[Senate Report 105-76]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 156
105th Congress                                                   Report
                                 SENATE

 1st Session                                                     105-76
_______________________________________________________________________


 
             EXPORT-IMPORT BANK REAUTHORIZATION ACT OF 1997

                                _______
                                

               September 10, 1997.--Ordered to be printed

_______________________________________________________________________


Mr. D'Amato, from the Committee on Banking, Housing, and Urban Affairs, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 1026]

    The Committee on Banking Housing and Urban Affairs, to 
which was referred the bill (S. 1026) to reauthorize the 
Export-Import Bank of the United States, having considered the 
same, reports favorably thereon with an amendment in the nature 
of a substitute and recommends that the bill as amended do 
pass.

                              INTRODUCTION

    On July 31, 1997, the Committee on Banking, Housing, and 
Urban Affairs marked up and ordered to be reported S. 1026, the 
Export-Import Bank Reauthorization Act of 1997. S. 1026 
reauthorizes, for a period of four years through September 30, 
2001, (1) the charter of the Export-Import Bank of the United 
States (Ex-Im Bank), (2) the Ex-Im Bank's Tied Aid Credit Fund 
and (3) the Ex-Im Bank's authority to provide financing for the 
export of ``dual-use'' items, which are nonlethal defense 
articles or services that will be used primarily for civilian 
purposes. S. 1026 also instructs the Chairman of the Ex-Im Bank 
to undertake efforts to enhance the Ex-Im Bank's capacity to 
provide information about its programs to small and rural 
companies which have not previously participated in Bank 
programs, and to report to Congress on such efforts within one 
year.

                       HISTORY OF THE LEGISLATION

    The Ex-Im Bank is an independent U.S. government agency 
established in 1945. The Ex-Im Bank provides loan guarantees, 
export credit insurance and direct loans to finance U.S. 
exports whenever (1) U.S. exporters are faced with government 
sponsored competition or (2) commercial banks are unable to 
provide financing. The Ex-Im Bank also supports U.S. government 
efforts in multilateral negotiations to restrict foreign-
government use of trade-distorting export financing, and plays 
an important role as a member of the interagency Trade 
Promotion Coordinating Committee in formulating the President's 
National Export Strategy.
    S. 1026, the Export-Import Bank Reauthorization Act of 
1997, represents a continuation of this Committee's 
longstanding support for the Ex-Im Bank. The Committee last 
approved the reauthorization of the charter of the Ex-Im Bank 
pursuant to the Export Enhancement Act of 1992 (P.L. 102-429). 
That Act provided a five-year reauthorization for the Ex-Im 
Bank through September 30, 1997, as well as a three-year 
reauthorization for the Bank's Tied Aid Credit Fund. Since that 
time, the Committee approved the reauthorization of the Tied 
Aid Credit Fund for an additional two years through September 
30, 1997. Also, the Committee in 1994 approved legislation 
authorizing the Ex-Im Bank, for a period of three years through 
September 30, 1997, to finance exports of ``dual-use'' items, 
which are nonlethal defense articles or services that will 
primarily be used for civilian purposes.
    On July 17, 1997, Senator Grams, Chairman of the 
Subcommittee on International Finance of the Committee, 
introduced S. 1026 with Senators D'Amato, Sarbanes, Moseley-
Braun, McConnell and Leahy. S. 1026 reauthorizes, for a period 
of four years through September 30, 2001, (1) the charter of 
the Export-Import Bank of the United States (Ex-Im Bank), (2) 
the Ex-Im Bank's Tied Aid Credit Fund and (3) the Ex-Im Bank's 
authority to provide financing for ``dual-use'' items.
    Also on July 17, 1997, the Subcommittee on International 
Finance held a hearing on S. 1026. Testifying before the 
Subcommittee were: James Harmon, President and Chairman, the 
Export-Import Bank of the United States; Stuart Eizenstat, 
Under Secretary for Economic and Business Affairs, Department 
of State (representing the Trade Promotion Coordinating 
Committee); M. Noor Doja, Executive Director, Minnesota Export 
Finance Authority (representing the National Association of 
State Development Agencies); JayEtta Hecker, Associate 
Director, International Relations and Trade Issues, General 
Accounting Office (GAO); Gary Groom, Vice President, Raytheon 
Engineers & Constructors (representing the Coalition for 
Employment Through Exports and the National Association of 
Manufacturers); William M. Murray, Treasurer, Fuller Company 
(representing the National Foreign Trade Council); Ian Vasquez, 
Director, Project on Global Economic Liberty, the Cato 
Institute; Richard P. Ferris, Executive Vice President, World 
Banking Group, Norwest Bank Minnesota, N.A.; and Edward Carter, 
Director, Harza Engineering Company.
    On July 31, 1997, the Committee conducted a mark-up of the 
original text of S. 1026. During the mark-up, the Committee 
approved one amendment by a unanimous roll call vote. The 
amendment, offered by Senator Enzi, instructs the Chairman of 
the Ex-Im Bank to undertake efforts to enhance the Bank's 
capacity to provide information about its programs to small and 
rural companies which have not previously participated in Bank 
programs, and to report to Congress on these activities within 
one year. The Committee, by a unanimous roll call vote, ordered 
S. 1026, as amended, to be reported.

