[House Report 105-224]
[From the U.S. Government Publishing Office]



105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    105-224
_______________________________________________________________________


 
               REAUTHORIZATION OF THE EXPORT-IMPORT BANK
                                _______
                                

 July 31, 1997.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Leach, from the Committee on Banking and Financial Services, 
                        submitted the following

                              R E P O R T

                             together with

                   ADDITIONAL AND SUPPLEMENTAL VIEWS

                        [To accompany H.R. 1370]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Banking and Financial Services, to whom was 
referred the bill (H.R. 1370) to reauthorize the Export-Import 
Bank of the United States, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. EXTENSION OF AUTHORITY.

  Section 7 of the Export-Import Bank Act of 1945 (12 U.S.C. 635f) is 
amended by striking ``1997'' and inserting ``2001''.

SEC. 2. TIED AID CREDIT FUND AUTHORITY.

  (a) Section 10(c)(2) of the Export-Import Bank Act of 1945 (12 U.S.C. 
635i-3(c)(2)) is amended by striking ``through September 30, 1997''.
  (b) Section 10(e) of such Act (12 U.S.C. 635i-3(e)) is amended by 
striking the first sentence and inserting the following: ``There are 
authorized to be appropriated to the Fund such sums as may be necessary 
to carry out the purposes of this section.''.

SEC. 3. EXTENSION OF 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 1(c) of Public Law 103-428 (12 U.S.C. 635 note; 108 Stat. 
4376) is amended by striking ``1997'' and inserting ``2001''.

SEC. 4. CLARIFICATION OF PROCEDURES FOR DENYING CREDIT BASED ON THE 
                    NATIONAL INTEREST.

  Section 2(b)(1)(B) of the Export-Import Bank Act of 1945 (12 U.S.C. 
635(b)(1)(B)) is amended--
          (1) in the last sentence, by inserting ``, after consultation 
        with the Committee on Banking and Financial Services of the 
        House of Representatives and the Committee on Banking, Housing, 
        and Urban Affairs of the Senate,'' after ``President''; and
          (2) by adding at the end the following: ``Each such 
        determination shall be delivered in writing to the President of 
        the Bank, shall state that the determination is made pursuant 
        to this section, and shall specify the applications or 
        categories of applications for credit which should be denied by 
        the Bank in furtherance of the national interest.''.

SEC. 5. ADMINISTRATIVE COUNSEL.

  Section 3(e) of the Export-Import Bank Act of 1945 (12 U.S.C. 
635a(e)) is amended--
          (1) by inserting ``(1)'' after ``(e)''; and
          (2) by adding at the end the following:
  ``(2) The General Counsel of the Bank shall ensure that the 
directors, officers, and employees of the Bank have available 
appropriate legal counsel for advice on, and oversight of, issues 
relating to ethics, conflicts of interest, personnel matters, and other 
administrative law matters by designating an attorney to serve as 
Assistant General Counsel for Administration, whose duties, under the 
supervision of the General Counsel, shall be concerned solely or 
primarily with such issues.''.

SEC. 6. ADVISORY COMMITTEE FOR SUB-SAHARAN AFRICA.

  (a) In General.--Section 2(b) of the Export-Import Bank Act of 1945 
(12 U.S.C. 635(b)) is amended by inserting after paragraph (8) the 
following:
  ``(9)(A) The Board of Directors of the Bank shall take prompt 
measures, consistent with the credit standards otherwise required by 
law, to promote the expansion of the Bank's financial commitments in 
sub-Saharan Africa under the loan, guarantee, and insurance programs of 
the Bank.
  ``(B)(i) The Board of Directors shall establish and use an advisory 
committee to advise the Board of Directors on the development and 
implementation of policies and programs designed to support the 
expansion described in subparagraph (A).
  ``(ii) The advisory committee shall make recommendations to the Board 
of Directors on how the Bank can facilitate greater support by United 
States commercial banks for trade with sub-Saharan Africa.
  ``(iii) The advisory committee shall terminate 4 years after the date 
of the enactment of this subparagraph.''.
  (b) Reports to the Congress.--Within 6 months after the date of the 
enactment of this Act, and annually for each of the 4 years thereafter, 
the Board of Directors of the Export-Import Bank of the United States 
submit to the Congress a report on the steps that the Board has taken 
to implement section 2(b)(9)(B) of the Export-Import Bank Act of 1945 
and any recommendations of the advisory committee established pursuant 
to such section.

SEC. 7. INCREASE IN LABOR REPRESENTATION ON THE ADVISORY COMMITTEE OF 
                    THE EXPORT-IMPORT BANK.

  Section 3(d)(2) of the Export-Import Bank Act of 1945 (12 U.S.C. 
635a(d)(2)) is amended--
          (1) by inserting ``(A)'' after ``(2)''; and
          (2) by adding after and below the end the following:
  ``(B) Not less than 2 members appointed to the Advisory Committee 
shall be representative of the labor community.''.

SEC. 8. OUTREACH TO COMPANIES.

  Section 2(b)(1) of the Export-Import Bank Act of 1945 (12 U.S.C. 
635(b)(1)) is amended by adding at the end the following:
  ``(I) The Chairman of the Bank shall design and implement a program 
to provide information about Bank programs to companies which have not 
participated in Bank programs. Not later than 1 year after the date of 
the enactment of this subparagraph, the Chairman of the Bank shall 
submit to the Congress a report on the activities undertaken pursuant 
to this subparagraph.''.

SEC. 9. FIRMS THAT HAVE SHOWN A COMMITMENT TO REINVESTMENT AND JOB 
                    CREATION IN THE UNITED STATES TO BE GIVEN 
                    PREFERENCE IN FINANCIAL ASSISTANCE DETERMINATIONS.

  Section 2(b)(1) of the Export-Import Bank Act of 1945 (12 U.S.C. 
635(b)(1)), as amended by section 8 of this Act, is amended by adding 
at the end the following:
  ``(J) The Board of Directors of the Bank shall prescribe such 
regulations and the Bank shall implement such procedures as may be 
appropriate to ensure that, in selecting from among firms to which to 
provide financial assistance, preference be given to any firm that has 
shown a commitment to reinvestment and job creation in the United 
States.''.

                     Explanation of the Legislation

    H.R. 1370 provides for the following: (1) a four-year 
renewal of the charter for the Export-Import Bank of the United 
States through September 30, 2001; (2) an extension of the tied 
aid credit fund authority; (3) an extension of the authority 
for providing financing for the export of nonlethal defense 
articles; (4) a clarification of the President's authority to 
prevent Bank financing based on national interest concerns; (5) 
the creation of an Assistant General Counsel for Administration 
position; (6) authorization for the establishment of an 
Advisory Committee to assist the Bank in facilitating U.S. 
exports to sub-Saharan Africa; (7) a requirement that two labor 
representatives be appointed to the Bank's existing Advisory 
Committee; (8) a requirement that the Bank's Chairman design 
and implement a program to increase awareness of its programs 
among companies that have not previously utilized the Bank's 
services; and (9) the establishment of regulations and 
procedures, as appropriate, to ensure that when the Bank is 
making a determination as among firms to receive assistance 
that preference be given those firms that have shown a 
commitment to reinvestment and job creation in the United 
States.

