Date: 1982-06-23
Speaker: ST GERMAIN (democrat)
Chamber: H

Mr. Speaker. unemployment in America has reached levels which have not been seen since the Great Depression. In my own home StateRhode Islandthe unemployment rate has reached 9.9 percent. Fortysix thousand Rhode Islanders are unable to find a job. This situation is largely the result of Reaganomics and the burdens the administrations high interest rate economic policy places on small- and moderatesized business. As is well known. these enterprises create over 70 percent of all jobs. It would help most if the Reagan administration and the Federal Reserve would let nominal and real interest rate decline. In addition. however. the profit outlook for small- and moderatesized firms would be improved significantly if they could successfully sell their products in foreign markets. To be successful exporters. though. these businesses need access to stable investment and credit sources. international marketing and financing expertise. and advanced communication and data processing capabilities. I believe these needs can and will be met in the coming years as export trading companiesETCsare _stablished and expanded around the country in response to enactment of H.R. 6016. the Bank Export Services Act introduced by myself and 24 other Banking. Finance. and Urban Affairs Committee members on March 31. 1PS2. Today. Mr. Speaker. I am pleased to report the Banking. Finance and Urban Affairs Committee favorably concluded. by an overwhelming vote of 40 to 0. its consideration of the Bank Export Services Act and urge prompt and equally favorable consideration by the full House of Representatives. The ability of small- and moderatesized businesses to successfully sell June 2-. 1982 II13896 their products in other countries is critically important for Americas economic health generally. and in particular to my area of New England. Traditionally. this region has been heavily involved in international trade. The New England Congressional Institute. for example. reports: In 1980. the six New England States generated over $10 billion in export sales. An estimated 135.000 jobs in New England are a direct result of export sales. When asked to predict the effect of passage of ETC legislation on their companies receipts in the New England Congressional Institute survey conducted in April. 57 percent of the export trading company respondents estimated an increase of over 25 percent. All of the respondents indicated increases of at least 5 percent. Applying the lowest of those esti. mates to current export data suggests that the potential effect of ETC legislation in New England means 500 milliot1 dollars earned in export sales. and over 10.000 jobs. (Emphasis in original.) The longstanding. inwardlooking posture of most U.S. producers contrasts sharply with the tremendous importance and reliance many foreign firms place on exporting. Most U.S. producers devote little or no effort to export promotion. Only 10 percent of U.S. manufacturing firms export. Fewer than 1 percent of these firms account for 80 percent of our exports. Until recently the U.S. market offered sufficient opportunities for the sale of U.S.-produced goods and services. There was little need for a strong export orientation by U.S. firms. The present world economy makes this inwordlooking posture obsolete. After World War II. the rapid growth in U.S. imports challenged the traditional domestic market share of U.S. producers in many product areas. The U.S. market changed from one dominated by domestic manufacturers to one in which demand was increasingly supplied by lowcost. lowwage foreign suppliers. In addition. the historically rapid growth in population and consumer demands. a hallmark of the U.S. economy in the past. slowed dramatically. Now new markets are needed by many U.S. producers. A Commerce Department survey concluded that about 20.000 U.S. manufacturers and agricultural producers offer goods and services which could be highly competitive abroad. The greatest potential for building Americas export capacity lies with the small- and mediumsized firms that have not previously turned their attention to overseas markets. Despite the Department of Commerces finding. many small- and mediumsized manufacturers never attempt to export. Some are intimidated by the complexity of exporting. Others cannot afford the higher than normal transactions costs associated with exporting. The establishment of ETCs to promote U.S. exports will facilitate sales of these products overseas. However. as was the case with Japanese ETCs. allowing banking organizations to invest directly in and to own ETCs is crucial if ETCs are going to increase U.S. exports. Banking organizations can provide services which will make an ETC function more effectively. They can supply the capital and international expertise necessary to allow ETCs to experience the. economies of scale necessary to overcome the high fixed costs and the redtap associated with exporting. The existing international communications and data processing systems and financial expertise of large banks can provide additional benefits. Due to a banks business contacts. and those of their correspondents with both domestic and foreign businesses. banking organizations are uniquely suited to serve as a bridge between potential exporters and potential importers. Thus. an ETC owned by a banking organization. represents a most efficient method of finding compatible buyers and sellers. The concerns .of many about maintaining the traditional separation of banking and commerce are addressed in H.R. 6016 by allowing only investments by bank holding companies or bankers banks but not banks themselves. Thus. having an export trading company operate within a bank itself would be precluded. and the existing ample bank holding company and bankers bank supervisory and regulatory resources of the Federal Reserve System would be available to prevent undue risk taking. Exporters. manufacturers. and banking organizations are enthusiastic about the export business opportunities this bill will create. In testimony before my Subcommittee on Financial Institutions Alden Anderson. the president of Hospital Trust Corp. in Providence. R.I.. said the passage of H.R. 6016. the Bank Export Services Act. will allow Hospital Trust "to make a valuable contribution to the economy of New England and. of course. to Rhode Island." Mr. Speaker. the action today by the Banking. Finance and Urban Affairs Committee represents a bipartisan effort of the highest order to do something about the lagging situation in U.S. exports and high unemployment. I commend and thank my committee colleagues on both sides of the aisle. and urge the House to follow our example and promptly and affirmatively pass this important legislation.e