79–006

106TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 106–528

OIL PRICE REDUCTION ACT OF 2000

MARCH 17, 2000.—Committed to the Committee of the Whole House on the State

of the Union and ordered to be printed

Mr. GILMAN, from the Committee on International Relations,

submitted the following

R E P O R T

together with

SUPPLEMENTAL VIEWS

[To accompany H.R. 3822]

[Including cost estimate of the Congressional Budget Office]

The Committee on International Relations, to whom was referred

the bill (H.R. 3822) to reduce, suspend, or terminate any assistance

under the Foreign Assistance Act of 1961 and the Arms Export

Control Act to each country determined by the President to be engaged in oil price fixing to the detriment of the United States economy, and for other purposes, having considered the same, reports

favorably thereon with an amendment and recommends that the

bill as amended do pass.

The amendment is as follows:

Strike out all after the enacting clause and insert in lieu thereof

the following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Oil Price Reduction Act of 2000’’.

SEC. 2. FINDINGS.

The Congress finds the following:

(1) Oil producing countries, including the nations of the Organization of Petroleum Exporting Countries (OPEC), took concerted actions in March and September of 1999 to cut oil production and hold back from the market 4,000,000

barrels a day representing approximately six percent of the global supply.

(2) OPEC, in its capacity as an oil cartel, has been a critical factor in driving

prices from approximately $11 a barrel in December 1998 to a high of $30 a

barrel in mid-February 2000, levels not seen since the Persian Gulf Conflict.

(3) On February 10, 2000, a hearing before the Committee on International

Relations of the House of Representatives on ‘‘OPEC and the Northeast Energy
2

Crisis’’ clearly demonstrated that OPEC’s goal of reducing its oil stocks was the

major reason behind price increases in heating oil, gasoline, and diesel oil

stocks.

(4) During this hearing, the Assistant Secretary in the Office of International

Affairs of the Department of Energy noted that artificial supply constraints

placed on the market are ultimately self-defeating in so far as they increase volatility in the market, lead to boom and bust cycles, and promote global instability, particularly in developing countries whose economies are extremely vulnerable to sharp price increases.

(5) These price increases have caused inflationary shocks to the United States

economy and could threaten the global economic recovery now underway in Europe and Asia where the demand for oil is rising.

(6) The transportation infrastructure of the United States is under stress and

tens of thousands of small- to medium-sized trucking firms throughout the

Northeast region are on the verge of bankruptcy because of the rise in diesel

oil prices to more than $2 per gallon—a 43 percent increase in the Central Atlantic region and a 55 percent increase in the New England region—an increase

that has had the effect of requiring these trucking firms to use up to 20 percent

of their operating budgets for the purchase of diesel oil.

(7) Many elderly and retired Americans on fixed incomes throughout the

Northeast region of the United States cannot afford to pay the prevailing heating oil costs and all too often are faced with the choice of paying the grocery

bills or staying warm.

(8) Several key oil producing nations relied on the United States military for

their protection in 1990 and 1991, including during the Persian Gulf Conflict,

and these nations still depend on the United States for their security.

(9) Many of these nations enjoy a close economic and security relationship

with the United States which is a fundamental underpinning of global security

and cooperation.

(10) A continuation of the present policies put in place at the meeting of

OPEC Ministers in March and September of 1999 threatens the relationship

that many of the OPEC nations enjoy with the United States.

SEC. 3. POLICY OF THE UNITED STATES.

(a) POLICY WITH RESPECT TO OIL EXPORTING COUNTRIES.—It shall be the policy

of the United States to consider the extent to which major net oil exporting countries engage in oil price fixing to be an important determinant in the overall political, economic, and security relationship between the United States and these countries.

(b) POLICY WITH RESPECT TO OIL IMPORTING COUNTRIES.—It shall be the policy

of the United States to work multilaterally with other countries that are major net

oil importers to bring about the complete dismantlement of international oil price

fixing arrangements.

SEC. 4. REPORT TO CONGRESS.

Not later than 30 days after the date of enactment of this Act, the President shall

transmit to the Congress a report that contains the following:

(1) A description of the overall economic and security relationship between

the United States and each country that is a major net oil exporter, including

each country that is a member of OPEC.

