[Congressional Record Volume 143, Number 93 (Friday, June 27, 1997)]
[Extensions of Remarks]
[Pages E1338-E1339]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            HELP REFORM OPIC

                                 ______
                                 

                        HON. DONALD A. MANZULLO

                              of illinois

                    in the house of representatives

                        Thursday, June 26, 1997

  Mr. MANZULLO. Mr. Speaker, it is with a distinct privilege and honor 
that I introduced legislation yesterday designed to reform the Overseas 
Private Investment Corp. or OPIC. As we begin the appropriations 
process this year, one of the most hotly debated issues in future 
funding for trade promotion agencies, including OPIC. OPIC provides 
political risk insurance, in addition to project finance, for U.S. 
investments overseas in developing nations and emerging economies. 
OPIC's insurance covers one of three broad areas of political risk: 
currency inconvertibility, expropriation, and political violence. 
OPIC's project finance provides direct loans of between $2 million and 
$10 million for small businesses and loan guarantees for businesses of 
any size, which typically range between $10 to $75 million. This 
legislation I introduced along with 34 bipartisan original cosponsors 
retains what is best about OPIC and proposes to make a variety of 
reforms to make it even a stronger agency.
  OPIC makes money for the U.S. Treasury. For 25 years, OPIC has 
operated at a surplus, accumulating more than $2.7 billion in reserves 
and has written off only $11 million in losses over that same time 
period, which is a record no bank or insurance company can match. These 
reserves are used by the U.S. Treasury to reduce the budget deficit. In 
1996, OPIC took in $209 million more than it spent through the 
collection of user fees from corporations. This amount is considered a 
net contribution to the 150 or the International Affairs Account. Even 
if OPIC was forced to put this money in a mattress and made no interest 
on these reserves, OPIC would still make money for the taxpayer to more 
than cover its annual operating expense through user fees imposed on 
corporations. Thus, by definition, OPIC is not corporate welfare.
  OPIC also generates U.S. exports and creates U.S. jobs. Where foreign 
investments start, U.S. exports soon follow. OPIC-backed investments 
have generated $52.8 billion in U.S. exports and have created more than 
225,000 U.S. jobs. In 1996, OPIC-backed projects generated $9.6 billion 
in U.S. exports and supported approximately 30,000 U.S. jobs. OPIC is 
specifically mandated in law that no project it supports costs U.S. 
jobs, and this legislation keeps current law.
  OPIC fills a commercial void in the private sector. The international 
trade playing field is not level. All of our major trade competitors 
have OPIC-like national agencies providing similar products. OPIC never 
provides all of the financing required in a venture, which is a risk 
shared with the private sector. However, in dealing with developing 
economics, only a government agency can provide political risk 
insurance, especially over the long term.
  For those who advocate that we should sell OPIC to the private sector 
because it makes money for the Government, privatization will cost the 
taxpayer money. According to a 1996 study by the respected J.P. Morgan 
Securities firm, the taxpayer would have to put up between $700 and 
$900 million to privatize OPIC because the commercial banks and 
insurance companies will not purchase OPIC's $2.7 billion in reserves 
dollar for dollar because of the loss of Government backing.
  One key benefit of OPIC that cannot be duplicated by the private 
sector is that OPIC also advances U.S. foreign policy goals. OPIC 
mobilizes private sector activity in support of overarching U.S. 
foreign policy aims including free market economic reform and 
democratization in developing nations and in formerly Communist 
countries while, at the same time, maintaining stringent environmental, 
health and safety standards, and supporting internationally recognized 
worker rights.
  There are still some legitimate concerns about OPIC, and this 
legislation attempts to address the specific issues raised by 
constructive critics of the agency. First, the legislation authorizes a 
separate inspector general for OPIC and for the Trade and Development 
Agency [TDA]. This would provide for very close oversight of these 
agencies to insure that taxpayer money was fully protected. Even though 
OPIC has written off only $11 million in losses over 25 years, an IG 
would be charged to continue this excellent track record to make sure 
OPIC accounts adequately protect the interests of the taxpayer.
  The legislation also includes a safety net provision that ensures any 
