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

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Chapter 1: Introduction Background Ex-Im Bank prepares its Competitiveness Report on an annual basis as mandated by section 8A of its Charter (the Export-Import Bank Act of 1945, as amended). The purpose of the Competitiveness Report is to present Congress with an assessment of Ex- Im Bank’s success in providing U.S. exporters with financial terms and conditions that are “fully competitive” with support provided by the major official export credit agencies (ECAs). Competitiveness Assessment Competitiveness is gauged within the context of the medium- and long-term (MLT) official export credit programs of the G-7 countries (as these ECAs have historically accounted for about 80% of MLT export finance). The competitiveness assessment is a series of comparisons that draw on quantitative information about the programs and policies of the major foreign ECAs’ activity and qualitative information collected through a survey of lenders and exporters and exporter and lender focus group meetings. In light of the increasing volume of MLT activity attributable to certain non-OECD ECAs and the steady drum beat of general and specific references to the impact that such an increase is having on U.S. exporter competitiveness, Ex-Im Bank has also included supplemental information on the G-11 ECA export credit programs and activity levels to the extent this information was available (see Data Qualification section below). G-11 ECAs are the G-7 ECAs (Canada, France, Germany, Italy, Japan, United Kingdom and United States) plus Brazil, Russia, India and China, also known as the BRICs. Data Qualification The lack of transparent and comparable data for some of these ECAs has been a major challenge in the preparation of this year’s Competitiveness Report. The difficulty was greater this year because the analysis was trying to reach more precise degrees of differentiation. That is, this year’s analysis is making a special effort to: Differentiate within the OECD/G-7 population between standard, officially supported export credits that are regulated by the OECD Arrangement and “unregulated” exportrelated credits or those that are not subject to the OECD Arrangement rules; and Identify “exceptional” financing by non-OECD ECAs that refers to forms of financing that are not comparable to OECD ECA official programs. Reflecting this focus on revisions to present comparable data as accurately as possible, Ex-Im Bank made adjustments (compared to previous Competitiveness Reports) to the data for Canada, Italy, Japan, UK, and China. As most of the adjustments pushed volumes of standard activity by G-7 ECAs down, the aggregate G-7 totals presented in Table 2 are lower than in previous reports. Nevertheless, the data can now provide a 5
easonable indication of both the comparable and total size of G-7 MLT standard activity that is regulated by the OECD Arrangement and the overall size of G-7 unregulated activity. On the other hand, the data for the non-OECD countries (which have an even greater diversity of programs, very different reporting systems, and limited transparency) is mostly an extrapolation from dated reports and represents at best an approximation as possible of each country’s activity based on the information available at this time. As much of the non-OECD “activity” is translated from figures for programs that have no counterpart in OECD structures, there is a considerable possibility for error in the translation. Given the growth rates of some of the non-OECD entities, the analytical assumption used in the translations of historical program reports to current annual activity was to overstate the direct implications. Hence, the non-OECD activity levels are more likely to be overstated than understated. Scope of Report This report compares Ex-Im Bank’s competitiveness with that of the other G-7 ECAs 1 , as these ECAs have historically accounted for approximately 80% of medium- and longterm official export finance. Further, the Competitiveness Report focuses on mediumand long-term export credits (but not short-term activities) because medium- and longterm transactions are typically subject to direct and indirect official ECA competition. In addition, there are very few official ECAs that continue to offer short-term support as an ongoing program. [Note: In 2010, many ECAs did continue to provide some temporary short-term support to offset the global shortage of short-term trade finance resulting from the lingering financial crisis.] Quantitative comparisons and information on each of the G-11 ECAs can be found in Chapter 2, Chapter 8 Annex, and Appendix D. 2 Overall Report Methodology Based on the “report card” methodology that was introduced in 2002, this year’s Competitiveness Report provides a grade for the competitiveness of Ex-Im Bank support. This approach evaluates each of the essential components of Ex-Im Bank’s financing and compares them to the capabilities of the Bank’s primary foreign ECA competitors. See Appendix A for more information on the Report’s grading system and letter grade definitions used in the calculation of the Ex-Im Bank Grade. In addition, Ex-Im’s survey of exporters and lenders provides respondents the opportunity to evaluate Ex-Im Bank’s competitiveness on individual program factors and public policy issues as they relate to Ex-Im Bank’s G-7 ECA counterparts. (See Survey Methodology section below.) However, because the economic philosophy and public policy issues do not affect every case – and because not all of these issues can be evaluated on a comparable basis with other ECA policies – the Report only notes the direction of the potential competitiveness impact on an individual transaction when one or more of these factors is rated noticeably different than those of other ECAs. 1 The names and brief descriptions of the other G-11 ECAs are contained in Appendix D. 2 All dollar volume data contained in the Report is in non-inflation-adjusted U.S. dollars. 6