(2) A description of the effect that coordination among the countries described

in paragraph (1) with respect to oil production and pricing has had on the

United States economy and global energy supplies.

(3) Detailed information on any and all assistance programs under the Foreign Assistance Act of 1961 and the Arms Export Control Act, including licenses

for the export of defense articles and defense services under section 38 of such

Act, provided to the countries described in paragraph (1).

(4) A determination made by the President in accordance with section 5 for

each country described in paragraph (1).

SEC. 5. DETERMINATION BY THE PRESIDENT OF MAJOR OIL EXPORTING COUNTRIES ENGAGED IN PRICE FIXING.

The report submitted pursuant to section 4 shall include the determination of the

President with respect to each country described in section 4(1) as to whether or

not, as of the date on which the President makes the determination, that country

is engaged in oil price fixing to the detriment of the United States economy.
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SEC. 6. DIPLOMATIC EFFORTS TO END PRICE FIXING.

(a) DIPLOMATIC EFFORTS.—Not later than 30 days after the date on which the

President transmits to the Congress the report pursuant to section 4, the President

shall—

(1) undertake a concerted diplomatic campaign to convince any country determined by the President pursuant to section 5 to be engaged in oil price fixing

to the detriment of the United States economy that the current oil price levels

are unsustainable and will negatively effect global economic growth rates in oil

consuming and developing countries; and

(2) take the necessary steps to begin negotiations to achieve multilateral action to reduce, suspend, or terminate bilateral assistance and arms exports to

major net oil exporters engaged in oil price fixing as part of a concerted diplomatic campaign with other major net oil importers to bring about the complete

dismantlement of international oil price fixing arrangements described in such

report.

(b) REPORT ON DIPLOMATIC EFFORTS.—Not later than 120 days after the date of

the enactment of this Act, the President shall transmit to the Congress a report describing any diplomatic efforts undertaken in accordance with subsection (a) and the

results achieved by those efforts.

(c) AUTHORITY TO REDUCE, SUSPEND, OR TERMINATE ASSISTANCE.—Pursuant to

the current authorities of the President and in furtherance of multilateral efforts,

or bilateral efforts when the United States is the sole exporter of a particular defense article or defense service, the President is authorized, at any time after transmitting the report pursuant to section 4, to reduce, suspend, or terminate assistance

under the Foreign Assistance Act of 1961 and the Arms Export Control Act, including the license for export of defense articles or defense services under section 38 of

such Act, to any country determined by the President pursuant to section 5 to be

engaged in oil price fixing to the detriment of the United States economy.

SEC. 7. DEFINITIONS.

In this Act:

(1) OIL PRICE FIXING.—The term ‘‘oil price fixing’’ means participation in any

agreement, arrangement, or understanding with other countries that are oil exporters to increase the price of oil or natural gas by means of, inter alia, limiting oil or gas production or establishing minimum prices for oil or gas.

(2) OPEC.—The term ‘‘OPEC’’ means the Organization of Petroleum Exporting Countries.

BACKGROUND AND PURPOSE

In testimony before the International Relations Committee on

February 10, 2000, the Assistant Secretary of the Office of International Affairs at the Department of Energy, Mr. David Goldwyn,

noted that, ‘‘* * * oil prices have more than doubled in the past

year. Prices have increased from near historically low levels,

around $11 in December 1998, to recent levels not seen since the

Gulf crisis. This rise in price is largely attributed to the actions

taken by the Organization of Petroleum Exporting Countries

(OPEC) to restrict supplies to the market * * *. Beginning in

March of 1998, OPEC instituted three tiers of production cuts,

which eventually totaled 4.3 million barrels per day. OPEC member compliance with the third cut, effective in April, 1999, has created an increasingly tight market as crude oil inventories have

been drawn down over the course of the past year.’’

Mr. Goldwyn went on to say that the worldwide shortfall in

crude oil last year averaged over one million barrels a day, an

amount which most observers believe has now reached two million

barrels a day. It is the view of the International Energy Agency

that oil exporting nations must close this two million barrel a day

gap in the very near future to prevent oil prices from rising any

further next month.