                  Background and Need for Legislation

    The bill as reported reauthorizes the charter of the 
Export-Import Bank of the United States (Eximbank or the Bank) 
through the close of business on September 30, 2001. Without 
reauthorization, Eximbank's charter will expire at the end of 
fiscal year 1997.
    Eximbank is an independent federal agency established to 
provide export financing for U.S. businesses. The Bank has a 
dual purpose: to neutralize aggressive financing by foreign 
export credit agencies, and to furnish prudent export credit 
financing when private financing is unavailable. It does this 
through a variety of loan, guarantee, and insurance programs. 
Since its founding, Eximbank has supported more than $300 
billion in U.S. exports, almost $100 billion in this decade 
alone. The Bank currently supports about $15 billion in U.S. 
exports annually.
    The Committee believes that there is a continuing need for 
the services that Eximbank is uniquely positioned to provide, 
and that it is crucial to maintain a strong U.S. export credit 
agency in the competitive world of international trade finance.
    Export growth is playing an increasingly significant role 
in overall U.S. economic performance. For example, from 1985-
1996, U.S. export growth accounted for about 30% of gross 
domestic product (GDP) growth. Most of the exports financed by 
the Bank are for capital equipment for the rapidly developing 
economies in Asia, Latin America, Eastern Europe, and the 
former Soviet Union. The Committee notes that in recent years 
overall economic growth in the developing world has averaged 
more than 5% annually, about twice the rate of the advanced 
industrial economies. The Department of Commerce predicts that 
U.S. exports to the developing world could quadruple between 
now and the year 2010. Given the potential size and intense 
competitiveness of capital goods markets in the developing 
world, the Committee believes that failure to reauthorize the 
Bank would put U.S. exporters at a severe competitive 
disadvantage.
    In this regard, Eximbank has been an important instrument 
in Congressional efforts to reduce the trade-distorting 
activities of foreign export credit agencies (ECAs). The Bank, 
together with the Treasury Department, has led U.S. efforts in 
the Organization for Economic Cooperation and Development 
(OECD) to reach agreements limiting subsidies by developed 
country ECAs. Eximbank has also used its tied aid credit fund 
authority (the ``tied aid war chest'') to counter the tied aid 
offers of foreign governments. Due to Eximbank's efforts to 
discipline tied aid, the use of this trade-distorting technique 
by foreign governments has declined by 75% since 1991.
    The Committee notes that the General Accounting Office 
(GAO) recently concluded that the most compelling reasons for 
reauthorizing Eximbank are that it helps to ``level the 
international playing field'' for U.S. exporters and provides 
leverage in trade policy negotiations to induce foreign 
governments to reduce and ultimately eliminate such subsidies. 
In serving this function, however, the Bank does not compete 
with the private sector. According to GAO, ``unlike Eximbank, 
other ECAs appear to compete to varying degrees with private 
sources of export financing. They do not aim to function 
exclusively as `lenders of last resort,' as the Eximbank 
strives to do. Eximbank aims to complement and not compete with 
private sources of capital.''
    Although Congress has mandated that the Bank complement the 
market and not compete with the private sector, other well-
supported ECAs are not similarly constrained in their 
operations. Without the Bank to bring more discipline to 
international trade finance, the U.S. would have no leverage in 
international negotiations to further reduce or eliminate all 
forms of export credit subsidies. Without Eximbank, 
international trade would become more distorted, and U.S. 
businesses and workers would suffer as a result.
    While the Committee strongly supports an international 
trading environment in which purchase decisions are made solely 
on the basis of market factors like price, quality, and 
service, this world does not yet exist. Indeed, our 
industrialized trade competitors account for a far larger share 
of total G-7 ECA activity and ECA-supported exports than the 
United States. The statistics speak for themselves. In 1994, 
Japan and France together accounted for 77% of total G-7 ECA 
activity. As a percentage of exports, ECA financing accounts 
for 32% of Japanese and 18% of French exports, compared with 2% 
for the United States. Japan and France devote a substantial 
6.4% and 4.3% of GDP, respectively, to export assistance. This 
compares with just 0.22% for the United States.
    Congress has mandated that 10% of Eximbank's financing be 
directed to small business. This target has been exceeded in 
recent years. During 1996, 21% of the Bank's financing and 
about 81% of all its transactions were with small businesses. 
During 1996, Eximbank extended nearly $378 million in 
guarantees under its Working Capital Guarantee Program to help 
make available revolving lines of credit used by small- and 
medium-sized exporters. The Bank continues to improve its 
outreach to small business through its City/State Program which 
consists of partnerships with state and local organizations and 
through its Delegated Authority Program where lenders in over 
twenty states have the authority to make commitments on behalf 
of the Bank.
    In providing financing to small business and other U.S. 
exporters, Eximbank has prudently managed its portfolio. Since 
1980 losses have been lessthan $2.5 billion on $125 billion 
worth of loans. This is equivalent to a loan loss ratio of about 1.9%. 
The loan loss ratio of commercial banks loans to foreign governments 
during this same time frame has been about 6%. The Bank is also well 
reserved against contingent liabilities under its guarantee and 
insurance policies. These reserves are funded on a continuing basis by 
user fees and risk-based premiums paid by U.S. exporters. The Bank has 
established loss reserves totaling $3.8 billion, which should be 
sufficient to cover potential losses on its $44 billion of contingent 
liabilities, given current economic conditions and continued 
maintenance of the Bank's high credit standards.
    Eximbank is not self-financing. It requires annual 
appropriations both for its administrative expenses and its 
program budget. The program budget for Eximbank, called a 
``credit subsidy'' under the terms of the 1990 Federal Credit 
Reform Act (designed to more accurately measure the costs of 
cash and credit transactions for the purpose of budgeting and 
analysis), provides the source for the Bank's export financing 
loans, loan guarantees, and export credit insurance. From the 
perspective of a financial institution, the Bank's credit 
subsidy is most closely analogous to a loan loss reserve. For 
example, for fiscal 1996 Eximbank's financial statements for 
its entire loan, guarantee and insurance portfolio showed a 
``profit'' of about $1.24 billion. The ``profit'' figure is 
made up of three elements: (1) net interest income of $401 
million; (2) a reduction in the Provision for Credit losses of 
$665 million; and (3) net non-interest income of $174.1 
million. However, under Credit Reform budgeting, each year the 
Bank must seek an appropriation to cover all losses which may 
be incurred on new business committed that year. This 
appropriation acts as a reserve, and unused amounts will be 
returned to the Treasury in the future when the loans and 
guarantees are repaid.
    Unanticipated demand for Eximbank's services in high-risk 
developing markets, most particularly Russia and the Newly 
Independent States (NIS), has placed a significant strain on 
its current year and fiscal year 1998 program budget. Given the 
magnitude of the shortfall, the Committee supports efforts to 
remedy this problem in the appropriations process. The 
Committee also supports allowing Eximbank to borrow budget 
authority from its tied aid war chest to bridge the immediate 
shortfall, provided that the Bank consults closely with the 
Committee regarding the pace and scope of the draw down to 
ensure that the capacity of the Bank to deter foreign tied aid 
offers is not compromised. For fiscal year 1998, the Bank has 
proposed a number of policy changes to reduce demand on its 
subsidy appropriation. The Committee urges the Bank to continue 
close consultations with the exporting community and Congress 
regarding its funding options.
    In this context, the Committee is aware that Eximbank 
activity in Russia and the NIS has occasionally been the focus 
of criticism. At the core of this criticism is the policy 
presumption that Eximbank should operate as a foreign policy 
agency. Critics suggest, for example, that Eximbank should not 
be supporting U.S. exports to Russia and the NIS when the buyer 
may be a state-owned enterprise. By financing such 
transactions, critics contend, Eximbank is operating at cross 
purposes to broader American foreign policy objectives. While 
the issue is a serious one, the Committee believes much of this 
criticism is misplaced. In Russia until very recently, 
economic, legal, and political conditions compelled the Bank to 
operate almost exclusively on a sovereign risk basis. It 
operates exclusively on a sovereign risk basis--that is, 
requiring a government guarantee--elsewhere in the NIS. It has 
done so because in order to protect the taxpayer against 
losses, Congress requires that Eximbank's borrowers must offer 
a reasonable assurance of repayment.
    As economic reforms gather speed, and as the financial 
services sectors in Russia and the NIS begin to develop true 
commercial banks with the objectives and skills to make 
commercial loans, Eximbank can accelerate its efforts to deal 
with the private sector without relying on government 
guarantees. The Committee points out with respect to Eximbank-
financed transactions with Russian state enterprises that in 
absence of the Bank's participation, the U.S. exporter would 
not have received the contract because the private sector 
cannot provide financing or would do so only on less favorable 
terms. The sales would have likely gone to a European firm 
instead. Further, it appears that international financial 
institutions offer a far better mechanism for promoting 
structural reforms in Russia and the NIS than do trade finance 
agencies.
    As amended, this legislation contains several provisions 
not in the Administration's original request.
    First, the Committee amended the so-called ``Chafee 
Amendment'' under which the President of the United States may 
make a determination that it is in the national interest that 
the Bank not take final action with respect to a particular 
transaction. In practice, this determination has been delegated 
to the Secretary of State. The new language clarifies and makes 
more transparent the procedures under which the President may 
invoke the authority provided by the Chafee Amendment. It 
simply requires that before the President or his designee makes 
a determination that it is in the national interest for the 
Bank to deny credit, there must be consultation with the House 
and Senate Banking Committees, and once a determination is 
reached, a written document containing that determination must 
be delivered to the President of the Bank specifically citing 
the legal authority and policy rationale for denying a final 
transaction by the Bank.
    The Committee has considered the Department of State's 
concerns regarding the practical implications of the 
``consultation'' requirement on the Department's ability to 
effectively invoke the Chafee Amendment. The Committee 
recognizes that facts and circumstances surrounding a decision 
to invoke the Chafee Amendment may require quick action. 
Accordingly, the bill does not specify the scope, length or 
nature of the consultations. The Committee recognizes that 
consultations may consist of a notification to the Committee 
and an opportunity for quick Committee reaction. The Committee 
does not expect this consultation requirement to interfere with 
the Secretary of State's decision-making process, but rather as 
a method of providing the Committee with prior knowledge of any 
action to be taken under Chafee and an opportunity to provide 
comment to State.
    Second, the Committee created the position of Assistant 
General Counsel for Administration within the Bank. This 
provision is intended to help the new management of the Bank 
ensure that certain recent management problems such as the past 
abuse of retention allowances and other issues are put behind 
the agency and the Bank upholds at all times the highest 
ethical and professional standards.
    Third, consistent with the Bank's existing credit 
standards, an Advisory Committee was established for promoting 
the Bank's commitments in sub-Saharan Africa. The Advisory 
Committee is to advise the Board of Directors on the 
development and implementation of policies and programs to 
enhance support for the expansion of loans, guarantees, and 
insurance to the sub-Saharan Africaregion. The Advisory 
Committee is set to terminate four years after the date of enactment.
    The Advisory Committee shall meet at least twice per year 
and submit a written report to the Board of Directors 
containing their suggestions on improvements in the provision 
of loans, guarantees, and insurance with respect to sub-Saharan 
Africa. It shall consist of five members who shall be appointed 
by the Board of Directors on the recommendation of the 
President of the Bank. Such members shall be broadly 
representative of trade finance, commerce, and banking. Not 
less than one member appointed to the Advisory Committee shall 
be representative of the small business community.
    This provision regarding sub-Saharan Africa trade and 
development initiatives has bipartisan support. With Africa 
presently accounting for only a small percent of Eximbank's 
transactions, the Bank sees Africa as a new frontier for its 
services. One of the means of developing a stronger economic 
partnership with reform-minded sub-Saharan African countries is 
trade finance and private sector development utilizing the 
resources of Eximbank.
    The Committee wishes to make clear that it does not intend 
to alter the Bank's basic mission as a consequence of the 
establishment of this Advisory Committee. The Committee does 
not intend for the Bank to assume a foreign policy or foreign 
assistance function. Rather, it is the Committee's strong 
expectation that Eximbank will remain ``deal driven'' and 
respond to the needs of exporters on a case-by-case basis.
    Fourth, the Committee required that the Bank include on its 
existing Advisory Committee not less than two representatives 
from the labor community. The Advisory Committee positions are 
filled on a year to year basis, and as such, the next available 
opening would be filled by a labor community representative. 
Given that the Bank benefits both businesses and workers, the 
Committee believes it entirely appropriate to increase labor's 
representation on Eximbank's Advisory Committee. As much of the 
Bank's operating policy is not set by statute, it is important 
that American workers have adequate ability to advise the Bank 
on policy matters. Otherwise, current statutory requirements 
regarding positions on the Export-Import Bank's Advisory 
Committee, including the requirement of three members to 
represent small business, remains unchanged.
    Fifth, the Committee directed the Bank to design an 
outreach program specifically targeted to reach those companies 
that have never used the Bank's services. The Committee further 
directed the Bank to implement the program within one year, and 
looks forward to consultation with Eximbank on ways to increase 
the number of small and medium size businesses familiar with 
the programs of the Bank.
    Sixth, the Committee required Eximbank to prescribe 
regulations and procedures, as appropriate, to ensure that in 
selecting among firms to provide financial assistance, 
preference be given to any firm that has shown a commitment to 
job creation and reinvestment in the United States. This 
amendment reflects the concern of a majority of the Committee 
that because the purpose of Eximbank is to support U.S. jobs 
through exports, the Bank should give preference to 
corporations which reinvest and support jobs in the United 
States. The Committee expects to remain in close consultations 
with the Bank regarding this provision, recognizing that 
Congress has otherwise directed the Bank to efficiently follow 
market demand, consider applications in the order they are 
received, make timely and market-sensitive judgments on the 
basis of the creditworthiness of the buyer (not the exporter), 
as well as the Bank's environmental guidelines, and establish a 
reasonable assurance of repayment for every transaction.
    Several Members of the Committee have also raised concerns 
about potential adverse impacts of Eximbank financing on U.S. 
industry. Currently, before it takes final action on any 
transaction, Eximbank is required to assess whether and to what 
extent its loans and guarantees are likely to cause substantial 
direct injury to U.S. industry. If Eximbank support would have 
a net adverse economic impact on U.S. production and employment 
then it may not provide assistance.
    The Committee understands that Eximbank has had in place 
its current Economic Impact Analysis Procedures (Procedures) 
since approximately 1988 with an update in 1992. The Committee 
believes that the current Procedures to determine if there is 
substantial adverse effect on American industries and workers 
as a result of Eximbank financing are in need of updating. 
Realizing that the world economy is rapidly changing and that 
new trade relationships have dramatically impacted the global 
delivery of goods and services, the Committee directs Eximbank 
to conduct a full review of its Economic Impact Analysis 
Procedures and take action for update pursuant, but not limited 
to, the Committee's instructions.
    The Committee understands that any change in the current 
Procedures must carefully weigh the interests of many diverse 
parties and take into account the overall long-term interests 
of the American worker. In the review of Procedures, the 
Committee directs the Bank to recommend and implement measures 
to improve the information gathering capability of Eximbank, 
increase consultation with American producers of goods and 
services similar to the goods and services to be produced as a 
result of Eximbank financing (such as giving greater notice to 
American industries that suffer competitively as a result of 
unfair trade practices--as noted by the United States Trade 
Representative--in the country or region Eximbank financing 
will be directed and improving communication with American 
companies that are able to demonstrate that an Eximbank-
financed project will have a substantial adverse affect on 
their company and workers), protecting proprietary trade 
secrets of American exporters, and not diminishing the 
competitiveness of American exporters by causing unnecessary 
delays in the application process.
    The Committee expects that this review process will take 
place in consultation with the Banking Committees. 
Additionally, the Committee expects that this review process 
will take place in consultation with representatives of 
appropriate federal agencies, private corporations, small 
businesses, and industry groups.
    The Committee expects the Bank to report the findings and 
actions taken as a result of the review of Procedures to the 
Banking Committees no later than May 31, 1998.
    In the future, the Committee directs the Bank to conduct a 
like review of Procedures and report findings and actions taken 
to the Banking Committees at least 90 days prior to the 
expiration of the Bank's charter (as amended from time to 
time).

