Export-Import Bank: Overview and
Reauthorization Issues

Shayerah Ilias Akhtar
Specialist in International Trade and Finance
June 3, 2014
Congressional Research Service
7-5700
www.crs.gov
R43581


Export-Import Bank: Overview and Reauthorization Issues

Summary
The Export-Import Bank of the United States (Ex-Im Bank or the Bank), an independent federal
government agency, is the official export credit agency (ECA) of the United States. It operates
under a renewable charter, the Export-Import Bank Act of 1945 (P.L. 79-173), as amended. Ex-Im
Bank helps finance U.S. exports of manufactured goods and services, with the objective of
contributing to U.S. employment, in circumstances when alternative financing is not available or
to assist U.S. exporters to meet foreign, government-backed sponsored, export credit competition.
Its main programs are direct loans, loan guarantees, working capital finance, and export credit
insurance. Its transactions are backed by the full faith and credit of the U.S. government.
Legislation was enacted in the 112th Congress to extend Ex-Im Bank’s authority through the close
of business on September 30, 2014 (P.L. 112-122) and to raise its exposure cap (total amount of
outstanding credit and insurance authority) to $140 billion by FY2014. Currently, Congress is
debating whether to renew Ex-Im Bank’s authority and, if so, for how long and under what terms.
Background
Congress sets statutory requirements for Ex-Im Bank’s support in its charter, under which the
Bank’s financing must have a reasonable assurance of repayment and must supplement, and not
compete with, private capital. Ex-Im Bank also abides by international rules for government-
backed export credit activity as a participant to the Organization for Economic Co-operation and
Development (OECD) Arrangement on Officially Supported Export Credits.
In FY2013, Ex-Im Bank approved 3,842 transactions of finance and insurance support, which
amounted to $27.3 billion in approved commitments, estimated by Ex-Im Bank to support $37.4
billion in U.S. exports of goods and services. Its overall portfolio exposure level in FY2013 was
$113.8 billion—below the $130 billion statutory cap for that year. Following the 2008-2009
financial crisis, the Bank’s exposure level has increased.
Ex-Im Bank uses offsetting collections to cover costs of its operations. As part of the annual
appropriations process, Congress sets an upper limit on the level available to the Bank for
operations and provides a direct appropriation for its Office of Inspector General (OIG). In terms
of operating expenses, Ex-Im Bank has been “self-sustaining” for appropriations purposes since
FY2008. For FY2014, Congress set an upper limit of $115.5 million for the Bank’s administrative
expenses, provided $5.1 million for its OIG, and allowed carryover funds of up to $10 million to
remain available through FY2016. Ex-Im Bank provided $1.1 billion to the U.S. Treasury in
FY2013 after covering operating expenses and loan loss reserves. Ex-Im Bank assesses credit and
other risks of proposed transactions, monitors current commitments for risks, and maintains
reserves against potential losses. It currently has an overall default rate of less than one-quarter of
1%. Since 1992, its recovery rate has been 50 cents on the dollar on average for transactions in
default.
Issues for Congress
Members of Congress hold a range of views on Ex-Im Bank. Proponents assert that the Bank
supports U.S. exports by addressing market failures that dampen export levels and helps U.S.
exporters compete against foreign companies backed by their governments’ ECAs. Critics oppose
the use of taxpayer funds for private benefit, whether for large or small businesses, and contend
Congressional Research Service