These successive waves of production cutbacks from OPEC nations and their oil exporting allies were not met with strong reac-
4

tion from the administration at the time decisions were made.

Since the heating oil crisis began to affect the Northeast, Secretary

of Energy Bill Richardson has been very active in pursuing energyrelated discussions with OPEC members to bring about a significant increase in production.

It is hard to gauge whether OPEC member states in their upcoming meeting in Vienna on March 27 will increase production to

make up the current global shortfall of two million barrels per day.

As heating oil and gasoline prices have mounted, our consumers,

elderly constituents, and businessmen across the Northeast and the

entire country have struggled to make ends meet, as the administration attempts to formulate a strategy to address this mounting

threat from OPEC nations.

In the view of the Committee, the Oil Price Reduction Act, H.R.

3822, would force the administration to undertake some critical

first steps in identifying the threats to our energy security from

OPEC and non-OPEC producers alike and in developing options for

dealing with them in a coherent and coordinated fashion.

This bill contains a number of findings relating to the OPEC and its efforts to limit oil production and drive prices up from $11 a

barrel to over $30 today. It notes that the price increases have

caused inflationary shocks to the U.S. economy, have put our entire

transportation infrastructure under stress, have harmed many

Americans on fixed incomes and could threaten as well the global

economic recovery now underway in Asia and Europe. It notes that

a continuation of the present OPEC policies of withholding oil production from the market could undermine the relationship we have

with the OPEC member states and other key net oil exporting

countries.

It states that it should be the policy of the United States to take

into account the extent to which a major net oil exporting country

engages in oil price fixing as an important determinant in our overall political, economic and security relationship. The bill also states

that the U.S. should work multilaterally with other countries that

are major net oil importers to bring about the dismantling of oil

price fixing arrangements.

Not later than 30 days after enactment, the President shall report on the overall relationship we have with each country that is

a major oil exporter, shall describe the nature of the coordination

between these countries in regard to the effect that oil pricing and

production has had on the U.S. economy, and shall provide detailed

information on any assistance programs under the Foreign Assistance Act, (FAA) or the Arms Export Control Act, (AECA) including

licenses for the export of defense articles and services, provided to

every one of these countries.

The report would include a determination by the President on

whether or not any country is engaged in oil price fixing to the detriment of the U.S. economy.

The bill further stipulates that not later than 30 days after the

President transmits this report to Congress he should (1) undertake a diplomatic campaign to convince those countries identified

as engaged in price fixing that current oil price levels will have a

negative impact on oil consuming and developing countries; and (2)

take necessary steps to begin negotiations to achieve multilateral
5

actions with other major net oil importers, including the suspension, termination or reduction of bilateral assistance or arms sales,

with the goal of dismantling of oil price fixing arrangements. Not

later than 120 days after enactment, the President shall report to

Congress describing the results and achievements of these diplomatic efforts.

Finally, the bill specifies that in furtherance of these multilateral

efforts, or bilateral efforts to the extent the U.S. is the sole exporter of a particular defense article or service, the President is authorized to reduce, suspend or terminate assistance under the FAA

or arms sales under the AECA to any country determined to be engaged in oil price fixing.

It is not the intention of the Committee that any provision of this

bill should limit or in any way constrain the authorities and powers

of the President in protecting the national economic security of the

United States against the activities of OPEC, and its coordination

of production levels among its member states and other major net

oil exporting countries to set prices.

The purpose of this legislation is to ensure that the President determines whether OPEC members or other major net oil exporters

are engaged in price fixing to the detriment of the United States

economy. If the President makes such determination for any country, then the President must undertake a concerted bilateral and

multilateral diplomatic campaign to bring about the end of oil price

fixing arrangements.

In that regard, in testimony before the International Relations

Committee, administration officials have stated clearly that OPEC

has restricted supplies to the market driving up prices and that its

activities as a cartel are not in the national interests of the United

States.

This bill also makes clear that any determination by the President that a country is involved in price fixing to the detriment of

the U.S. economy should also lead to (1) a review of our relationship with those countries and (2) a comprehensive review of those

options available to the President as part of the multilateral effort

including the suspension, termination or reduction of assistance or

arms sales to these same countries.