                          NEED FOR LEGISLATION

    The Ex-Im Bank plays a crucial role in assisting U.S. 
companies that are exporting to emerging markets and, thereby, 
maintaining and creating high-quality export-related jobs for 
U.S. workers. The Ex-Im Bank levels the playing field for U.S. 
exporters, which must compete with foreign companies that 
receive government export assistance from their own export 
credit agencies (ECAs). Furthermore, through its loan guarantee 
and credit insurance programs, the Ex-Im Bank provides U.S. 
exporters with the opportunity to obtain export finance from 
commercial banks that might otherwise be reluctant to provide 
financing for exports to emerging markets.
    Ideally, U.S. firms seeking to export to emerging markets 
should face competition that is based solely on price, quality 
and service. Unfortunately, subsidized export financing 
provided by the ECAs of foreign governments can greatly 
influence purchasing decisions, causing U.S. firms to lose 
export contracts they otherwise might have won. Firms facing 
subsidized foreign competition often lose not only the initial 
sale but also follow-on sales and replacement part sales. 
Replacement part sales are not insignificant, as they can equal 
as much as 10 to 15 percent of the original sale price each 
year over the life span of the product.
    Seventy-three countries have ECAs. However, about half of 
all export credit support worldwide is extended by the seven 
largest industrial nations. In addition to the United States, 
these include Canada, France, Germany, Italy, Japan and the 
United Kingdom. Each of the governments of these six countries 
finance a larger portion of their exports than does the U.S. 
government. While the U.S. government supports approximately 3 
percent of its exports, the Japanese government supports about 
32 percent of that country's exports. Similarly, the French 
government supports 18 percent of its exports and the Canadian 
government about 7 percent of its exports. Many countries also 
seek to enhance the impact of their official financing by 
strategically concentrating on particular geographic regions. 
For example: Japan concentrates its efforts on Southeast Asia, 
France concentrates on Northern Africa, and Germany focuses on 
the Middle East.
    Another difficulty that U.S. companies have in exporting to 
emerging markets is that U.S. commercial banks often are 
reluctant to finance such exports. This is because the markets 
of developing countries sometimes lack adequate infrastructure, 
generally have not yet developed the necessary legal structure 
to enforce contractual obligations and protect private 
property, and are sometimes beset with political instability. 
The Ex-Im Bank responds to this reluctance by providing loan 
guarantees and credit insurance for commercial bank loans. 
Pursuant to the Credit Reform Act of 1991, funds from the Ex-Im 
Bank's program budget are set aside as a loan loss reserve for 
each loan guarantee or credit insurance policy that the Bank 
issues. Over the past 17 years, the Ex-Im Bank has maintained a 
loan loss ratio of about 1.9 percent, which compares favorably 
with U.S. commercial banks' 3.3 percent loan loss ratio for 
foreign government debt.

