Export Promotion: Issues for Assessing the Governmentwide Strategy
(Testimony, 02/26/98, GAO/T-NSIAD-98-105).
GAO discussed issues related to the U.S. government's role in promoting
exports, focusing on the: (1) evolution of the government strategy
designed to reshape federal export promotion activities; and (2) results
and issues related to GAO's past work on U.S. government efforts to
improve U.S. export promotion programs.
GAO noted that: (1) Congress, in enacting the Export Enhancement Act of
1992, required the Trade Promotion Coordinating Committee (TPCC) to
improve the delivery of export assistance to U.S. firms; (2) the TPCC
efforts have focused on three broad areas: (a) devising a governmentwide
strategy and a unified budget that would set priorities; (b) developing
partnerships with all levels of government and the private sector; and
(c) dealing with obstacles that U.S. businesses encounter as they
compete against businesses supported by their foreign governments; (3)
the TPCC has taken a number of steps in each of these areas, but some of
their goals remain elusive; (4) with respect to the strategy, the
cooperating agencies have established priority foreign markets and
increased the visibility of the components and distribution of the
aggregate federal expenditures on export promotion activities; (5)
partnerships have been developed through a number of initiatives,
including a network of export assistance centers to help unify the
delivery of export promotion services, and making the U.S. Export-Import
Bank's (Eximbank) and the Small Business Administration's (SBA) working
capital program procedures more consistent and to enable exporters to
receive financing more easily; (6) the TPCC has also worked to keep U.S.
financing programs fully competitive; (7) GAO's work also suggests that
outstanding issues remain regarding the effectiveness of the cooperative
efforts of the agencies under the TPCC to achieve the congressional
objectives of the 1992 legislation; (8) for example, while the
expenditures of the 19 federal agencies are now clearly presented in one
place, major challenges remain for achieving the unified budget that
would align resources with national priorities and program performance;
(9) while the Department of Commerce and the SBA have colocated in 19
cities, with some closer ties with Eximbank officials, no evaluation has
been completed on how effectively these centers are operating to achieve
the intended objective of streamlining the delivery and quality of
services to small- and medium-sized businesses; and (10) the elapsing of
5 years since the passage of the Export Enhancement Act provides a good
opportunity for Congress to assess the achievements and remaining
challenges for the effort to strategize, streamline, and coordinate the
wide array of federal export promotion efforts through the institutional
mechanism of the TPCC.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-NSIAD-98-105
TITLE: Export Promotion: Issues for Assessing the Governmentwide
Strategy
DATE: 02/26/98
SUBJECT: International trade
Exporting
Foreign trade policies
Interagency relations
Business assistance
Sales promotion
Foreign aid programs
Strategic planning
Competition
IDENTIFIER: TPCC National Export Strategy
United Kingdom
Germany
Japan
Italy
France
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO report. Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved. Major **
** divisions and subdivisions of the text, such as Chapters, **
** Sections, and Appendixes, are identified by double and **
** single lines. The numbers on the right end of these lines **
** indicate the position of each of the subsections in the **
** document outline. These numbers do NOT correspond with the **
** page numbers of the printed product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
** A printed copy of this report may be obtained from the GAO **
** Document Distribution Center. For further details, please **
** send an e-mail message to: **
** **
** **
** **
** with the message 'info' in the body. **
******************************************************************
Cover
================================================================ COVER
Before the Task Force on International Affairs,
Committee on the Budget, U.S. Senate
For Release on Delivery
Expected at
10:00 a.m., EST
Thursday,
February 26, 1998
EXPORT PROMOTION - ISSUES FOR
ASSESSING THE GOVERNMENTWIDE
STRATEGY
Statement of JayEtta Z. Hecker, Associate Director, International
Relations and Trade Issues, National Security and International
Affairs Division
GAO/T-NSIAD-98-105
GAO/NSIAD-98-105T
Export Promotion
(711316)
Abbreviations
=============================================================== ABBREV
TPCC - Trade Promotion Coordinating Committee
SBA - Small Business Administration
OPIC - Overseas Private Investment Corporation
OECD - Organization for Economic Cooperation and Development
============================================================ Chapter 0
Mr. Chairman and Members of the Task Force:
We are pleased to be here today to discuss issues related to the U.S.