OPIC project commitment of more than $200 million are sent to Congress 
for a 35-day waiting period prior to final OPIC board action. This 
provision is similar to policies already in place at the Export-Import 
Bank of the United States [Ex-Im]. This will give an opportunity for 
the appropriate congressional committees to become aware of impending 
action of this magnitude and to be able to comment to the OPIC Board 
regarding their views on this proposal. While OPIC has never entered 
into any deal throughout its 25 year history that breached the $200 
million mark, there may be such opportunities in the future.
  The bill also requires the administration to negotiate with other 
countries providing OPIC-like services an arrangement that would 
provide greater transparency, better notification, and maximum common 
terms for all such financing and insurance programs. Critics of OPIC 
often forget that other foreign governments have much more aggressive 
export promotion programs, and this provision, I hope, will bring the 
opponents and supporters of OPIC together in a common cause to 
multilaterally reduce foreign government-sponsored investment 
assistance. To let OPIC expire without addressing the massive export 
promotion spending by other countries would amount to unilaterally 
disarmament by the United States in the global trade wars.
  Another key feature of the legislation is a requirement that OPIC 
develop transparent and public participation guidelines as part of its 
policies to implement obligations relating to protection of the 
environment. OPIC has been criticized in the past for supplying 
insufficient information in a timely manner to the pubic about some of 
its projects. It is already part of OPIC policy that no project it 
supports can harm the environment. Anyone can see the clear difference 
United States investment can make in places like Russia where a diamond 
mine supported by OPIC is, in terms of environmental protection, light 
years ahead of their Russian-owned counterparts. But this provision 
would ensure that adequate information is provided to the public and to 
Congress on the implementation of OPIC's environmental protection 
obligations.
  The bill would also create a 12-member export promotion commission 
comprised of individuals from both the private and public sectors to 
examine all Federal Government export promotion programs, including 
OPIC. The commission would be charged with making recommendations to 
Congress as to which programs should be retained, terminated, or merged 
with similar programs in other agencies. There are 19 different Federal 
agencies that are part of the Trade Promotion Coordinating Committee 
[TPCC]. Once and for all, we will resolve the question of which export 
promotion programs are necessary to maintaining our competitiveness and 
which programs deserve to end.
  While this report is being prepared, the TPCC would be charged in 
this legislation to develop a comprehensive strategic export plan to 
encourage more small- and medium-sized businesses to export. This has 
been an issue close to my heart, as chairman of the Small Business 
Exports Subcommittee, where I have learned after holding 10 hearings on 
the subject of trade of the large number of small businesses that do 
not know where to got to take the first steps of finding customers 
overseas. This strategic export plan would reorient Federal export 
promotion agencies to be more proactive in reaching out to small 
businesses. The plan would also require more coordination of export 
promotion programs at the Federal, State, and local levels.
  The bill also abolishes the separate ceilings on financing and 
investment insurance, combining the two in one overall ceiling and 
increase this combined ceiling by a total of $6 billion through 1999. 
This allows OPIC to manage its resources more effectively and thus does 
not require the higher ceiling level that was proposed in the previous 
OPIC reauthorization bill that the House debated last year--H.R. 3759. 
In addition, a 2-year authorization also allows for more frequent 
congressional input, as opposed to a 5-year authorization that was 
contained in H.R. 3759.
  Finally, the legislation would enable the administration to appoint 
the most skillful and

[[Page E1339]]

able officials and vice chairman of the OPIC Board. Current law 
requires that the Administrator of the Agency for International 
Development [AID] and the U.S. Trade Representative [USTR] or the 
Deputy USTR to serve on the board in these positions. This reform would 
allow the executive branch to appoint individuals who could best serve 
OPIC without having their time and attention devoted to their other 
important duties.
  Mr. Speaker, I urge my colleagues to join me and the 34 other Members 
from both sides of the aisle in helping to reform and reauthorize OPIC 
by cosponsoring H.R. 2064.

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