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88–412 PDF 2003

S. HRG. 107–951

THE ANNUAL NATIONAL EXPORT STRATEGY

REPORT OF THE TRADE PROMOTION

COORDINATING COMMITTEE

HEARING

BEFORE THE

COMMITTEE ON

BANKING, HOUSING, AND URBAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

ON

REVIEWING THE ANNUAL REPORT OF THE TPCC ON ITS NATIONAL

EXPORT STRATEGY AND ITS PLANS FOR THE COMING YEAR

MAY 14, 2002

Printed for the use of the Committee on Banking, Housing, and Urban Affairs

(

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

PAUL S. SARBANES, Maryland, Chairman

CHRISTOPHER J. DODD, Connecticut

TIM JOHNSON, South Dakota

JACK REED, Rhode Island

CHARLES E. SCHUMER, New York

EVAN BAYH, Indiana

ZELL MILLER, Georgia

THOMAS R. CARPER, Delaware

DEBBIE STABENOW, Michigan

JON S. CORZINE, New Jersey

DANIEL K. AKAKA, Hawaii

PHIL GRAMM, Texas

RICHARD C. SHELBY, Alabama

ROBERT F. BENNETT, Utah

WAYNE ALLARD, Colorado

MICHAEL B. ENZI, Wyoming

CHUCK HAGEL, Nebraska

RICK SANTORUM, Pennsylvania

JIM BUNNING, Kentucky

MIKE CRAPO, Idaho

JOHN ENSIGN, Nevada

STEVEN B. HARRIS, Staff Director and Chief Counsel

WAYNE A. ABERNATHY, Republican Staff Director

MARTIN J. GRUENBERG, Senior Counsel

AMY F. DUNATHAN, Republican Senior Professional Staff

MICHAEL JAMES BARTON, Republican Professional Staff

JOSEPH R. KOLINSKI, Chief Clerk and Computer Systems Administrator

GEORGE E. WHITTLE, Editor

(II)

CONTENTS

TUESDAY, MAY 14, 2002

Page

Opening statement of Chairman Sarbanes ........................................................... 1

Opening statements, comments, or prepared statements of:

Senator Carper ................................................................................................. 2

Senator Akaka .................................................................................................. 3

Senator Hagel ................................................................................................... 6

WITNESSES

Donald L. Evans, Secretary, U.S. Department of Commerce .............................. 4

Prepared statement .......................................................................................... 23

Eduardo Aguirre, Vice Chairman and First Vice President, Export-Import

Bank of the United States ................................................................................... 7

Prepared statement .......................................................................................... 26

Hector V. Barreto, Administrator, Small Business Administration .................... 9

Prepared statement .......................................................................................... 29

Thelma J. Askey, Director, U.S. Trade and Development Agency ...................... 10

Prepared statement .......................................................................................... 31

Ross Connelly, Executive Vice President, Overseas Private Investment

Corporation ........................................................................................................... 12

Prepared statement .......................................................................................... 33

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

The 2002 National Export Strategy Report submitted by the Trade Promotion

Coordinating Committee ...................................................................................... 36

(III)

(1)

THE ANNUAL NATIONAL EXPORT STRATEGY

REPORT OF THE TRADE PROMOTION

COORDINATING COMMITTEE

TUESDAY, MAY 14, 2002

U.S. SENATE,

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS,

Washington, DC.

The Committee met at 10:35 a.m. in room SD–538 of the Dirksen

Senate Office Building, Senator Paul S. Sarbanes (Chairman of the

Committee) presiding.

OPENING STATEMENT OF CHAIRMAN PAUL S. SARBANES

Chairman SARBANES. The hearing will come to order.

We may be interrupted by a vote shortly. But you are never absolutely sure when those votes are going to take place, so we might

as well get started, and if the vote comes, we will have to suspend

and resume afterwards.

I am very pleased to welcome before the Committee this morning

this panel of distinguished representatives of the Trade Promotion

Coordinating Committee: Secretary of Commerce Donald Evans,

who serves as the Chairman of the Trade Promotion Coordinating

Committee; Eduardo Aguirre, Vice Chairman and First Vice President of the Export-Import Bank, in which capacity he serves as

Vice Chairman of the TPCC; Hector Barreto, Administrator of the

Small Business Administration; Thelma Askey, Director of the

Trade and Development Agency; and Ross Connelly, Executive Vice

President of the Overseas Private Investment Corporation.

Peter Watson, the President, is in Africa, as I understand.

Mr. CONNELLY. Correct.

Chairman SARBANES. Before we address today’s subject, I want

to take just a moment to acknowledge someone who was on this

panel when the Banking Committee held its last hearing, but is

not, regrettably, with us today, and that is John Robson.

I had the highest regard and respect for John. I thought he was

a very effective Chairman of the Export-Import Bank. He brought

great stature, depth of public sector experience, and just plain good

judgment to the position. As Chairman of the Export-Import Bank,

he also served as Vice Chairman of the TPCC, in which I know he

took a very strong interest. Not only the Export-Import Bank and

the TPCC, but also, indeed, the Nation, will greatly miss his leadership and his dedicated service.

I very much wanted to put that on the record this morning.

2

The purpose of today’s hearing is to review the Annual Report

of the TPCC on its National Export Strategy and its plans for the

coming year.

The Trade Promotion Coordinating Committee was established in

statute by the Export Enhancement Act of 1992. I should note that

before that, actually, we had a trade promotion coordinating committee as an initiative of the first Bush Administration. In fact, the

legislation was passed during the Bush Administration.

I make that point only to emphasize that this has been a bipartisan effort from its inception. It has commanded strong support on

both sides of the aisle and it was also, I think, a reflection of close

Executive-Congressional cooperation at the time, and I think that

has continued to be reflected as we have worked on this over the

last decade.

The purpose of the TPCC, as stated in the statute, is to provide

a unifying framework to coordinate the export promotion and export financing activities of the U.S. Government, and to develop a

Government-wide strategic plan for carrying out Federal export

promotion and export financing programs. The statute designates

the Secretary of Commerce as the Chairman and designated as

members all the Federal agencies involved in export promotion.

The effectiveness of the TPCC depends greatly on the leadership

it receives from the Chairman and other key members, and let me

say that it has been my perception that Secretary Evans and

Under Secretary Grant Aldonas have recognized the TPCC from

the time they took office as an opportunity to bring a greater sense

of strategy and focus to U.S. export promotion efforts, and we very

much appreciate that perception on their part and their efforts to

energize the TPCC as a priority.

And they appear, at least, to have gotten active cooperation and

leadership from the other agencies represented on the panel—well,

certainly, the ones represented on the panel and, hopefully, others

not here represented.

As I mentioned, last October, the Banking Committee held a

hearing on the preliminary report of the TPCC, in expectation of

the Annual Report submitted today. At that time, Secretary Evans

indicated that the Committee planned to undertake a benchmarking exercise to learn more about what customers of the agencies

want from U.S. export promotion programs, and to examine the

best practices of the governments of our major competitor countries

to determine how they promote exports. I understood that then

they would review U.S. export promotion programs in light of this

exercise and develop recommendations for making improvements.

As I understand it, that exercise has been completed, or at least

a good part of it has, and Secretary Evans and the other members

of the Trade Promotion Coordinating Committee are here this

morning to present their findings and recommendations.

So, we very much look forward to your testimony. With that, I

yield to Senator Carper.

STATEMENT OF SENATOR THOMAS R. CARPER

Senator CARPER. Thank you, Mr. Chairman. And to each of our

witnesses, good morning, and welcome.

3

There are three old Governors, who sit right here, side by side—

former Governor Evan Bayh, former Governor Zell Miller, and

former Governor Tom Carper. And even though we serve in the

Senate——

Chairman SARBANES. It is a powerful bloc.

[Laughter.]

Secretary EVANS. Indeed.

[Laughter.]

Senator CARPER. A lot of frustration over here on this part of the

panel.

[Laughter.]

Not really. One of the things that each of us used to do as Governors is lead trade delegations to countries all over the world. And

during the time that I was privileged to be Governor of Delaware,

I remember going to places like Japan, Vietnam, Taiwan, Canada,

Mexico, Chile, and some other places.

I was a shut-in compared to some of the Governors. They really

got around the globe to promote their States and trade with other

countries.

One of the things we focused on within the National Governors

Association was the belief that if governors led trade delegations to

other parts of the world, if we went over a little better briefed, and

our staffs went over a little better briefed, we might not only do

maybe some good for our States, but also we might do some more

good for the country.

I think your predecessor, Mr. Secretary, was good to work with

us, and I think the State Department was good to work with the

National Governors Association and with the governors.

I think that in your testimony here today, Secretary Evans, you

indicate that the Department of Commerce plans to dedicate some

more resources to training State partners in trade promotion coordinating activities.

I applaud that. I know if Senator Bayh and Senator Miller were

here today, they would as well. But we help our States and we help

our country to the extent that we can continue to work as partners

in training and in export promotion.

I simply wanted to make that point to remind you that it is important, and to let you know that these old Governors, and I think

I speak for my two colleagues as well, appreciate and applaud what

you are doing here.

Thank you, Mr. Chairman.

Chairman SARBANES. Thank you, Senator Carper.

Senator Akaka.

COMMENTS OF SENATOR DANIEL K. AKAKA

Senator AKAKA. Thank you very much, Mr. Chairman.

I want to join you in welcoming the witnesses. I also thank them

for appearing here today. I look forward to your discussion of the

Annual National Export Strategy Report of the Trade Promotion

Coordinating Committee.

The work of the TPCC in coordinating and developing Federal

activities to increase exports is extremely important to our Nation,

and really, the world as well. Increased exports have a positive imVerDate 11-MAY-2000 07:37 Jul 29, 2003 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 88412.TXT SBANK4 PsN: SBANK4
4

pact on the economy through the potential creation of jobs, increasing wages, and acceleration of economic growth.

Representing a State where small businesses are such a vital

part of the economy, I am particularly interested in the efforts

being made to provide assistance to small businesses that export

their products or have the potential to do so.

Mr. Chairman, I look forward to today’s discussion on a strategy

for U.S. export promotion and export financing programs.

Thank you very much, Mr. Chairman.

Chairman SARBANES. Thank you, Senator Akaka.

The light has gone off. The vote has begun. Mr. Secretary, I

think probably that we should suspend and go and vote and we will

come back, and then we will take your testimony.

Secretary EVANS. Very well.

Chairman SARBANES. So the Committee will stand in recess for

a few minutes.

[Recess.]

Chairman SARBANES. The Committee is prepared to resume.

Mr. Secretary, I have no colleagues here who want to make opening statements, so why don’t we go right to you.

STATEMENT OF DONALD L. EVANS

SECRETARY

U.S. DEPARTMENT OF COMMERCE

Secretary EVANS. Thank you, Mr. Chairman. I am delighted to

be back in front of your Committee. This is one of the subjects we

talked about in our very first meetings. I know how important it

is to you. I appreciate your focus on it.

I also want to associate myself with the remarks you made with

respect to John Robson. He was truly an extraordinary public servant. He served this country with great dignity and integrity and he

will be missed. His presence was very much felt on this Committee

for the period of time that he was on it. And so, again, thank you

for those kind words that you offered.

Mr. Chairman, and other Members who are not here, as Chairman of the Trade Promotion Coordinating Committee, I am extremely pleased to be here today with my colleagues to preview the

President’s first National Export Strategy.

I ask that you include my written testimony in the record.

Chairman SARBANES. It will be included in the record.

Secretary EVANS. Thank you, Mr. Chairman.

I intend to focus my oral remarks on three basic points. One, the

tool the President needs to pry open markets for American goods,

services, investments, and ideas. Two, the means by which we can

ensure that the President’s export promotion objectives are met.

And three, the continuing role I expect the TPCC to play in implementing the President’s strategy. President Bush and I both start

from the proposition that American farmers, workers, and business

already compete in a global economy. The only real question is

whether we will give the President the tools that he needs to shape

that global economy to our advantage or leave others to write the

rules of the road.

The President and, by extension, the United States, has been

shunted aside in the battle to open new markets because the PresiVerDate 11-MAY-2000 07:37 Jul 29, 2003 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 88412.TXT SBANK4 PsN: SBANK4
5

dent lacks the tools he needs to defend our interests at the negotiating table—Trade Promotion Authority. With TPA, the President

could conclude trade agreements that might contribute as much as

$1.9 trillion to worldwide economic growth. Without TPA, those

new markets will go to our trading partners, along with the investments in jobs that those markets will create.

The question before the Senate is whether U.S. farmers, workers,

and entrepreneurs will get a chance to compete for a slice of the

expanding global economic pie or find their goods and services increasingly locked out of markets around the world.

The President needs TPA, or Trade Promotion Authority, now.

While Trade Promotion Authority is a necessary condition for defending America’s trade interests, it is not sufficient. That is where

our export promotion strategy and the TPCC comes in. I can summarize our approach in three words that lie at the very heart of

the President’s management agenda—follow-through, results, and

accountability.