government's role in promoting exports. In enacting legislation in
1992 calling for a coordinated national strategy for promoting and
financing U.S. exports, the Congress was aware of the vital and
ever-increasing role that exports play in creating the new jobs
driving the economic growth of the United States. The legislation
established in statute the Trade Promotion Coordinating Committee
(TPCC), comprised of more than a dozen federal departments and
agencies, to bring coherence and direction to the federal
government's efforts to help U.S. companies export more goods and
services. Export promotion efforts include diverse programs, such as
providing U.S. businesses with market research and trade leads,
business counseling, high-level government advocacy through the use
of trade missions, and export finance.
Our comments today will address two points: (1) the evolution of the
government strategy designed to reshape federal export promotion
activities and (2) the results and issues related to our past work on
U.S. government efforts to improve U.S. export promotion programs.
Our remarks are based largely on past GAO reports and testimonies, a
list of which is attached.
SUMMARY
---------------------------------------------------------- Chapter 0:1
The Congress, in enacting the Export Enhancement Act of 1992,
required the TPCC to take steps to improve the delivery of export
assistance to U.S. firms. The TPCC efforts have focused on three
broad areas: (1) devising a governmentwide strategy and a unified
budget that would set priorities, (2) developing partnerships with
all levels of government and the private sector, and (3) dealing with
obstacles that U.S. businesses encounter as they compete against
businesses supported by their foreign governments.
The TPCC has taken a number of steps in each of these areas, but some
of their goals remain elusive. With respect to the strategy, the
cooperating agencies have established priority foreign markets and
increased the visibility of the components and distribution of the
aggregate federal expenditures on export promotion activities.
Partnerships have been developed through a number of initiatives,
including a network of export assistance centers to help unify the
delivery of export promotion services, and making the U.S.
Export-Import Bank's (Eximbank) and the Small Business
Administration's (SBA) working capital program procedures more
consistent to enable exporters to receive financing more easily. The
TPCC has also worked to keep U.S. financing programs fully
competitive.
Our work also suggests that outstanding issues remain regarding the
effectiveness of the cooperative efforts of the agencies under the
TPCC to achieve the congressional objectives of the 1992 legislation.
For example, while the expenditures of federal export promotion
agencies are now clearly presented in one place, major challenges
remain for achieving the unified budget that would align resources
with national priorities and program performance. While the
Department of Commerce and the SBA have colocated in 19 cities, with
some closer ties with Eximbank officials, no evaluation has been
completed on how effectively these centers are operating to achieve
the intended objective of streamlining the delivery and quality of
services to small- and medium-sized businesses. The elapsing of 5
years since the passage of the Export Enhancement Act\1
provides a good opportunity for the Congress to assess the
achievements and remaining challenges of the effort to strategize,
streamline, and coordinate the wide array of federal export promotion
efforts through the institutional mechanism of the TPCC.
--------------------
\1 Public Law 102-429 (Oct. 21, 1992).
EVOLUTION OF GOVERNMENT
STRATEGY FOR ADDRESSING EXPORT
NEEDS OF U.S. BUSINESSES
---------------------------------------------------------- Chapter 0:2
When the Congress passed title II of the Export Enhancement Act of
1992, it was concerned that the existing federal export promotion
programs lacked coordination and an overall strategy.\2 Before 1992,
a business desiring to export goods or services faced a bureaucratic
labyrinth of federal and state agencies to get information on
markets, financing, insurance, methods, and restrictions on
exporting. In addition, a business might have noted that there were
over a dozen federal agencies with more than 100 export promotion
programs. To improve export services, the Congress mandated, in the
1992 act, that the TPCC develop a governmentwide strategic plan that
establishes priorities for federal activities supporting U.S.
exports, and propose an annual unified federal trade promotion budget
that supports the plan.\3 The Congress also directed the Commerce
Department to set up centralized export assistance centers. In
addition, the act specified that the TPCC,\4 chaired by the Secretary
of Commerce, would report annually to the Congress on the national
export strategy and its implementation.