Export-Import Bank: Overview and Reauthorization Issues

that the private sector is more efficient in financing exports. The Ex-Im Bank reauthorization
issues facing Congress are two-fold. The first issue is whether to renew the Bank in its current
form, or pursue alternatives, such as privatizing or reorganizing its functions. In April 2014, the
Obama Administration submitted a legislative proposal to Congress requesting a reauthorization
of Ex-Im Bank. Second, should Congress choose to renew Ex-Im Bank’s authority, specific
reauthorization issues could include the following:
How long should Ex-Im Bank be reauthorized for? A shorter renewal period, as
provided in 2012, could allow for more active congressional oversight of Ex-Im
Bank. A longer renewal, such as four to five years, typical of past
reauthorizations, could enhance Ex-Im Bank’s long-term planning and provide
more assurance to those involved in Ex-Im Bank-supported transactions. The
Administration’s legislative proposal calls for a five-year renewal of the Bank’s
authority.
Should Ex-Im Bank’s exposure cap be adjusted and if so, by what amount?
Congress has periodically raised the Bank’s exposure cap. Given growing
demand for Ex-Im Bank’s services, some call for an increase in the Bank’s
exposure limit. Critics have, in part, opposed raising the cap based on concerns
about Ex-Im Bank’s risk management practices, and may favor maintaining or
lowering the cap. The Administration’s legislative proposal asks for the cap to be
raised incrementally to $160 billion by FY2018.
What revisions should be made to Ex-Im Bank’s policies, if any? Debate could
center on the Bank’s effectiveness and efficiency in meeting its core export and
jobs mission and other statutory requirements, as well as international concerns,
including the policies of foreign ECAs. Concerns about the competitiveness of
the Bank’s policies relative to foreign ECAs may be weighed against the Bank’s
efforts to balance a range of stakeholder interests, including those representing
business, labor, and environmental concerns.
How well does the Bank manage the risks associated with its portfolio? Focus on
the Bank’s risk management practice has grown since the financial crisis, as its
exposure level has increased. Key areas of focus include the Bank’s analytic tools
for risk management, as well as its operational capacity to manage its growing
portfolio prudentially. Questions also may be raised about whether the cost of
federal credit is priced appropriately.
How should the United States approach international disciplines to guide
government-backed export credit activity? For some stakeholders, the growth in
unregulated financing by U.S. trading partners has raised questions about the
effectiveness of the OECD Arrangement and what role the World Trade
Organization may play in establishing export credit disciplines. It also has
prompted consideration of efforts to bring China and other non-OECD countries
into the Arrangement, as well as U.S. efforts to negotiate separate export credit
disciplines with China. Others call for enhanced U.S. efforts to eliminate all
international government-backed export financing through negotiations in the
OECD and other venues.

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Export-Import Bank: Overview and Reauthorization Issues

Contents
Background ...................................................................................................................................... 1
Overview of Ex-Im Bank Policies ............................................................................................. 1
Financial Products ..................................................................................................................... 4
Direct Loans ........................................................................................................................ 4
Medium- and Long-Term Loan Guarantees ........................................................................ 5
Working Capital Financing ................................................................................................. 6
Export Credit Insurance ...................................................................................................... 7
Specialized Finance Products .............................................................................................. 8
Activity Level ............................................................................................................................ 9
Focus Areas ......................................................................................................................... 9
Authorizations ................................................................................................................... 10
Portfolio Exposure............................................................................................................. 11
Ex-Im Bank Budget ................................................................................................................. 13
Risk Management .................................................................................................................... 15
Ex-Im Bank in an International Context ........................................................................................ 16
International Rules on Official Export Credit Activity ............................................................ 16
Growth in Unregulated Financing ........................................................................................... 18
Developments in International Export Credit Negotiations .................................................... 20
Selected Issues for Congress.......................................................................................................... 20
Renewal of Ex-Im Bank .......................................................................................................... 20
Length of Reauthorization ....................................................................................................... 21
Exposure Limit ........................................................................................................................ 22
Ex-Im Bank Policies ................................................................................................................ 23
Domestic Content .............................................................................................................. 23
Economic Impact Analysis ................................................................................................ 25
Environmental Impact Analysis ........................................................................................ 26
Shipping ............................................................................................................................ 27
Co-Financing ..................................................................................................................... 28
Tied Aid ............................................................................................................................. 29
Mandates Targeting Ex-Im Bank Activity to Specific Sectors .......................................... 29
Risk Management and Financial Accounting .......................................................................... 30
Effectiveness of International Rules on Government-Backed Export Credit Activity ............ 34
Congressional Outlook .................................................................................................................. 35