                      SECTION-BY-SECTION ANALYSIS

Section 1. Short title

    S. 1026 is titled the ``Export-Import Bank Reauthorization 
Act of 1997.''

Section 2. Extension of authority

    Section 1 of the legislation extends the expiration date of 
the Ex-Im Bank's charter from September 30, 1997 to September 
30, 2001. The Ex-Im Bank provides loan guarantees, export 
credit insurance and direct loans to finance U.S. exports 
whenever (1) U.S. exporters are faced with government sponsored 
competition or (2) commercial banks are unable to provide 
financing. The Ex-Im Bank also supports U.S. government efforts 
in multilateral negotiations within the Organization for 
Economic Cooperation and Development (OECD) to restrict 
foreign-government use of trade-distorting export financing, 
and plays an important role as a member of the interagency 
Trade Promotion Coordinating Committee in formulating the 
President's National Export Strategy.
    The Ex-Im Bank is the sole federal agency providing a full 
range of export assistance programs for non-agricultural U.S. 
exports, which include (1) guarantees of commercial bank loans 
to foreign buyers of U.S. goods, (2) direct loans to foreign 
buyers of U.S. goods, (3) credit insurance policies to cover 
the credit and political risks of loans made to finance U.S. 
exports and (4) guarantees of working capital loans provided by 
commercial banks to U.S. firms for the manufacture of goods 
destined for export. The Ex-Im Bank also has recently expanded 
its services to include project finance, which involves 
creating export finance packages to support the development of 
large projects in foreign countries, using project cash flows 
for repayment.
    When deciding whether to support a transaction, the Ex-Im 
Bank requires ``additionality'' (which is evidence that the 
deal would not go forward without the Bank's involvement) and a 
reasonable expectation of repayment. The Ex-Im Bank reviews 
applications for credit support on a first-come, first-served 
basis, and it does not choose exports by sector or target 
countries for exports.
    The Ex-Im Bank's programs are having a significant impact 
on assisting U.S. firms gain entry to emerging markets. Since 
the Ex-Im Bank was last rechartered in 1992, it has spent about 
$3.7 billion to support about $75 billion in exports. For every 
taxpayer dollar invested in Ex-Im Bank, the Bank has provided 
credit assistance to $20 in exports. According to the Ex-Im 
Bank, the exports it financed in fiscal year 1996 alone 
supported or maintained nearly 300,000 jobs. The Ex-Im Bank 
expects to provide about $16.5 billion of export finance 
support in fiscal year 1997, which is an all time high.
    U.S. firms very often seek the agency's assistance for 
exports to countries designated as ``Big Emerging Markets'' by 
the interagency Trade Promotion Coordinating Committee. 
According to Ex-Im Bank Chairman James Harmon, these countries, 
located mostly in Asia and Latin America, have over the past 
decade averaged approximately 10 percent growth in their Gross 
Domestic Product and over 15 percent in import growth. The 
World Bank reports that these countries will require $200 
billion in infrastructural improvements alone by the end of the 
decade. According to State Department Under Secretary Stuart 
Eizenstat, these countries are importing almost as much as 
Japan and the European Union combined, accounting for 44 
percent of the dollar growth in world exports between 1990 and 
1995. U.S. exports to these markets are expected to surpass 
those to Japan and the European Union by the year 2000.
    The Ex-Im Bank is having an impact on opening these 
emerging markets to U.S. export competition. For example, the 
Ex-Im Bank supported about 11 percent of U.S. exports to China 
and 22 percent of U.S. exports to Indonesia. The Ex-Im Bank is 
also having significant impacton certain sectors that rely 
heavily on exporting to these markets. In high-growth developing 
markets, the Bank is responsible for providing long-term financing for 
10 to 40 percent of all U.S. capital goods in crucial sectors like 
telecommunications, major construction projects, and power. Also, in 
countries on the threshold of significant growth, such as India and 
Poland, the Ex-Im Bank has provided export assistance for approximately 
48 percent of U.S. exports of capital goods.
    The Ex-Im Bank participates in U.S.-led negotiations in the 
OECD to minimize the export subsidies from foreign ECAs. These 
negotiations, led by the Treasury Department, aim to ensure 
that purchasing decisions are made on the basis of market 
forces, such as price, quality, and service, rather than 
government-provided financial inducements. Without Ex-Im Bank, 
U.S. negotiators would have substantially less leverage in 
these discussions and, inevitably, less success. The United 
States has already succeeded in reaching agreements that 
dictate the basic structure of official export credits, 
establish minimum interest rates, and restrict the use of tied 
aid.
    Most recently, 23 nations of the OECD who offer long-term 
official export credit have agreed to new rules for exposure 
fees (or ``premia''), which ECAs charge to compensate for the 
risk associated with export transactions. These new rules, 
which take effect on April 1, 1999, will create a transparent 
and uniform system which establishes a minimum fee for all 
variations of assistance for all export credit agencies. This 
agreement also obviates the possibility of a ``fare war'' of 
competitive price cuts among ECAs and is predicted to yield 
annual budget savings of between $50 million and $75 million 
once the phase-in period is over.