First, I say follow-through. I mean ensuring that the benefits of

our trade agreements accrue to American exporters, rather than

our trading partners. Too often, the United States has left its trade

gains on the bargaining table.

We aim to reverse that trend. We have already begun to implement that strategy. The most significant market opening initiative

in recent years has been China’s accession to the World Trade Organization. That is why I recently led a trade mission to Bejing and

Shanghai. It is also why I will send a high-level Commerce official

to China each month to ensure that China implements its WTO obligations, so that our small- and medium-sized companies can reap

the gains from China’s compliance. We have adopted the same approach with our free trade agreement partners. I will lead a trade

mission for small- and medium-sized U.S. businesses to one of our

NAFTA trading partners, Mexico, this summer. I will be joined on

that trip by many of my TPCC colleagues here with me today because, as I have told my colleagues, we would be better prepared

to do business.

Second, when I focus on results, it is because that is what the

President and I both expect. When we met with you last October,

Mr. Chairman, we described our intention to ensure our export promotion programs were best in class, when compared against our

Government counterparts abroad and within private industry.

Today, after 7 months of research and a true team effort, my colleagues and I are confident that we have laid the groundwork for

achieving just that goal.

That said, after 30 years of experience in the private sector, I can

tell you that if you cannot measure your progress, you won’t make

any progress. That is why I will insist that our first step in implementing the recommendations set out in the TPCC’s Report will be

to define the results we want to achieve and develop the means to

measure our progress toward those goals.

The guideposts I intend to use to measure our progress include

the growth of U.S. exporters, particularly small- and medium-sized

exporters, and the level of exports that take place as a result of our

efforts. And three, whether we have met our customers’ expectations. That will ensure that our export promotion programs remain

6

grounded in what our customers want, which is the surest way to

guarantee results.

Third, and finally, I intend to emphasize accountability. My colleagues and I have assumed personal responsibility for making this

work. We expect to be held to that standard. The President expects

nothing less, nor should you.

The role that the TPCC will play in implementing our export

strategy is straightforward. I intend to adopt what my friends in

business would call a total quality approach to export promotion,

with the TPCC serving as the auditor of our progress toward that

goal. The TPCC agencies will meet at least once a month at the

cabinet level or subcabinet level to take stock. The TPCC will

produce quarterly reports so that we can check our progress

throughout the year, rather than waiting for the Annual Report.

In the process, I expect the TPCC process to ensure that the

agencies involved are coordinating our efforts, to name only a few

of the recommendations contained in this Report.

Working together to discover projects sooner and bringing the

prospect of U.S. financing early on in order to help U.S. companies

take full advantage of these opportunities. Also presenting a single

face to the exporter, tailing agency programs to meet the exporters’

needs by functioning as one-stop shops.

We want our people in the field to function like account managers, helping firms navigate the full array of Government export

promotion programs. Also combining the marketing efforts of SBA,

Ex-Im Bank, and the Commercial Service to make sure lenders

know how these programs can help their small business clients.

In addition, enhancing our use of the Internet as a communication tool, particularly our primary portal—export.gov—so that exporters can find the Government’s best information on trade leads

in one place in real time. And reaching out to our State and local

partners, elected officials, and private sector representatives, as a

means for reaching small- and medium-sized companies as multipliers of our services.

In closing, let me reiterate my appreciation to you, Senator, and

all the Members of this Committee for your interest in and oversight of the export promotion process. What the TPCC really offers

us is an avenue through which we can apply many of the principles

of private sector management to Government programs, yielding

what I promise will be both effective and results-oriented.

I welcome your thoughts and those of your colleagues on the recommendations we are presenting today, and would be pleased to

answer any questions you may have.

Chairman SARBANES. Thank you very much, Mr. Secretary.

We have been joined by Senator Hagel. Chuck, did you have any

opening statement?

COMMENT OF SENATOR CHUCK HAGEL

Senator HAGEL. No. Thank you, Mr. Chairman.

Chairman SARBANES. Well, we will move right along, then, and

we will now hear from the Vice Chairman of the Export-Import

Bank, Mr. Aguirre.

7

STATEMENT OF EDUARDO AGUIRRE

VICE CHAIRMAN AND FIRST VICE PRESIDENT

EXPORT–IMPORT BANK OF THE UNITED STATES

Mr. AGUIRRE. Thank you, Mr. Chairman.

Before I begin my remarks, I would like to once again thank you

for your comments and for the comments of so many others regarding the passing of our late Chairman Robson. Clearly, Ex-Im Bank

is still in mourning and will be for some time. We miss him. But

our extended family, and certainly the Robson family, very much

appreciate all the sympathy that we have been receiving over the

past month and a half.

Chairman SARBANES. I note that there is a very nice tribute to

John Robson in the opening of the TPCC Report. I commend you

for that.

Mr. AGUIRRE. Thank you, Mr. Chairman. And thank you for the

opportunity to appear before you today, particularly in my role as

Vice Chairman of the TPCC, and to present the National Export

Strategy. We are very pleased to share our collective strategy on

how to increase U.S. exporter competitiveness through collaborative Government support. And with your indulgence, and in the

interest of brevity, a more extensive testimony is being provided for

the record.

Chairman SARBANES. It will be included in the record.

Mr. AGUIRRE. Thank you, Mr. Chairman.

My testimony focuses on Ex-Im Bank and the export finance

arena. The Export-Import Bank of the United States is in step with

the Administration’s commitment to free and fair trade. Ex-Im

Bank supports American jobs by assisting U.S. exporters to compete fairly and successfully in the world marketplace. U.S. businesses rely on Ex-Im Bank to facilitate the financing of exports

that would otherwise not take place. We attempt to level the playing field for U.S. businesses by offsetting market imperfections and

trade-distorting subsidies that disadvantage U.S. exporters. Last year alone, Ex-Im Bank supported $12.5 billion worth of

U.S. exports. Of all Bank transactions, 90 percent were in direct

support of small businesses, representing $1.7 billion or 18 percent

of the exports supported. In fact, 383 new small businesses utilized

the Bank for the first time last year to support their exports. As

all of you know, Ex-Im Bank does not compete with the private sector financing.

The Bank works closely with other U.S. Government agencies to

capture possible efficiencies and to protect the interest of the taxpayer. Let me briefly review some of the prior TPCC initiatives

involving Ex-Im Bank and what Ex-Im Bank is currently doing to

address them.

The Bank maintains eight regional offices across the country. For

the past 2 years, the Bank has delivered direct marketing material

jointly with the Department of Commerce and some of their divisions. We are doing more educational seminars outside of Washington and have reformatted them into efficient one-day minicourses.

We actively participate in trade association shows, where thousands of exporters and buyers are gathered in a very cost-effective

outreach tactic. Just 2 weeks ago, the Bank hosted 1,500 particiVerDate 11-MAY-2000 07:37 Jul 29, 2003 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 88412.TXT SBANK4 PsN: SBANK4
8

pants, who came to learn about the Bank and to network, at our

annual conference. Participants included exporters, bankers, brokers, foreign buyers, and the United States and foreign government

officials. Now onto the current TPCC recommendations.

The recommendations of the National Export Strategy were developed in close coordination amongst the TPCC agencies and with

significant input from the U.S. export community. From this dialogue, the TPCC developed the recommendations.

Highlights of the recommendations that pertain to the Ex-Im

Bank include five key areas:

Number one, technology. Employ technology to maximize customer service, creating processing efficiencies, and leveraging

scarce human resources through automation. We also have several

upgrading programs in place, and we aim to provide faster turnaround time and more up-to-date management information.

Number two, tied aid. Develop a multipronged approach to address the trade-distorting effect of commercially driven tied aid.

Number three, Ex-Im Bank and SBA coordination. We aim to

better integrate Ex-Im Bank’s and SBA’s Working Capital Guarantee Programs. In fact, last week, Administrator Hector Barreto

of the SBA and I signed an agreement to coordinate marketing

efforts and to work together to identify additional opportunities to

integrate these programs.

Number four, market windows. Commission a study to assess the

impact of market window activity on U.S. exporter competitiveness.

And last, number five, the service sector. Examine the unique

financing needs of the services sector and develop programs and

procedures that address those needs.

In conclusion, since last October, when the TPCC agencies collectively last testified before this Committee, we have been working

very hard to identify innovative ways to serve Ex-Im Bank’s customers—the Nation’s exporters. I look forward to working with you

and the other TPCC agencies in implementing these critical steps

to improve U.S. exporter competitiveness.

Mr. Chairman, Senator Hagel, and Senator Akaka during my 34-

year banking career, I have always tried to make decisions on what

is right for the customer. In the private sector, it was a matter of

survival, aligning your organization around your customers’ needs

and expanding your services through strategic alliances. Those

were, and still are, one of the best ways for companies to expand

market share.

In the public sector, the principles of the TPCC are fundamentally issues of efficiency and providing our exporters with a unified

and simplified Government response. Our exporters need the best

their Government can offer. The best will only come through our

collective and coordinated actions.

While the TPCC has made progress in the past few years, we

recognize that we have more to do in several areas. The TPCC is

committed to this effort. We appreciate your leadership on these

issues and I look forward to addressing your questions.

Thank you.

Chairman SARBANES. Thank you very much.

Next, we will hear from Hector Barreto the Administrator of the

Small Business Administration.

9

STATEMENT OF HECTOR V. BARRETO

ADMINISTRATOR

SMALL BUSINESS ADMINISTRATION

Mr. BARRETO. Thank you, Chairman Sarbanes, and distinguished

Members. Thank you for inviting me to testify on the Trade Promotion Coordinating Committee’s National Export Strategy, and

the role that the U.S. Small Business Administration plays in the

Federal Government’s export promotion strategy.

I would first like to recognize the outstanding leadership of Secretary Evans, Under Secretary Aldonas, and the TPCC staff for

their dedication to this effort. The SBA has been working closely

with the Department of Commerce, Ex-Im Bank, OPIC, and other

TPCC agencies in developing recommendations for the National

Export Strategy that incorporate small business issues in order to

grow them to be the most competitive in the world.

Small businesses create two-thirds of new U.S. jobs, are responsible for much of our economy’s innovation and generate over half

of our private gross domestic product. But while 97 percent of U.S.

exporters are small businesses, fewer than 1 percent of our small

businesses export.

The TPCC conducted a formal survey of 3,000 U.S. small- and

medium-sized businesses to determine what was needed for them

to be more competitive in the global marketplace. The survey found

that small companies face more hurdles exporting than large companies. Specifically, small businesses need good information and

expertise in a way that does not require large resources of time.

Small businesses also need capital. And the SBA is a resource for

these needs.

The National Export Strategy presented today by the TPCC recommends: ‘‘A Government that provides better customer service

through joint promotion, training, trade finance, and information

delivery.’’ In order to meet the need to create a one-stop-shop approach, we have enhanced our working relationships with our partners in the following ways:

SBA and the Ex-Im Bank have entered into a Memorandum of

Cooperation. The first phase of this initiative will be to leverage

marketing resources across SBA and Ex-Im Bank to raise awareness among lenders and exporters.

SBA and the Department of Commerce are working more closely

to coordinate marketing and outreach efforts to the U.S. small

business community in the delivery of both technical and financial

assistance programs. The SBA’s and Commerce’s national network

of service providers will collaborate and will work in partnership

to provide significantly improved counseling, training, and financial

assistance, while also forming a more efficient and transparent delivery system for these services. We are already making great

strides in cross-training. For example, in recent months, SBA has

participated in Commerce’s annual regional meetings of Senior

Commercial Officers and have begun the process of training them

on SBA’s International Trade Loan Programs.

Another example of our efforts in leveraging our partnership to

further promote export opportunities for U.S. small businesses will

be the Small Business Initiative between SBA and OPIC that will

focus on cross-training and outreach to provide the necessary tools

10

and products needed to invest internationally. We look forward to

formalizing this opportunity in the very near future.

After reviewing our existing International Trade loan programs

and the recommendations from the National Export Strategy, SBA

increased the Export Express loan guaranty to a new maximum of

$250,000. The SBA Export Express loan guaranty program can be

used to finance small businesses’ export development costs such as

participation in a foreign trade show or translation of product catalogues, as well as finance actual export orders.

SBA is also a partner in many of the President’s E-government

initiatives to make information available on-line 24 hours a day, 7

days a week. We are currently working together with Commerce to

strengthen our links with export.gov and looking at enhancing

SBA’s International Trade website to allow the customer to access

information at the time and the place of his or her convenience.

SBA currently provides information to small businesses through

the Export Trade Assistance Partnership, or E–TAP. E–TAP is a

training program offered at each of the 19 U.S. Export Assistance

Centers and some Small Business Development Centers, which

combined with individual business counseling, offers effective and

customized assistance to new-to-export companies looking to enter

the global marketplace. We are looking at ways of increasing the

number of E–TAP programs being offered by encouraging our resource partners to implement the program.