Specifically, it is the intent of the Committee that the administration provides complete and accurate information about the pricefixing activities of all major net oil exporting nations, including

those OPEC member states and non-OPEC members which have

held production off the world market with the aim of driving up

prices to the detriment of the U.S. economy. By all accounts, the

U.S. economy has been harmed by the rapid rise of prices from $11

a barrel in early 1999 to over $32 a barrel in mid-March.

High energy prices helped push the U.S. Labor Department’s

producer price index up 1 percent in February as prices paid to our

nation’s producers posted the biggest increase since the Iraqi invasion of Kuwait in October of 1990. Other key prices, including

those for autos and computers actually fell indicating that inflationary pressures are largely oil-related.

The Center for Global Energy Studies has estimated that $30 a

barrel oil cuts the U.S. growth rate by nearly 1 percent. But millions of Americans driving to and from work found that the dra-
6

matic rise in gasoline prices—up 12 cents in the past two weeks

alone—is beginning to cut into their disposable income. For thousands of American trucking firms the dramatic rise in diesel oil

prices has already driven up their operating costs forcing many

into bankruptcy.

COMMITTEE ACTION

H.R. 3822 was introduced by Representative Gilman on March 2,

2000. The bill was referred to the Committee on International Relations.

The Committee has held two hearings on the issue of oil price

fixing since the beginning of 2000. On February 10, 2000, the Committee took testimony from the Assistant Secretary for International Affairs of the Department of Energy, from a Deputy Assistant Secretary of State for Economic Affairs in the Department

of State, and from private witnesses. On March 1 the Committee

took testimony from the Secretary of the Department of Energy,

the Honorable Bill Richardson.

The Committee on International Relations marked up the bill in

open session, pursuant to notice, on March 15, 2000. During its

consideration, the Committee agreed to an amendment in the nature of a substitute offered by Mr. Gilman. Prior to the final vote

on the amendment in the nature of a substitute, an amendment

was offered by Mr. Gejdenson to the pending amendment. The

Gejdenson amendment replaced certain language relating to Presidential authority to reduce, suspend, or terminate assistance. The

Gejdenson amendment provided, in essence, that the only bilateral

efforts to reduce, suspend, or terminate assistance under the Foreign Assistance Act or Arms Export Control Act shall be with respect to a particular defense article or service if the United States

is the sole exporter of such an article or service. The Gejdenson

amendment was agreed to by a record vote of 21 to 15.

Subsequently, the Committee agreed to a motion offered by Mr.

Bereuter to favorably report the bill, as amended, to the House of

Representatives, by voice vote, a quorum being present.

Record votes on amendments and motion to report

Clause (3)(b) of rule XIII of the Rules of the House of Representatives requires that the results of each record vote on an amendment or motion to report, together with the names of those voting

for or against, be printed in the committee report. The following

record vote was taken during consideration of H.R. 3822:

Description of amendment, motion, order, or other proposition (votes

during markup of H.R. 3822—March 15, 2000)

Vote No. 1.— Gejdenson amendment to the Gilman substitute

amendment.

Voting yes: Manzullo, Houghton, Campbell, Gejdenson, Berman,

Ackerman, Faleomavaega, Payne, Menendez, Brown, Hastings,

Danner, Hilliard, Sherman, Wexler, Rothman, Davis, Pomeroy,

Delahunt, Meeks and Lee.
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Voting no: Gilman, Goodling, Bereuter, Smith, Gallegly, RosLehtinen, Ballenger, Rohrabacher, Royce, King, Chabot, McHugh,

Brady, Cooksey and Tancredo.

Ayes, 21. Noes, 15.

OTHER MATTERS

Committee oversight findings

In compliance with clause 3(c)(1) of rule XIII of the Rules of the

House of Representatives, the Committee reports the findings and

recommendations of the Committee, based on oversight activities

under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated in the descriptive portions of this report.

Committee on Government Reform findings

Clause 3(c)(4) of rule XIII of the Rules of the House of Representatives requires each committee report to contain a summary of the

oversight findings and recommendations made by the Government

Reform Committee pursuant to clause (4)(c)(2) of rule X of those

Rules. The Committee on International Relations has received no

such findings or recommendations from the Committee on Government Reform.