The first TPCC strategy, issued in 1993, identified impediments to
effective delivery of export promotion services and made 65
recommendations to improve export promotion programs.
Specifically, the TPCC expected that
-- development of a government strategy would be helped by devising
performance measures as a means to reallocate resources and
attain a unified budget;
-- establishment of partnerships with the public and private
sectors would be assisted by such actions as simplifying federal
services, setting up "one-stop shops" for exporters, and
streamlining the export working capital programs of the Eximbank
and the SBA; and
-- provision of export services for U.S. exporters similar to
those received by foreign competitors would help U.S. companies
compete on a "level playing field" abroad.
The TPCC has subsequently issued four further National Export
Strategy reports. In these reports, the TPCC continued to highlight
its pursuit of the major themes that emphasized achieving efficient
delivery of export services. The later strategies also focused on
specific initiatives such as improving trade data, establishing an
advocacy network, and eliminating barriers to fair competition such
as bribery and corruption.
--------------------
\2 We have previously reported that the absence of a governmentwide
strategy had resulted in an ad hoc approach to export promotion.
This approach lacked clear priorities and overlooked opportunities
for improved delivery of services to exporters. See Export
Promotion: Federal Programs Lack Organizational and Funding
Cohesiveness (GAO/NSIAD-92-49, Jan. 10, 1992).
\3 The TPCC was originally established by the President in May 1990.
The 1992 act provided a statutory basis for the TPCC to give it more
permanence and a stronger role in bringing coherence and direction to
federal export promotion efforts.
\4 The TPCC membership includes representatives from the Departments
of Agriculture, Commerce, State, Defense, Energy, the Interior,
Labor, Transportation, and the Treasury; the Agency for International
Development; the Environmental Protection Agency; the U.S. Trade and
Development Agency; the U.S. Information Agency; the SBA; the
Eximbank; and the Overseas Private Investment Corporation (OPIC).
RESULTS OF OUR PAST WORK ON
GOVERNMENT EFFORTS TO IMPROVE
U.S. EXPORT PROMOTION PROGRAMS
---------------------------------------------------------- Chapter 0:3
Our past work has focused on several elements of the governmentwide
strategy to improve the delivery of export promotion programs. We
will highlight the results of our work concerning the three broad and
continuing themes of the TPCC strategy and then outline some issues
that may be raised in the context of the overall governmentwide
strategy.
EFFORTS TO DEVELOP A
GOVERNMENTWIDE STRATEGY AND
A UNIFIED BUDGET
-------------------------------------------------------- Chapter 0:3.1
In 1996, we examined the TPCC's progress toward establishing a
governmentwide strategy for promoting exports and toward devising an
annual unified federal budget to promote exports that reflects these
priorities.\5 At that time, we reported that governmentwide export
promotion priorities were being identified in terms of foreign
markets, export programs, and export policies and that agencies were
exercising flexibility in focusing their efforts. The centerpiece of
the strategy was the identification of the "big emerging markets" as
priority markets for U.S. goods and services.\6 We also examined
whether the TPCC had proposed to the President an annual unified
budget, as required by the Export Enhancement Act, that would support
the strategic plan and eliminate funding for any areas of overlap and
duplication. As we have testified in the past, one of the indicators
of whether the unified budget is working would be whether the budget
changed the distribution of resources to the various priorities,
programs, and agencies.\7
We found that the TPCC had prepared and included in the National
Export Strategy budget presentations that displayed each member
agency's historical and prospective export expenditures on export
promotion, using tables showing spending from different perspectives.