SBA is fully committed to the National Export Strategy. We believe that the recommendations in this Report will help to streamline and improve Federal export assistance programs and benefit

U.S. small businesses so that they will continue to be the most

competitive companies in the world.

I look forward to SBA’s ongoing contribution to the TPCC and

our commitment to evaluate and harmonize our programs. I would

be happy to answer any questions you may have, and thank you

very much for the opportunity.

Chairman SARBANES. Thank you very much. And in introducing

you, I wanted also to thank you for the SBA’s quick response to the

tornado that struck Southern Maryland. Your people were on the

scene and we very much appreciate that.

Mr. BARRETO. Thank you, Mr. Chairman.

Chairman SARBANES. It has been very helpful.

Next, we will hear from Thelma Askey, Director of the U.S.

Trade and Development Agency.

STATEMENT OF THELMA J. ASKEY

DIRECTOR

U.S. TRADE AND DEVELOPMENT AGENCY

Ms. ASKEY. Thank you, Chairman Sarbanes, Senator Hagel, and

Senator Akaka, for providing this opportunity for TDA and the

other members of the TPCC to come before you today.

As has already been said, the last time we were before you was

October 2 of last year, shortly after the attacks of September 11.

Now, 6 months later, I think it is even more clear that trade promotion efforts such as those we are discussing here today, are vital

to the United States—and global—economic and political security.

In particular, our ability to foster development in and trade with

11

the Front Line States, with countries in South and South-East

Asia, and with struggling markets in Africa, will go a very long

way toward promoting international stability.

To begin with, let me first express my appreciation to Secretary

Evans, Under Secretary Aldonas, and their staffs for the tremendous amount of work that they have put into the TPCC process in

the past 7 months. They are to be commended for their proactive

efforts to discern the needs of the exporting community and to develop specific strategies to respond to those needs.

The Report contains a number of specific proposals pertaining to

TDA, and I will outline them in a moment, but since TDA does not

regularly appear before this Committee, I would like to quickly

take a moment to reiterate TDA’s mission and activities.

As directed by statute, TDA promotes American private sector

participation in developing and middle-income countries, with special emphasis on economic sectors that represent significant U.S.

export potential. TDA is a small, nimble agency that partners with

U.S. companies and assists them in building mutually beneficial relationships with overseas project sponsors and Government officials. The result is increased U.S. exports and jobs, as well as the

completion of high-quality, successful projects and other solutions

that address priority developmental needs in host countries.

TDA’s operations put it at the forefront of U.S. foreign and trade

policy, where it works in concert with a wide array of other U.S.

Government agencies, such as the Departments of State, Commerce, Treasury, Agriculture, Energy, and Transportation, the U.S.

Trade Representative, Export-Import Bank, of course, and the

Overseas Private Investment Corporation.

Turning to the TPCC Report, there are a number of recommendations that involve U.S. TDA. Since my colleagues have already

identified many of them, I will simply highlight a few key recommendations.

First of all, we will continue to focus on developing coordinated

strategies in crisis regions. For example, TDA has been working

closely with OPIC in developing potential projects in Afghanistan,

particularly in the telecom sector. In fact, TDA is already providing

funding for an advisor to the communications ministry, to assist

them with evaluating proposals for the telecommunications sector.

We also have been working closely with Commerce and the FAA

in developing a technical assistance program for the aviation sector

in Afghanistan that will support U.S. commercial interests.

In addition, as proposed by Treasury and other TPCC agencies,

TDA will explore opportunities to fund front-end engineering and

design studies, which are commonly referred to as FEED studies.

Other countries sometimes fund such studies as part of aggressive

efforts to win large development projects, and TDA will initiate a

pilot program to support U.S. companies who are confronted with

this type of competition.

TDA also looks forward to continuing its efforts in the area of

biotechnology. We continue to work with USDA, USTR, and the

Department of State to support public-private partnerships that

help promote sound regulatory environments overseas for American

biotech products. These efforts are crucial for ensuring that our

12

trading partners continue to allow the import of American pharmaceutical and agricultural products.

Additionally, TDA will continue to develop strategies for supporting efforts in the service sector, such as in insurance, banking/

finance, tourism and e-commerce. For example, TDA has been supporting feasibility studies and technical assistance for projects

around the world involving e-commerce. Most recently, 2 weeks

ago, TDA signed a grant with Sinopec, China’s leading petroleum

and petrochemical company, for a feasibility study to help develop

an e-trade platform, putting all of the company’s procurement activities online. And of course, that is particularly beneficial to U.S.

exporters.

In sum, TDA will continue to work closely with the TPCC and

its member agencies in making sure that U.S. policy objectives are

supported by concrete results, and that U.S. companies have the

support they need to operate around the world. This obviously is

of benefit to the U.S. economy, as it supports exports and creates

U.S. jobs. But equally important, the dissemination of U.S. goods,

technology, services, and business practices around the world represents a cost-effective, market-based means of effectuating the

President’s strategy of supporting economic growth and development in developing countries.

Again, I appreciate the opportunity to appear before you today

and look forward to answering any questions you may have.

Chairman SARBANES. Thank you very much.

Our concluding panelist is Ross Connelly, the Executive Vice

President of the Overseas Private Investment Corporation.

STATEMENT OF ROSS CONNELLY

EXECUTIVE VICE PRESIDENT

OVERSEAS PRIVATE INVESTMENT CORPORATION

Mr. CONNELLY. Thank you, Mr. Chairman, and Members of the

Committee. I am pleased and honored to be here today on behalf

of Dr. Peter Watson, OPIC’s President and CEO. Dr. Watson regrets that he could not be here today in person due to previously

scheduled travel to Africa.

Mr. Chairman, I have some brief verbal remarks I would like to

make and ask that my written statement be submitted for the

record.

Chairman SARBANES. Mr. Connelly, your full statement will be

included in the record.

Mr. CONNELLY. Thank you.

At the onset, Mr. Chairman, I want you and the Committee to

know that OPIC is committed to working with our sister agencies

to meet the objectives of the TPCC Report.

I am very pleased to be sitting here with my colleagues from the

Trade Promotion Agencies, many with whom we have developed

good and productive working relationships.

I want to briefly speak to the most encouraging fact of this entire

TPCC exercise, that not only have the agencies reached consensus

on these recommendations, but also many of us are already implementing them.

As you know, Mr. Chairman, I spent 25 years in the private sector. Policy-setting and goals are very important. But at the end of

13

the day, as Secretary Evans said, success in the private sector is

measured by tangible results. In that regard, I am pleased to report on specific actions that we have taken in support of the TPCC

objectives.

The TPCC Report calls for greater cooperation among the agencies in early project development, as well as better coordination in

crisis regions. This has been a major objective of mine in the last

10 months at OPIC, and I am pleased to report that with our colleagues at the Ex-Im Bank and TDA, we are making this a reality.

In the company of my friend, Eduardo Aguirre, our three agencies conducted an investment assessment mission to Pakistan this

past February that has helped us develop a significant volume of

U.S. investment opportunities in that country.

More recently, as you have heard, OPIC and TDA have been

working closely to develop opportunities in Afghanistan that we believe should lead to fruition shortly.

There are other areas where we have played a more pro active

role—sub-Saharan Africa being an example. But I would like to

state for the record that, based on my own experience, early identification and development of market opportunities is a role OPIC

can perform quite effectively for the benefit of U.S. businesses and

taxpayers in the context of OPIC’s overall development mission.

The TPCC call for better customer service for U.S. businesses,

mirrors our own effort to date. Through an internal reorganization,

OPIC is working to empower its individual line departments who

work directly with U.S. businesses to take ownership of a project

as it works its way through the agency approval process, to utilize

new internal structures to resolve disputes quickly, and to streamline the application process so that we can provide a more efficient,

less costly service.

As a small agency, OPIC is looking for ways to leverage its resources with other agencies. And in this regard, as Administrator

Barreto has indicated, OPIC soon hopes to conclude an agreement

with the Small Business Administration that will provide a vehicle

to seamlessly connect interested U.S. companies currently doing

business with the SBA with the tools and the products that OPIC

provides, in order to help U.S. firms expand internationally.

Through these efforts and through the implementation of the recommendations of the TPCC Report, we will have better coordination, improved customer service, and more aggressive outreach and

advocacy for U.S. business, particularly U.S. small business.

We at OPIC are confident that the TPCC recommendations have

placed us on the right path.

Thank you very much, Mr. Chairman. I would be pleased to answer any questions.

Chairman SARBANES. Thank you very much.

First of all, I want to commend you and the Committee. I think

both the survey you did of exporters and the review you did of

what other countries do provide us a very important data base.

I am particularly interested in the Committee following up on

the resources that our competitors devote to export promotion. And

if you can get the material, what their budget breakdown is, what

goes into it, a summary of the activities that they are doing.

14

I think it is very important that we fully understand and appreciate what we are up against, what our exporters are up against

and, in effect, what you all are up against. It may influence people

here to make somewhat different judgments about the kind of commitment that we should make to the export strategy.

So, I think that is a very important initiative and I hope you will

build on it in future reports.

I want to focus for a moment on the two charts at the end of the

Report, which show where the money goes for export promotion.

Now, I guess the first question that I am interested in, and I

know that budget issues are difficult and sensitive for interagency

committees to deal with. But did the TPCC play a role in formulating the export promotion budget recommendations that are contained in the President’s budget, or did each agency simply come

forward with their proposal and got it included one way or another,

so that there was no coordination on the budget proposal?

Secretary EVANS. Mr. Chairman, I think as far as these charts

are concerned, which refers to the 2003 budget, it was clear that

each agency and department acted on their own, independent of

one another.

We are making the effort to talk about this issue as we go into

the 2004 budget cycle, particularly as it relates to an important

area like training. That is one of our focused initiatives, to train

individuals across Government as to all the various programs that

are available to our exporters in this country, making sure that the

right hand knows what the left hand is doing, what each agency

is doing. And so, we are having discussions about that. I cannot tell

you that it is formal yet. But I do recognize the importance of talking about a coordinated effort.

So, Mr. Chairman, as was mentioned in my comments, I think

that we have come a long way since the October meeting. We have

a long way to go, though. We are going to meet every month and

talk about priority issues that this Coordinating Committee must

deal with.

I think one of those priority issues are the resources that we

have available to us, like our budgets, and make sure that there

is not duplication, make sure there is not overlap, make sure that

there is discussion as to the kind of dollars that each agency is

using as it relates to the Coordinating Committee and are there

some savings there some place?

I do not know the answer to the question, but we are having, and

will have, those discussions as it relates to the 2004 budget.

Chairman SARBANES. Well, we changed the date for the Report

from September to March in 1999, in an effort to try to get the

TPCC into the budget cycle, so that there was a coordinated Administration strategy on export promotion, which kind of reflected

the judgment of the interagency committee.

I am encouraged to hear that, to some extent, you are thinking

in those terms for the 2004 budget. I think as you look at what

other countries are doing, it would be helpful if we got some sense

of how they allocate their assistance, to. I notice 50 percent of the

promotion is done by the Department of Agriculture.

Secretary EVANS. Right.

15

Chairman SARBANES. Now, without more analysis, I do not know

whether that is the right figure, too much, too little. It is hard to

judge. But it would be interesting to know what other countries do

and how this relates.

I am struck by the fact that in the Report, because I have a feeling that probably the overall amount we are providing is not adequate. Actually, I know you all are bound by the OMB, but I might

try to find some indirect way to put that question because you indicate that Canada last year spent 13 times more on export promotion than the United States did per dollar of GDP. And that

France and the United Kingdom outspent and outstaffed the

United States in absolute terms. In other words, they had a bigger

budget than we have. Is that correct?

Secretary EVANS. They have a larger budget than we have, yes.

I do not know the exact numbers, but, yes.

Chairman SARBANES. Those are pretty challenging figures when

you look at them. What kind of issues besides the budget issue do

you anticipate focusing on as you move toward the future?

Secretary EVANS. Well, I guess there are two or three, Mr. Chairman. One is education. I think one of the real challenges we face

in this country is educating small- and medium-size companies,

really educating America, as to the importance of trade in our

growing and changing economy.

I think that it is clear that our global economy is becoming integrated at a much faster pace than certainly any of us would have

thought 5 years ago, and certainly much faster than any of us

would have thought some 10 years ago when you passed the Export

Enhancement Act.

We are rapidly moving into a very integrated, global economy.

And it is important that we provide the tools to not only educate

our companies as to how that economy will function, but also have

the tools and the support and the resources to facilitate our smalland medium-size enterprises participating in that.

So, I think I would say, education is a large focus of ours. I mentioned training in my earlier comments, training across agencies.

And in that, Mr. Chairman, I would say a serious, coordinated effort. Not an effort where we talk to each other once every 4 or 5

months and then send you a report once a year, but let’s get results. Let’s talk. Let’s make sure we are meeting monthly and

make sure that we are receiving results on a monthly basis. This

is not something that I want to hear about a year from now. I want

to hear about it on an ongoing kind of basis.