Advisory Committee statement

No advisory committees within the meaning of section 5(b) of the

Federal Advisory Committee Act were created by this legislation.

Applicability to the legislative branch

The Committee finds that the legislation does not relate to the

terms and conditions of employment or access to public services or

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act.

Constitutional authority statement

In compliance with clause 3(d)(1) of rule XIII of the Rules of the

House of Representatives, the Committee cites the following specific powers granted to the Congress in the Constitution as authority for enactment of H.R. 3822 as reported by the Committee: Article I, section 8, clause 1 (relating to providing for the common defense and general welfare of the United States); Article I, section

8, clause 3 (relating to the regulation of commerce with foreign nations); and Article I, section 8, clause 18 (relating to making all

laws necessary and proper for carrying into execution powers vested by the Constitution in the Government of the United States or

in any Department or Officer thereof).

Preemption clarification

Section 423 of the Congressional Budget Act of 1974 requires the

report of any committee on a bill or joint resolution to include a

committee statement on the extent to which the bill or joint resolution is intended to preempt state or local law. The Committee

states that H.R. 3822 is not intended to preempt any state or local

law.
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New budget authority and tax expenditures, Congressional Budget

Office cost estimate, and Federal mandates statements

Clause 3(c)(2) of rule XIII of the Rules of the House of Representatives requires each committee report that accompanies a measure

providing new budget authority, new spending authority, or new

credit authority or changing revenues or tax expenditures to contain a cost estimate, as required by section 308(a)(1) of the Congressional Budget Act of 1974, as amended, and, when practicable

with respect to estimates of new budget authority, a comparison of

the estimated funding level for the relevant program (or programs)

to the appropriate levels under current law.

Clause 3(d) of rule XIII of the Rules of the House of Representatives requires committees to include their own cost estimates in

certain committee reports, which include, when practicable, a comparison of the total estimated funding level for the relevant program (or programs) with the appropriate levels under current law.

Clause 3(c)(3) of rule XIII of the Rules of the House of Representatives requires the report of any committee on a measure which

has been approved by the Committee to include a cost estimate

prepared by the Director of the Congressional Budget Office, pursuant to section 403 of the Congressional Budget Act of 1974, if the

cost estimate is timely submitted.

Section 423 of the Congressional Budget Act requires the report

of any committee on a bill or joint resolution that includes any Federal mandate to include specific information about such mandates.

The Committee states that H.R. 3822 does not include any Federal

mandate.

The Committee adopts the cost estimate of the Congressional

Budget Office as its own submission of any new required information with respect to H.R. 3822 on new budget authority, new

spending authority, new credit authority, or an increase or decrease in the national debt. It also adopts the estimate of Federal

mandates prepared by the Director of the Congressional Budget Office pursuant to section 423 of the Unfunded Mandates Reform Act.

The estimate and report which has been received is set out below.

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,

Washington, DC, March 17, 2000.

Hon. BENJAMIN A. GILMAN,

Chairman, Committee on International Relations,

House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3822, the Oil Price Reduction Act of 2000.

If you wish further details on this estimate, we will be pleased

to provide them. The CBO staff contact is Sunita D’Monte.

Sincerely,

BARRY B. ANDERSON

(For Dan L. Crippen, Director).

Enclosure.
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H.R. 3822—Oil Price Reduction Act of 2000

H.R. 3822 would require the President to report to Congress on

the economic and security relationships between the United States

and major oil exporting countries (including members of the Organization of Petroleum Exporting Countries) and whether those

countries have engaged in price fixing that has harmed the U.S.

economy. The bill would authorize the President to reduce, suspend, or terminate foreign assistance to any country that engages

in price fixing that has harmed the U.S. economy and would require him to make diplomatic efforts to end the price fixing.

CBO estimates that H.R. 3822 would have insignificant costs resulting from the reporting requirements and possible increase in

diplomatic activity. The authorization to terminate, suspend, or reduce U.S. foreign assistance to specific countries would have no

budgetary impact because the President has that authority under

current law. Because H.R. 3822 would not affect direct spending or

receipts, pay-as-you-go procedures would not apply.

