[Congressional Record Volume 144, Number 135 (Thursday, October 1, 1998)]
[Senate]
[Pages S11282-S11283]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. MURKOWSKI:
  S. 2537. A bill to amend the Export-Import Bank Act of 1945 to assure 
that the United States is consistent with other G-7 countries in 
evaluating environmental concerns relating to projects to be financed, 
and for other purposes; to the Committee on Banking, Housing, and Urban 
Affairs.


                   export-import bank act amendments

  Mr. MURKOWSKI. Mr. President, I rise to introduce legislation 
regarding the Export-Import Bank. This legislation is both pro-trade 
and pro-environment.
  Let me start by saying that I support U.S. international finance 
institutions like Ex-Im Bank, OPIC and TDA because they are necessary 
to level the playing field for American companies seeking to compete 
abroad. In a perfect world, such government assistance would be 
unnecessary, but we know that the other industrialized countries are 
using government financing to sweeten the pot for their companies' 
participation in international projects.
  My legislation addresses the well-meaning environmental policies of 
the Bank that are actually harming the environment while undermining 
American competitiveness. Specifically, my legislation does two things: 
First, it directs the Ex-Im Bank to negotiate a mulitlateral agreement 
with the export financing agencies of all G-7 countries to address 
environmentally sensitive development overseas. Second, until such 
agreement is reached, my legislation would allow U.S. companies to 
compete on equal footing with other international companies bidding on 
international projects. In other words, my legislation would ensure 
that American companies have access to Ex-Im Bank financing for 
overseas projects where other G-7 countries are providing or have 
indicated an intent to provide financing to the project in question 
without conditioning such assistance on environmental policies or 
procedures.
  Mr. President, under current law, the Ex-Im Bank can deny financing 
to U.S. companies seeking to participate in international projects when 
the Bank's environmental concerns have not been adequately addressed by 
foreign countries. But there is no mechanism in place to ensure that 
all G-7 countries abide by the same set of rules or environmental 
standards in competing for such projects. The net effect of this law is 
to impose unilateral sanctions on U.S. companies in the name of the 
environment.
  The lack of American participation in the largest hydroelectric 
project in the World, the $24.5 billion Three Gorges Dam Project in 
China, illustrates why this change in law is necessary. The mission of 
the Ex-Im Bank is to promote U.S. exports and U.S. jobs. Yet, the Bank 
refused to provide financial guarantees for this project because the 
Bank's environmental concerns had not been satisfactorily addressed by 
the Chinese government.
  There were two perverse outcomes from the Bank's decision. First, the 
project is going ahead anyway without the environmental technologies 
and practices our companies' participation would bring. And second, the 
only American participation is by companies that are large enough to 
use their foreign subsidiaries with another government's financing, and 
consequently the jobs are going to the Japanese, the Canadians and the 
Europeans.
  A letter that I received from the President of Rotec Industries, 
located in Elmhurst, Illinois, explains the detrimental effects of the 
Ex-Im Banks decision. Rotec submitted a bid to the Chinese government 
for $130 million of U.S.-made concrete placing and transporting 
equipment. Following the Ex-Im Bank's negative decision they received 
an order for only a fraction of their proposal. A Japanese-French 
consortium received an order for ``Rotec-equivalent'' equipment. But it 
gets worse. As Rotec's president explained:

       No Ex-Im financing meant no made-in-the-USA requirements 
     and no made-in-the-USA price premium . . . For the first time 
     in our 32-year history, Rotec subcontracted manufacturing to 
     companies in South Korea. The effect on U.S. jobs is easy to 
     quantify . . . Rotec will have spent over $13,000,000 in 
     South Korea. With Ex-Im's support, this work--and probably 
     more--would have stayed in the United States.

  But this was not the only bad news for Rotec. Before Ex-Im's 
decision, Rotec was the world's only manufacturer of this specialized 
equipment. But the Japanese-French consortium selected by the Chinese 
have now copied Rotec's product. As Rotec's president described it, Ex-
Im's decision helped open the door and they [the consortium] walked 
right in. Rotec will likely face foreign competition wherever this 
product is needed.''
  Other U.S. companies who sought to participate in the Three Gorges 
Dam project tell a similar story. Caterpillar estimates that it lost 
$200 million in sales. GE routed its bid through its Canadian 
subsidiary. Voight Hydro of Pennsylvania had to withdraw its bid in 
favor of its German parent, which won $85 million of contracts.
  Although my legislation cannot retroactively change the effect of the 
Ex-Im Bank's decision on U.S. participation in the Three Gorges Dam 
project, we will face this issue again. A recent New York Times story 
quoted Chinese officials who pledge to spend $1.2 trillion on a vast 
program of new infrastructure projects over the next three years. 
Included in those projects are plans to build five large hydroelectric 
power stations over the next 12 years, at a cost exceeding $7 billion. 
Although this is small compared to Three Gorges, it presents excellent 
opportunities for U.S. companies. In addition, the Chinese have plans 
to order a new nuclear plant each year for the next 20 years. This 
emerging Chinese market is estimated to be worth $1.65 billion per year 
in U.S. nuclear exports, supporting an equivalent of 25,400 full time 
American jobs.
  I am told that the environmental lobbyists are out in full force 
against this legislation. Environmental groups have circulated a letter 
stating that my legislation would mean that ``[t]he United States 
Government will likely support dangerous nuclear power plants, 
unsustainable logging of primary forests, and huge hydroelectric dams 
resettling millions of people in developing countries with no 
environmental safeguards allowed.''
  Mr. President, let me just respond to their claim that nuclear power 
plants and hydroelectric dams should not be funded on environmental 
grounds. China is a case in point. By 2015 China will surpass the 
United States as the largest emitter of greenhouse gases.