I would say a focus is to just—and we have great cooperation. We

absolutely are talking to each other. I have heard nothing but a

spirit of cooperation throughout all agencies and all departments.

I want to make sure that we sustain that, make sure that we are

focused on not only continuing that, but also achieving results.

What are the action items that we need to be dealing with month

to month to month, and let’s check them off.

Another area that came up in the meeting last October was this

coordination—and came up again by the good Senator this morning—coordination between Federal and State and how important it

is to coordinate our efforts. We have made good progress on that.

We have some 12 States right now where we share office space, so

16

people are right next to each other talking to each other. We have

programs underway where we are providing support to promote

trade State by State.

That is an education tool. We are going to focus on working very

closely with the States because they are the ones that are the closest to the small- and medium-size businesses.

I think those are probably several of the highlights. I think one

last one we would mention, Mr. Chairman, is the importance of,

after the training, you really do have people in the Government

that can take people through a project from start to finish and can

stay with them, and not only help them identify the market, identify the opportunity, but also once it is identified, work with them

on helping them find and source financing.

Once financing is found and sourced, then making sure that they

understand the rules and regs and standards of the country that

they are moving into, and how to deal with customs in this country

that they are going into. And then stay with them for any kind of

regulatory or any kind of related issue that they may deal with in

another country. That is the challenge. These are new countries

and different rules and different regs.

You want to have kind of a start to finish. Somebody that can

stay with them. So those are four or five, I think, of the very important issues that we are focused on.

Chairman SARBANES. Very good.

Senator Akaka.

Senator AKAKA. Thank you very much, Mr. Chairman.

Mr. Secretary, I am here because I want to talk about tourism.

Secretary EVANS. Good.

Senator AKAKA. I would like to go back and quote Mr. Doggett,

the former Deputy Assistant Secretary for Tourism Industries, who

said, ‘‘International travel to the United States is an export just

like the sale of agricultural products, automobiles, or consumer

goods, and that strength plays over into our GDP.’’ So it is very

much a part of the export of services that you promote. One of the

recommendations in the Report is that the Department of Commerce’s Office of Travel and Tourism in Trade Development should

develop public-private partnerships. You mentioned in your statement that you are even doing that at the office here.

My question to you is, how will these partnerships be developed

and how will the Department coordinate promotion efforts with

State agencies?

Secretary EVANS. Well, Senator, a couple thoughts on that.

One is we certainly put a lot of emphasis on tourism and travel

in the last 15 months, but even more so since September 11, because if there was any industry that was seriously impacted by

September 11, it was the travel and tourism industry. And we recognized that early.

I met with the private sector probably no longer than a couple

of weeks after September 11. I cannot remember the exact date.

But I asked them to come to Washington and sit down and visit

with us and talk about ways we can work together in partnership

to promote tourism.

Out of that came an ad campaign that we encouraged and I

think has been helpful to the industry. Out of that meeting came

17

the idea of revitalizing the Tourism Policy Council, which gives us

a regular opportunity to sit down with the private sector to talk

about joint efforts, joint ideas, joint promotional kind of campaigns.

I cannot point to anything specific right now, other than the ad

campaign that took place this last—I think the ad campaign probably was right after the first of the year, if my memory serves me

right. There were some TV spots that were not only run here in

America, but also in Europe and in Japan.

It is certainly something that I talk about everywhere I go, and

I will continue to do that.

But the focus for us to look for opportunities of public-private

partnerships will be through our Tourism Development Desk, as

well as our Tourism Policy Council, which keeps us, and myself,

frankly, in regular communication with the private sector.

Senator AKAKA. Do we have any efforts that place agency representatives in particular countries to work with that country on

tourism at this time?

Secretary EVANS. We have, of course, Commercial Service offices

all over the world and we will, through those offices and through

our embassies, quite frankly, but through those offices, through our

foreign commercial service offices around the world, we encourage

those to promote tourism and travel any way that they can.

Again, I think it is a part of the overall training initiative, we

should make sure that the people that are around the world have

the tools that they should have to promote American products and

goods and services. One of those is export of tourism and travel.

Senator AKAKA. I just want to say, Mr. Secretary, that we appreciate what you are doing for the Commerce Department. Thank you

very much.

I want to move to—— Ms. ASKEY. Senator Akaka.

Senator AKAKA. Director Askey, I appreciate the way you describe your agency as being small and nimble. You are also working on partnerships, especially with other countries and our U.S.

companies to promote exports.

You mentioned in your statement that the Trade and Development Agency will continue to develop strategies for supporting efforts in the service sector, including tourism. What strategies are

being developed by the TDA to support tourism?

Ms. ASKEY. Thank you. I had wanted to add to the Secretary’s

comments on that because we happen to have a concrete example.

This month, we are hosting a conference for exporters of tourism

packages, et cetera, opportunities in Istanbul. And we worked very

closely with the Department of Commerce’s Foreign Commercial

Service officers in the region.

We particularly reinvigorated our effort in the post-September 11

period, both because it is important for those front-line States and

some of the other countries in the region, to look to tourism as kind

of the first steps or early steps in development.

Of course, it is very important for U.S. exporters to be active participants in that. And the conferences that we set up are very

project-specific type conferences. Along with the Foreign Commercial Service and with Ex-Im Bank and OPIC, we have worked hard

to try to develop specific opportunities that we can highlight for

18

U.S. participants and foreign country participants that will be coming together for this tourism conference.

And it is one of the ways that we both let our trading partners

around the world know about U.S. service exports in this particular

sector, but also U.S. providers in this sector, what opportunities

there are, what development opportunities there are in this region,

and throughout the world.

We very much look at tourism as an important service sector and

as one where U.S. providers are very competitive.

Chairman SARBANES. Thank you.

Mr. Aguirre.

Mr. AGUIRRE. Senator, if I could just add a couple of comments

about tourism. As you know, Ex-Im Bank is very involved in aircraft financing, export aircraft financing. Obviously, a lot of that is

going to the Pacific Basin.

I would suspect that many of the 560 or so aircraft that are currently in our portfolio are landing in Hawaii, just as we speak. So,

in a round-about way, I think we are financing some exports which

are clearly bringing tourism to our shores.

Senator AKAKA. Thank you.

Mr. Secretary.

Secretary EVANS. I would add one other quick thought, Senator.

I was in Tokyo about 3 weeks ago and signed a tourism promotion

agreement with the Minister of Land and Transportation Ogi. We

were very pleased to be able to sign that as another indication of

our cooperation with Japan to promote tourism.

She further said that she would be happy to save me the journey

all the way to Tokyo next time and would meet me in Hawaii. So

maybe that is another way to promote tourism to Hawaii.

Senator AKAKA. Thank you very much, yes.

Secretary EVANS. Thank you.

Mr. BARRETO. Senator Akaka, I also wanted to contribute that

the SBA has been very involved since September 11 with our disaster loans. Obviously, whenever there is a disaster, we are always

at the forefront. We were recently in LaPlata, Maryland.

Right after September 11, we received a lot of calls into the SBA,

and some of those were from Hawaii, especially from the travel and

tourism industry.

One of the things that the SBA has done, as well as continuing

to coordinate with the Secretary’s roundtable on travel and tourism, is that we have also reached out across the country, outside

of the disaster area, to do economic injury disaster loans. Those are

the loans that the SBA does directly. They are 4 percent loans over

as much as a 30-year time horizon. We took the unprecedented

move of changing our regulations to be able to allow us to do those

types of loans all across the country.

It has been very successful. We have done a lot of outreach. And

I know that one of the areas that has been the most effective is

the travel and tourism industry, and we will continue to reach out

to that very important segment of our economy.

Senator AKAKA. Thank you, Mr. Barreto.

Mr. Chairman, thank you. My time has expired.

Chairman SARBANES. Thank you.

19

I think Senator Akaka is on to a very important point here.

There are a number of Members in the Congress who are very interested in promoting travel and tourism. Senator Reid in Nevada

actually heads up a Congressional Caucus in that regard. Obviously, it is very important to Hawaii.

I know other countries have these major tourism promotion outlets here, like France and the United Kingdom. Up in New York,

they have that. Does the United States have anything that is comparable overseas, trying to promote the residents of those countries

to come here?

Secretary EVANS. I do not know what it would be, Mr. Chairman.

Something may be escaping me, but I do not know that we have

anything on that level.

Chairman SARBANES. I think we have left it primarily to the private sector to do, I guess.

Secretary EVANS. Right.

Chairman SARBANES. But it might be worth looking at.

I have a few more questions, then we will let the panel go.

We had a hearing about a week ago on the Treasury Department’s Report on the International Economic and Exchange Rate

Policy, which you probably read about. I know the Secretary of the

Treasury pronounces or not, as the case may be, on dollar policy

and its exchange rates.

I do not want to get anyone in trouble here, but let me ask you

this question, since you survey our exporters. How much are you

hearing from them that the exchange rate of the dollar, what many

of them would argue is the over-valued exchange rate of the dollar,

is impacting their ability to compete internationally with respect to

exports? When you did your surveys and everything, or in the

course of doing your normal business, how much of this do you run

into?

Secretary EVANS. Mr. Chairman, we did have a question on that.

Actually, I think our survey says it was not ranked very highly. We

hear comments about it, of course, but I haven’t seen the ranking

specifically. So if you would like to see that study, I am sure we

could provide you with that.

Chairman SARBANES. Was that the one you just did with the

small and medium people who are not very much into the export

business, or did that cover all of the export community?

Secretary EVANS. I am sure it was just the one we did with the

small- and medium-size companies.

Chairman SARBANES. Because the NAM came before us.

Secretary EVANS. Right.

Chairman SARBANES. The president of the NAM stated, and I am

now quoting him: ‘‘Exports of U.S.-manufactured goods have

plunged $140 billion in the last 18 months at an annual rate, the

largest such fall in U.S. history. The export losses, principally due

to the over-valued dollar, are a key factor explaining why the manufacturing sector has fared so much more poorly than the rest of

the economy in this recession.’’ And the American Farm Bureau was also at the table asserting

that their ability to export had been significantly hampered by

what they asserted was the over-valuation of the dollar. So have

any of the others run into that assertion?

20

Mr. AGUIRRE. Mr. Chairman, I cross the threshold with trepidation here because I certainly believe Secretary O’Neill is responsible for foreign monetary policy and for U.S. export financing. We

are not going to cross into each other’s territory. But I think there

are so many factors involved in an export. The dollar and the

strength of the dollar is a very important factor.

What we heard most about, quite frankly, in the TPCC Report

had to do with being user-friendly and having the right technology

that gives the right management information systems to the exporters so that we could work with them and provide better accessibility to financing.

Quite clearly, the dollar was brought up, but I do not think it

ranked that high. And it might have been just the timing of the

survey why that factor did not bubble up that high.

Chairman SARBANES. Anyone else want to comment?

Mr. CONNELLY. Mr. Chairman, I would just point out that in our

experience, the issue is not so much the level of the exchange rate,

but the volatility of the exchange rate. And I think that is the concern that our clients express more than anything else.

Chairman SARBANES. I have one closing question. I would like to

ask each of you what is the single impediment that you encounter,

that if it could be cleared away, would be most helpful to you in

doing your work? And if you wish, you may take on the OMB.

[Laughter.]

After all, you are here and we have you here. You are supposed

to give us very straightforward responses. Why don’t I just go right

down the list.

Secretary EVANS. I am not sure. I think that I would put a more

positive spin on it. I have been really encouraged by what has been

a committee that has not been particularly active coming together

with a very strong focus on wanting to make a difference in providing the kind of information to our small- and medium-sized

businesses that they need to export their products and services.

And until I see what are our results, what are we accomplishing,

I am not sure I am ready to talk about what our real impediments

are yet. I think we might be in a better position to do that in 6

months or so. I would be glad to come back up and talk about it.

But I think we are still building what will be a very effective, forceful effort in promoting trade. I do not see any real impediments

yet. It is certainly not dollars, as far as I am concerned, at this

stage of the game.

Chairman SARBANES. Mr. Aguirre.

Mr. AGUIRRE. Senator, as you know, I am fresh to the Government from the private sector, so my comments are tainted by the

perception that I had until recently.

Chairman SARBANES. Well, they might be enhanced, rather than

tainted.

[Laughter.]

Mr. AGUIRRE. It could be.

[Laughter.]

I think that the issue is actually being addressed right here at

TPCC. The exporting community does not appreciate the many resources that our Government puts in front of them. And I think

21

they perceive dealing with the various agencies as a task and not

an opportunity.

In TPCC, what we are trying to do is do better coordination, better communication, and in some cases, eliminate duplication, as I

think we are trying to do with the various agencies.

So the obstacle, if there is one, is a perception obstacle. Clearly,

there are a lot of things that we need to do to make ourselves more

user-friendly. But if we can persuade the exporters that, in fact,

there are so many resources here that we can provide for them, I

think we will help the country.

Chairman SARBANES. I thought you might say for Congress to

give me an Export-Import Bank authorization.

