*EPF111 05/15/00
Text: Commerce Secretary Daley on Expanding Ex-Im Bank Lending
(Use of commercial credits, co-financing considered) (1870)

Secretary of Commerce William Daley says a Clinton administration inter-agency group is formulating proposals for expanding the scope of the Export-Import Bank of the United States (Ex-Im Bank).

In a May 15 Washington speech for Ex-Im's 65th anniversary, Daley said the Trade Promotion Coordinating Committee (TPCC) was considering, for example, Germany's and Canada's use of commercial credit financing along with official public credits to promote exports.

Such use of a market window was one of the areas on which the TPCC would report by fall for implementation in the Clinton administration and the following administration, Daley said.

He said the TPCC should consider Ex-Im participation in co-financing projects with other governments' export credit agencies.

He said other areas for consideration are moving export credit activity to the Internet, promoting exports of the newer sectors of the economy and reforming foreign sanctions policy.

Daley also discussed his work in the campaign to get permanent normal trade relations with China passed in Congress.

Following is the text of Daley's remarks:

(begin text)

Remarks by Secretary of Commerce William M. Daley
Ex-Im Bank's 65th Anniversary
May 15, 2000
Washington, DC
[As Prepared For Delivery]

As many of you know, these days I am working non-stop for the President and Vice President on the China vote, which will be sometime next week. No question it will come down to the wire. We don't have the 218 votes yet to win it, and the opposition doesn't have them to defeat it.

The members are not questioning the economics of the deal. But many are concerned with the human rights, and labor issues, and rule of law. These concerns are very real. Reps. Levin and Bereuter [Representatives Sander Levin and Doug Bereuter] have proposed setting up a watchdog commission. Their proposal is good because it takes care of the substantive concerns people have. And from a political view, it broadens the base of support for the vote.

To be frank with you, without their efforts, our chances of winning are slim to none. Right now it's a long way between the lip and the cup. This next week will be the toughest battle the President has faced since his economic plan in '93 won by just one vote. But I am optimistic we will pull it out. I'm optimistic Congress will do the right thing. We need to send the message to the rest of the world that the largest trading nation on earth wants a 21st century of open markets.

This bank knows as well as any organization how important China is. China is now Ex-Im's largest market, with $6 billion [$6,000 million] in outstanding loans and guarantees. Much of that has been aircraft and energy related, but it is broadening to telecom, environmental technologies, and medical equipment.

Just as our businesses are staffing up to be ready to export on day one of China's entry into the WTO [World Trade Organization], we want to be ready, too. So in cooperation with Ex-Im, Commerce is hiring a new financial expert, to be located in China, starting this summer. This person's job will be to market the Ex-Im Bank and its programs, so that more exporters can sell to China.

Now when I am not wearing my China hat -- I also have the honor to head the Trade Promotion Coordinating Committee task force. We bring all 19 government agencies that deal with trade together to ask: how can we do things better?

If we expect in the Internet age to help companies export, how do we change old, inflexible, bureaucratic government? Having been in government for three years -- and this is my first experience in public service -- it is frustrating at times.

No question, we have to find ways to more effectively deliver public services, or we're going to become irrelevant. In fact, I think the greatest challenge government faces in this century is to deliver services better.

Jim Harmon knows this. He spent 38 years in the private sector -- something he considers a blessing. He asked the Trade Promotion Coordinating Committee for our ideas on how to change Ex-Im. How do we make it a major force in the 21st century, as it has been in the 20th century?

If somebody gives you a chance like that, we obviously are not shy about sharing our thoughts. But what is more important -- and far more useful than any idea I have -- is that we went out to the people who know the situation best: America~s exporters. We asked them -- what do they think.

These are companies -- facing a far different business environment than 65 years ago, or 35 years ago, or even 5 years ago. They have much greater flexibility in sourcing their products overseas, now that design and production can take place around the globe. This will be a world where products are global, and winning project bids must be global to meet increasing cost pressures.

More and more they are seeing situations where export credit agency financing is becoming the deal maker in project negotiations. Sourcing decisions are linked to where an exporter can find the most competitive export credit financing. So production -- and the jobs that go with it -- increasingly follow the financing of a deal, not the other way around.