                                Hearings

    On April 17, 1997, at the request of the Administration, 
Mr. Michael N. Castle introduced H.R. 1370, a bill to 
reauthorize the Export-Import Bank of the United States.
    On April 29, 1997 the Subcommittee on Domestic and 
International Monetary Policy held a hearing on the 
reauthorization of the Export-Import Bank. Witnesses were as 
follows: (1) Dr. Rita M. Rodriguez, Acting President and 
Chairman of the Export-Import Bank of the United States; (2) 
Ms. Meg Lundsager, Deputy Assistant Secretary, Trade and 
Investment Policy at the U.S. Treasury; (3) Mr. Benjamin F. 
Nelson, Director of International Relations and Trade Issues of 
the General Accounting Office; (4) Mr. John H. Robinson, Jr., 
Managing Partner at Black & Veatch, representing the National 
Foreign Trade Council; (5) Mr. Gary Groom, Vice President of 
Project Finance for Raytheon Engineers and Constructors, 
representing the National Association of Manufacturers and the 
Coalition for Exports through Employment; (6) Mr. Peter Bowe, 
President of Ellicott Machine Corporation International, 
representing the Small Business Exporters Association; (7) Mr. 
Peter P. Ferris, Executive Vice President and Manager of the 
World Banking Group of Norwest Bank Minnesota, N.A.; (8) Mr. 
Howard D. Samuel, Executive Director of the Labor/Industry 
Coalition for International Trade; and (9) Mr. Peter J. 
Ferrara, General Counsel and Chief Economist for Americans for 
Tax Reform.