Page 1 and 2: Ex p o r t-Im p o r t Ba n k of the
Page 3 and 4: FRED P. HOCHBERG CHAIRMAN AND PRESI
Page 5 and 6: suggests that efforts be made to in
Page 7 and 8: 2011 ADVISORY COMMITTEE MEMBERS The
Page 9 and 10: Definition of Grades Grade Definiti
Page 11 and 12: 2010 COMPETITIVENESS REPORT TABLE O
Page 13 and 14: Executive Summary Background The 20
Page 15: esponse to such interest, Ex-Im Ban
Page 19 and 20: co-financing, foreign currency guar
Page 21 and 22: Export Trends Figure 1 illustrates
Page 23 and 24: now on the upswing. These condition
Page 25 and 26: Chapter 2: Competitiveness Framewor
Page 27 and 28: Chapter 3: Core Business Policies a
Page 31 and 32: One new product, the Take-Out Optio
Page 35 and 36: this gap, the OECD members continue
Page 37 and 38: Chapter 4: Major Program Structures
Page 39 and 40: ecord setting pace the commercial a
Page 41 and 42: in the 2007 ASU). In 2010, Ex-Im ap
Page 43 and 44: Conclusion Even with the increased
Page 45 and 46: the awarding of contracts. As in 20
Page 47 and 48: have an adverse impact on Ex-Im’s
Page 49 and 50: With respect to non-aircraft transa
Page 51 and 52: In addition, survey respondents ack
Page 53 and 54: this type of information be disclos
Page 55 and 56: portion of total G-7 ECA activity,
Page 59 and 60: In 2010, Ex-Im Bank supported 12 fo
Page 61 and 62: Conclusion Ex-Im’s strict crystal
Page 63 and 64: During 2008-2010, the majority of E
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Figure 16: Aid Credit Volume by Typ
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Figure 19: Helsinki-type Tied Aid N
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Exporter and Lender Survey and Focu
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Window program. Although only three
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Conclusion While no specific cases
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Chapter 6: Public Policies - Stakeh
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Figure 25: Transactions Scrutinized
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Figure 26: Comparison of Content Po
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Figure 28: Recent Trends in Ex-Im B
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cargo is ocean-borne. In 2010, Ex-I
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Trends Ex-Im’s Bank overall compe
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Chapter 8: Unregulated and Exceptio
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Since 2006, NEXI’s support throug
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purchase of the goods and services
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Figure 37: Summary of G-7 Investmen
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A. China 1 Of the three countries,
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This program is perhaps the most si
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industry had reached up to 46.3%. O
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BNDES is the government-owned offic
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Organization of “Export China”
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When compared with the OECD Arrange
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foreign buyer due to either/or both
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India Eximbank was established to i
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transactions, while SBCE will provi
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Appendix A: Calculation of Ex-Im Ba
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Appendix B: Purpose of Ex-Im Bank T
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exporters were asked to participate
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Figure C5: Exporter Experience Leve
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Appendix D: G-11 Export Credit Inst
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private participation, instituted i
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Czech Republic Construction Equipme
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Ukraine Mining Equipment $18,838,21
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governed by the Helsinki Discipline
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notifications slightly decreased to
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Energy Generation and Supply ($3.7
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a tied aid and standard credit pers
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The intention of a common line is t
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Appendix F Annex 2 Key Tied Aid Eli
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Appendix F Annex 4 Projects General
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Appendix H: Equal Access for U.S. I
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forums is aimed at helping small bu
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The Bank’s approval of $15 millio
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Appendix K: Legal and Regulatory Re
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The PRA Information Collection Requ
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