Figures
Figure 1. Ex-Im Bank Direct Loan Structure ................................................................................... 5
Figure 2. Ex-Im Bank Loan Guarantee Structure ............................................................................ 6
Figure 3. Ex-Im Bank Exporter Insurance Structure ....................................................................... 7
Figure 4. Ex-Im Bank Authorizations, FY1997-FY2013 .............................................................. 10
Figure 5. Ex-Im Bank Exposure Level by Program, Geographic Region, and Economic
Sector, FY2013 ........................................................................................................................... 12
Figure 6. Ex-Im Bank Exposure Levels and Exposure Cap, FY1997-FY2013 ............................. 13
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Export-Import Bank: Overview and Reauthorization Issues

Figure 7. Medium- and Long-Term Government-Backed Export Credit Volumes for
Selected Export Credit Agencies, 2012 ...................................................................................... 18

Tables
Table 1. Overview of Major Statutory and Policy Requirements for Ex-Im Bank .......................... 2
Table 2. Ex-Im Bank’s Credit and Insurance Authorizations, FY2012-FY2013 ........................... 11
Table 3. Budget of the Export-Import Bank, FY2011-FY2015 ..................................................... 15
Table 4. Selected Risks Faced by Ex-Im Bank .............................................................................. 16
Table 5. Legislative Changes to the Export-Import Bank’s Limit on Outstanding
Aggregate Credit and Insurance Authority ................................................................................. 22
Table 6. Foreign Content Requirements of Selected Country ECAs ............................................. 24
Table 7. Risk Management: GAO Studies and Ex-Im Bank Action .............................................. 33

Appendixes
Appendix. International Government-Backed Export Credit Activity .......................................... 36

Contacts
Author Contact Information........................................................................................................... 37
Acknowledgments ......................................................................................................................... 37

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Export-Import Bank: Overview and Reauthorization Issues

he Export-Import Bank of the United States (Ex-Im Bank or the Bank) is an independent
U.S. government executive agency and a wholly-owned U.S. government corporation.1 It
Tis the official export credit agency (ECA) of the United States, and is charged with
financing and promoting exports of U.S. manufactured goods and services, with the objective of
contributing to the employment of U.S. workers. Ex-Im Bank is among the federal government
agencies involved in promoting U.S. exports of goods and services.2
The Bank operates under a renewable charter, the Export-Import Bank Act of 1945, as amended
(P.L. 79-173; 12 U.S.C. §635 et seq). In 2012, Congress debated and ultimately reauthorized Ex-
Im Bank through the close of business on September 30, 2014 (P.L. 112-122). Currently,
Congress is considering whether to renew Ex-Im Bank’s authority and if so, for how long and
under what terms.
This report provides: (1) a general background of Ex-Im Bank; (2) a discussion of the
international context of the Bank; (3) analysis of key issues that Congress may consider in a
reauthorization debate; and (4) the congressional outlook on Ex-Im Bank.
Background
Ex-Im Bank seeks to: (1) correct market failures by assuming the risks of financing exports that
the private sector is unwilling, or unable, to undertake alone at competitive terms; and/or (2) meet
foreign competition by countering government-backed financing offered by other countries to
their companies.3
Overview of Ex-Im Bank Policies
Congress sets statutory requirements for Ex-Im Bank’s activity in its charter (see Table 1 for
summary). Under the charter, Ex-Im Bank’s financing must have a reasonable assurance of
repayment and must supplement, not compete with, private sources of financing. The charter also
includes other statutory requirements that serve as the basis for Ex-Im Bank’s policies, for
example, with respect to providing terms that are fully competitive with other ECAs, economic
and environmental considerations, and focusing on supporting specific types of exports.
Ex-Im Bank also abides by the Organization for Economic Cooperation and Development
(OECD) Arrangement on Officially Supported Export Credits (the “Arrangement”), which
establishes terms and conditions for the export credit agencies of the United States and other
participants (discussed later).