For example, the 1997 National Export Strategy displayed the
distribution of federal spending by budget authority and across
various trade promotion categories, such as providing information
counseling and export services, combating foreign export subsidies,
and providing government advocacy. We observed that this step had
helped foster a better understanding of federal expenditures for
export promotion. However, we emphasized that performance measures
would be needed to provide a basis for the allocation of export
promotion resources. According to TPCC officials, they recently
reviewed TPCC agency strategic plans as a step toward ensuring that
the budget priorities are fully aligned with the TPCC's commercial
policy goals.
--------------------
\5 National Export Strategy (GAO/NSIAD-96-132R, Mar. 26, 1996).
\6 These markets include the Chinese economic area (including Taiwan
and Hong Kong); South Korea; India; the Association of South East
Asian Nations (Brunei, Indonesia, Malaysia, the Philippines,
Singapore, Thailand, and Vietnam); South Africa; Brazil; Argentina;
Mexico; Poland; and Turkey.
\7 See Export Promotion: Initial Assessment of Governmentwide
Strategic Plan (GAO/T-GGD-93-48, Sept. 29, 1993).
STEPS TAKEN TO HELP U.S.
BUSINESSES THROUGH PUBLIC
AND PRIVATE SECTOR
PARTNERSHIPS
-------------------------------------------------------- Chapter 0:3.2
Another major thrust of the TPCC's efforts was to improve the
delivery of federal export promotion services by developing greater
cooperation among federal, public, and private entities. One
significant effort was the creation of a nationwide network of 19
"one-stop-shops," called U.S. Export Assistance Centers. The TPCC
sought to present exporters with a "seamless" delivery of services
rather than a confusing network of federal programs with multiple
domestic offices.
Another initiative was to help small- and medium-sized businesses by
increasing the availability of export working capital and making the
Eximbank's and the SBA's export working capital programs and
procedures more streamlined, consistent, and simple. This
"harmonization" initiative was to address exporter and lender
concerns about overlap and confusion over federal program parameters
and procedures.
EXPORT ASSISTANCE CENTERS
-------------------------------------------------------- Chapter 0:3.3
In creating the nationwide network of one-stop shops, representatives
of the Department of Commerce and the SBA--two federal agencies with
extensive export promotion field networks--were combined and, in some
cases, the Eximbank representatives were included as well. These
export assistance centers were designed to (1) provide exporters with
information on all U.S. government export promotion and export
finance services, (2) assist exporters in identifying which federal
programs may be of greatest assistance, and (3) help exporters make
contact with those federal programs.
We reviewed the implementation of the first four export assistance
centers and reported to the Congress in July 1996 on both the
benefits realized as well as the opportunities for improving their
operations.\8 In general, we found that staff and customers of the
four centers we visited believed that colocating agency staff helped
U.S. firms gain access to and become more knowledgeable about a
broader range of federal export services. We also identified
specific initiatives at the centers that demonstrated the potential
benefits that can be derived through working more closely with
federal and nonfederal partner organizations.
In addition, we identified steps that were needed to improve the
delivery of services. For example, we found that the export
assistance centers' Directors did not have (1) the ability to affect
interagency cooperation and teamwork and (2) adequate authority over
center expenditures and an export assistance centerwide accounting
system that would enable them to accurately identify and allocate
costs and better manage expenditures. Moreover, we found that the
assistance centers did not have an integrated client tracking system.
--------------------
\8 The first four centers were established in Baltimore, Chicago,
Long Beach, and Miami. See U.S. Export Assistance Centers:
Customer Service Enhanced, but Potential to Improve Operations Exists
(GAO/T-NSIAD-96-213, July 25, 1996).
HARMONIZATION
-------------------------------------------------------- Chapter 0:3.4
According to the TPCC, one of the greatest obstacles to increased
U.S. exports faced by small- and medium-sized businesses is the lack
of sufficient working capital--capital that is used to finance the
manufacture or purchase of goods and services. Since the Eximbank
and the SBA have programs designed to increase the availability of
export working capital for businesses, the TPCC recommended that the
Eximbank and the SBA harmonize their programs and procedures to make
them more streamlined, consistent, and simple.
