[Congressional Record Volume 141, Number 64 (Thursday, April 6, 1995)]
[Senate]
[Pages S5513-S5514]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


           DEFENSE EXPORT LOAN GUARANTEE AMENDMENT TO S. 570

 Mr. LIEBERMAN. Mr. President, I am pleased to join my 
colleagues as a cosponsor of this amendment to S. 570, to create a 
defense export loan guarantee program. I believe the loan guarantee 
program will be critical to preserving our defense industrial base and 
is, therefore, an investment in America's long-term security.
  In the post-cold war period, the United States has rightly reduced 
its procurement of expensive weapons systems. This has resulted in cost 
savings to the U.S. Treasury, but it has undermined the financial 
security of many of the manufacturers. We have encouraged conversion of 
some of the defense industry into production of other products. 
However, in the long run, we cannot afford to have all defense 
manufacturers convert to nondefense production. Even if the world's 
current trouble spots do not erupt into conflict, prompting another 
round of rearmament, the U.S. military must maintain an up-to-date 
inventory of the world's most capable equipment. To do that, we must 
preserve a minimum threshold of defense production, lest we face either 
astronomical startup costs or the disappearance of one or more critical 
defense producers altogether. Current U.S. defense procurement is not 
sufficient to keep some of these industries going; we must help them in 
their own efforts to export abroad.
  I commend the administration for its recent review of arms export 
policy. That review concluded with the President's decision to preserve 
the current policy to discourage arms proliferation but to take into 
account as well U.S. domestic economic considerations in reaching a 
decision on applications for arms export licenses. I do not propose to 
change that policy in any respect.
  While we do not want to make arms export licenses any more freely 
available than they are under current policy, I believe we should do 
more to level the playing field for U.S. manufacturers once an export 
license has been approved. U.S. defense industries face extremely tough 
competition for arms exports in the current international environment. 
Not only the United States, but also most of Western Europe have cut 
defense spending and military procurement budgets. In this shrinking 
market, U.S. defense manufacturers must compete against European and 
Canadian manufacturers who benefit from the extensive support--in some 
cases, including subsidies--of their governments.
  Buyers have the advantage in the current, competitive international 
arms market. Having the best product, track record
 and support network is often not enough to win a competition. In many 
cases, one must also provide financing for the sale. At present, the 
only source of financing for U.S. weapons systems exports are 
commercial banks, whose loan rates often make the price for U.S. 
weapons exports uncompetitive. French, German, British, Italian and 
Canadian defense manufacturers can get government-subsidized or 
guaranteed loans for weapons exports. These governments are prepared to 
pay [[Page S5514]] a high price to preserve their defense industries 
and keep jobs at home.

  In my own State of Connecticut, Norden, a corporation which produces 
advanced electronic systems for military vehicles, was forced to move 
some of its production to Canada in order to qualify for the Canadian 
export loan program essential to Norden's winning a contract for an 
export sale. Seventy-two Norden workers in Connecticut lost their jobs, 
good, skilled jobs, as a result. And they are not alone; defense 
industry workers in Rhode Island, Colorado and elsewhere have had their 
jobs exported for similar reasons.
  In the current tight budgetary environment, we cannot afford a new 
subsidy for the defense industry, but neither can we afford to export 
highly-skilled, good-paying jobs abroad in order to keep our defense 
industries alive. This draft legislation fits within those constraints. 
In many ways, it could serve as a model for the 104th Congress. It is 
not foreign aid and does not require appropriated funds, yet it 
leverages the credit of the United States to help a sector of America's 
manufacturing and high-technology industry compete in the world market. 
This program is entirely self-financing; exporters and buyers together 
would provide money to cover the exposure fees and administrative costs 
associated with each loan. Furthermore, this program could not be used 
by poor countries to purchase arms they can ill afford; it would only 
be available to NATO allies, Central European countries moving toward 
democracy and members of the organization for Asia Pacific Economic 
Cooperation. Although limited in scope and requiring financial 
contributions from participating corporations, this program would be 
significant for U.S. defense manufacturers. A similar program operated 
by the State of California since 1985 has produced a steadily growing 
business in exports of defense equipment to Germany, the Netherlands, 
Spain, Canada, Australia and New Zealand at a consistent 1-percent 
default rate. By supporting economic competitiveness at very modest 
cost to the U.S. Treasury, this program could be a model for the 104th 
Congress.
  Although I am persuaded that this program will make a significant 
contribution to U.S. defense manufacturers' competitiveness, I would 
like to see proof. That is why we have included in the legislation the 
requirement for a report from the administration on the program's 
impact after 2 years. It if does not prove to be constructive 
contribution to the viability of the defense industry that I expect it 
to be, it should be ended. However, I expect the administration will 
report that this program has made a big difference in keeping these 
industries in production and keeping good jobs at home. I invite my 
colleagues to join us in working for adoption of this 
legislation.


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