2010 Competitiveness Report - Export-Import Bank of the United ...

long-term guarantee program, such as the “Take-Out” Option and, the reemergence of a
capital markets structure.
First, the U.S. exporting community continues to view Ex-Im Bank’s foreign content
policy as a significant competitive issue. In fact, the U.S. exporting community noted
with emphasis that the aggregate impact of the public policy considerations of economic
impact, PR 17/MARAD requirements, and U.S. content have represented a negative
influence on Ex-Im’s overall competitiveness. Nevertheless, Ex-Im Bank’s local cost
policy application has become a more positive attribute to Ex-Im’s overall
competitiveness because Ex-Im Bank is one of the few G-7 ECAs that does not explicitly
require local costs to be in the exporter’s contract in order to be eligible for coverage. As
a result, foreign buyers who benefit from Ex-Im Bank financing support have more
liberal access to local cost financing when purchasing goods and services from the U.S.
Second, Ex-Im Bank Environmental Policies were deemed competitive with those of the
G-7 ECAs. However, Ex-Im Bank’s Carbon Policy was viewed as an additional layer of
due diligence that placed the Bank at a competitive disadvantage compared to its OECD
peers. The chilling effect of the Carbon Policy may also play a role in the assessment as
only a small number of transactions in 2010 were subject to the provisions of the Carbon
Policy and only one transaction required Enhanced Due Diligence due to its high carbon
intensity.
Finally, regarding financing solutions in response to U.S. exporter and lender needs, the
fact that Ex-Im Bank cover and direct lending support was available through a variety of
programs did enhance Ex-Im Bank competitiveness and facilitate U.S exports in 2010.
In particular, Ex-Im Bank’s direct lending capacity, the Take-Out option, and the capital
markets program did contribute to Ex-Im Bank’s overall competitiveness. Although
these niche programs impacted a limited subset of Ex-Im Bank business, such risk
mitigating programs were considered critical to ensuring that lenders remained engaged
in export finance in support of U.S. exports. In fact, Ex-Im has been able to offer
competitive financing under its direct loan program more consistently than any other
ECA in the post-crisis economic environment.
Nevertheless, the wide program availability cannot fully offset U.S. exporter concerns
regarding other program and public policy considerations described in the report,
including content (considered to have an “Extremely negative” impact on
competitiveness) and carbon policy considerations, which is why despite the recent
surge in Ex-Im Bank’s activity, its overall competitiveness remained at par with the four
year “A-/B+” average (and slightly declined in 2010).
Looking Forward
Although Ex-Im Bank programs are generally competitive with those of its OECD G-7
counterparts, innovative, unregulated programs as well as new, exceptional (non-
OECD) players now represent a significant – if not majority share – of export credit
financing. The fact that unregulated export credit and financing programs continue to
grow and evolve has prompted U.S. exporters to demand more information on the
implications of these unregulated financing flows on U.S. exporter competiveness. In
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