                   Committee Consideration and Votes

Rule XI, clause 2(l)(2)(B)

    On May 8, 1997, the Domestic and International Monetary 
Policy Subcommittee of the Banking and Financial Services 
Committee met in open session to mark up H.R. 1370.
    The Subcommittee considered as original text for purposes 
of amendment an amendment in the nature of a substitute from 
Chairman Castle. The Castle substitute extended the Export-
Import Bank's charter from September 30, 1997 through September 
30, 2001. For the same reauthorization period, the amendment 
extended the authority to: (1) obtain reimbursement for tied 
aid credits; (2) receive appropriations for the Tied Aid Credit 
Fund; and (3) delay the termination of amendments that provide 
financing for the exportation of nonlethal defense articles or 
services used for civilian purposes. The amendment also: (1) 
clarified the procedures for denying credit based on national 
interest by requiring that such a determination be presented to 
the President of the Export-Import Bank in writing; (2) 
provided for an Assistant General Counsel for Administration to 
be designated to handle issues relating to ethics, conflicts of 
interest, personnel matters and other administrative law 
matters; and (3) provided for an Advisory Committee to be 
established to promote the expansion of the Bank's financial 
commitments in sub-Saharan Africa. The amendment was adopted by 
unanimous consent.
    Roll call votes were taken on the following amendments:
    Representative Sanders' Unfiled Amendment 1: This amendment 
required the Bank to give preference to firms which, over the 
last 15 years, had increased rather than decreased, their 
number of employees or had shown a demonstrable commitment to 
job creation in the United States. It was defeated 5 to 11.
        YEAS                          NAYS
Dr. Paul                            Mr. Castle
Mr. Sanders                         Mr. LaTourette
Mr. Hinchey                         Mr. Lucas
Mr. Jackson, Jr.                    Mr. Barr
Mr. Torres                          Dr. Weldon
                                    Mr. Bereuter
                                    Mr. Cook
                                    Mr. Manzullo
                                    Mr. Flake
                                    Mr. Frank
                                    Mr. Bentsen

    Representative Sanders' Unfiled Amendment 2: This amendment 
required the Bank to give preference to a firm where the chief 
executive officer did not receive compensation that exceeded 40 
times the average compensation provided to nonsupervisory 
employees of the firm. It was defeated 3 to 8.
        YEAS                          NAYS
Mr. Ney                             Mr. Castle
Mr. Sanders                         Mr. Lucas
Mr. Jackson, Jr.                    Dr. Weldon
                                    Mrs. Roukema
                                    Mr. Bereuter
                                    Mr. Cook
                                    Mr. Manzullo
                                    Mr. Bentsen

    Representative Frank's Unfiled Amendment 5: This amendment 
required a community service commitment for the Board of 
Directors of any corporation receiving Bank assistance. This 
amendment was defeated 8 to 11.
        YEAS                          NAYS
Mr. Flake                           Mr. Castle
Mr. Frank                           Mr. Lucas
Mr. Kennedy                         Mr. Metcalf
Ms. Velazquez                       Mr. Ney
Mrs. Maloney                        Mr. Barr
Mr. Bentsen                         Dr. Weldon
Mr. Jackson, Jr.                    Mrs. Roukema
Mr. Gonzalez                        Mr. Bereuter
                                    Mr. Cook
                                    Mr. Manzullo
                                    Mr. Hinchey

    On July 9, 1997, the Committee on Banking and Financial 
Services marked up the amended bill as passed out of 
subcommittee in open session, pursuant to notice.
    Roll call votes were taken on the following amendments:
    Representative Jones' amendment 1: This amendment provided 
that Eximbank may provide up to 90% coverage of the interest 
and principal instead of 100% of the 85% maximum that the Bank 
currently is allowed to provide for guarantees. It was defeated 
8 to 35.
        YEAS                          NAYS
Mr. Campbell                        Mr. Leach
Mr. Royce                           Mrs. Roukema
Mr. Ney                             Mr. Bereuter
Mr. Fox                             Mr. Baker
Dr. Paul                            Mr. Bachus
Mr. Foley                           Mr. Castle
Mr. Jones                           Mr. Lucas
Mr. Jackson, Jr.                    Mr. Metcalf
                                    Mr. Ehrlich
                                    Mrs. Kelly
                                    Dr. Weldon
                                    Mr. Ryun
                                    Mr. Cook
                                    Mr. Snowbarger
                                    Mr. Riley
                                    Mr. Hill
                                    Mr. Sessions
                                    Mr. Manzullo
                                    Mr. Gonzalez
                                    Mr. Vento
                                    Mr. Frank
                                    Mr. Kanjorski
                                    Mr. Kennedy
                                    Mr. Flake
                                    Ms. Waters
                                    Mr. Gutierrez
                                    Mrs. Roybal-Allard
                                    Mr. Barrett
                                    Mr. Watt
                                    Mr. Ackerman
                                    Mr. Bentsen
                                    Ms. Kilpatrick
                                    Mr. Maloney
                                    Ms. Hooley
                                    Ms. Carson

    Representative Sanders' amendment 3: This amendment 
directed the Eximbank to establish procedures to ensure that, 
when selecting among firms to provide financial assistance, 
preference be given to any firm that has shown a commitment to 
reinvestment and job creation in the United States. It was 
accepted 24 to 21.
        YEAS                          NAYS
Mr. Campbell                        Mr. Leach
Mr. Ney                             Mr. Bereuter
Dr. Paul                            Mr. Baker
Mr. Cook                            Mr. Lazio
Mr. Foley                           Mr. Bachus
Mr. Gonzalez                        Mr. Castle
Mr. LaFalce                         Mr. Royce
Mr. Vento                           Mr. Lucas
Mr. Kanjorski                       Mr. Metcalf
Mr. Flake                           Mr. Ehrlich
Mr. Sanders                         Mr. Barr
Mrs. Roybal-Allard                  Mr. Fox
Mr. Barrett                         Mrs. Kelly
Ms. Velazquez                       Dr. Weldon
Mr. Watt                            Mr. Ryun
Mr. Hinchey                         Mr. Snowbarger
Mr. Ackerman                        Mr. Riley
Mr. Bentsen                         Mr. Hill
Mr. Jackson                         Mr. Sessions
Ms. McKinney                        Mr. LaTourette
Ms. Kilpatrick                      Mr. Manzullo
Mr. Maloney
Ms. Hooley
Ms. Carson

    Representative Frank's amendment 5: This amendment would 
have instituted a community service work requirement for 
members of Boards of Directors of firms receiving assistance 
from the Eximbank. It was defeated 9 to 29.
        YEAS                          NAYS
Mr. Gonzalez                        Mr. Leach
Mr. Vento                           Mr. Bereuter
Mr. Frank                           Mr. Baker
Mr. Kennedy                         Mr. Lazio
Mr. Sanders                         Mr. Bachus
Mrs. Roybal-Allard                  Mr. Castle
Mr. Jackson, Jr.                    Mr. Campbell
Ms. McKinney                        Mr. Royce
Ms. Carson                          Mr. Lucas
                                    Mr. Metcalf
                                    Mr. Ney
                                    Mr. Ehrlich
                                    Mr. Fox
                                    Mrs. Kelly
                                    Dr. Weldon
                                    Mr. Ryun
                                    Mr. Cook
                                    Mr. Snowbarger
                                    Mr. Riley
                                    Mr. Hill
                                    Mr. Sessions
                                    Mr. Manzullo
                                    Mr. Foley
                                    Mr. Jones
                                    Mr. Barrett
                                    Mr. Watt
                                    Mr. Bentsen
                                    Mr. Maloney
                                    Ms. Hooley

    With a quorum being present, the Committee by voice vote 
ordered the bill reported to the House with the recommendation 
that the bill, as amended, do pass.

                      Committee Oversight Findings

    In compliance with clause 1(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
the findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         Committee on Government Reform and Oversight Findings

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(d) of rule XI of the Rules of the House of 
Representatives.

                        Constitutional Authority

    In compliance with clause 2(l)(4) of rule XI of the Rules 
of the House of Representatives, the Constitutional Authority 
for Congress to enact this legislation is derived from Article 
I, section 8, clause 1 (relating to the general welfare of the 
United States); Article I, section 8, clause 3 (relating to 
Congressional power to regulate commerce); and Article I, 
section 8, clause 18 (relating to making all laws necessary and 
proper for carrying into execution powers vested by the 
Constitution in the government of the United States). In 
addition, the power to ``coin money'' and ``regulate the value 
thereof'' provided for in clause 5, Article I, has been broadly 
construed to allow for the Federal regulation of the provision 
of credit.

               New Budget Authority and Tax Expenditures

    Clause 2(l)(3)(B) of rule XI of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

                      Advisory Committee Statement

    An advisory committee within the meaning of Section 5(b) of 
the Federal Advisory Committee Act was created to promote the 
expansion of the Bank's financial commitments in sub-Saharan 
Africa.

                    Congressional Accountability Act

    The reporting requirement under section 102(b)(3) of the 
Congressional Accountability Act (P.L. 104-1) is inapplicable 
because this legislation does not relate to terms and 
conditions of employment or access to public services or 
accommodations.

  Congressional Budget Office Cost Estimates and Federal Mandate Cost 
                                Estimate

    The cost estimate pursuant to clause 2(l)(3)(c) of rule XI, 
of the Rules of the House of Representatives and Section 403 of 
the Congressional Budget Act of 1974, and the cost estimate 
pursuant to Section 424 of the Unfunded Mandates Reform Act 
(P.L. 104-4) follow below.