In February 1997, we reported\9 that the Eximbank and the SBA had
made progress in harmonizing certain aspects of their respective
programs, including the loan guarantee coverage, the application
form, and initial loan application fee. We also noted that each
agency had taken other steps to improve program delivery, such as
providing staff with export financing training, conducting seminars
that were attended by lenders, and developing partnerships with both
the private and public sectors. These partnerships include programs
in which (1) exporters can have working capital guarantees processed
and approved by a network of private sector lenders located in
various states and (2) federal resources are leveraged through
coguarantee agreements with state agencies. In addition, we had
identified eight states that provided export working capital
guarantees for small businesses during fiscal year 1996.\10
Although the Eximbank and SBA programs were still not fully
standardized at the time our report was issued, the steps toward
harmonization and other program initiatives had helped to simplify
the lending process, increase the number and value of loans
guaranteed, and expand the number of exporters and lenders who
participate in the programs.
--------------------
\9 See Export Finance: Federal Efforts to Support Working Capital
Needs of Small Business (GAO/NSIAD-97-20, Feb. 13, 1997).
\10 California had the largest program of the eight states. The
seven other states with export working capital programs were Florida,
Georgia, Kansas, Maryland, Massachusetts, Minnesota, and South
Carolina.
POTENTIAL FOR GREATER
SHARING OF INVESTMENT RISK
-------------------------------------------------------- Chapter 0:3.5
Our past work has also highlighted another potential opportunity to
develop partnerships with public and private sector entities by
sharing investment risk. In 1993, the TPCC recommended raising
OPIC's project limits for loans, guarantees, or insurance to better
meet the rising demand by U.S. firms to finance major capital
projects overseas. The increase in OPIC insurance cover from $100
million to $200 million (as well as its project financing limits) and
the private sector's willingness to have greater involvement in some
emerging markets had created opportunities for OPIC to further reduce
the risk in its insurance program by sharing the risk with other
private or public partners. In recent work,\11 we identified three
potential options for sharing project risks. For example, OPIC
could, on a case-by-case basis, share the risk of losses by
reinsuring or coinsuring projects with the private insurers and
sharing project risk with investors. Under the reinsurance scenario,
OPIC could insure part of its high- and medium-risk portfolio with
private sector insurance companies at mutually acceptable rates.
OPIC could also coinsure projects with private or other public
insurers. A third option could involve sharing project risk with
investors by offering less then the 20-year standard insurance cover,
as is the practice with other public insurers. In commenting on our
report, OPIC officials told us that while reinsurance, coinsurance,
and greater risk-sharing may be good risk mitigation strategies, they
cautioned that they should maintain flexibility about when to use
them so that OPIC can continue meeting U.S. foreign policy
objectives and the needs of the customers.
--------------------
\11 See Overseas Investment: Issues Related to the Overseas Private
Investment Corporation's Reauthorization (GAO/NSIAD-97-230, Sept. 8,
1997).
EFFORTS TO ENSURE FOREIGN
COMPETITION DOES NOT
DISADVANTAGE U.S.
BUSINESSES
-------------------------------------------------------- Chapter 0:3.6
According to the TPCC, the competition for major procurements by
foreign countries is fierce. Major foreign competitor nations, which
have subsidized export programs, have become increasingly aggressive
in helping their firms expand exports. In particular, the TPCC noted
that the availability and competitiveness of export financing often
played a decisive role in the export success of U.S. companies. In
general, the U.S. approach has been to help neutralize foreign
competitor nation support of its exporters by providing similar
financing for U.S. exporters. This requires accurate information on
the nature and extent of the foreign competitor programs. The U.S.
approach has also involved working through the Organization for
Economic Cooperation and Development (OECD)\12 to seek international
agreements to standardize practices, with the ultimate goal of
reducing and eliminating export subsidies.
