant for Export-Import Bank financing, 
     and confirmed at the point of application by the Export-
     Import Bank, according to the best evidence then available to 
     it.
       The bill sets a ceiling for such financing at ten percent 
     of the loan, guarantee, and insurance authority available to 
     the Bank in a fiscal year, to avoid funding distortions or a 
     crowding out of financing of other desirable non-defense 
     exports.
       The bill requires 15-day advance notification of the 
     intention to provide such financing to the Banking Committee 
     and the Appropriations Committee in the House of 
     Representatives and in the Senate, respectively.
       The provision will expire on September 30, 1997 and 
     therefore in effect requires an assessment of experience 
     under the provision prior to the next reauthorization of 
     Export-Import Bank programs.
       By September 1 of each fiscal year, the GAO, in 
     consultation with the Bank, must submit a report to certain 
     Congressional committees on the end uses of any defense 
     articles or services financed under this section during the 
     second preceding fiscal year in order to monitor actual end 
     uses.
       The Committee expects the Export-Import Bank to develop a 
     policy requiring that it work with other appropriate U.S. 
     government agencies to review transactions with military 
     sales potential to determine whether such transactions meet 
     the standards established in this legislation regarding 
     nonlethal nature and the condition that the primary end use 
     of such sales be for civilian purposes. The Bank is expected 
     to develop a formal written policy requiring that it will, 
     with reasonable regard for the resources at its disposal, 
     take at least the following steps: investigate the 
     prospective use of dual-use items and those sold to military 
     buyers; require that the buyer or user provide a certificate 
     affirming that the use of the article or service satisfies 
     the intent of the legislation by stating that civilian use is 
     primary according to a standard requiring unquestionable and 
     predominant civilian use; monitor the actual use of the items 
     with the help of other appropriate U.S. Government agencies. 
     Such policy should enumerate at least these possible 
     consequences if the buyer misrepresented the intended use: 
     accelerated repayment of loans where feasible; administrative 
     actions or sanctions as determined by the Export-Import Bank 
     according to the nature of the loan; suspension or debarment 
     from access to future Export-Import Bank credits, and that of 
     other U.S. Government agencies, for those buyers, users, or 
     sellers who have violated agreed limitations on the nature or 
     the use of the defense articles or services financed by the 
     Bank.
       Section 2 of the bill adds such transactions to an existing 
     reporting requirement. The Committee recommends review of the 
     reporting requirement on an annual basis.


   financing exports of environmentally beneficial goods and services

       Section 3 of the bill encourages the export of goods and 
     services that would promote environmentally sustainable 
     development, energy efficiency, and effective use of 
     resources. The Export-Import Bank is given an additional 
     authorization of $35 million dollars in credit subsidy in an 
     effort to help American firms capture as large a portion of 
     the new environmental market as possible, a market that is 
     expected to reach $600 billion by the end of the decade.

  Mr. Speaker, I reserve the balance of my time.
  Mr. BEREUTER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, this Member would like to rise in support of H.R. 4455 
which was introduced by this Member, and to thank his distinguished 
colleague from Massachusetts, the chairman of the Subcommittee on 
International Development, Finance, Trade and Monetary Policy, Mr. 
Frank, and the chairman and the ranking member of the full Banking 
Committee, Mr. Gonzalez and Mr. Leach, for their support and assistance 
in moving this legislation to the floor today with the unanimous, 
bipartisan support of the Committee on Banking, Finance and Urban 
Affairs.
  The principal purpose of the bill, which will be explained at greater 
length in a minute, it to permit the Export-Import Bank, which now 
cannot finance any defense good and service unless it is used solely 
for civilian purposes or is used primarily for antinarcotics purposes, 
to consider financing for defense goods and services that are nonlethal 
but only in the narrow set of circumstances when the unquestionably 
primary use will be for civilian purposes. Without this legislation, we 
do not have a U.S. Government export finance program that can 
accommodate dual-use items that are used primarily for civilian 
purposes.