                                                     July 31, 1997.
Hon. James A. Leach,
Chairman, Committee on Banking and Financial Services, House of 
        Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1370, a bill to 
reauthorize the Export-Import Bank of the United States.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Joseph C. 
Whitehill.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.
    Summary: H.R. 1370 would authorize the Export-Import Bank 
(Eximbank) to finance exports through 2001. CBO estimates that 
enacting the bill would result in additional discretionary 
spending of about $80 million in 1998 and $1.2 billion to $1.3 
billion over the 1998-2002 period. H.R. 1370 would not affect 
direct spending or receipts; therefore, pay-as-you-go 
procedures would not apply. The bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act of 1995 (UMRA), and would have no 
impact on the budgets of state, local, or tribal governments.
    Estimated Cost to the Federal Government: H.R. 1370 would 
extend through 2001 the Eximbank's authority to finance exports 
of goods and services through loans, guarantees, and highly 
subsidized tied-aid credits. The bank has a permanent, 
indefinite authorization for appropriations to cover the cost 
of its loans and guarantees, as defined by the Federal Credit 
Reform Act of 1990. Because the bill does not authorize 
specific amounts, funding will depend on subsequent 
appropriations actions. The following table shows estimated 
spending assuming funding at the 1997 level adjusted for 
inflation and assuming that funding is held at the 1997 level 
through 2001. The estimate assumes that outlays would follow 
historical spending patterns.

                                    [By fiscal years, in millions of dollars]                                   
----------------------------------------------------------------------------------------------------------------
                                                                   1997    1998    1999    2000    2001    2002 
----------------------------------------------------------------------------------------------------------------
                Spending Subject to Appropriation                                                               
                                                                                                                
Spending Under Current Law for the Eximbank:                                                                    
    Estimated authorization level \1\ \2\.......................     715      -1       6      12      17      21
    Estimated outlays...........................................     463     437     361     296     234     151
                                                                                                                
    Assuming Funding at the 1997 Level Adjusted for Inflation                                                   
                                                                                                                
Proposed Changes:                                                                                               
    Estimated authorization level...............................  ......     743     757     774     792     -15
    Estimated outlays...........................................  ......      82     195     291     383     378
Spending Under the Bill for the Eximbank:                                                                       
    Estimated authorization level...............................     715     742     763     786     809       6
    Estimated Outlay............................................     463     519     556     587     617     529
                                                                                                                
               Assuming Funding at the 1997 Level                                                               
                                                                                                                
Proposed Changes:                                                                                               
    Estimated authorization level...............................  ......     723     716     710     705     -22
    Estimated outlays...........................................  ......      78     185     271     351     344
Spending Under the Bill for the Eximbank:                                                                       
    Estimated authorization level \1\...........................     715     722     722     722     722      -1
    Estimated outlays...........................................     463     516     547     568     586     496
----------------------------------------------------------------------------------------------------------------
\1\ The 1997 level is the amount appropriated for that year.                                                    
\2\ The estimated authorization for 1998 through 2002 under current law represents the net impact of the        
  permanent, indefinite authorization for administrative expenses and estimated negative subsidy receipts from  
  credit extended prior to 1998.                                                                                

    The costs of this legislation would fall within budget 
function 150 (international affairs).
    Pay-as-you-go considerations: None.
    Intergovernmental and private-sector impact: H.R. 1370 
contains no intergovernmental or private-sector mandates as 
defined in UMRA, and would have no impact on the budgets on 
state, local, or tribal governments.
    Estimate prepared by: Federal Cost: Joseph C. Whitehill. 
Impact on State, Local, and Tribal Governments: Pepper 
Santalucia. Impact on the Private Sector: Lesley Frymier.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                      Section-by-Section Analysis

Section 1.  Extension of Authority
Section 2.  Tied Aid Credit Fund Authority
Section 3.  Extension of 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 4.  Clarification of Procedures for Denying Credit 
            Based on the National Interest
Section 5.  Administrative Counsel
Section 6.  Advisory Committee for Sub-Saharan Africa
Section 7.  Increase in Labor Representatives on the Advisory 
            Committee of the Export-Import Bank
Section 8.  Outreach to Companies
Section 9.  Firms that have Shown a Commitment to Reinvestment 
            and Job Creation in the U.S. to be Given Preference 
            in Financial Assistance Determinations

Section 1. Extension of authority

    This section allows the Export-Import Bank of the United 
States (the Bank) to continue to exercise its functions in 
connection with in furtherance of its objects and purposes 
until the close of business on September 30, 2001.

Section 2. Tied aid credit fund authority

    Section 2(a) extends the time by which the Bank would be 
reimbursed for tied aid credits authorized by the Bank through 
September 30, 2001.
    Section 2(b) authorizes to be appropriated to the Tied Aid 
Credit Fund such sums as may be necessary to carry out the 
purposes of section 10 of the Act.

Section 3. Extension of authority to provide financing for the export 
        of nonlethal defense articles or services the primary end use 
        of which will be for civilian purposes

    This section delays the termination of the amendments made 
by Section 1 of Public Law 103-428 until September 30, 2001.

Section 4. Clarification of procedures for denying credit based on the 
        national interest

    Section 4(1) requires the President of the United States to 
consult with the Committee on Banking and Financial Services of 
the House of Representatives and the Committee on Banking, 
Housing, and Urban Affairs of the Senate before making a 
determination that the Bank should deny applications for credit 
for nonfinancial or noncommercial considerations where denial 
would clearly and importantly advance the United States policy 
in such areas as international terrorism, nuclear 
proliferation, environmental protection and human rights.
    Section 4(2) requires that the President of the United 
States deliver in writing to the President of the Bank, his 
determination that the Bank should deny applications for credit 
in furtherance of the national interest and that the writing 
specify the applications or categories of applications for 
credit which should be denied by the Bank.

Section 5. Administrative counsel

    Section 5(1) designates an attorney to serve as Assistant 
General Counsel for Administration under the supervision of the 
General Counsel of the Bank whose duties shall be concerned 
solely or primarily with ensuring that the directors, officers, 
and employees of the Bank have available appropriate legal 
counsel for advice on, and oversight of, issues relating to 
ethics, conflicts of interest, personnel matters, and other 
administrative law matters.

Section 6. Advisory Committee for sub-Saharan Africa

    Section (a) requires that the Board of Directors of the 
Bank is to take prompt measures, consistent with the credit 
standards required by law, to promote the Bank's financial 
commitments in sub-Saharan Africa by establishing an Advisory 
Committee. It also creates section 2(b)(9)(B) under the Act to 
form an Advisory Committee that shall advise the Board of 
Directors on the development and implementation of policies and 
programs to support its expansion into sub-Saharan Africa. The 
Advisory Committee shall make recommendations to the Bank's 
Board on how it can facilitate greater support by the U.S. 
commercial banks for trade with sub-Saharan Africa. The 
Advisory Committee shall terminate 4 years after the date of 
enactment.
    Section(b) requires that within 6 months after the date of 
enactment of this Act, and annually for each of the 4 years 
thereafter that the Board of Directors of the Bank submit to 
Congress a report on the steps that the Board of Directors has 
taken to implement section 2(b)(9)(B) of the Act in sub-Saharan 
Africa and any recommendations of the Advisory Committee.

Section 7. Increase in labor representatives on the Advisory Committee 
        of the Export-Import Bank

    Requires that not less than two members be appointed to the 
Advisory Committee of the Bank to represent labor.

Section 8. Outreach to companies

    Under this section the Chairman of the Bank is to design 
and implement a program for the Bank that will provide 
information about its programs to companies which have not 
participated and to expand its outreach program to increase the 
awareness of U.S. businesses to the benefits of Eximbank's 
services. The Chairman is also required to submit to Congress a 
report on the activities taken under this program within one 
year of enactment.