Section 3. Tied aid credit fund authority

    Section 3 of the legislation extends the expiration date of 
the Tied Aid Credit Fund from September 30, 1997 to September 
30, 2001 and authorizes the appropriation of such funds as may 
be necessary to carry out the purposes of the Fund. Tied aid is 
highly concessional financing provided by one country to 
another that is linked to the purchase of goods or services 
from the donor country. The U.S. government has targeted 
foreign-government use of such financing as particularly 
harmful to U.S. interests. Foreign governments use tied aid as 
an inducement to persuade purchasers to buy home-country goods 
and services. The U.S. government has sought to limit the use 
of tied aid through negotiations in the OECD, in which U.S. 
officials have sought to persuade other governments to restrict 
their use of tied aid. To show other countries that we would 
match their efforts to gain sales through the use of tied aid, 
Congress created the Ex-Im Bank Tied Aid Credit Fund which, as 
of June 30, 1997, contained $343 million in funds.
    In 1992, OECD negotiations resulted in the signing of the 
Helsinki agreement, which establishes two broad principles: (1) 
that tied aid credits should not be used for commercially 
viable projects and (2) that a number of key markets are no 
longer targets for tied aid financing. These markets included 
``high income'' or ``upper middle income'' countries such as 
Argentina, Brazil, Mexico, Thailand and the Czech Republic. The 
Helsinki agreement does not contain an enforcement mechanism 
but contains transparency procedures which the U.S. government 
uses to monitor compliance.
    When the United States has credible information that a 
foreign government is using (or plans to use) tied aid in a 
manner detrimental to U.S. interests, the Ex-Im Bank may use 
the Tied Aid Credit Fund as a second line of defense to support 
U.S. exporters interested in the contract. The Ex-Im Bank's 
strategy is to use the Fund to level the playing field. The Ex-
Im Bank will match a tied aid package offered by a foreign 
government, which will permit the purchaser to make a decision 
based on market factors rather than a foreign government's 
financial inducements. From 1994 through 1996, the Ex-Im Bank 
has used the Tied Aid Credit Fund as a deterrent to counter 
$2.7 billion of actual and potential foreign tied aid credits 
and, on 10 occasions, actually authorized the use of its funds 
to finance U.S. exports. The Ex-Im Bank made its greatest use 
of the fund in 1995, when it approved 9 tied aid transactions, 
consuming $29 million in program budget. Annual use of trade-
distorting tied aid is estimated to have decreased from 
approximately $10 billion prior to the adoption of the Helsinki 
agreement in 1992 to approximately $4.3 billion in 1995. 
According to Treasury Department estimates, U.S. exports will 
increase by about $1 billion annually due to the Helsinki 
agreement.