  Mr. Speaker, H.R. 4455, as amended, was passed by the Committee on 
Banking, Finance and Urban Affairs on June 29, 1994 by voice vote. It 
was reported by the Subcommittee on International Development, Finance, 
Trade and Monetary Policy on June 24 by a vote of 17 to 0. The amended 
version includes the provisions of my original bill, H.R. 4455 and 
other provisions added to respond to concerns raised by Members in the 
course of the hearing and other consideration of H.R. 4455. In section 
3 the amended bill also includes a separate provision added by 
Representative Kennedy relating to Eximbank promotion of exports of 
environmental goods and services.
  The original bill, corresponding to the first fourteen lines of the 
amended bill, provides an exception to the current prohibition on 
Eximbank financing of exports of defense articles and services, but 
only in cases where the article to be exported is both nonlethal and 
the primary end use is for civilian purposes. Thus, the bill provides a 
narrow exception to the current law, and it is this Member's intention 
to keep the exception narrow. This Member does not consider the 
Eximbank to be an appropriate agency for financing defense sales for 
primarily military purposes nor for sales of lethal items. Many other 
Members share this view.
  An example of an item which cannot now be financed by Eximbank, but 
which would be permitted if this bill is passed, is radar for air 
traffic control systems, if the radar feeds into both civilian and 
military air traffic control systems. The bill would allow such export 
sales to be considered for Eximbank financing as long as the primary 
use is for civil air traffic control. It does not make sense to cede to 
our trade competitors the whole field of high-technology dual-use 
electronics when the military use or involvement is clearly secondary 
and subsidiary to the civilian use. This step is consistent with the 
direction of conversion that many defense industries are seeking and 
being encouraged to pursue, and the current inflexible policy impedes 
export sales of such nonlethal dual-use items that are destined 
primarily for civilian purposes.
  The bill is supported by the Aerospace Industries Association and the 
Electronic Industries Association, among others.
  Six items have been added to the original bill in an abundance of 
caution. First, there is a requirement that each transaction proposed 
for financing under this exception must be reported to the House and 
Senate Committees on Banking and on Appropriations at least 15 calendar 
days in advance of final approval by the Eximbank Board of Directors. 
This is similar to the reporting requirement of the Appropriations 
Committees. This provision has been included to respond to the desire 
of Members that close, ongoing congressional oversight of the 
implementation of this provision is needed in order to ensure that this 
discretion is properly and narrowly construed.
  Second, as an additional safeguard, the provisions of this 
legislation will sunset on September 30, 1997. At that time, after 
about 3 years of experience, it will be timely to assess whether this 
provision should continue in law in the context of the next full 
reauthorization of the Export-Import Bank.
  Third, as a further safeguard against crowding out of other 
commercial sales, the bill limits the amount of Eximbank's funding that 
can be devoted to funding the sales made possible by this bill. The cap 
is set at 10 percent of Eximbank's available subsidy appropriation 
under credit reform.
  Fourth, the GAO will be consulting with Eximbank annually and 
reporting on the end use of articles financed under this provision to 
provide a followup assessment of the actual use of articles financed.
  Fifth, section 2 of the amended bill requires a quarterly report on 
any transactions financed under the authority provided in the earlier 
part of the bill. Eximbank already files a quarterly report with the 
two Banking Committees on any transaction involving a defense sale 
which will be used solely for civilian purposes. The transactions 
financed under section 1 of the bill would be added to this quarterly 
report.
  Lastly, in section 3, there is a provision on Eximbank promotion of 
exports of environmental goods and services added by Representative 
Kennedy's amendment during committee consideration. This provision was 
also the subject to a separate hearing by the subcommittee earlier this 
year.
  In response to questions raised by Members at the hearing about the 
necessity of guarding against fraudulent representation of the primary 
end use of a sale, our staff had lengthy discussions with Eximbank 
personnel about the current Eximbank practice in assessing sales with 
military potential. The committee expects the Export-Import Bank to 
continue its present policy of working with other appropriate U.S. 