Section 9. Firms that have shown a commitment to reinvestment and job 
        creation in the United States to be given preference in 
        financial assistance determinations

    Under section 9, the Board of Directors of the Bank shall 
prescribe such regulations and the Bank shall implement such 
procedures as may be appropriate to ensure that, in selecting 
among firms to which to provide financial assistance, 
preference be given to any firm that has shown a commitment to 
reinvestment and job creation in the United States.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

                     EXPORT-IMPORT BANK ACT OF 1945

          * * * * * * *
  Sec. 2. (a) * * *
          * * * * * * *
  (b)(1)(A) * * *
  (B) It is further the policy of the United States that loans 
made by the Bank in all its programs shall bear interest at 
rates determined by the Board of Directors, consistent with the 
Bank's mandate to support United States exports at rates and on 
terms and conditions which are fully competitive with exports 
of other countries, and consistent with international 
agreements. For the purpose of the preceding sentence, rates 
and terms and conditions need not be identical in all respects 
to those offered by foreign countries, but should be 
established so that the effect of such rates, terms, and 
conditions for all the Bank's programs, including those for 
small businesses and for medium-term financing, will be to 
neutralize the effect of such foreign credit on international 
sales competition. The Bank shall consider its average cost of 
money as one factor in its determination of interest rates, 
where such consideration does not impair the Bank's primary 
function of expanding United States exports through fully 
competitive financing. The Bank may not impose a credit 
application fee unless (i) the fee is competitive with the 
average fee charged by the Bank's primary foreign competitors, 
and (ii) the borrower or the exporter is given the option of 
paying the fee at the outset of the loan or over the life of 
the loan and the present value of the fee determined under 
either such option is the same amount. It is also the policy of 
the United States that the Bank in the exercise of its 
functions should supplement and encourage, and not compete 
with, private capital; that the Bank, in determining whether to 
provide support for a transaction under the loan guarantee, or 
insurance program, or any combination thereof, shall consider 
the need to involve private capital in support of United States 
exports as well as the cost of the transaction as calculated in 
accordance with the requirements of the Federal Credit Reform 
Act of 1990; that the Bank shall accord equal opportunity to 
export agents and managers, independent export firms, export 
trading companies, and small commercial banks in the 
formulation and implementation of its programs; that the Bank 
should give emphasis to assisting new and small business 
entrants in the agricultural export market, and shall, in 
cooperation with other relevant Government agencies, including 
the Commodity Credit Corporation, develop a program of 
education to increase awareness of export opportunities among 
small agribusinesses and cooperatives, that loans, so far as 
possible consistent with the carrying out of the purposes of 
subsection (a) of this section, shall generally be for specific 
purposes, and, in the judgment of the Board of Directors, offer 
reasonable assurance of repayment; and that in authorizing any 
loan or guarantee, the Board of Directors shall take into 
account any serious adverse effect of such loan or guarantee on 
the competitive positition of United States industry, the 
availability of materials which are in short supply in the 
United States, and employment in the United States, and shall 
give particular emphasis to be objective of strengthening the 
competitive position of United States exporters and thereby of 
expanding total United States exports. Only in cases where the 
President, after consultation with the Committee on Banking and 
Financial Services of the House of Representatives and the 
Committee on Banking, Housing, and Urban Affairs of the Senate, 
determines that such action would be in the national interest 
where such action would clearly and importantly advance United 
States policy in such areas as international terrorism, nuclear 
proliferation, environmental protection and human rights, 
should the Export-Import Bank deny applications for credit for 
nonfinancial or noncommercial considerations. Each such 
determination shall be delivered in writing to the President of 
the Bank, shall state that the determination is made pursuant 
to this section, and shall specify the applications or 
categories of applications for credit which should be denied by 
the Bank in furtherance of the national interest.
          * * * * * * *
  (I) The Chairman of the Bank shall design and implement a 
program to provide information about Bank programs to companies 
which have not participated in Bank programs. Not later than 1 
year after the date of the enactment of this subparagraph, the 
Chairman of the Bank shall submit to the Congress a report on 
the activities undertaken pursuant to this subparagraph.
  (J) The Board of Directors of the Bank shall prescribe such 
regulations and the Bank shall implement such procedures as may 
be appropriate to ensure that, in selecting from among firms to 
which to provide financial assistance, preference be given to 
any firm that has shown a commitment to reinvestment and job 
creation in the United States.
          * * * * * * *
  (9)(A) The Board of Directors of the Bank shall take prompt 
measures, consistent with the credit standards otherwise 
required by law, to promote the expansion of the Bank's 
financial commitments in sub-Saharan Africa under the loan, 
guarantee, and insurance programs of the Bank.
  (B)(i) The Board of Directors shall establish and use an 
advisory committee to advise the Board of Directors on the 
development and implementation of policies and programs 
designed to support the expansion described in subparagraph 
(A).
  (ii) The advisory committee shall make recommendations to the 
Board of Directors on how the Bank can facilitate greater 
support by United States commercial banks for trade with sub-
Saharan Africa.
  (iii) The advisory committee shall terminate 4 years after 
the date of the enactment of this subparagraph.
          * * * * * * *
  Sec. 3. (a) * * *
          * * * * * * *
  (d)(1) * * *
  (2)(A) Not less than three members appointed to the Advisory 
Committee shall be representative of the small business 
community.
  (B) Not less than 2 members appointed to the Advisory 
Committee shall be representative of the labor community.
          * * * * * * *
  (e)(1) No director, officer, attorney, agent, or employee of 
the bank shall in any manner, directly or indirectly, 
participate in the deliberation upon or the determination of 
any question affecting such individual's personal interests, or 
the interests of any corporation, partnership, or association 
in which such individual is directly or indirectly personally 
interested.
  (2) The General Counsel of the Bank shall ensure that the 
directors, officers, and employees of the Bank have available 
appropriate legal counsel for advice on, and oversight of, 
issues relating to ethics, conflicts of interest, personnel 
matters, and other administrative law matters by designating an 
attorney to serve as Assistant General Counsel for 
Administration, whose duties, under the supervision of the 
General Counsel, shall be concerned solely or primarily with 
such issues.
          * * * * * * *
  Sec. 7. The Export-Import Bank of the United States shall 
continue to exercise its functions in connection with and in 
furtherance of its object and purposes until the close of 
business on September 30, [1997] 2001, but the provisions of 
this section shall not be construed as preventing the Bank from 
acquiring obligations prior to such date which mature 
subsequent to such date or from assuming prior to such date 
liability as guarantor, endorser, or acceptor of obligations 
which mature subsequent to such date, or from issuing either 
prior or subsequent to such date, for purchase by the Secretary 
of the Treasury or any other purchasers, its notes, debentures, 
bonds, or other obligations which mature subsequent to such 
date or from continuing as a corporate agency of the United 
States and exercising any of its functions subsequent to such 
date for purposes of orderly liquidation, including the 
administration of its assets and the collection of any 
obligations held by the Bank.
          * * * * * * *

                    tied aid credit program and fund

  Sec. 10. (a) * * *
          * * * * * * *
  (c) Tied Aid Credit Fund.--
          (1) * * *
          (2) Expenditures from fund.--Amounts in the Fund 
        shall be available for grants made by the Bank under 
        the tied aid credit program established pursuant to 
        subsection (b) and to reimburse the Bank for the amount 
        equal to the concessionality level of any tied aid 
        credits authorized by the Bank [through September 30, 
        1997].
          * * * * * * *
  (e) Authorization.-- [There are authorized to be appropriated 
to the Fund such sums as may be necessary for each of fiscal 
years 1996 and 1997.] There are authorized to be appropriated 
to the Fund such sums as may be necessary to carry out the 
purposes of this section. Such sums are authorized to remain 
avaliable until expended.
          * * * * * * *
                              ----------                              


                SECTION 1 OF THE ACT OF OCTOBER 31, 1994

  AN ACT 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.

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.

  (a) * * *
          * * * * * * *
  (c) Period of Effectiveness.--The amendments made by this 
section shall remain in effect during the period beginning on 
the date of enactment of this Act and ending on September 30, 
[1997] 2001.