H.R. 3822 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would

not affect the budgets of state, local, and tribal governments.

The estimate was prepared by Sunita D’Monte. This estimate

was approved by Peter H. Fontaine, Deputy Assistant Director for

Budget Analysis.

SECTION-BY-SECTION ANALYSIS

Section 1. Short title

The bill may be cited as the ‘‘Oil Price Reduction Act’’.

Section 2. Findings

This bill contains a number of findings relating to the Organization of Petroleum Exporting Countries and its efforts to limit oil

production and drive prices up from $11 a barrel to over $30 today.

It notes that the price increases have caused inflationary shocks to

the U.S. economy, have put our entire transportation infrastructure

under stress, have harmed many Americans on fixed incomes and

could threaten as well the global economic recovery now underway

in Asia and Europe.

It notes that several key oil producing nations relied on the U.S.

military for their protection in 1990 and 1991 and that these nations still depend on the U.S. for their security. Finally, it finds

that a continuation of the present OPEC policies of withholding oil

production from the market could undermine the relationship we

have with the OPEC member states and other key net oil exporting

countries.

Section 3. Policy of the United States

It states that it should be the policy of the United States to take

into account the extent to which a major net oil exporting country

engages in oil price fixing as an important determinant in our overall political, economic and security relationship. The bill also states

that the U.S. should work multilaterally with other countries that

are major net oil importers to bring about the dismantling of oil

price fixing arrangements.
10

Section 4. Report to Congress

Not later than 30 days after enactment, the President shall report on the overall relationship we have with each country that is

a major oil exporter, shall describe the nature of the coordination

between these countries in regard to the effect that oil pricing and

production has had on the U.S. economy, and shall provide detailed

information on any assistance programs under the Foreign Assistance Act, FAA, or the Arms Export Control Act, AECA, including

licenses for the export of defense articles and services, provided to

every one of these countries.

Section 5. Determination by the President on major oil exporting

countries engaged in price fixing

The report would include a determination by the President on

whether or not any country described in Section 4 is engaged in oil

price fixing to the detriment of the U.S. economy.

Section 6. Diplomatic efforts to end price fixing

The bill further stipulates that not later than 30 days after the

President transmits this report to Congress he should (1) undertake a diplomatic campaign to convince those countries identified

as engaged in price fixing that current oil price levels will have a

negative impact on oil consuming and developing countries and (2)

take multilateral actions with other major net oil importers, including the suspension, termination or reduction of bilateral assistance

or arms sales, with the goal of dismantling of oil price fixing arrangements.

Not later than 120 days after enactment, the President shall report to Congress describing the results and achievements of these

diplomatic efforts.

Finally, the bill specifies that in furtherance of these multilateral

efforts or bilateral efforts when the U.S. is the sole exporter of a

particular defense article or service, the President is authorized to

reduce, suspend or terminate assistance under the FAA or arms

sales under the AECA to any country determined to be engaged in

oil price fixing.

Section 7. Definitions

The bill defines ‘‘oil price fixing’’ as participation in any agreement with other oil exporting countries to increase the price of oil

by limiting production or establishing minimum price levels. It defines OPEC as the Organization of Petroleum Exporting Countries.
(11)

SUPPLEMENTAL VIEWS

I voted to move the ‘‘Oil Price Reduction Act of 2000’’ from the

International Relations Committee to the floor of the House of Representatives for the purpose of giving the President the authority

to restrict or stop foreign aid from the United States to countries

involved in fixing the production limits of oil.

The Organization of Petroleum Exporting Countries (OPEC),

which includes Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela,

and the other major oil producing nations of Mexico, Norway,

Oman, and Russia all agreed to restrict the production of oil, resulting in a marked increase in fuel prices. According to a memo

prepared for the committee from the Congressional Research Service (CRS), countries receiving direct U.S. foreign aid include Algeria, Indonesia, Nigeria, Venezuela, Mexico, Oman, and Russia.

This conspiracy has caused multiple problems in our country.