Past GAO work has addressed the nature and extent of U.S. foreign
competitors' export finance programs, a key U.S. effort to combat
foreign competitor practices, and opportunities for reducing the cost
of the Eximbank's programs while remaining competitive with programs
of competitor export credit agencies.
--------------------
\12 The OECD, created in 1960, is a forum for monitoring economic
trends and coordinating economic policy among 29 countries, including
the United States. It serves as the forum for negotiating
limitations on government export credit subsidies and developing
guidelines for export-financing assistance programs.
OTHER COUNTRIES' PROGRAMS
-------------------------------------------------------- Chapter 0:3.7
Over 70 countries have export credit agencies designed to help
businesses export.\13
Various methods can be used to measure the level of support provided
by export credit agencies. One way is to look at support in terms of
the share of financing commitments extended. About half of all
export credit support extended in 1995 (the latest year for which
comparable data are available) was provided by the seven largest
industrial nations. Of this amount, Japan (56 percent), France (20
percent), and Germany (9 percent) accounted for the largest shares.
The United States (the Eximbank) ranked fourth with Canada (each with
5 percent), followed by the United Kingdom (3 percent) and Italy (2
percent).
Another way is to look at the percentage of national exports financed
by the seven export credit agencies. Using this approach, the
Eximbank is tied for last with 2 percent of total exports. In
contrast, Japan supported 32 percent of its country's exports, with
France second at 18 percent. The support provided by Canada,
Germany, the United Kingdom, and Italy ranged from 7 to 2 percent.
Although these measurements do not show the Eximbank near the top of
the highest Group of Seven countries providers, other measures
present a different picture. For example, the Eximbank data show
that it remains preeminent with respect to the number of markets for
which unrestricted medium- and long-term cover is provided--more than
twice as many markets as Canada, its nearest competitor.
Although comparing the export credit agency programs is difficult, we
studied the five largest exporting countries of the European Union
and found that there is no single export finance model.\14 One
fundamental difference between the Eximbank and these export credit
agencies is the concept of risk sharing. The Eximbank provides
100-percent, unconditional political and commercial risk protection
on most of the medium- and long-term coverage it issues. The
European agencies (with the exception of the United Kingdom)
generally require exporters and banks to assume a portion of the
risks (usually 5 to 10 percent) associated with such support.
On the multilateral front, the United States has participated in
negotiations with the OECD to implement agreements or initiate
efforts to limit government subsidies and provide common guidelines
for national export-financing assistance programs. The OECD's
Arrangement on Guidelines for Officially Supported Export Credits set
terms and conditions for government-supported export loans. The
agreement has been progressively strengthened since it was first
established in 1978.
--------------------
\13 Euromoney publishes an annual survey of world export credit
agencies.
\14 Our review covered the programs of France, Germany, Italy, the
Netherlands, and the United Kingdom. See Export Finance:
Comparative Analysis of U.S. and European Union Export Credit
Agencies (GAO/GGD-96-1, Oct. 24, 1995).
U.S. EFFORTS TO COMBAT TIED
AID PRACTICES
-------------------------------------------------------- Chapter 0:3.8
Competitor's tied aid\15 practices are also of concern to the United
States--in particular when contract awards for overseas projects are
based on the availability of such concessional financing rather than
on the basis of price and quality of the goods or services exported.
Such practices can distort recipient countries' development decisions
and place U.S. exporters at a competitive disadvantage. Since the
early 1980s, the United States has negotiated a series of
increasingly stronger agreements within the OECD to restrict the use
of distorting tied aid. In addition, in 1986 the Congress authorized
the Eximbank to create a "war chest" fund to counter other countries'
use of tied aid offers.