Section 4. 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 of the legislation extends the expiration date 
from September 30, 1997 to September 30, 2001 of the Ex-Im 
Bank's authority to finance ``dual-use'' exports, which are 
exports of nonlethal defense articles or services that are 
destined to be used primarily for civilian purposes. Under 
existing law, the Ex-Im Bank can support exports of defense 
articles and services only in three narrow circumstances: (1) 
dual-use articles or services as described above, (2) 
humanitarian items that will be used for civilian services, or 
(3) small marine vessels and aircraft that will be used for 
coast guard, border patrol or drug interdiction purposes.
    In a July 1997 report, entitled ``U.S. Export-Import Bank: 
Process in Place to Assure Compliance With Dual-Use Exports 
Requirements'' (GAO/NSIAD-97-211), the GAO concluded that the 
process used by the Ex-Im Bank to assess, approve, and monitor 
dual-use exports, if effectively implemented, should provide 
reasonable assurance that these exports are indeed nonlethal 
and primarily used for civilian purposes. The report found that 
the Ex-Im Bank, although authorized to use up to 10 percent of 
its total annual export financing commitments to support dual-
use exports, has actually used less than one percent of the 
agency's total commitments for this purpose. As of June 1997, 
the Ex-Im Bank had made commitments totaling about $226.1 
million to support 10 dual-use exports to 4 countries. Only one 
of these dual-use exports--involving aircraft parts and 
services to Indonesia--has actually taken place to date.
    Despite the Ex-Im Bank's limited use of its authority to 
support dual-use exports, the Committee believes that this is 
an important authority for the Bank to have, and thus has 
reported legislation to renew it for four years.

Section 5. Outreach to companies

    Section 5 of the legislation instructs the Ex-Im Bank to 
enhance its capacity to provide information about Bank programs 
to small and rural companies that have not previously 
participated in these programs and to report on this effort 
within one year. The Ex-Im Bank is required to set aside at 
least 10 percent of its financing authority to directly assist 
small business. In 1996, about 21 percent of Ex-Im Bank 
financing and 81 percent of its transactions were used to 
directly assist small firms. The number of small firms 
participating in its programs doubled between 1992 and 1996. In 
fiscal year 1996, the Ex-Im Bank provided first-time assistance 
to 411 small businesses, and directly supported a total of 
1,934 small business transactions valued at $2.4 billion.
    The Ex-Im Bank has increased its assistance to small 
business by improving the quality of its export services and, 
in 1994, expanding its export insurance products to meet the 
unique needs of small business. Small business has responded 
favorably to these changes by increasing its use of Ex-Im 
Bank's medium-term policies from 107 policies in 1994 to 396 
policies in 1996, and increasing purchases of short-term 
policies from 1,333 in 1994 to 1,647 in 1996. The Ex-Im Bank 
also overhauled its pre-export Working Capital Guarantee 
Program. Small business has responded by more than doubling its 
use of this program from $180 million in fiscal year 1994 to 
$380 million in fiscal year 1996.
    The Ex-Im Bank reaches out to small business at both its 
agency headquarters and field offices. At its headquarters in 
Washington, D.C., the Ex-Im Bank sponsors 1 and 2 day seminars 
for business officials to provide detailed information about 
the Bank's export finance programs. In the field, four of the 
Ex-Im Bank's five offices are co-located with the Commerce 
Department, the Small Business Administration, and several non-
federal partners at U.S. Export Assistance Centers (USEAC).
    While Ex-Im Bank's field staff reach out to small business 
through a variety of mechanisms, such outreach is accomplished 
primarily through banks and state and local government export 
assistance agencies which share information regarding the 
Bank's programs with their clients. The Ex-Im Bank has sought 
to expand and formalize these relationships through its City/
State and Delegated Authority programs. Through the City/State 
program, 33 state and local organizations have entered into 
partnerships with the Ex-Im Bank that permit them to package 
requests for certain types of the Bank's export assistance. 
Through the Delegated Authority program, 80 lenders in more 
than 20 states have entered into partnerships with Ex-Im Bank 
that permits them to unilaterally commit certain types of Ex-Im 
Bank financing.
    The Ex-Im Bank also indirectly assists small businesses 
which serve as suppliers to larger corporations that receive 
Ex-Im Bank financing. At the July 17 hearing, one witness, Mr. 
Groom of Raytheon, indicated that an export contract his 
company was able to win because of the Ex-Im Bank's assistance 
not only benefitted Raytheon but also 47 suppliers in 21 states 
nationwide who participated in the export. Similarly, Mr. 
Carter of Harza Engineering referred in his testimony to a 
``ripple effect,'' through which transactions supported by the 
Ex-Im Bank benefit not only Harza Engineering but also its 
subcontractors and their suppliers.
    Despite its progress, the Committee believes that Ex-Im 
Bank can do more to ensure a broad distribution of its services 
to U.S. small firms. Each year, many of the same firms take 
advantage of the Ex-Im Bank's services. According to the GAO, 
during fiscal years 1994 to 1996, the 15 most frequent users of 
the Ex-Im Bank's financing still accounted for about $14.4 
billion (about 38 percent) of its total financing commitments. 
During that same period, export finance transactions involving 
these companies absorbed $682 million (about 27 percent) of the 
Ex-Im Bank's total program budget. It is the Committee's belief 
that the Ex-Im Bank needs to address this situation by further 
strengthening its efforts to reach out to new businesses, 
particularly small business in rural areas of the United States 
that have yet to benefit from the Bank's outreach activities.