Government agencies to review transactions with military sales 
potential to determine whether they meet the standards established in 
this legislation regarding nonlethal nature and the primary end use 
being for civilian purposes. The Bank is expected to continue its 
present practices of: investigating the prospective use of dual-use 
items and those sold to military buyers; requiring the buyer or user to 
provide a certificate that the use of the article or service satisfies 
the requirements of the legislation; assessing whether civilian use is 
primary according to a standard requiring unquestionably and strongly 
predominant civilian use; monitoring the actual use of the items, 
especially if there is any reason to suspect that the actual use does 
not conform to the agreed use; requiring accelerated repayment of loans 
if the buyer has misrepresented the intended use, and using other 
available sanctions such as debarring from access to future Export-
Import Bank credit any buyer or user that violates agreed limitations 
on the nature or use of the defense articles or defense services 
financed by the Bank. The Banking Committee expects that the Eximbank 
will continue these procedures with respect to transactions financed 
under H.R. 4455 in order to guard against and deter any fraud and 
misrepresentation.
  The committee's understanding of the term ``end use'' is the intended 
application or use of an item or service as represented by an applicant 
for financing from the Export-Import Bank.
  It is worth noting that H.R. 4455 only addresses the question of 
export finance. Any sale of controlled items requiring export licensing 
still must have whatever licenses are required before being eligible 
for export, with or without Eximbank financing.
  It is further worth noting that while the bill slightly widens the 
universe of goods and services that Eximbank is allowed to finance, 
Eximbank would not have to provide financing in any particular 
situation. It would still be using its normal financial standards to 
assess the merits of a particular export deal.

                              {time}  1530

  Mr. Speaker, again, this Member would like to thank the Chairman, the 
gentleman from Massachusetts [Mr. Frank], and a number of other 
Members, including Appropriation Chairman Obey and Representatives 
Kennedy and Watt, for their assistance and that of their staff in 
crafting amendments to the original bill in a form that apparently 
satisfies their concerns about oversight, concerns about crowding-out 
of other lending, and concerns about guarding against abuse. Adoption 
of this bill will help bolster U.S. exports of dual-use goods for 
primarily civilian purposes and create and sustain good, high skill 
jobs in the United States.
  Mr. Speaker, as I prepare to yield my time, I cannot help mentioning 
the fact that a very valuable staff aide to the Congress, and 
specifically to the Committee on Banking, Finance and Urban Affairs, 
working with me and other Members in the minority, but also with the 
majority, Nelle Temple Brown, will be leaving our committee for an 
assignment, a high level assignment in Washington with the World Health 
Organization.
  She has had an outstanding and positive effect on hunger legislation, 
on development legislation, and on a variety of banking legislation, 
and most especially, the Multilateral Development Banks and the Export-
Import Bank. We will miss her greatly, and wish her well in her new 
duties with the World Health Organization, where she will continue to 
pursue some of the objectives that we have pursued on the committee.
  Mr. Speaker, I urge my colleagues to give their strong support to 
H.R. 4455, as amended.
  Mr. KENNEDY. Mr. Speaker, I rise in support of this bill, the Export-
Import Bank Authorization Act. First, I want to recognize the efforts 
of Representative Bereuter, who authored the first two sections of this 
bill, and the subcommittee chairman, Barney Frank, who worked with Mr. 
Bereuter and me to come to the finished product. I also thank Chairman 
Gonzalez for his expeditious consideration of the legislation.
  H.R. 4455 includes a bill I authored called the Environmental Exports 
Promotion Act. It authorizes an additional $35 million in credit 
subsidy for the U.S. Export-Import Bank to support exports of about 
$500 million in environmental exports.
  Mr. Speaker, every week we read about another corporate giant laying 
off American workers. Since January 1993, for example, just 6 companies 
laid off 250,000 workers. At the same time, America's entrepreneurs--
small business men and women--are creating millions of new jobs.
  One of the greatest concentrations of successful entrepreneurs is in 
the field of environmental technologies. The United States has between 
45,000 and 60,000 small environmental firms that have produced the most 
advanced technologies in the field. These firms create high value-added 
goods and services; they are creating high-paying jobs; and they are 
helping solve some of the most difficult environmental issues facing 
our planet.