[[Page S11283]]

 According to the World Health Organization, 6 of the 10 most polluted 
cities in the world are in China. Coal supplies three-quarters of 
China's energy and is choking its cities. Already, hundreds of 
thousands of Chinese die premature deaths each year from chronic 
respiratory illness. Thousands more died this year from flooding of the 
Yangtze River and millions more were displaced.
  Mr. President, how can the environmentalists ignore the benefits to 
China's environment, indeed to the World's environment, of helping 
China turn to cleaner forms of energy such as hydro and nuclear? The 
18,200 megawatt Three Gorges Dam will replace the equivalent of thirty-
six 500 megawatt coal fossil plants. In a country suffocating on dirty 
air, how can any rational environmental policy promote coal and 
penalize clean burning hydro and nuclear power? Of course, hydro and 
nuclear plants have environmental consequences. Every form of energy 
production does. Even windmills become cuisinarts for birds. But 
countries such as China have the right to determine which consequences 
she can accept.
  Let's make sure that Ex-Im does not unilaterally rule out American 
participation in future projects. Support my legislation and vote to 
help American companies compete.
  Mr. President, I ask unanimous consent that a copy of the Rotec 
letter be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                             Rotec Industries,

                                 Elmhurst, IL, September 23, 1998.
     Hon. Frank Murkowski,
     U.S. Senate,
     Washington, DC.
       Dear Senator Murkowski: As president of a company which has 
     been involved in the construction of China's Three Gorges 
     Dam, I read your September 16th Washington Post op-ed 
     article, ``Too Green'', with great interest.
       Rotec Industries, along with Caterpillar and Voith Hydro, 
     aggressively pursued Ex-Im Bank financing for Three Gorges 
     Dam. Of course, we were disappointed when Ex-Im denied 
     financing. It seemed like the wrong decision for economic, 
     environmental and common-sense reasons.
       Your legislation, which would prohibit Ex-Im from 
     withholding financing on environmental grounds where any 
     other G-7 country is providing financing, offers some hope 
     that U.S. businesses and workers will have the support of Ex-
     Im Bank in future, similar situations.
       During the two years since Ex-Im's decision, Rotec has 
     continued to pursue its business at Three Gorges with some 
     successes and with some disappointments. A brief history our 
     Three Gorges events:
       January 1996--Rotec submitted a proposal (before Ex-Im's 
     decision) to supply more than $130,000,000 of U.S.-made 
     equipment.
       November 1996--Following Ex-Im's negative decision, we 
     received an order for only $31,000,000 of equipment.
       December 1996--Japanese-French consortium received an order 
     for ``Rotec-equivalent'' equipment.
       May 1998--Rotec received an additional $22,000,000 order.
       We do not expect any additional major orders from Three 
     Gorges. Our total is approximately $53,000,000; about 40% of 
     what we had hoped to receive.
       It gets worse: Losses for American workers were even 
     greater. During negotiations following Ex-Im's decision, our 
     Chinese customer demanded a price discount because ``Rotec 
     can subcontract manufacturing in China or a third country.'' 
     No Ex-Im financing meant no made-in-the-USA requirements and 
     no made-in-the-USA price premiums. Rotec was literally 
     fighting for its existence; we were facing serious 
     competition from foreign suppliers and Ex-Im would not help. 
     For the first time in our 32-year history, Rotec 
     subcontracted manufacturing to companies in South Korea. The 
     effect on U.S. jobs is easy to quantify: when the last 
     shipment is made at the end of this year, Rotec will have 
     spent over $13,000,000 in South Korea. With Ex-Im's support, 
     this work--and probably more--would have stayed in the United 
     States.
       More bad news: Before Ex-Im's decision, Rotec was the 
     world's only manufacturer of this specialized equipment. The 
     Japanese-French consortium had copied our concepts on paper, 
     but had never designed, manufactured or sold any similar 
     product. Now they have and Rotec has a new competitor. Ex-
     Im's decision has helped open the door and they walked right 
     in. Rotec will likely face foreign competition wherever this 
     product is needed.
       My environmental ``feelings'': (I have made twelve trips to 
     China during the past three years so this comes mostly from 
     personal observation.) China is a huge country with a very 
     low standard of living--especially in the rural areas. Many 
     people live on mountainsides in hand-dug ``caves''. China's 
     people need energy, improved transportation and the ability 
     to control flooding in order to improve their standard of 
     living.
       It seems unfair for the United States or anyone else to 
     tell China they can not develop their rivers, especially when 
     so much can be gained. Building Three Gorges Dam means 
     producing clean electricity with hydro-power, mitigating the 
     effects of flooding and adding navigable stretches to a river 
     in an area with very poor roads. Not building the dam means 
     burning more fossil fuel, further polluting the already-
     terrible air; continuing floods which kill thousands, 
     violently displacing hundreds-of-thousands or even millions 
     and cause untold property damage for people who have so 
     little; and slowing economic development for people who 
     desperately need it. In this case, building a dam is ``the 
     green decision.''
       Your initiation of this measure is supported and 
     appreciated by Rotec. We wish you success.
           Sincerely,
                                                     Steve Ledger,
                                 President, Rotec Industries, Inc.
                                 ______