                               BACKGROUND

    The Committee is aware of certain ongoing issues affecting 
the Ex-Im Bank's operation. While the Committee does not 
believe that these issues need to be addressed through 
legislative action, these issues have been, and will continue 
to be, the subject of Committee oversight. Foremost among these 
issues are the Ex-Im Bank's efforts to responsibly manage its 
resources in light of the recent increase in demand for its 
export finance services.

The Ex-Im Bank's budget

    In fiscal year 1997, the Ex-Im Bank has faced a difficult 
situation with regard to its program budget which threatens to 
worsen in fiscal year 1998. The Ex-Im Bank is currently 
budgeted at $772.6 million, which includes $726 million for its 
program budget (including tied aid) and $46.6 million for 
administrative purposes. For fiscal year 1998, the President 
has proposed a budget reduction to $680.6 million, including 
$632 million for the program budget and $48.6 for 
administrative purposes. The House Appropriations Committee has 
recommended a level of funding equal to the President's 
proposal. The Senate Appropriations Committee has recommended 
an increase from the President's proposal to $746.6 million, 
including $700 million for the program budget and $46.6 million 
for administrative purposes.
    When developing budget estimates for fiscal years 1997 and 
1998, the Ex-Im Bank did not anticipate the increased demand 
for the Bank's services that has materialized. As a result, the 
Ex-Im Bank does not have the funding that it needs to support 
the demand for its export financing activities during fiscal 
year 1997, and will need to defer to fiscal year 1998 
transactions requiring approximately $300 million in program 
budget funding. Assuming a program budget for fiscal year 1998 
of between $632 million and $700 million, the Ex-Im Bank would, 
in effect, begin next fiscal year with as little as 50 percent 
of its program resources to meet exporter demand that is likely 
to continue at fiscal year 1997 levels or higher. The Ex-Im 
Bank is currently considering various options to stretch its 
current funding.

Use of the Ex-Im Bank to attain foreign policy objectives

    The Ex-Im Bank has come under increasing pressure to use 
its facilities to support what are ostensibly foreign policy 
goals. The most notable example of this trend involves U.S. 
relations with Russia. After the President's most recent summit 
with Russian President Boris Yeltsin, the White House issued a 
``Joint Statement on U.S.-Russia Economic Initiative'' which, 
among other things, committed the Ex-Im Bank to increasing 
support for exports to Russia. While the Ex-Im Bank has already 
taken steps to make possible increased support for exports to 
Russia and other NIS countries, the agency has stated that it 
has maintained its independence from the foreign policy 
establishment and has not compromised its underwriting 
standards. The Ex-Im Bank opened in Russia first on a sovereign 
risk basis, where the Russian government guarantees the 
financing extended to its importers. The Ex-Im Bank soon 
discovered, however, that even sovereign guarantees would be 
insufficient in reaching the full potential of these countries 
to purchase U.S. exports. Consequently, the Ex-Im Bank entered 
into an Oil and Gas Framework Agreement with the Russian 
government through which the Bank provides financing for the 
modernization of the Russian oil sector without requiring a 
government credit guarantee from the Russian Federation.