To meet foreign competitors' use of tied aid, the TPCC recommended
the development and implementation of strategies to further reduce
the use of tied aid worldwide. In 1994, the Eximbank announced a new
policy for responding to competitors' tied aid offers. Rather than
using the fund to enforce the OECD agreement, Eximbank was to become
more actively involved in trying to deter tied aid at an earlier
stage in a project's development. The Eximbank's policy was to issue
tied aid "willingness to match" indications and "letters of
interest," which are contingent commitments to match foreign tied aid
should it be offered. In 1995, we testified that although it was too
early to determine the effect of the U.S. strategy, there were
initial indications of progress.\16
--------------------
\15 "Tied aid" refers to foreign assistance that is linked to the
purchase of exports from the country extending the assistance. Tied
aid can consist of (1) foreign aid grants alone, (2) grants mixed
with commercial financing or official export credits ("mixed
credits"), or (3) concessional (low-interest-rate) loans.
\16 See International Trade: U.S. Efforts to Counter Competitors'
Tied Aid Practices (GAO/T-GGD-95-128, Mar. 28, 1995.
REDUCING EXIMBANK COSTS
-------------------------------------------------------- Chapter 0:3.9
Our past work has also highlighted two broad options--raising fees
for services and reducing program risks--that would allow the
Eximbank to reduce subsidies while remaining competitive with foreign
export credit agencies.\17 These options would not require a change
in the Eximbank's present authority. However, we acknowledged that
these options would need to be considered within the full context of
their trade and foreign policy implications.
One option for reducing subsidy costs at the Eximbank would be to
increase the fees charged for its financing programs while still
satisfying the congressional mandate for setting fees at levels that
are fully competitive with competitor nation programs. To
illustrate, we estimated that the Eximbank could have saved about $84
million in fiscal year 1995 if it had raised its fees to a level
where they were at the mid-range (as low as or lower than 45 percent
to 50 percent rather than at about 75 percent) of the fees charged by
competitor nation programs in the same importing country.
The U.S. government continues to use international forums such as
the OECD to work toward reducing and eventually eliminating
subsidized export finance programs. Since our report was issued, the
OECD countries have made progress in establishing minimum fees across
all major export credit agencies. In 1997, the OECD set a minimum
fee for services, effective in April 1999. Given concerns about
keeping the Eximbank's programs competitive with its competitor
nations' programs, this agreement should provide the Eximbank with a
greater opportunity to further reduce the costs of its operations by
raising fees.
Another option for reducing subsidy costs involves reducing program
risks. As stated earlier, the Eximbank provides 100-percent,
unconditional political and commercial risk protection on virtually
all of the medium- and long-term cover that it issues. Some of the
Eximbank's major competitors, such as the European export credit
agencies, on the other hand, generally require exporters and banks to
assume a portion of the risks associated with such support and do not
absorb 100 percent of the risks themselves. Instead, they require
that exporters or banks assume a minimum percentage (usually 5
percent to 10 percent) of the risks.
--------------------
\17 See Export-Import Bank: Options for Achieving Possible Budget
Reductions (GAO/NSIAD-97-7, Dec. 20, 1996).
CONCLUSIONS
---------------------------------------------------------- Chapter 0:4
Five years have passed since the Congress mandated that the TPCC
develop a governmentwide strategy for federal export promotion
activities. A key question is whether federal export programs and
resources are strategically focused to help U.S. businesses
effectively compete in foreign markets.
The federal strategy targets markets, centralizes export services,
and addresses unfair barriers to exports. However, a driving force
behind the passage of the Export Enhancement Act was to identify
areas of overlap and duplication among the various federal export
promotion activities and propose means of eliminating them. A key
requisite to allocating export promotion resources is performance
measures. The TPCC agencies have developed measures that indicate
outputs such as volume of loans or number of clients and outcome
measures such as numbers of exports generated by individual programs.
However, these measures are not sufficient to address a core
objective of whether these programs meet the TPCC's strategic goals
and efficiently and effectively serve their customers.