                            ADDITIONAL VIEW

    H.R. 1370, reauthorizing the Export-Import Bank, should be 
rejected for several reasons. The claim to constitutionality is 
dubious. The Bank rewards special interest groups with 
political favors. Reallocating money from the job-producing, 
productive sectors of the economy to the less efficient sectors 
distorts credit allocation. Reauthorization of the Bank is both 
had economics and bad politics.
    Article I section 8 of the U.S. Constitution enumerates 
areas over which Congress has authority. The Ninth and Tenth 
Amendments further reinforce that powers not vested in the U.S. 
Congress are reserved to the States or to the People. The Fifth 
Amendment of the Constitution forbids the ``taking'' from the 
people in order to subsidize the business of the politically 
well-connected. It is not through free trade that the 
government subsidizes the politically well-connected. Rather, 
it is through such organizations as the Ex-Im Bank.
    The U.S. government takes money from its citizens through 
taxes to subsidize other nations' purchases. Very often, our 
government subsidizes the purchases by foreign governments, 
such as the People's Republic of China or other brutal regimes, 
whose practices many Americans find objectionable. In fact, 
according to the Export-Import Bank's 1996 Annual Report, the 
People's Republic of China was the second largest recipient 
country of U.S. Ex-Im Bank loans or loan guarantees; American 
taxpayers subsidized $4.1 billion of mainland China's 
purchases. It is one thing to permit voluntary exchanges 
between citizens of different countries but quite another to 
coerce the American taxpayer to subsidize the purchases of a 
country whose practices offend many. Such practices can best be 
explained by considering the way in which the Ex-Im Bank 
operates. Maria L. Haley, one of the five Bank directors, is a 
long-time ``Friend of Bill'' from Arkansas who ran then-Gov. 
Clinton's program to attract foreign investment in the state. 
She advocated approval of loans to Pauline Kanchanalak (a Thai 
native living in Virginia) to set up Blockbuster Video stores 
in Bangkok, Thailand. The Ex-Im Bank has never approved 
financing for franchise rights; retail stores abroad do not 
create U.S. jobs. Ms. Kanchanalak contributed $85,000 on June 
18, 1996, the same day DNC fundraiser John Huang arranged for 
her to be invited to a White House coffee. Mr. Huang called her 
that day and twice more in August. The DNC eventually returned 
$250,000 of Ms. Kanchanalak's donations because of questionable 
foreign origin. It is clear that the Bank sometimes acts as a 
slush fund to repay political favors--it is, however, not their 
money to lend. It is the taxpayer' money.
    Rep. Walter Jones had a serious and thoughtful amendment 
that recognized the simple fact that it is the taxpayer's money 
with which we are dealing. With a few technical perfections, 
the amendment should be adopted by the House. Limiting the 
taxpayer liability is a small step that would neither 
eviscerate the Bank nor hurt our ability to compete 
internationally. The modest amendment merely reduces the 
Bank's--and ultimately the taxpayers'--liability by 10% of its 
current liability.
    The act of the government taking from its people to return 
only part of it (and that part with strings attached) is 
another sign of the so-called ``Nanny State.'' The strings are 
meant to induce the welfare or subsidy recipients to act in a 
manner that another group of individuals, through the coercive 
power of the State, subjectively consider desirable. A ``Bully 
State'' might be a better characterization of such a 
government. The Frank amendment rightfully acknowledges this 
fact and attempts to maintain some form of equality of 
discrimination.
    The amendment by Rep. Bernard Sanders makes an effort to 
address the charge that the Bank uses taxpayer dollars from 
both individuals and job-producing small businesses to fund 
large corporations that export American jobs or downsize their 
workforce here. If money is to be taken from the paychecks of 
our citizens, then it should at least be spent on companies 
showing a commitment to reinvestment and job creation in the 
United States.
    The supporters of the Export-Import Bank will point to the 
few examples of claimed jobs created through subsidized exports 
of the beneficiaries of the their programs. They will be 
conspicuously silent on the greater number of jobs lost or 
forgone, dispersed throughout the country, due to the increased 
tax burden levied on the productive companies to support the 
lest efficient companies living on government subsidies. The 
few beneficiaries of government largesse are easier to identify 
than the no less real, but harder to identify, losers of the 
government's misguided policies.
    The funding for the Export-Import Bank affords politicians 
the opportunity to pay back their contributors with other 
people's money. By voting for reauthorization of the Bank, 
those individual politicians that depend on the political 
support of the few large companies subsidized at taxpayer 
expense can return the favor. This Congress should put a stop 
to this special interest favoritism. The Congressional Research 
Service, in a recent report, noted that the Bank's ``subsidized 
export financing raised financing costs for all borrowers by 
drawing on financial resources that otherwise would be 
available for other uses.''
    Small businesses that are the engine of export growth and 
job creation in this country subsidize the larger corporations 
that are shedding jobs in America. This misallocation of credit 
occurs because the larger corporations have the resources to 
lobby politicians in order to seek special favors that are out 
of reach of the small businesses. These lobbyists will claim 
that these special interest subsidies are important to the 
country. Yet with nearly $900 million funding for the Bank (a 
part of over three billion tax dollars spent annually on export 
promotion activities), only $20 billion of our total U.S. 
exports of $700 billion are subsidized.
    Arguments that we must reauthorize the Bank because it 
creates jobs, generates economic growth, and counterbalances 
the subsidies of our major trading partners is not supported by 
objective economic data:

                                                  [In percent]                                                  
----------------------------------------------------------------------------------------------------------------
                                                                      Country's      Rate of                    
                             Country                                   exports       real GDP        Rate of    
                                                                   subsidized \1\   growth \2\  unemployment \2\
----------------------------------------------------------------------------------------------------------------
Japan............................................................             32           0.7             3.1  
France...........................................................             18           2.2            11.6  
Canada...........................................................              7           2.2             9.5  
Germany..........................................................              5           2.1             9.4  
Italy............................................................              4           3.0            12    
U.K..............................................................              3           2.4             8.2  
U.S.A............................................................              2           2.0             5.6  
----------------------------------------------------------------------------------------------------------------
Source: \1\ Export-Import Bank, 1995 figures; \2\ Bureau of Economic and Business Affairs, 1995 figures).       

    It would be difficult for anyone but the most committed 
statists to argue that the dirigiste wonders of government 
bureaucrats could be demonstrated by macroeconomic statistics. 
However, if there is a broad relationship, it is directly 
inverse to the relationship the central planners envision.
    In 1995, according to Export-Import Bank data, Japan 
subsidized 32% of its exports and France subsidized 18% while 
the United States only aided 2% of total exports. However in 
the same year, according to figures from the Bureau of Economic 
and Business Affairs, Japan's real growth in Gross Domestic 
Product registered a paultry 0.7% against a solid 2.0% here in 
the U.S. and France had an unemployment rate of 11.6%, more 
than double the American rate of only 5.6%. Perhaps, following 
the logic of the Bank's supporters, we should increase the 
portion of our subsidized exports to nine times the current 
level (with the accompanying tax increases) to double our 
unemployment rate, and, if that isn't desirable, we could 
double that rate of subsidy (again with the increased tax 
burden) to cut our economic growth rate to one-third its 
current level. We should not jump off the bridge of special 
interest corporativism just because our competitors do.
    ``Corporate welfare does not work anywhere in the world. It 
does not work because it penalizes a country's winners with 
excess taxes in order to fund that country's losers with 
inefficiently run government programs,'' testified Dr. T.J. 
Rodgers, President and C.E.O. of Cypress Semiconductor 
Corporation, before Congress in 1995. `` `They've got 
subsidies, we need subsidies,' is exactly wrong. America will 
be much more competitive on a relative basis if we allow the 
nations with whom we compete to squander their taxpayers' 
money, while we encourage our companies to win without 
subsidies. It's like the Olympics: there comes the day when an 
athlete must walk alone into the area of competition. The 
government cannot lift the weights and run the miles that are 
required to be a champion--only an individual can.''

                                                          Ron Paul.



                 ADDITIONAL VIEWS OF HON. DOUG BEREUTER

    I am pleased that the House Banking Committee 
overwhelmingly approved legislation extending the authorization 
of the Export-Import Bank (Ex-Im) into the next millennium. I 
am also pleased that the Committee included two provisions 
which I authored.
    The first extends current law which allows Ex-Im 
participation in financing of defense articles which have 
civilian uses, provided there is appropriate end-use monitoring 
to ensure that they are truly used for civilian, non-military 
uses.
    I am also pleased that the Committee accepted an amendment 
I offered in Sub-committee which requires the President to 
report to the House and Senate Banking Committees before 
rejecting financing applications based on ``the Chafee 
amendment.''
    However, there is one provision the Committee approved 
which I believe will prove to be problematic if enacted. 
Specifically, the Committee approved an amendment which will 
require Ex-Im to give preference to firms that have shown a 
commitment to job creation and reinvestment in the United 
States through Ex-Im prescribed regulations and procedures. 
Although noble sounding, this provision changes Ex-Im's role 
from determining how many jobs a particular project would 
support to considering the commitment a corporation makes to 
supporting employment in the U.S. versus other countries in all 
areas of their corporate operations.
    Requiring Ex-Im to give preference to any firm that has 
shown a commitment to reinvestment and job creation in the U.S. 
shows a misreading of what Ex-Im does best and a 
misunderstanding of its procedures. Ex-Im does not choose 
between exporters. It evaluates buyers on the basis of credit 
worthiness. It also applies environmental guidelines to some 
transactions.
    Ex-Im Bank does not select from among firms and choose to 
give assistance to one firm over another. Ex-Im's primary job 
is to judge the credit worthiness of buyers, not exporters. 
This is in fulfillment of Ex-Im's Congressional mandate to find 
a reasonable assurance of repayment on every transaction and 
thus protect the taxpayer's investment in Ex-Im. Confusion in 
this mandate will put taxpayer money at risk.
    Ex-Im responds to market signals, not the policies of 
exporters. The more confusing mandates are placed upon Ex-Im, 
the more Ex-Im risks becoming unfocused in its policies. It is 
also probable that such directives will slow the Bank's 
response time and thus risk the timely response necessary to 
win export contracts for American firms.
    This amendment also raises the possibility that the 
``firms'' referred to could apply to banks providing the loans 
which Ex-Im Bank guarantees. If this proves to be the case, it 
is unclear whether foreign banks or foreign branches of U.S. 
banks would still be eligible to receive Ex-Im Bank's 
guarantee. This would contravene Ex-Im Bank's charter, 
specifically section 2(b)(1)(G), that non-U.S. persons cannot 
be discriminated against in seeking access to Bank programs. 
Since Ex-Im Bank makes frequent use of foreign banks as 
guaranteed lenders, this would imperil much of Ex-Im's 
guarantee program and would also greatly hamper Ex-Im's very 
effective Project Finance program, which also makes frequent 
use of foreign banks.
    Since the wording of the amendment is broad and vague, it 
potentially opens Ex-Im to litigation, especially from 
companies who may feel that they should have been given a 
``preference'' over other companies. This means the use of 
taxpayer dollars to defend Ex-Im against lawsuits, instead of 
using those dollars to process the export transactions that 
sustain and increase U.S. jobs.

