Date: 1987-04-28
Speaker: ST GERMAIN (democrat)
Chamber: H

Mr. Chairman. I yield myself such time as I may consume. Mr. Chairman. the effects of a mushrooming trade deficit have been felt in every section of this nation. In all of our districts. plants are closed. workers are unemployed and consumers are purchasing foreign products which used to be manufactured in this Nation. In some cases. our U.S. companies have not taken the steps necessary to be internationally competitive. In other cases. American business and workers have been the victims of unfair competition from foreign countries. It is imperative that Congress take action to reverse the runaway trade deficit. The bill we have before us today will give our national leaders the tools to fight unfair foreign competition. open up foreign markets and increase the ability of U.S. companies to export U.S. produced goods and services. I am proud of the contribution of the Banking Committee in this effort. Four subcommittees produced legislation which .has been included in title IV. I want to recognize and commend the efforts of members of the Banking Committee and especially the efforts of the subcommittee chairmen. The Subcommittee on International Development Institutions and Finance. chaired by WALTER FAUNTROY. produced an innovative approach to help insure that developing nations have the financial resources to continue as important trading partners. The Subcommittee on Economic Stabilization. chaired by MARY ROSE OAKAR. reported the provisions creating the Council on Industrial Competitiveness. The Council is a much needed tool for developing and coordinating longrange strategies to assure the international competitiveness of American business. The Subcommittee on International Finance. Trade and Monetary Policy. chaired by ROBERT GARCIA. provided a mechanism for the formulation of a coherent international exchange rate policy and the coordination of economic policy with other major nations. All the members of the Banking Committee know the time and effort needed to produce this important legislation. I know I speak for the entire committee in expressing our thanks to these subcommittee chairmen. I will defer to each of them for further explanations of their provisions. In the time I have remaining. I want to describe the contribution of the Subcommittee on Financial Institutions. which I chair. Section 476 and 477 contain amendments to the Export Trading Company Act of 1982. The committees goal in reporting these amendments to the 1982 act was to balance two competing and important concerns. Our immediate concern is to increase the participation of financial institutions in promoting the exportation of U.S. products. However. the committee must also insure that any such changes are accomplished in a manner that does not threaten the safety and soundness of the banking system or individual financial institutions. The legislation before us today can accomplish both those goals. It is a measured but significant step toward improving our export capability. The Export Trading Company Act was signed into law in October of 1982. Amid concerns about a $50 billion trade deficit and rising unemployment. Congress authorized banks to engage in a limited range of activities that would not otherwise be permitted to financial institutions except that these activities fostered the exportation of U.S.-produced goods and services. The purpose of this legislation was to increase American exports by providing American business with greater knowledge of foreign markets. Clearly this was an area where the Congress felt that the contribution of the American banking communitys -experience and knowledge would result in the creation of jobs for American workers. During floor consideration of last years trade bill. an amendment was offered by Representative BONKER to substantially amend title II of the Export Trading Company Act. I oppose that amendment until it could be considered by our committee. Pursuant to a floor discussion with Mr. LEAcH and me. Mr. BONKER withdrew his amendment and the Banking Committee began discussions with the Department of Commerce and the Federal Reserve. As a result of these discussions and of subcommittee hearings. it became apparent that some additional flexibility for bank related export trading companies was warranted. The committees hearing on the implementation of Export Trading Company Act revealed that the success of bankrelated ETCs has been limited. Of the 43 approved by the Federal Reserve. 14 have ceased operation and only a handful of the remaining 29 have even approached original expectations. There has been little interest evidenced from regional banks or from cooperative efforts by groups of smaller banks. In recent years few sectors of the American economy have been successful exporters. Most observers would agree that the primary difficulties facing ETCs are no different than those facing other exporters. The value of the dollar made U.S. goods and services uncompetitive. Restrictive trade barriers and a lack of hard currency exist throughout the world. International marketing has become extremely competitive and profit margins are getting thinner. Finally. there remains in U.S. manufacturers and bankers an institutional skepticism and lack of experience in international markets. Certainly it has been a most difficult time to embark upon new export related activities. The committee found the basic structure of the act sound. We also found that there were areas where additional flexibility could result in greater use of bankrelated export trading companies and yet maintain the basic export promotion purpose of the act. The proposals received by the Banking Committee for changes in the 1982 act focused on six areas. The committee adopted the recommendation of the industry for an end to strict dollar volume limits on inventories. The legislation also includes recommendations contained in several proposals which lengthened the determination period from 2 to not less than 4 years and provides a 2year startup period. This legislation contains. with some modification. the provisions of proposals received by the committee to increase the permitted leveraging ratios of assets to capital and to permit the facilitation of third party trade to be recognized as an export activity under certain conditions. The need for legislation to increase U.S. exports has never been greater. Despite adjustment in international currency -values. our trade deficit could approach $200 billion this year. Unless we take dramatic steps. we will squander the economic gains of generations of hardworking Americans and leave to our children only the bills to pay for our profligacy. I urge my. colleagues to support this important legislation. Mr. Chairman. I do have a concern about section 720 of this bill. This section requires that the Secretary of Commerce and Treasury investigate and report to Congress on the financial services foreign firms can offer in the United States and what financial services U.S. firms can offer in foreign countries. In general. the Banking Committee has no problems with the study of the reciprocal treatment of foreign financial services other than banking services. While I am confident that it was not the intention of the Committee on Energy and Commerce. section 702 has raised concerns and questions about committee jurisdiction. To the extent that this study examines banks and similar institutions. the committee wishes to clarify that it in no way affects or alters the Banking Committees sole jurisdiction over the activities of foreign or domestic banks. As a matter of fact. and I will say this very slowly. if this legislative tightrope walking continues. it may well be that the Committee on Banking. Finance and Urban Affairs will actively seek and pursue an expansion of Jurisdiction to properly reflect its obligations and to assist and facilitate it in the execution of its mandate from the Congress over the years. Mr. Chairman. I reserve the balance of my time.