The Ex-Im Bank's environmental guidelines

    When reauthorizing the Ex-Im Bank in 1992, Congress 
instructed the Bank to establish ``environmental procedures'' 
to take into account the beneficial and potentially adverse 
environmental effects of projects that it supports. The Ex-Im 
Bank responded in two ways. First, the Bank developed an 
Environmental Exports Program to support projects that are 
environmentally beneficial, such as waste water treatment 
plants and renewable energy plants. Through this program, the 
Ex-Im Bank provides exporters with certain financing 
enhancements to its loan guarantee, direct loan and insurance 
programs that are designed to make the Bank's financial support 
more attractive. Since 1995, the Ex-Im Bank has supported over 
$1.5 billion in environmental exports or exports for projects 
that are specifically beneficial to the environment.
    Second, the Ex-Im Bank established Environmental Procedures 
and Guidelines designed to ensure that foreign projects that 
receive Ex-Im Bank support are built in an environmentally 
responsible manner. The guidelines, which were designed with 
input from U.S. exporters and environmental groups, focus on 
maintenance of air quality, adequate solid and toxic waste 
management, design of projects to mitigate risk from natural 
hazards, avoidance of socioeconomic and sociocultural adverse 
impacts, protection of ecological resources and protection from 
unhealthy levels of noise. Since 1995, when these guidelines 
were approved, the Ex-Im Bank has reviewed the potential 
environmental effects of about 120 applications involving 
foreign projects and has approved all but one of them. The Ex-
Im Bank decided not to assist firms seeking to participate in 
China's Three Gorges project because the Chinese government has 
yet to make needed environmental information available.

China's Three Gorges Project

    Many U.S. businesses are very interested in participating 
in China's Yangtze Three Gorges project, which is arguably one 
of the largest public works projects in history. Several U.S. 
exporters sought to obtain ``letters of interest'' from the Ex-
Im Bank. Concerned that the project did not meet its 
environmental standards for projects it could support, the Ex-
Im Bank conducted a review of the environmental implications of 
the Three Gorges project. Using a national interest provision 
in the Ex-Im Bank's authorizing legislation, the National 
Security Council informed the Bank on September 22, 1995 that 
the U.S. government should refrain from offering commercial 
assistance in connection with the Three Gorges project due to, 
among other things, the environmental damage that the project 
may cause. In May 1996, the Ex-Im Bank reached the same 
conclusion on the basis that the Chinese government had not 
provided information needed for the Bank to approve financing 
for exports from U.S. companies participating in the project. 
Several Members of Congress and business leaders have been 
critical of this decision, arguing that the National Security 
Council may have construed the national interest provision too 
broadly in advising the Ex-Im Bank.

                 CHANGES IN EXISTING LAW (CORDON RULE)

    In the opinion of the Committee, it is necessary to 
dispense with the requirements of paragraph 12 of the rule XXVI 
of the Standing Rules of the Senate in order to expedite the 
business of the Senate.

                      REGULATORY IMPACT STATEMENT

    Pursuant to rule XXVI, paragraph 11(b), of the Standing 
Rules of the Senate, the Committee has evaluated the regulatory 
impact of the bill and concludes that it will not increase the 
net regulatory burden imposed by the Government.

                  COST OF THE LEGISLATION (CBO REPORT)

S. 1026--A bill to reauthorize the Export-Import Bank of the United 
        States

    Summary: S. 1026 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. S. 1026 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: S. 1026 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\1\............................     715     742     763     786     809       6
    Estimated Outlays...........................................     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: S. 1026 
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.
    Previous CBO estimate: On July 11, 1997, CBO prepared an 
estimate for H.R. 1370, a bill to reauthorize the Export-Import 
Bank of the United States, as ordered reported by the House 
Committee on Banking and Financial Services. The CBO estimates 
of the budgetary impacts of the two bills are the same.
    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.

                                S. 1026

        A BILL To reauthorize the Export-Import Bank Act of 1945

    Be it enacted by the Senate and the House of 
Representatives of the United States of America assembled.

Section 1. Short title

    This Act may be cited as the ``Export-Import Bank 
Reauthorization Act of 1997.''

Section 2. 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''.

Section 3. 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'' and 
all that follows through ``1997''.
    (b) Section 10(e) of such Act (12 U.S.C. 635i-3(3)) 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.''.

Section 4. 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''.

Section 5. 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 undertake efforts to 
enhance the Bank's capacity to provide information about the 
Bank's programs to small and rural companies which have not 
previously participated in the Bank's programs. Not later than 
1 year after the date of the enactment of this subparagraph, 
the Chairman of the Bank shall submit to Congress a report on 
the activities undertaken pursuant to this subparagraph.''.