  Moreover, the world market is gigantic. Today's market is about $200 
to $300 billion, and it will grow to $600 billion by the end of the 
decade. Mexico alone is a huge market, and we have not yet begun to 
take adequate advantage.
  In fact, we export less as a percentage of our environmental 
production than the Japanese, the French or the British. We must do 
better, and I believe the Federal Government can play a constructive 
role in making this happen.
  This bill will help create an atmosphere that helps tens of thousands 
of small businesses find the environmental markets abroad and, then, 
makes sure they have the access to capital and financing necessary to 
win those markets against our industrial competitors.
  The Eximbank, under the leadership of President Ken Brody, is working 
hard to reach out to small businesses and other new exporters. The Bank 
is pursuing new markets aggressively, and it is working with the other 
agencies of Government--Department of Commerce, U.S. Trade Development 
Agency, and OPIC--to make sure U.S. envirotechnology companies are 
prepared to do battle for these new markets. This legislation will give 
the Bank a new and important tool to achieve this goal.
  H.R. 4455 also opens up the Export-Import Bank for use to promote 
exports of nonlethal defense goods for primarily civilian purposes. 
This raises several important issues that need some discussion.
  The U.S. Congress has worked carefully for many years to keep the 
Export-Import Bank of the United States out of the business of the 
export of military goods. There have been several efforts to use the 
Eximbank in this way as U.S. defense spending has dropped; proponents 
have wanted Eximbank to start financing the export of defense goods as 
a way to maintain production and reduce the painful effects of defense 
cuts. Each of these efforts has been defeated.
  While sympathizing with the employment and economic effects defense 
cuts entail, I have always opposed the use of the Eximbank to encourage 
exports of defense goods. I have two primary concerns: first, the 
United States has already become the primary arms exporter in the post 
cold war era in the world by far. I fear that this will promote 
widespread instability in several regions around the world. Our 
soldiers often face foreign troops with American-made arms.
  However, putting aside this important argument, the main reason for 
opposing Eximbank's involvement has been economic; American economic 
growth will depend in the near future on exports of civilian goods. 
There is no shortage of markets. However, there is a shortage of 
financing. Military deals tend to be very big deals, costing a lot of 
money, that are relatively easy to put together. Eximbank's limited 
funds could be quickly depleted after a small number of these sales, 
thereby crowding out the civilian sector.
  The goal of this legislation is to open up a number of lucrative 
markets to U.S. exporters where a good is designed to be used for 
civilian purposes, though there might be a military use as well. An 
example frequently cited is the sale of air traffic control equipment 
for a civilian airport to a government where the military is in charge 
of both civilian and military air traffic. This good is nonlethal. Its 
use is primarily civilian, though it is controlled by the military.
  Clearly, this is a case where U.S. manufacturers should be able to 
compete on the same basis as companies from other nations. Therefore, I 
supported this bill. However, I raised several concerns about the bill 
in committee, and I offered two important amendments to address these 
concerns.
  The first amendment caps the amount of credit subsidy the Eximbank 
can use to support nonlethal defense exports at 10 percent of its 
total. This will prevent these exports from crowding out the other 
business of the Eximbank. At the same time, it will allow the Bank to 
support at least $1.5 billion of these new exports, a figure that 
should allow for plenty of the new business.
  The second amendment addresses the difficulty of ensuring that the 
end use of a product really is ``nonlethal and primarily civilian.'' 
The amendment requires the General Accounting Office [GAO] to work with 
the Eximbank to investigate the previous year's loans to make sure they 
are being used for the purposes stated. The amendment requires an 
annual report of the findings of this investigation to the committee. 
This look back provision will go a long way towards preventing the 
misuse of these exports. With these two important additions, I support 
this new legislation and urge my colleagues to pass it.
  Mr. BEREUTER. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  Mr. FRANK of Massachusetts. Mr. Speaker, I have no further requests 
for time, and I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Kopetski). The question is on the motion 
offered by the gentleman from Massachusetts [Mr. Frank] that the House 
suspend the rules and pass the bill, H.R. 4455, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof), the rules were suspended and the bill, as amended, was 
passed.
  A motion to reconsider was laid on the table.

                          ____________________