[Laughter.]

Mr. AGUIRRE. That would be more an extra focus.

[Laughter.]

Chairman SARBANES. We are working on that. We are going to

conference on it, as you know, so let’s see what we can produce.

Mr. AGUIRRE. Thank you, Mr. Chairman.

Chairman SARBANES. Mr. Barreto.

Mr. BARRETO. Mr. Chairman, I would also concur with my colleague. I am also, as many of the members here, coming from the

private sector. When you are in the private sector and you are

thinking about taking advantage of Government programs, and we

talk to small businesses every day and they tell us, no, it is going

to take too long.

I can take a yes, I can take a no, but the maybes kill me and

I would rather not even try.

So, we have a major challenge to kind of go out and reintroduce

ourselves to our clients. I oftentimes say, they do not really know

what they do not know. There are a lot of great programs and services. And me, coming from the private sector as well, I did not even

realize how much was out there until I got back here.

We have to change the perception so that the people that we are

supposed to be benefiting really think of us as their partner. They

really think of us as an advocate, somebody that they can count on

to respond to them.

I think that we have some very good tools available to us. And

I also agree with Vice Chairman Aguirre that the collaboration

that we are going to have is going to help us leverage the existing

resources that we have.

One of the benefits that the SBA has is a pretty large network.

We have offices and resource partners in every State in the union

and many of the major cities, multiple offices. So, we need to leverage what we have. And working together, I think we will get that

word out and start helping more small businesses.

Thank you.

Chairman SARBANES. Director Askey.

Ms. ASKEY. Thank you, Mr. Chairman. Since we are in the business of partnering with U.S. firms abroad, and we have two parts

to our activity. One is direct support of projects and the other is

more of a technical assistance training activity.

With respect to U.S. businesses and firms that we are working

with overseas, I think the impediment is two-fold. One is subsidized competition by our trading partners. That is generally why

22

we are there, to give some additionality to the process. So subsidized competition by our foreign trading partners is key.

Also the staying power of small- and medium-sized business in

difficult markets. Exporting is not an easy task over time. And so,

getting companies to focus on their sustainability in the export

market is a task.

On the technical assistance side and the more policy-oriented

things we do, it is generally trying to persuade the governments to

have a stake in the outcome of the technical assistance. For example, on our biotechnology initiative with China, the important thing

is getting the Chinese government to participate in the process of

developing the technical assistance and understanding the United

States technical expertise to be brought to bear. We are not just

giving them money and saying, work on your biotechnology regime.

So on the technical assistance side, it is basically getting a mesh

between the foreign government policy goals and U.S. policy goals.

But when it comes to U.S. exporters, I think it is subsidized competition that they face and sustainability in export markets.

Chairman SARBANES. Good.

Mr. Connelly.

Mr. CONNELLY. Well, I need to preface my remarks by saying we

have an excellent relationship with the OMB.

[Laughter.]

I think I would summarize the challenge from my standpoint in

that it is not a budgetary challenge.

Chairman SARBANES. I am sure everyone else would echo that

comment.

Mr. CONNELLY. Yes.

[Laughter.]

But we do have the need to innovate, to modernize our products

and services, and to meet the challenges of a world that is becoming more complex and highly globalized.

We have in the agency, what I have learned—I have just been

out of the private sector for 9 or 10 months. We have excellent people, tremendously dedicated professionals, and they can do the job.

We have to find a way to recognize how the world has changed,

to organize to meet those challenges and to introduce products and

services that deliver the best service to our clients in a way that

passes muster, as it must, within the entire interagency process.

Chairman SARBANES. Thank you all very much. It has been a

very helpful panel, and we look forward to the implementation of

the recommendations in the Report, and also, to the various new

initiatives that you talked about for the next report.

The hearing stands adjourned.

Secretary EVANS. Thank you, Mr. Chairman.

Mr. BARRETO. Thank you.

Mr. AGUIRRE. Thank you, Mr. Chairman.

[Whereupon, at 12:15 p.m., the hearing was adjourned.]

[Prepared statements and additional material supplied for the

record follow:]

23

PREPARED STATEMENT OF DONALD L. EVANS

SECRETARY, U.S. DEPARTMENT OF COMMERCE

MAY 14, 2002

Thank you, Mr. Chairman. My colleagues and I are extremely pleased to have the

opportunity to present to you this Administration’s first National Export Strategy.

The Report is the culmination of the best efforts of all of the agencies here with

me today, as well as the Departments of State and the Treasury, USAID, and

USTR. It has truly been a team undertaking, and we are confident that the steps

we have laid out are grounded in what our customers want, need, and expect from

their Government export promotion programs. We think these steps will make a difference in the way we serve our clients—especially small businesses.

This is very much the approach the President wants all of us in the Administration to take. The President, through his Government-wide Management Agenda, has

made clear that he believes that Americans deserve a Government that is ‘‘best in

class’’ in service and effectiveness and that is results-oriented.

In the broader context of our trade agenda, this commitment to results translates

into two things. First, it means aggressively opening new markets for our exporters.

Second, it means having the best tools available to our exporters to realize sales in

those markets once they are open.

The first prong of the trade agenda—opening new markets—is, quite frankly, on

hold, waiting for the Senate to give the President Trade Promotion Authority. The

President believes this bill is overdue. Simply put, we are losing real trade opportunities without it. We know the trade agreements that TPA will let us conclude over

the next 5 years could contribute as much as $1.9 trillion to world economic growth.

The question for the Senate is, what slice of this growing pie of opportunities will

belong to U.S. companies? We believe the longer the delay on Trade Promotion Authority, the more it costs American farmers, business owners, and workers. We are

pleased that the legislation appears to be moving to a vote as a carefully crafted,

bipartisan balance. Amendments that would upset that careful balance would be

strongly opposed by the Administration.

Senator Sarbanes, we appreciate the opportunity to articulate here the second aspect of the President’s strategy—expanding the base of exporters and providing the

promotional support they need to ‘‘fill in’’ behind the agreements we negotiate. From

the perspective of a small U.S. company wanting to export, new trade agreements

are only half the battle. Agreements are meaningless to a company if it does not

have the information, expertise, and financing it needs to get started exporting and

to do the deals.

All of you are aware that trade has never been more important to the United

States and world economy. It now accounts for about a quarter of both the United

States and world GDP and is growing at over twice the rate of any other sector.

The goal of the 60 recommendations in this Report is to make sure all export-ready

U.S. companies can participate in this growth. Small companies now account for just

under 30 percent of the value of U.S. exports; yet our survey found that 30 percent

of U.S. small companies that do not currently export would like to. Moreover, of

those that export, two-thirds only export to one market. By improving customer

service and providing new export opportunities, we want to tap the unrealized export potential of both large and small U.S. companies.

These recommendations give our exporters a new strategic partner, and provide

them with the tools they need to be globally competitive. We want to help those

companies exporting to only one market broaden their horizons and make sure that

capable small businesses can take full advantage of new market openings.

The recommendations in this Report were the result of 7 months of research and

interagency deliberations. As we explained last October, we took a management approach, starting first with our customers. The driving force behind all of these recommendations was to respond to customer needs. We talked to about 100 exporters

in focus groups and one-on-one meetings, about half of which were smaller companies. We undertook a survey of more than 3,000 small and mid-sized U.S. firms. We

asked them what works and what doesn’t work. We asked them to tell us how to

improve Government services and to tell us about other Government, State, and

local agencies that do a great job of meeting their needs. We talked to both exporters and nonexporters to get at the question of why many small businesses choose

not to export.

FROM OUR SURVEY AND INTERVIEWS WITH CLIENTS, we came away with a number

of observations:

• Our clients are pleased with our products and services, but want them to be even

more streamlined and timely. Time is critical to companies of any size. Even the

24

smallest customers have very high expectations about how quickly they get what

they need.

• Our clients think Government agencies have an important role to play in both

trade and investment promotion. This is particularly true because other governments are more strategic in helping their companies get the best shot at possible

opportunities and providing high-level focus and coordination of small business

programs.

• U.S. companies want more than export assistance. They want an account manager

to take them from their first transaction, to their first investment, through the

life of a project. They want Government personnel trained and skilled enough to

take them through the maze of Government programs, and they want the Government to help generate new opportunities.

• U.S. companies want more coordinated Government service. They want us to operate as if we were one company—not a collection of individual agencies. They expect seamless programs with a common set of standards and requirements and

want coordinated client management among the agencies.

• U.S. companies look to the Government first for information on market opportunities and financing. The companies that do not export would export if they had

more information about foreign market trends and trade leads.

In addition, we took an in-depth look at the PROGRAMS OFFERED BY OUR MAJOR

COMPETITORS:

• We were particularly impressed by the high level of support our trading partners

give to small- and middle-sized firms. Here in the United States, we know that

these firms are a tremendous engine of job growth. And when these firms are successful in international markets, they can achieve even higher growth rates and

pay better wages here at home. Our competitors also understand the dynamism

and power of small business. We found that a number of our trading partners

have coordinated, Cabinet-level task forces dedicated to getting small companies

into overseas markets. Korea, for example, is moving away from support for large

conglomerates or chaebols, and has a Presidential Commission that integrates

programs and budgets that help small business exporters. France, Canada, Spain,

and the UK also have coordinated, high-level programs to help small business

exporters.

• Our competitors take a more active approach in generating opportunities for their

exporters. Many governments cultivate relationships with procurement officials in

emerging markets and ‘‘cherry pick’’ the best projects for their exporters—presenting them with shopping lists of the most lucrative projects.

• Other governments take a more holistic view toward export promotion, combining

their export and investment promotion programs. Rather than focus strictly on

export sales, they focus on their firms’ international competitiveness.

• And we found especially in Europe, the Swedes, the French, and the British have

elaborate e-business strategies that have become the organizing principle for their

trade promotion programs. By next year, the British will have all of their export

promotion services online. All of the trade promotion agencies will be linked with

each other and with all of their known exporters.

The National Export Strategy

Our strategy, simply put, is to make sure our exporters have the best tools to take

advantage of the commercial opportunities we negotiate. It boils down to three important points:

• A more active U.S. Government partner with U.S. exporters when it comes to

major project competitions.

• Better customer service through joint promotion, training, trade finance, and information delivery.

• A Government that is working harder, through State and local partnerships and

trade education to make sure that potential exporters know about the services

we provide.

STRATEGIC APPROACH TO PROJECT DEVELOPMENT

One of the themes that came up repeatedly in our discussions was that companies

want Government to take a more coordinated and more strategic approach to helping them compete internationally. This applies to a wide range of issues including

major project development, a coordinated commercial response in crisis regions and

advocacy support throughout the life of the project. Our competitors often have the

upper hand in major project competitions well before the project is publically tendered. Other governments indicate that they can finance a particular project early

25

on and then coordinate their response between the agencies responsible for on-theground market intelligence, technical assistance and financing. Ex-Im Bank, Commerce and a number of TPCC agencies are going to meet this challenge by working

together to discover projects sooner, show an early likelihood of U.S. financing and

help U.S. exporters take advantage of these opportunities. In key pilot countries, we

will now have a coordinated, team approach to bringing buyers and sellers together.

Exporters also told us they want to see the U.S. Government take a more active

role in countering and discouraging market distorting uses of tied and untied aid.

As a result, we have expanded the tools available to exporters to address tied aid,

including a more aggressive response to Japan’s use of tied and untied aid (Japan

is the largest provider of both), a pilot program that would enable the Trade Development Agency to fund engineering studies that often set the standards and specifications for future projects, exploring the design of a pilot project that would provide mixed credits for specific developmentally sound projects, and use of the war

chest to address instances where non-Japanese trading partners use tied aid to capture market share in emerging markets.

BETTER CUSTOMER SERVICE

In the area of client service, we found that U.S. firms that export have an increasingly sophisticated understanding of what they need to be successful overseas. They

are aware of competing Government programs and have very high expectations

about the quality of service that they get. Not surprisingly, the more experienced

exporters want better coordination among the Government agencies; in short, they

want the agencies to operate as if they were part of the same U.S. Government

‘‘company.’’ To respond to this concern, we are going to do a better job of promoting each

others’ programs. We are planning on training our Commercial Service officers so

they can act as ‘‘account managers’’ that can help our companies with an overseas

strategy, and not just an export sale. That means a much greater emphasis on

training across agencies than ever before, with the goal of creating agency staff that

can function as ‘‘one-stop-shops,’’ or account managers, that can help a firm navigate

the full array of Government export promotion programs.

Trade Finance

Our survey told us that trade finance is still a major obstacle to getting small

businesses into world markets. It also indicated that too many U.S. companies

turned down sales because they had problems getting financial support, or limited

their exports to those opportunities they could fund on their own. Too few small exporters are taking advantage of SBA and Ex-Im Bank working capital programs.