First, it will cost farmers paying sky high prices for diesel fuel

more to put in and harvest their crops at a time when the price

of crops is at an all time low. Second, it hurts consumers because

the high cost of fuel increases the cost of transportation of food and

consumer items. Third, it hurts all Americans because the inflationary spiral of increased fuel costs may spur the Federal Reserve

to increase interest rates.

Additionally, in the case of Kuwait and Saudi Arabia, the United

States, a little less than a decade ago, helped ensure their sovereignty during the Persian Gulf War. Have they forgotten the sacrifice of our fighting men and women?

But in supporting this bill, I wanted to express my point of view

that I do not believe our export promotion programs should be included in the definition of ‘‘foreign aid’’ in this legislation. Technically, the Overseas Private Investment Corporation (OPIC) and

the Trade Development Agency (TDA) are authorized by Congress

under the overall statutory framework of the Foreign Assistance

Act of 1961. Thus, they are lumped in with other foreign aid programs.

As the prime author of the Export Enhancement Act of 1999,

which reauthorized OPIC and TDA and was signed into law by the

President last year (P.L. 106–158), I know that these programs are

not give-aways to foreign governments. In fact, they are two of the

many critically important tools that helps U.S. workers win export

opportunities which otherwise would have gone to foreign competitors.

For 29 years, OPIC has been the U.S. government agency providing political risk insurance and financing or projects that help

America compete abroad and promote stability and development in

strategic countries and economies around the world. OPIC’s political risk insurance covers three main areas—expropriation (loss of
12

an investment due to nationalization or confiscation by a foreign

government); currency inconvertibility (inability to remit profits

from local currency to US dollars); and political violence (loss of assets or income due to war, revolution or politically-motivated civil

strife, terrorism or sabotage). Since 1971, OPIC supported projects

have generated $61 billion in U.S. exports and created more than

242,000 American jobs. And, unlike other foreign aid programs,

OPIC operates totally on a user-fee self-sustaining basis by charging U.S. companies for their services, which results in no cost to

the taxpayer. OPIC brought in $144 million in revenue to the U.S.

Treasury last year and they expect a $220 million surplus this

year. And, OPIC has $3.7 billion in reserves.

Last year, OPIC had nine projects worth $601.7 million in three

countries (Indonesia, Venezuela, and Russia) potentially targeted

by H.R. 3822. Foreign competitors may have won these projects if

it wasn’t for OPIC. By reducing, suspending, or terminating OPIC’s

operations in these targeted countries to show our disgust with

OPEC’s price fixing scheme will only boomerang on future U.S. export opportunities to these countries.

TDA develops feasibility studies designing in American specifications so that U.S. exporters can win major infrastructure projects

in developing countries and emerging economies later down the

road. This 43 person agency has generated $16 billion in exports

since its inception in 1981. Every $1 in spending for TDA projects

has led to the export of $37 in U.S. goods and services overseas.

In the law that I authored, the Export Enhancement Act requires,

to the maximum extent possible, the imposition of ‘‘success fees’’ on

companies that win export deals thanks to the groundwork laid by

a feasibility study conducted by the TDA. Thus, more and more

companies will pay to use these services. This is certainly not an

‘‘aid’’ program.

Since the early 1990’s TDA has been involved in 284 projects

(funding feasibility studies, organizing visits to the United States,

match-making conferences, etc.) worth $81.6 million in eight nations potentially covered by H.R. 3822 (Algeria, Nigeria, Oman,

Saudi Arabia, Indonesia, Russia, Mexico, and Venezuela). Using

TDA’s calculus, the impact of these efforts will result in $3 billion

of U.S. exports to these countries. It makes no sense, then, to cut

off our exports by halting TDA programs in these countries to protest OPEC’s behavior.

In my opinion, OPIC and TDA are not ‘‘foreign aid’’ programs.

U.S. companies pay to use these services. They are primarily a tool

to help U.S. exporters win sales that would have otherwise gone to

our foreign competitors. Thus, as the Executive Branch tries to discern the will of Congress on this issue, I want to make it clear from

my perspective that OPIC and TDA should be excluded from the

definition of foreign assistance under the Foreign Assistance Act of

1961. These programs simply help Americans by increasing exports

and job growth in this country.

DONALD A. MANZULLO.

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