2011 508 accessible version - Export-Import Bank of the United States

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Chapter 5: Economic PhilosophySection A: Trade-related Tied and Untied AidIntroductionTied and untied aid has been a longstanding competitive concern among U.S. exporters.However, those concerns have dimin ished over the last 20 years through theintroduction of multilateral rules which rest rict donor use of t ied and unt ied aid forcommercial or trade purposes. Nonetheless, certain donor governments continue tooffer tied aid for commercial as well as developmental gain in particular situation s.Those remaining competitive issues regarding ti ed aid use are detailed in th is chapter.See Appendix F for a more com prehensive summary of the OECD tied aid rules anddefinitions, as well as data on tied and untied aid tren ds that draw out the c ompetitiveimplications of foreign tied and untied aid on U.S. exporters.The Ex-Im Bank Tied Aid Capital Projects Fu nd totals approximately $160 million. Thefund was not used in 2011, and furthermore, has only been used once over the past eightyears (See Appendix F for details).Overview of Tied and Untied Aid“Tied aid” is a conces sional, trade-related aid credit, provided by a donor government,to induce t he borrower to purch ase equipment from suppliers in the donor’s country.Tied aid is typically offered as a component of develop ment assistance to the recipientcountry. “Untied aid” differs from tied aid in that it is not formally cond itioned on thepurchase of equipment from suppliers in the donor country. That is, recipients of untiedaid technically can use the funds to purchase goods from suppliers located anywhere inthe world and not just from the donor’s country.U.S. Government efforts to discipline tied aid at the OECD resulted in a 1991 agreemen t(also known as the Helsinki Disciplines) that has significantly limited the tradedistortingeffects of t ied aid and focused tied aid fl ows on legitimate developmentprojects. With respect to untied aid, in 2005, the U.S. secured a transparency agreementthat requires OECD Members to (a) notify un tied aid project loan commitments at least30 days prior to the opening of the competiti ve tender period (to allow for internationalcompetitive bidding) and (b) report the national ities of the bid winners of untied aid onan annual ex-post reporting basis. OECD Memb er tied aid act ivity is governed withinthe bounds of the Helsinki Disciplines (for more details see Appendix F).As indicated in Figure 24 the volume of Helsinki-type tied aid showed a slight increaseof 0.3% to approxim ately $5.9 billion in 2011. The number of Helsinki-type tied aidnotifications decreased almost 1 0% in 2011, to 123 notifications as compared to 132 in2010 (Figure 25). In 2011, these slight adjustme nts evidenced that the decreasednumber of Helsinki-type tied aid notificat ions and minor increase in volume a re in linewith the 5 year trend, asserting that Helsinki -type tied aid activ ity has remained stabl eeven during the financial crisis. Variations in volume since 20 07 are dependent on thesize of the actual transactions approved.73
Figure 24: Aid Credit Volume by Type, 1991-2011 (Millions USD)15,000US $ Millions10,0005,0000199119921993199419951996199719981999200020012002200320042005200620072008200920102011YearUntied Total Non‐Helsinki Helsinki TypeNote: Consistent untied aid data reporting began in 1994. Discrepancies between untied aid data reported under theOECD Arrangement and data captured under the 2005 Transparency Agreement on Untied ODA Credits can beattributed to differences in the timing of OECD Notifications – which are typically made well in advance of (perhapsyears before) the contract bid is awarded – and are, therefore, not comparable on an annual basis with ODA Creditamounts, which reflect actual credit commitments included in bid tenders.Figure 25: Number and Volume of Helsinki-type Tied Aid Notifications(2007-2011)2007 2008 2009 2010 2011Helsinki-type Tied AidNotifications (Number)Helsinki-type Tied AidNotifications (USD)135 116 135 132 123$5,213 $7,271 $4,609 $5,838 $5,949Ex-Im Bank’s Policy and PracticeEx-Im Bank applies the Helsinki Disciplines more stringently than other OECDMembers. For transactions to be eligible for tied aid, the Bank, in consultation withTreasury, must first attempt to get competitors to withdraw tied aid offers. If that actiondoes not prove successful, tied aid support will be limited in order to support only thosetransactions whose benefits extend beyond the particular projects (e.g. follow-on saleson commercial terms). Furthermore, Ex-Im does not have an untied aid program.In 2011, tied aid or concessional financing allegations reported to Ex-Im that wererepresented as a threat to U.S. exporter sa les prospects were related to tied aid orconcessional financing offers by both OECD and non-OECD countries. While the actual74
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FRED P. HOCHBERGCHAIRMAN AND PRESID
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Fourth, the Advisory Committee enco
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2011 Competitiveness ReportTable of
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With respect to interest rates, the
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Chapter 1: IntroductionBackgroundIn
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from lenders and exporters. See App
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introductory Chapter 1, Chapter 2 f
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Export TrendsFigure 1 depicts the g
Page 21 and 22: Figure 3 illustrates that overall c
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Page 39 and 40: premium package will be very m uch
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knowledgeable buyers. Ex-Im gathere
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Chapter 8Annex III Foreign Buyer qu
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Chapter 8Annex V Foreign Lender Int
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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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Part 3:Part 4:Respondent ratings of
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Figure C3: Lender Experience Levels
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COFACE/France, and NEXI/Japan in a
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China Export and Credit Insurance C
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RussiaThe Bank for Developmen t and
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Dominican RepublicDominican Republi
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Mexico Large Aircraft $8,530,600 47
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governed by the He lsinki Disciplin
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However, traditional tied aid donor
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Indonesia in terms of volume ($3.6
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Ex-Im Bank issued one Tied Aid Lett
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In sum, U.S. exporter experience wi
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Appendix FAnnex II Key Tied Aid Eli
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Appendix FAnnex IV Projects General
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Appendix H: Equal Access for U.S. I
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As shown in Figure I1, highlights r
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2. Policy implementation: Ex-Im Ban
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Appendix K: Legal and Regulatory Re
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concurrent with the first 30 days o
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