While many companies know about these programs, they are unaware of how they

work and are confused by the fact that there are two, apparently competing programs. We are going to address this by combining the marketing efforts of SBA,

Ex-Im Bank, and the Commercial Service to make sure lenders know how these programs can help their clients. We also want to integrate the programs to the extent

we can—while still preserving the benefits of each. In the future, we will promote

one Government trade finance service to our customers, that can then be customized

with SBA and Ex-Im Bank features, as appropriate, depending upon the resources

of the Bank and the needs of the client.

Information

This came up again and again in our discussions with customers and was ranked

in our survey as the most important service Government provides and businesses

need. We learned that more than half of the exporters we surveyed use a Government source to gather information on potential trade opportunities, and that they

want a single site where they can get trade leads and information about specific

markets. At the same time, they are unaware of the full range of Government assistance that is currently available. In response, we are enhancing export.gov—our

one-stop web portal—so that exporters can find all of the Government’s best information on trade leads and markets in one place, in real time. We will use our

BuyUSA product—which links buyers and sellers directly—to link foreign affiliates

of U.S. multinationals abroad with U.S. suppliers, who are often small- and

medium-sized exporters looking for project opportunities.

OUTREACH, EDUCATION, AND PARTNERING

We can develop the best programs in the world, but if no one knows about them,

we will not get very far. We need to do a better job of letting companies know what

is available and make it easier for them to participate. Although our study found

that awareness is better today than it was 5 years ago, we can certainly do a better

job of connecting with business people who want to take advantage of new trade

26

opportunities. We propose working more closely with State and local trade groups,

as well as elected officials, to expand awareness and increase outreach. We will also

be leveraging technology to offer simpler Internet solutions for companies looking

for help.

We will distribute packages of our export promotion services to the States to prevent duplication and leverage State resources. We will encourage joint strategy sessions on outreach and trade events. We will dedicate more resources to training our

State partners in TPCC programs. We will develop joint TPCC agency marketing

materials for our State and local partners. We will do a better job of leveraging the

information provided by elected officials, who are often the first point of contact for

companies seeking Government assistance. And we plan to expand education for

new-to-export firms and develop a strategy to use trading companies as multipliers

of our services.

To sum up, we are placing a much greater focus on what our customers need;

we are taking a comprehensive approach to making our companies competitive in

the world market; we are actively developing opportunities for our companies; we

are building programmatic bridges across the agencies; and we are using training

and joint promotional efforts to improve coordination and our effectiveness across

the agencies.

Senator, while in many ways I believe we have gone farther than ever before with

the TPCC, this is really just the starting point of our work. Some of these recommendations can be implemented immediately; but some will take more time and

require a formal benchmarking effort—such as training, information, and the speed

with which we deliver our services. We also expect to use this Report as a tool to

fit our resources and programs to key markets where we are negotiating bilateral

and regional agreements.

In the meantime, I want to make sure we are held accountable for what we have

said we are going to do. Whether it is the number of new project opportunities we

generate from these recommendations, or the number of small business working

capital loans we undertake, I think it is important Congress knows that we expect

to measure our progress. We will report how far we have come next year.

Again, Senator, I appreciate your great interest in the importance of strengthening our trade promotion programs. I intend to continue to use the TPCC not only

to coordinate our future efforts, but also to generate new initiatives that will help

keep America the most competitive exporting Nation in the world.

—————

PREPARED STATEMENT OF EDUARDO AGUIRRE

VICE CHAIRMAN AND FIRST VICE PRESIDENT

EXPORT-IMPORT BANK OF THE UNITED STATES

MAY 14, 2002

Thank you for the opportunity to appear before you today. As Vice Chairman of

the Export-Import Bank, I also serve as Vice Chairman of the Trade Promotion

Coordinating Committee (TPCC), the body designated by Congress to coordinate

interagency efforts on trade promotion.

Working in partnership with business and labor, we support exports in order to

create and sustain jobs here in the United States. That means the Bank must be

in tune with the Administration’s trade and foreign policy objectives, as well as the

needs of U.S. companies to compete abroad.

I appreciate the efforts of all the agencies represented here today, in addition to

others both inside and outside the Government, who contributed time and energy

in pursuit of our common goal—to make U.S. trade promotion efforts second to none

by being effective, coordinated, and user-friendly.

In keeping with the Administraton’s firm commitment to free and fair trade, the

Export-Import Bank (Ex-Im Bank) of the United States assists U.S. exporters in

competing fairly and successfully in the world marketplace. Participation in foreign

trade is a critical component of the Nation’s economy. In 2001, exports represented

about 10 percent of the Nation’s GDP and supported approximately 12 million jobs

(Department of Commerce, U.S. Trade Facts), including one-in-five manufacturing

jobs. Moreover, medium- and small-sized companies represented 97 percent of U.S.

exporters. These companies are an important source of U.S. employment. Moreover,

as jobs in the export sector on average pay wages that are 13 to 18 percent higher

than the national average of nonexport jobs (Department of Commerce, U.S. Trade

Facts).

27

Market imperfections and trade distorting subsidies frustrate U.S. exporters’ ability to compete and win business in new markets. The Ex-Im mission is to meet both

of these challenges head-on. When foreign governments subsidize the financing of

products and services sold by their companies, we step in to level the playing field.

These unfair practices distort free trade, and we are committed to providing the

U.S. exporters a competitive environment where the market drives the process; in

other words, the best product at the best price wins the sale, and not Governmentsubsidized financing. Eventually, the hope and the efforts are to eliminate any Government trade distorting subsidies.

Capital always moves to its best risk-adjusted rate of return. Especially in dynamic emerging markets, capital tends to be jittery even during the best of times.

When these markets begin to slow or experience difficulty, capital flight is swift and

can be crippling. Sometimes, especially in the short-term, this phenomenon is

counter to the Bank’s broader, long-term financing strategy. These sharp market

movements most affect small companies. South Korea’s economic turmoil during the

Asian Financial Crisis was a good example of this phenomenon. When the private

market collapsed in 1997–1998, Ex-Im Bank stepped up to the plate and supported almost $2 billion dollars in exports during that critical period. The Bank did not lose

taxpayer dollars, and, in fact, Ex-Im Bank played a role in keeping trade relations

and businesses open for U.S. exports. Now that the economy has stabilized in South

Korea, the private sector has reentered the market, and the Bank has appropriately

scaled back its support. What was Ex-Im Bank’s role? The Bank stepped into the

breach and covered appropriate short-term risk. We to some degree insulated

against potential financial contagion from that crisis.

In carrying out its mission in 2001, Ex-Im Bank supported approximately 4 percent of all U.S. exports to emerging markets and 6 percent of all U.S. capital goods

exports to emerging markets. One of Ex-Im Bank’s missions in this changed world

is to take the lead in the U.S. commercial effort to penetrate the risky emerging

markets.

The Bank also steps up in times of crisis—as Ex-Im Bank did during the 1997– 1998 Asian financial crisis, and as the Bank did this past fall through supporting

the airline industry in the wake of the September 11 attacks. In this case, Ex-Im

Bank has decided not to exercise its requirement that airlines have third-party war

risk insurance coverage, in coordination with the U.S. Government and other nations, to keep the airlines of the world flying, until such time as the airline industry

is able to secure a solution that will reinstate liability insurance. The process was

successful, and international commerce continued without any hitches, as aircraft

were not grounded. In so doing, not only did the Bank increase U.S. exports, but

also fostered stability and economic growth at home and abroad. Last year alone, Ex-Im Bank supported $12.5 billion worth of U.S. exports. Of all

Bank transactions, 90 percent were in direct support of small businesses, representing $1.65 billion or 18 percent of the U.S. exports by dollar volume supported.

In fact, 383 new small businesses utilized the Bank for the first time last year to

support their exports. Ex-Im Bank is proud of its record and intends to continue

these efforts.

At the same time, the Export-Import Bank has several other mandates, as stated

in our charter:

Ex-Im Bank Acts

Ex-Im Bank promotes private sector financing. Where there is not a private sector

alternative and there is a creditworthy transaction, the Ex-Im Bank steps up and

ensures that U.S. exporters can compete and are not at a disadvantage. In short,

Ex-Im Bank’s role is to provide official financing support that levels the playing field

for U.S. exporters until agreements can be reached to eliminate market-distorting

practices.

Ex-Im Bank does not perform this vital job in a vacuum. The Bank works closely

with other U.S. Government agencies to capture possible efficiencies and to protect

the interests of the taxpayer. The TPCC plays a critical role, as illustrated by the

recommendations in the National Export Strategy Report.

Allow me to briefly review some of the prior TPCC initiatives involving Ex-Im

Bank and our sister trade agencies and what the Ex-Im Bank is already doing to

address some of these key needs.

• The Bank maintains eight regional offices across the country. Six of these offices

are located with the U.S. Export Assistance Centers (USEAC’s) with the Department of Commerce (DOC) and the Small Business Administration (SBA). Co-location allows our respective staffs to co-market, pursue, and share trade leads and

market information. The Bank has placed offices in strategic locations (Miami,

FL, Washington, DC, New York, NY, Chicago, IL, Houston, TX, and three in CaliVerDate 11-MAY-2000 07:37 Jul 29, 2003 Jkt 000000 PO 00000 Frm 00031 Fmt 6621 Sfmt 6621 88412.TXT SBANK4 PsN: SBANK4
28

fornia). The States in which these offices are located are home to approximately

65 percent of the exporters in the United States. Where we are not co-located, ExIm Bank employees cross-train with DOC and SBA employees in the remaining

USEAC’s to ensure that DOC and SBA professionals are kept up-to-date on new

initiatives at the Bank.

• For the past 2 years, the Ex-Im Bank has delivered joint direct mail with the Department of Commerce’s Foreign Commercial Service and the Census Bureau’s

Foreign Trade Statistics Division. This year Ex-Im Bank will deliver close to

50,000 pieces of direct mail. Not only is this partnered approach cost-effective, (it

reduces the Bank’s costs by two-thirds) it gives the recipient a comprehensive

view of the menu of services offered by our respective institutions. Ex-Im Bank’s

direct mail initiative has been a huge success.

• Educational seminars have long been a primary approach of many of the trade

agencies. So what is new? First, the Ex-Im Bank is doing more seminars. Second,

the Bank has taken them outside of Washington and delivers one-day minicourses. Third, Ex-Im Bank almost always either partners with the Department

of Commerce, a City/State Partner, or one of Ex-Im Bank’s sister trade agencies.

For example, this spring OPIC participated in a well-received exporter seminar

in Indianapolis, and 3 weeks ago Ex-Im Bank’s business development team co-presented with the Department of Commerce in Lubbock, Texas. This year Ex-Im

Bank executed over 50 of these type seminars, all with some form of sister agency

involvement.

• Trade Associations: Attending trade association shows where hundreds, sometimes thousands, of exporters and buyers are amassed is a very cost-effective outreach tactic for Ex-Im Bank. Partnering with DOC and the Census Bureau makes

Ex-Im Bank’s approach even more effective. The Bank will continue this successful enterprise with DOC and the Census Bureau and expand upon it.

• Ex-Im’s Annual Conference: Just 2 weeks ago, the Bank had 1,500 participants

in Washington, DC, to learn about the Bank and network. Participants included

exporters, bankers, brokers, foreign buyers, U.S. Government officials, and foreign

government officials.

National Export Report

Turning to the National Export Report, these recommendations were developed in

close coordination among TPCC agencies and with significant input from the U.S.

export community. The TPCC listened to the concerns of our customers—the U.S.

exporters. The TPCC listened to those that distribute and market our services, trade

finance lenders. From this dialogue, the TPCC developed the recommendations continued in the Report.

The highlights of the recommendations that pertain to the trade finance arena

include:

(1) Maximize customer service orientation by employing technology to create processing efficiencies and to leverage scarce human resources through automation.

• Many of you on this Committee are aware of Ex-Im Bank’s automation plans. The

TPCC recognized we could never substantially expand our support, especially for

small business exporters unless and until we developed automated tools that

made our processes faster. We have several upgraded programs currently in place

that will assist us with providing faster turn around time and more up to date

information and statistics.

• Earlier I mentioned the Ex-Im Bank’s direct mail initiatives. The Bank’s direct

mail, which also includes periodic email contact, is all initiated and managed from

customer management tools. Inquiries from direct mail are sent electronically to

the Bank’s eight field offices for prompt follow-up. When Ex-Im Bank started direct mail 2 years ago, the Bank used existing database software and low-cost customer management software. Ex-Im Bank is a victim of its own success. The Bank

has now outgrown its own database and software system. The database the Bank

uses was designed for 50,000 records; Ex-Im now has over 300,000 records. We

knew we were doing right when private sector financial institutions started showing up at Ex-Im’s doorstep asking us how the Bank markets its financing products; for example, in November 2001 GMAC sent representatives from their organization to identify how we conduct our direct mail and how we target trade

shows. It is not often that the private sector asks the Government how to market.