                                                     Doug Bereuter.

            ADDITIONAL VIEWS OF HON. KENNETH E. BENTSEN, JR.

    As an original co-sponsor of H.R. 1370, legislation to 
reauthorize the Export-Import Bank (EXIMBank) of the United 
States, I am pleased to support this important legislation that 
will ensure our ability to compete abroad.
    The EXIMBank has proven to be effective in selling American 
products. Over the last five years, the EXIMBank has helped to 
sell more than $75 billion in US exports to the world. In our 
global economy, this investment is critically important to 
improving our economy and improving our balance of trade. In 
addition, these sales ensure that American companies continue 
to grow and prosper. When we sell American-made products 
abroad, we make our companies more competitive and we ensure 
that American workers keep their jobs.
    In Texas, the impact of these exports on our economy is 
significant. In my district, Ex-Im financing is felt in the 
petrochemical industry as it exports abroad. Texas companies 
sell the second highest level of exports in our nation. the 
EXIMBank helps to ensure that our state will continue to sell 
more Texas-made products.
    I strongly believe that EXIMBank is good investment that is 
fiscally responsible. EXIMBank and its programs only go to 
projects where the private insurance and finance sector will 
not go, in order that we may sell U.S. products in the most 
challenging markets. The EXIMBank assistance program is 
targeted to only those investments where our private capital 
markets have failed to serve. Further, there is no empirical 
evidence that EXIMBank results in a transfer of capital and 
economic activity abroad in and of itself. For every $1 dollar 
spent on EXIMBank, American companies are able to leverage $20 
dollars in private capital to build new markets and promote 
American products. Another added benefit of this program is 
that when EXIMBank invests in a project, other private capital 
become available. This, in fact, could be viewed as capital 
formation.
    Some have labeled this program to be corporate welfare, 
others have argued that it is inefficient. In a perfect world, 
perhaps that would be true, but we do not live in a perfect 
world. Under classical economics, it might be argued that we 
should eliminate this program. While our trading partners will 
continue to heavily subsidize export finance, U.S. companies 
would be at a competitive disadvantage and would be unable to 
seek contracts abroad. In name of philosophical purity, we 
would be no more successful than that of mercantilism in the 
eighteenth century.
    If the United States did not invest in the EXIMBank, we 
would be hurting our own economy. Other nations aggressively 
promote the sale of their products through extensive export 
assistance programs. In some cases, these countries spend up to 
40 percent of their export assistance on promoting the sale of 
domestically-made products. Our nation invests a much smaller 
amount, up to 3 percent, for those projects where the private 
sector is not and will not be involved. I believe this targeted 
investment is appropriate and ensures that our investment is 
narrowly tailored to those projects which the private sector no 
longer serves.
    I am a strong supporter of this legislation and will work 
to ensure its passage this year.

                                                Kenneth E. Bentsen.

               SUPPLEMENTAL VIEWS OF HON. BERNIE SANDERS

Preference for companies that show a commitment to reinvestment and job 
        creation in the United States
    I am very pleased that the Committee approved an amendment 
that directs the Export-Import Bank (Ex-Im) to establish 
procedures to ensure that, when selecting among firms to 
provide financial assistance, preference is given to any firm 
which has shown a commitment to reinvestment and job creation 
in the United States. Because the purpose of Ex-Im is to 
support U.S. jobs through exports, the Bank should give 
preference to U.S. corporations which reinvest and support jobs 
in the United States, as opposed to corporations which are 
laying off American workers only to locate production and other 
facilities in countries which have less expensive, unprotected 
workforces.
    This amendment gets at the heart of the issue of the 
relationship between the U.S. government, the taxpayers of this 
country and corporate America. A number of Federal programs are 
being criticized, inside and outside Congress, as ``corporate 
welfare'' and these programs are being targeted for spending 
cuts by people with widely different political philosophies. 
The Export-Import Bank is one of those programs.
    The Journal of Commerce reported on June 12, 1997, that Ex-
Im, like the rest of the country, is presently facing a money 
crunch. The journal reports that Ex-Im: ``faced with strong 
exporter demand, may run out of money this fiscal year as early 
as July, officials indicate. Next year, the money squeeze could 
be worse.'' It seems clear that it is time for the Export-
Import Bank to prioritize; this money squeeze should indicate 
to us that there is actually a need for a system of priorities, 
such as that in this amendment, to ensure that companies which 
are the most committed to jobs in the U.S. are given preference 
over companies that are not.
    It is becoming too common for U.S. corporations, including 
corporations which are supported by Ex-Im, to downsize their 
U.S. workforce and move their production facilities to take 
advantage of cheap labor in other countries. According to 
information from Ex-Im, among the top 25 companies which 
receive assistance from Ex-Im are Boeing, General Electric, and 
AT&T. A brief look at the employment practices of these 
corporations underscores the need for an amendment which gives 
preference to corporations that show a commitment to employment 
in the U.S.
    Boeing is the top recipient of Ex-Im loans and guarantees. 
Reports indicate that in 1990 Boeing had 155,900 employees. In 
1996, it had 103,600 employees--a decline of 52,300 jobs during 
that period. In other words, it laid off \1/3\ of its 
workforce, despite being the top recipient of Ex-Im aid.
    General Electric (GE) is listed as the number two recipient 
of Ex-Im aid. In 1975 GE had 667,000 American workers. Twenty 
years later, it had 398,000, a decline of 269,000 jobs. General 
Electric is well known for its policies of moving GE jobs to 
anyplace in the world where it can get cheap labor--Mexico, 
China and other poor Third World countries.
    As for AT&T, in 1995 AT&T laid off 40,000 workers. 
Interestingly enough, reports show that in that same year, AT&T 
provided its CEO, Robert Allen, with $15 million in options 
plus a $11 million grant.
    The point here is that the entire approach of Ex-Im in 
terms of job creation is too narrow. They approach the idea of 
``jobs through exports'' on a project-by-project basis, and 
ignore the totality of what the company is doing. This 
amendment, on the other hand, expands Ex-Im's focus when making 
the determination as to how many jobs a transaction will 
support. This amendment directs the Export-Import Bank to look 
at the totality of the situation regarding a company's 
commitment to job creation in the United States, and not just a 
particular project. In other words, if there is a company that 
is showing a commitment to job creation and reinvestment in the 
United States, then that company should receive preference for 
assistance.
    At a time when the Congress is working very hard to balance 
the budget, it seems only right that if U.S. taxpayer funds are 
to be used to support U.S. corporations' exports, then 
incentive and priority must be given to those corporations to 
reinvest and support jobs in the United States. A preference 
system, as provided by this amendment, would provide such an 
incentive to corporations, while at the same time, allowing the 
Bank some discretion in implementation, to ensure that both the 
purpose of the Bank and this amendment are fulfilled.
Two representatives from the labor community on the Advisory Board of 
        the Export-Import Bank
    The Committee also approved an amendment which directs the 
Export-Import Bank to include upon its Advisory Committee no 
less than two representatives from the labor community. It is 
my expectation that these positions would be filled by 
representatives of the AFL-CIO.
    Because the purpose of the Export-Import Bank is to support 
U.S. jobs through exports, it is important to have two members 
representing the American workforce on the Advisory Committee 
to ensure that the influence of the Advisory Committee is more 
evenly balanced for the sake of U.S. workers.

                                                    Bernie Sanders.