Another key element of the act was to identify ways to develop closer
partnerships with federal and nonfederal entities that provide
similar export promotion services. While a number of initiatives
have been taken, our past review of the export assistance centers
raised several issues related to the integration of the delivery of
services. The TPCC agencies have not since evaluated how effectively
these centers are operating to achieve the intended objective of
streamlining the delivery and quality of services to small- and
medium-sized business. The TPCC plans to review the effectiveness of
the centers in 1998. Until such a review occurs, we cannot know if
these colocated agencies have integrated their services to
effectively serve U.S. exporters.
-------------------------------------------------------- Chapter 0:4.1
Mr. Chairman, this concludes our prepared remarks. We would be
happy to respond to any questions you or other Task Force members may
have.
RELATED GAO PRODUCTS
=========================================================== Appendix 1
GOVERNMENT EXPORT STRATEGY
--------------------------------------------------------- Appendix 1:1
National Export Strategy (GAO/NSIAD-96-132R, Mar. 26, 1996).
Export Promotion: Rationales for and Against Government Programs and
Expenditures (GAO/T-GGD-95-169, May 23, 1995).
Export Promotion: Governmentwide Plan Contributes to Improvements
(GAO/T-GGD-94-35, Oct. 26, 1993).
Export Promotion: Initial Assessment of Governmentwide Strategic
Plan (GAO/T-GGD-93-48, Sept. 29, 1993).
Export Promotion Strategic Plan: Will it Be a Vehicle for Change?
(GAO/GGD-93-43, July 26, 1993).
Export Promotion: Governmentwide Strategy Needed for Federal
Programs (GAO/T-GGD-93-7, Mar. 15, 1993).
Export Promotion: Federal Approach Is Fragmented (GAO/T-GGD-92-68,
Aug. 10, 1992).
Export Promotion: Overall U.S. Strategy Needed (GAO/T-GGD-92-40,
May 20, 1992).
Export Promotion: U.S. Programs Lack Coherence (GAO/T-GGD-92-19,
Mar. 4, 1992).
Export Promotion: Federal Programs Lack Organizational and Funding
Cohesiveness (GAO/NSIAD-92-49, Jan. 10, 1992).
EXPORT FINANCE AND INVESTMENT
--------------------------------------------------------- Appendix 1:2
Overseas Investment: Issues Related to the Overseas Private
Investment Corporation's Reauthorization (GAO/NSIAD-97-230, Sept. 8,
1997).
Export Finance: Federal Efforts to Support Working Capital Needs of
Small Business (GAO/NSIAD-97-20, Feb. 13, 1997).
Export Import Bank: Options for Achieving Possible Budget Reductions
(GAO/NSIAD-97-7, Dec. 20, 1996).
Export Finance: Comparative Analysis of U.S. and European Union
Export Credit Agencies (GAO/GGD-96-1, Oct. 24, 1995).
Export Promotion: Improving Small Businesses' Access to Federal
Programs GAO/T-GGD-93-22, Apr. 28, 1993).
FEDERAL EXPORT ASSISTANCE
--------------------------------------------------------- Appendix 1:3
U.S. Export Assistance Centers: Customer Service Enhanced, but
Potential to Improve Operations Exists (GAO/T-NSIAD-96-213, July 25,
1996).
One-Stop Shops (GAO/GGD-93-IR, Oct. 6, 1992).
FOREIGN COMPETITION
--------------------------------------------------------- Appendix 1:4
U.S. Agricultural Exports: Strong Growth Likely, but U.S. Export
Assistance Programs' Contribution Uncertain (GAO/NSIAD-97-260, Sept.
30, 1997).
Export-Import Bank: Key Factors in Considering Eximbank
Reauthorization (GAO/T-NSIAD-97-215, July 17, 1997).
Export-Import Bank: Reauthorization Issues (GAO/T-NSIAD-97-147, Apr.
29, 1997).
International Trade: U.S. Efforts to Counter Competitors' Tied Aid
Practices (GAO/T-GGD-95-128, Mar. 28, 1995).
International Trade: Combating U.S. Competitors' Tied Aid Practices
(GAO/T-GGD-94-156, May 25, 1994).
*** End of document. ***