(2) Develop a multipronged approach to address the trade-distorting effect of commercially-driven tied aid, the means by which other countries provide partial grants

and/or concessional loans either alone or combined with export credits and linked

to procurement from the donor country, and to add tools to the U.S. cache by comVerDate 11-MAY-2000 07:37 Jul 29, 2003 Jkt 000000 PO 00000 Frm 00032 Fmt 6621 Sfmt 6621 88412.TXT SBANK4 PsN: SBANK4
29

bining the resources and the expertise of one or more TPCC agencies to address the

problem.

• Work with Treasury negotiators to use the Tied Aid Credit Fund (TACF) resources to advance the U.S. position in the Organization for Economic Cooperation

and Development (OECD) to establish disciplines on the use of untied aid. The

goal here is to ensure that untied aid financing is truly untied, and not defacto

tied to procurement from donor country suppliers. Thus, the Bank would utilize

the TACF to provide a negative incentive that would bring other untied aid donor

ECA’s to negotiate greater discipline in their use of those funds. For example, as

cited in the new TPCC Report, the OECD recently notified Japan that a power

project they wanted to support in China was not eligible for Tied Aid because it

was deemed commercially viable. Within 10 days, Japan converted its support

from Tied to Untied Aid, thereby raising the question: Did the Japanese really

change the financing arrangement, or just change what policy they state it falls

under?

• Begin a pilot program where the Trade Development Agency would selectively finance FEED (front-end engineering and design) studies until there are multilateral rules that prevent governments from using these studies to promote exports.

• Ex-Im Bank, Treasury, USAID, TDA, and the Commerce Department will work

collaboratively to design creative financing arrangements for developmentally

sound projects for which commercial financing is not available, achieving Administration trade and aid goals.

• Use the Tied Aid Credit Fund to defend U.S. exporters from patterns of use of

tied aid that effectively (whether intentionally or not) represent a threat to longrun U.S. market share or access to emerging markets.

(3) In response to concerns raised by the small business community, better integrate Ex-Im Bank’s and SBA’s Working Capital Guarantee Programs, where appropriate. Toward this end, last week Administrator Barreto of the SBA and I signed

an agreement where the two agencies would begin to coordinate marketing efforts.

We have also directed our respective staff to work together to identify additional opportunities to integrate these programs.

(4) Commission a study to assess the impact of market window activity on U.S.

exporter competitiveness, which is also a topic of interest in the Bank’s reauthorization bill.

(5) Examine the unique financing needs of the services sector and develop programs and procedures that address those needs.

Since October, when the TPCC agencies collectively last testified before this Committee, we have been working hard to identify innovative ways to serve Ex-Im

Bank’s customers—the Nation’s exporters. And now, I look forward to working with

you and the other TPCC agencies in implementing these critical steps to improve

U.S. exporter competitiveness.

Mr. Chairman, throughout my 34 years in banking, I have always tried to make

decisions on what is right for the customer. In the private sector, it was a matter

of survival—aligning your organization around your customers needs, expanding

your services through strategic alliances—these were and still are one of the best

ways for companies to expand market share. In the public sector, the principles of

the TPCC are fundamentally issues of efficiency and providing our exporters the

best unified and simplified Government support possible. Especially in these tough

times, our exporters need the best their Government can offer. The best will only

be realized collective and coordinated actions. While the TPCC has made progress

in the past few years, we recognize we have more to do in several areas. The TPCC

is committed to this effort. Thank you for your leadership on these issues, and I am

now prepared to answer any questions you may have.

Thank you.

—————

PREPARED STATEMENT OF HECTOR V. BARRETO

ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION

MAY 14, 2002

Mr. Chairman, Ranking Member, and distinguished Members, thank you for inviting me to testify on the Trade Promotion Coordinating Committee’s (TPCC) National Export Strategy and the role that the U.S. Small Business Administration

(SBA) plays in the Federal Government’s export promotion strategy.

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I would first like to recognize the outstanding leadership of Secretary Evans. The

SBA has been working closely with the Department of Commerce, Export-Import

Bank of the United States (Ex-Im Bank), the Overseas Private Investment Corporation (OPIC), and other TPCC agencies in developing recommendations for the National Export Strategy that incorporate small business issues in order to grow them

to be the most competitive in the world.

Small businesses create two-thirds of new U.S. jobs, are responsible for much of

our economy’s innovation and generate over half of our private gross domestic product. But while most—66 percent—of U.S. exporters have fewer than 20 employees,

fewer than 1 percent of our small businesses export. Proportionately far more small

businesses export in other countries, where governments dedicate far more resources to export promotion, but more importantly take a more strategic and holistic

approach. Most of our trading partners offer more comprehensive support for small

companies—providing assistance from beginning to end of the export process, and

combining their trade and investment services.

The TPCC conducted a formal survey of 3,000 U.S. small- and medium-sized businesses to determine what was needed for them to be more competitive in the global

marketplace. The survey found that small companies face more hurdles exporting

than large companies. Specifically, small businesses need good information and expertise in a way that does not require large resources of time. Small businesses also

need capital. SBA is a resource for these needs.

The National Export Strategy presented by the TPCC recommends ‘‘a Government

that provides better customer service through joint promotion, training, trade finance, and information delivery.’’ In order to meet the need to create a ‘‘one-stopshop’’ approach, we have enhanced our working relationships with our partners in

the following ways:

SBA and the Ex-Im Bank have entered into a ‘‘Small Business Initiative’’ Memorandum of Cooperation. The first phase of this initiative will be to leverage marketing resources across SBA and Ex-Im Bank to raise awareness among lenders and

exporters. Another part of the initiative is to make our financing products more

compatible, flexible and streamlined, so that one application form can be used for

either agency’s loans.

SBA and Commerce are working more closely to coordinate marketing and outreach efforts to the U.S. small business community in the delivery of both technical

and financial assistance programs. The SBA’s and Commerce’s national network of

service providers will collaborate and work in partnership to provide significantly

improved counseling, training and financial assistance activities while also forming

a more efficient and transparent delivery system for these services. We are already

making great strides in cross-training. For example, in recent months, the SBA has

participated in Commerce’s annual regional meetings of Senior Commercial Officers

and have begun the process of training them on SBA’s International Trade Loan

Programs.

Another example of our efforts in leveraging our partnerships to further promote

export opportunities for U.S. small business will be the Small Business Initiative

between SBA and OPIC that will focus on cross-training and outreach to provide

the necessary tools and products needed to invest internationally. We look forward

to formalizing this opportunity in the very near future.

After reviewing our existing International Trade loan programs and the recommendations from the National Export Strategy, SBA increased the Export Express

loan guaranty to a new maximum of $250,000. The SBA Export Express loan guaranty program can be used to finance small businesses’ export development costs

such as participation in a foreign trade show or translation of product catalogs, as

well as finance actual export orders.

The Export Working Capital Program (EWCP) is another of SBA’s International

Trade loan programs. It allows SBA to guaranty up to $1 million of a lender’s working capital loan to eligible small businesses for export purposes. A small business

that has prospered with SBA’s EWCP assistance is M.A.S. Exports Ltd. of Savannah, Georgia. M.A.S. Exports is a supplier of auto parts and lubricants. Clifford

King, President and Owner, decided 3 years ago to use an SBA export loan to help

finance additional business to his offshore customers primarily in the Caribbean and

Latin America. King’s company, through a $250,000 revolving line of credit for export shipments under the SBA’s EWCP, reached annual sales of $970,000 in 2001.

SBA is also a partner in many of the President’s E-Gov initiatives to make information available online 24/7. We are currently working together with Commerce to

strengthen our links with export.gov and also looking at enhancing SBA’s International Trade website to allow the customer to access information at the time and

place of his/her convenience.

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SBA currently provides information to small businesses through our Export Trade

Assistance Partnership (E–TAP). E–TAP is a training program offered at each of the

19 U.S. Export Assistance Centers (USEAC’s) and some Small Business Development Centers (SBDC’s), which combined with ongoing individual business counseling, offers effective and customized assistance to new-to-export companies looking

to enter the global marketplace. We are looking at ways of increasing the number

of E–TAP programs being offered by encouraging our resource partners to implement the program.

SBA is fully committed to this National Export Strategy. We believe that the recommendations in this Report will help to streamline and improve Federal export assistance programs and benefit U.S. small businesses so that they will continue to

be the most competitive companies in the world.

I look forward to SBA’s ongoing contribution to the TPCC and our commitment

to evaluate and better coordinate our programs. I would be happy to answer any

questions you may have. Thank you.

—————

PREPARED STATEMENT OF THELMA J. ASKEY

DIRECTOR, U.S. TRADE AND DEVELOPMENT AGENCY

MAY 14, 2002

Thank you, Chairman Sarbanes, Senator Gramm, and Members of the Committee

for providing this opportunity for TDA and the other members of the TPCC to come

before you today.

The last time we were before you was on October 2 of last year, shortly after the

attacks of September 11. Now, 6 months later, I think it is even more clear that

trade promotion efforts, such as those we are discussing here today, are vital to

United States—and global—economic and political security. In particular, our ability

to foster development in and trade with the Front Line States, with countries in

South and South-East Asia, and with struggling markets in Africa, will go a long

way toward promoting international stability.

To begin, let me first express my appreciation to Secretary Evans, Under Secretary Aldonas, and their staffs for the tremendous amount of work that they have

put into the TPCC process in the past 7 months. They are to be commended for

their proactive efforts to discern the needs of the exporting community and to develop specific strategies to respond to those needs. TDA has been an active participant in those efforts and we look forward to continuing this role as we face the

future challenges and implement the many ideas contained in the Report.

The Report contains a number of specific proposals pertaining to TDA, and I will

outline them in a moment, but since TDA does not regularly appear before this

Committee, I would like to quickly take a moment to reiterate TDA’s mission and

activities.

As directed by statute, TDA promotes American private sector participation in developing and middle-income countries, with special emphasis on economic sectors

that represent significant U.S. export potential. TDA is a small, nimble agency that

partners with U.S. companies and assists them in building mutually beneficial relationships with overseas projects sponsors and Government officials. The result is

increased U.S. exports and jobs, as well as the completion of high-quality, successful

projects, and other solutions that address priority developmental needs in host

countries.

Thus, the TDA’s goals are two-fold: Helping American businesses export their

products, and thereby creating jobs, while simultaneously promoting commercially

viable economic growth in developing and middle-income countries. TDA’s dual

trade and development mission allows it to serve as an essential catalyst for priority

development around the globe through support of key infrastructure projects and

capacity building initiatives.

TDA’s operations put it at the forefront of U.S. foreign and trade policy, where

it works in concert with a wide array of other U.S. Government agencies, such as

the Departments of State, Commerce, Treasury, Agriculture, Energy, and Transportation, the U.S. Trade Representative, the Export-Import Bank of the United States,

and the Overseas Private Investment Corporation. Thus, the TDA works together

closely with the other TPCC agencies on a regular basis, in the normal course of

its business.

TDA’s role is to ensure that there are early successful demonstrations that U.S.

policies result in viable and in mutually beneficial economic growth. This demonstration of U.S. support has the direct effect of increasing exports of U.S. goods,

32

services, technology, and expertise. TDA accomplishes its mission using a number

of early project planning tools, including the funding of various forms of technical

assistance, feasibility studies, detailed design and engineering, orientation visits,

specialized training grants, and conferences. TDA utilizes its tools creatively, tailoring its flexible resources to fit the particular needs of specific opportunities. The

agency thereby achieves two results—assisting U.S. businesses as they compete for

infrastructure and other development projects in highly competitive, emerging markets, and offering tailored solutions to foreign governments in need of effective

commercial-sector development assistance.

Turning to the TPCC Report, there are a number of recommendations that involve

TDA. Since my colleagues have already identified many of them, I will simply highlight a few key recommendations.

First of all, we will continue to focus on developing coordinated strategies in crisis

regions. For example, the TDA has been working closely with OPIC in developing

potential projects in Afghanistan, particularly in the telecom sector. In fact, the

TDA is already providing funding for an advisor to the communications ministry,

to assist them with evaluating proposals for the sector. This work is also being coordinated with the State Department’s Office of International Communications and

Information Policy and with USAID. We also have been working closely with Commerce and the FAA in developing a technical assistance program for the aviation

sector in Afghanistan that will support U.S. commercial interests. Similarly, we

have worked with Ex-Im Bank in identifying projects in Uzbekistan that can be supported by TDA at the feasibility study stage and later by Ex-Im Bank guarantees.

We will continue to work with other TPCC agencies to develop coordinated strategies in Afghanistan and other crisis areas.

In addition, as recommended by the exporting community, TDA will explore opportunities to fund front-end engineering and design studies, which are commonly

referred to as FEED studies. Other countries sometimes fund such studies as part

of their aggressive efforts to win large development projects, and TDA will initiate

a pilot program to support U.S. companies who are confronted with this type of competition.

TDA will continue working with other TPCC agencies on designing a pilot project

to support capital projects in traditionally commercially nonviable sectors, such as

the environment, renewable energy, health care, and water. TDA is active in all of

these sectors, and will coordinate with the other TPCC agencies to further expand

opportunities for U.S. businesses.