And, it is important to remember: Ex-Im Bank is no longer the only game in town. There are more than 80 export credit agencies around the world, offering services that increasingly push the envelope on global trade rules.

These trends -- the globalization of the supply chain, the financing as the deal maker, and the aggressiveness of Ex-Im's competitors -- add up to one important conclusion for our exporters. The company that wins the project and brings home the jobs is the one that provides competitive financing in real time, on flexible terms, with minimal red tape, and at reasonable cost.

No question, we are at a point where we risk losing America's edge in world markets, if we don't take a serious look at our export policies and programs.

So, today I am asking the Trade Promotion Coordinating Committee to develop -- by this fall -- a set of recommendations that can feed into the Bank's advisory process. Together, we can lay out specific steps Ex-Im can take both now and in the next Administration.

Today, I want to offer five examples of areas that should be included. This is the beginning of the list -- not the end of the list. Nothing should be dismissed -- everything should be on the table because the exporters we talked to have many, many ideas.

First is co-financing. With globalization and bigger infrastructure projects, more deals are being done with a variety of suppliers from different countries. Project developers now want all sourcing, regardless of the country where it originates, to be covered by one set of documents. This means export credit agencies need to apply the requirements -- from sourcing to shipping -- flexibly.

Ex-Im has begun to do this -- co-financing its first deal with its Canadian counterpart last fall. It has made co-financing a priority. And we encourage you to work out additional arrangements with other agencies. We need to ensure our exporters are not cut out of a deal simply because developers don't want to have a separate financing package for Ex-Im.

Second is market windows. Other governments, most notably Germany and Canada, are offering what is becoming very popular with their companies -- commercial export credit financing. Our exporters are concerned. They think this -- which brings with it a private sector mentality of flexibility, of speed, of aggressiveness -- is difficult for Ex-Im to match. And they think if this becomes too widespread, it will be a disadvantage to them.

In the past, this kind of support has been limited to aircraft financing. But the practice is clearly spreading to other areas, as our competitors notice the success of these packages. We understand in Canada the situation has changed so much, that the bulk of their medium- and long-term financing is now provided through its market window -- rather than through official export credits. So, we think this is an area Ex-Im needs to consider.

Third is 21st century service. The Internet has created a world where customers demand quicker responses and better service. If we can get a mortgage online, and buy stocks online, and open bank accounts online, why not finance an international deal over the Internet? Why not -- as Jim Harmon says -- make a virtual Ex-Im bank?

No question, Ex-Im can utilize technology to reduce and streamline the documentation burden on companies. It needs to find ways to support our businesses as quickly as other country's credit agencies support theirs. And by using the Internet, in my opinion, we can get more small businesses into exporting.

Fourth are new economy customers. A big reason America is in the longest economic expansion in our history is information technologies. In fact, since President Clinton has been in office, one-third of our growth comes from information technologies. So in the 21st century, new policies and programs will be required for the service sector.

Companies that sell licenses instead of tractors -- and can download their products rather than ship them -- will need financing. More and more, these firms will expand into high-growth emerging markets -- and Ex-Im needs to find innovative ways to help them.

Fifth is sanctions reform. This continues to be a top priority of the business community, especially as it relates to the use of Ex-Im as a tool of foreign policy. Ex-Im cannot be competitive in the global economy unless it is seen as a reliable lender. Three years ago, the President's Export Council put out recommendations that were extremely valuable in framing the sanctions reform debate.

In the last 65 years, Ex-Im has helped make our exporters the most competitive in the world. But with globalization, with technology with more competitors -- it's a different world out there. Today, we trade as much in one day, as what our country traded all year in 1935, when Ex-Im was created.

I really believe if government agencies work as a team -- rather than as adversaries -- we can help each other out. And, more important, we can help the customer out.

Franklin Roosevelt, believed very much in the role government could play in putting Americans back to work. Soon after the Bank was created, he said: "government is competent when all who compose it work as trustees for the whole people. Government can make constant progress when it keeps abreast of all the facts."

That is what Jim Harmon is doing here. He is looking for the facts, and taking the facts to shape a bank whose greatest days are ahead of it.

I thank you for asking us to help shape that Bank. Thank you very much.

(end text)

(Distributed by the Office of International Information Programs, U.S.
Department of State. Web site: http://usinfo.state.gov)
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