TDA also looks forward to continuing its efforts in the area of biotechnology. We

continue to work with USDA, USTR and the Department of State to support publicprivate partnerships that help promote sound regulatory environments overseas for

American biotech products. These efforts are crucial for ensuring that our trading

partners continue to allow the import of American pharmaceutical and agricultural

products.

Additionally, TDA will continue to develop strategies for supporting efforts in the

service sector, such as in insurance, banking/finance, tourism and e-commerce. For

example, TDA has been supporting feasibility studies and technical assistance for

projects around the world involving e-commerce. Two weeks ago, the TDA signed

a grant with Sinopec, China’s leading petroleum and petrochemical company, for a

feasibility study to help develop an e-trade platform, putting all of the company’s

procurement activities online. The study would show Sinopec how to manage and

finance its e-procurement investments, as well as how to prepare its management

for the organizational requirements demanded by the new system’s implementation.

Not only will this lead to a potential of $23 million in direct U.S. exports associated

with setting up the system, but will also make their procurement process more efficient and transparent, further increasing the likelihood that U.S. companies will be

successful in doing business with Sinopec in the future.

The TPCC Report identifies exporters’ desire that the trade agencies provide better access to information and to streamline data collection, such as with the application process. TDA is currently revamping its computer system, moving to a webbased system that will both allow our staff to work with data more efficiently and

provide better access for U.S. companies to TDA information and activities. We are

scheduled to have this system operational later this year.

In sum, the TDA will continue to work closely with the TPCC and its member

agencies in making sure that U.S. policy objectives are supported by concrete results, and that U.S. companies have the support they need as they operate around

the world. This obviously is of benefit to the U.S. economy, as it supports exports

and creates U.S. jobs. But equally importantly, the dissemination of U.S. goods,

technology, services and business practices around the world represents a cost-effecVerDate 11-MAY-2000 07:37 Jul 29, 2003 Jkt 000000 PO 00000 Frm 00036 Fmt 6621 Sfmt 6621 88412.TXT SBANK4 PsN: SBANK4
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tive, market-based means of effectuating the President’s strategy of supporting economic growth and development in developing countries.

Again, I appreciate the opportunity to again appear before you and look forward

to answering any questions you may have.

—————

PREPARED STATEMENT OF ROSS CONNELLY

EXECUTIVE VICE PRESIDENT

OVERSEAS PRIVATE INVESTMENT CORPORATION

MAY 14, 2002

Mr. Chairman and Members of the Committee, I am pleased and honored to be

here today on behalf of Dr. Peter Watson, OPIC’s President and CEO. Dr. Watson

regrets he could not be here in person due to previously scheduled travel to Africa

as part of OPIC’s special initiative to spur development and promote investment in

sub-Saharan Africa.

I want to thank you, Mr. Chairman and Members of the Committee, for the consistent leadership and support you have provided OPIC and its sister agencies in

the Trade Promotion Coordinating Committee (TPCC). Given our commitment to the

development of a unified and successful U.S. trade program, I have every confidence

that the TPCC Report, and our ongoing efforts to execute its recommendations, will

have the desired effect: To enable U.S. companies to better compete for access to

existing and emerging markets, to the benefit of American investors and exporters.

Toward that end, I want to reinforce the Report’s recognition of the invaluable

contributions of late Export-Import Bank Chairman John E. Robson to our cooperative endeavor. John’s dedication to excellence should serve as both a foundation and

a beacon to the efforts of the TPCC agencies.

I also wish to express OPIC’s appreciation for the leadership of Secretary of Commerce Don Evans, whose efforts and vision have been key in marshaling the collective resources of our agencies for TPCC’s worthy mandate.

Mr. Chairman, in his introductory letter to the TPCC Report, President Bush

makes clear the central goal of his unified U.S. trade policy: Providing American

companies the information, expertise, and financing they need to take full advantage of the opportunities which exist in international markets. The President

expects that the TPCC agencies and departments will achieve this goal by providing

customer service that is responsive, streamlined, and results-oriented. While the

Report contains many specific recommendations, they are all in service of a single

objective: Providing the investors and exporters ‘‘with the tools they need to compete.’’ OPIC is committed to working with our sister agencies to meet this worthy

objective.

Over the agency’s 31-year history, OPIC has promoted sustainable development

and supported $138 billion worth of investment in 3,000 projects from Algeria to

Zimbabwe. These same projects have generated $64 billion in U.S. exports and

created nearly 250,000 U.S. jobs. The activities of these projects are as diverse as

the countries that host them. Over its history, OPIC has built up reserves of over

$4 billion, and as you know, accomplishes its mission at no net cost to American

taxpayers.

In reiterating OPIC’s commitment to the goals contained in the TPCC Report, I

want to share with you today specific steps OPIC has taken to implement the recommendations of the Report, and to outline OPIC’s future course of action to that

end. Taken as a whole, these actions represent demonstrable progress toward better

coordination between OPIC and its sister agencies; improved customer service; and

more aggressive outreach to the American business community. In all these efforts,

OPIC has striven in particular to improve small- and medium-sized businesses’ access to international markets.

Improved coordination among TPCC agencies is a priority of the Report, with the

expectation that this would enable the agencies to identify investment opportunities

more quickly. As the Report points out, OPIC has already been working in tandem

with our colleagues from the Export-Import Bank (Ex-Im) and the Trade and Development Agency (TDA) on joint initiatives. These include efforts in Indonesia, and

more recently in Pakistan and Afghanistan.

New OPIC Small Business Emphasis

As another example of improved coordination and cooperation, I am also pleased

to report that one of OPIC’s key priorities under the Presidency of Peter Watson

is to establish an innovative framework agreement between OPIC and the Small

34

Business Administration (SBA). This important cooperative relationship will provide

a new dimension for American small businesses currently working with the SBA by

providing a vehicle to seamlessly connect interested companies with the tools and

products needed to invest internationally.

The effect of the OPIC/SBA Small Business Initiative will be to leverage, through

cross-training and outreach, the relative strengths of the two TPCC agencies, in

order to provide U.S. small businesses with the expertise and financial wherewithal

necessary to make investments in international markets. We hope to formalize this

arrangement in the near future.

In the same spirit as our SBA cooperation, OPIC will also seek a new relationship

with the U.S. Commercial Service that will establish a training program by which

Commercial Service officers will be able to explain OPIC products and services to

investors already familiar with international operations through existing relationships with the Commercial Service.

Establishing improved customer service is another goal of the TPCC Report and

an OPIC priority. OPIC’s management and staff are committed to increasing responsiveness to and streamlining business processes.

Minimizing the red tape and providing responsive service to those who have an

interest in the agency’s products is one of the critical links in meeting OPIC’s development. Towards this end, OPIC will:

• BE RESPONSIVE TO THE NEEDS OF CLIENTS. Through customer surveys and

hosting annual client conferences, OPIC will explore new ways to improve communications with its clients and stakeholders, both in formal and informal contexts.

• STREAMLINE APPLICATION PROCESSES. One of the most effective ways that OPIC

can improve its ability to leverage investment is by eliminating bureaucratic procedures. By streamlining its paperwork requirements and adopting electronic

processes, OPIC will be better able to serve American businesses—both large and

small—that cannot afford a long and expensive application process that is not

geared to the faster pace of decisionmaking that is required today.

• MEASURE RESULTS. OPIC will develop and implement measurements that assess

results and outputs, as opposed to inputs, thereby offering a more effective way

to gauge our progress in serving the taxpayer.

OPIC is committed to servicing our customers as effectively and efficiently as possible. Indeed, the work of the TPCC will complement the ongoing efforts that OPIC

itself has embarked upon in assessing its programs, refocusing our efforts toward

mobilizing capital where but for OPIC there would be no private investment, and

in streamlining our operations.

Refocus on Developmental Mission

Our objective since coming to OPIC has been to align our products and services

in a manner that supports OPIC’s statutorily-mandated mission, while also recognizing a robust and growing private market that has developed since OPIC’s founding. As such, we have concentrated on, among other areas: Refocusing OPIC on its

core, developmental mission; rededicating our commitment to small business; and

ensuring that OPIC’s products are complementary, not competitive, with the private

sector. Each of these reforms will also contribute importantly to meeting the goals

of the TPCC Report.

We are working actively to strengthen OPIC’s consciousness of its historical developmental mission. We look to assess the investments that OPIC ultimately supports

by more than simple dollar flows; that is, to critically examine and benchmark the

added value of a particular investment to the host country, or as we say, to assess

the additionality the project represents.

Our goal is to ensure that OPIC’s participation ‘‘adds value’’ by measuring the extent to which there is a market failure, the degree to which OPIC can leverage its

resources for a broader economic impact, and the extent to which the project in

question contributes to the overall economic development of the host country.

Our ability to refocus on the developmental nature of our projects is made possible

in part by the growth and success of private market financing and insurance mechanisms. This growth allows OPIC, with its unique strengths as a Government agency,

to complement the private markets by working in countries in which the private sector would otherwise not participate. Indeed, OPIC’s role is to do things that the private market will not, such as offering more tolerance for higher risk countries or

projects, longer tenure, or larger per project capacity, which will help fulfill our development mandate, but to do so by accepting only prudent financial risk, as OPIC

has consistently practiced over its history.

The TPCC Report also calls for member agencies to formalize cooperation in pilot

investment countries, such as Mexico, South Africa, Brazil, and Turkey. I am

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pleased to report that OPIC has been active in each of those countries, and looks

forward to working with our sister agencies as part of a unified trade program.

The TPCC Report notes that U.S. exporters wanted a coordinated response to the

crisis regions that would enable them to take advantage of emerging commercial

opportunities. Among TPCC agencies, OPIC is uniquely positioned to provide such

coordination.

Special Foreign Policy Initiatives

Since the events of September 11, OPIC has announced a series of initiatives in

support of the frontline states in the international war against terrorism, the cumulative effect of which is to demonstrate to potential U.S. investors the opportunities

that exist in countries rebuilding from strife.

Last October, OPIC announced an initiative for Pakistan, which included the extension of a $300 million special line of credit for U.S. companies interested in investing in Pakistan.

As part of the Bush Administration’s commitment to the economic reconstruction

of post-Taliban Afghanistan, OPIC announced in January that it would establish an

initial $50 million line of credit to support U.S. investment in that country. OPIC

has also encouraged U.S. investment in the neighboring states of Uzbekistan and

Kazakhstan.

We have made significant progress in each of these areas, and expect that within

a reasonable period of time, we can fulfill the commitments we have made.

Before closing, I want to note that the TPCC Report pays special attention to the

needs of U.S. small- and medium-sized enterprises (SME’s). Despite its small staff,

OPIC has done remarkably well in reaching out to small- and medium-sized businesses that constitute a growing percentage of project participants. Of the 37 new

insurance and finance projects that OPIC supported in fiscal year 2001, approximately 57 percent (21 projects) involved American small businesses. In addition,

thousands of SME’s participate as suppliers to OPIC-supported projects. By comparison, 40 percent of all projects that OPIC supported in fiscal year 2000 involved

U.S. small businesses.

Data on the specific U.S. companies that will provide goods and services to OPICassisted projects for the 7 fiscal years 1994 through 2000 show the specific U.S. suppliers for $11.4 billion in expected procurement for OPIC-assisted projects. These

U.S. companies are located in 46 States. It is estimated that approximately 62 percent of these identified suppliers to OPIC-backed projects are U.S. small businesses.

OPIC’s focus is increasingly on those countries where the needs are greatest and

on the U.S. small and medium businesses that otherwise would hesitate to expand

overseas without OPIC financing or insurance. Fortuitously, these are the same

markets where our Nation’s trade assistance programs as implemented by fellow

members of the TPCC can also have significant impact. It is the developing country

markets that will continue to grow the fastest and it is those same markets where

our exports are in demand.

Small businesses often do not meet the profile that private sector financial institutions and insurers are looking for in their overseas clients. This is where the development goals of the U.S. Government, the needs of small business, and OPIC’s

programs intersect. With OPIC’s assistance, the proven dynamism of U.S. small

businesses can be mobilized to produce viable projects in the developing world.

Conclusion

In conclusion, the measures outlined above speak to OPIC’s strong commitment

to a leadership role in providing American companies the kind of unified trade program President Bush expects of the TPCC agencies. They represent significant

progress toward better coordination between OPIC and its sister agencies; improved

customer service; and more aggressive outreach to the American business community, all with a specific eye toward assisting small- and medium-sized businesses’

efforts to access international markets.

I would be remiss in closing without noting that recommendations in the Report

were based on a survey of U.S. exporters, which identified their expectations and

needs. It is vital for we the member agencies always to keep in mind the investor’s

understanding of the global marketplace, its vagaries and opportunities, in formulating our unified trade program. In that context, we at OPIC have much more to

accomplish before we have made our full contribution to this process, but we are

confident that our attention to investors’ needs has placed us on the right path.

Thank you, Mr. Chairman.

I will be pleased to respond to your questions.

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