1 A U.S. government corporation is a government agency established by Congress to provide market-oriented public
services and to produce revenues that meet or approximate expenditures. See CRS Report RL30365, Federal
Government Corporations: An Overview
, by Kevin R. Kosar.
2 For more information, see CRS Report R41495, U.S. Government Agencies Involved in Export Promotion: Overview
and Issues for Congress
, coordinated by Shayerah Ilias Akhtar.
3 Ex-Im Bank, Annual Report 2013 of the Export-Import Bank of the United States (hereinafter Ex-Im Bank, FY2013
Annual Report
).
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Export-Import Bank: Overview and Reauthorization Issues

Table 1. Overview of Major Statutory and Policy Requirements for Ex-Im Bank
Requirement Description Statutory
Basis
OVERALL


Mandate
Ex-Im Bank’s mandate is to support financing and to facilitate U.S.
12 U.S.C. 635(a)(1)

exports of goods and services and, in doing so, contribute to the
employment of U.S. workers.
Private Capital
The Bank must supplement and encourage, and not compete with,
12 U.S.C. 635(b)(1)(B)
private capital.
Reasonable
Al Ex-Im Bank transactions must have a reasonable assurance of
2 U.S.C. 635(b)(1)(B)
Assurance of
repayment.
Repayment
Rates, Terms, and
Ex-Im Bank loans must be at rates and on terms and conditions
12 U.S.C 635(b)(1)(B)
Conditions
which are fully competitive with exports of other countries, and
consistent with international agreements.
Fees
The Bank is authorized to charge fees and premiums commensurate 12 U.S.C. 635(c)(1)

with the risks covered in connection with its contractual liability for
its financing.
Due Diligence
The Bank is required to set due diligence standards for its lender
12 U.S.C. 635(i)
partners and participants.
Exposure Cap
Congress sets a limitation on the total amount of outstanding loans,
12 U.S.C. 635e(F)(i )
guarantees, and insurance Ex-Im Bank can have any one time. For
FY2014, the exposure cap is $140 billion.
Default Rate
Ex-Im Bank must monitor its default rate; report quarterly to
12 U.S.C. 635g(g)

Congress on its default rate; and, if the default rate exceeds 2%,
submit a report to Congress on a plan to reduce it to below 2%.
TRANSACTION-SPECIFIC

Content
Content is the amount of domestic and foreign costs from labor,
Ex-Im Bank policy

materials, overhead, and other inputs associated with the
production of an export. Based on its jobs mandate, the Bank
finances the U.S. content of U.S. exports, which the agency
considers to be a proxy for U.S. jobs. For medium- and long-term
transactions, Ex-Im Bank limits its support to the lesser of: (1) 85%
of the value of all goods and services contained within a U.S. supply
contract or; (2) 100% of the U.S. content of an export contract. In
effect, in order to receive full Ex-Im Bank financing for an export
transaction, the minimum domestic content is 85% and the
maximum foreign content allowance is 15%. If the foreign content
exceeds 15%, then the Bank's support would be reduced
proportionally. For short-term transactions, the minimum U.S.
content required for full financing is general y 50%.
Local Cost
Local costs are the project-related costs for goods and services that Ex-Im Bank policy
are incurred in the buyer’s country. When Ex-Im Bank provides
medium- or long-term financing for U.S. exports for foreign
projects, it may also provide local cost support. Specifically, the
Bank can support up to 30% of the value of the U.S. exports for
goods and services that are originated and/or manufactured in the
buyer’s country, subject to certain requirements.
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Export-Import Bank: Overview and Reauthorization Issues

Requirement Description Statutory
Basis
Economic Impact
The Bank is required to have regulations and procedures to insure
12 U.S.C. 635a-2;

that ful consideration is given to the extent that any loan or
12 U.S.C. 635(b)(1)(B);
guarantee is likely to have an adverse effect on industries and
12 U.S.C. 635(e)(1);
employment in the United States. [12 U.S.C. 635a-2] These
12 U.S.C. 635(e)(2); 12
regulations and procedures are in support of the congressional
U.S.C. 635(e)(3)
policy that in authorizing any loan or guarantee the Board of
Directors shall take into account any serious adverse effect of such
loan or guarantee. [12 U.S.C. 635(b)(1)(B)] Furthermore, the Bank
is prohibited from extending any loan or guarantee that would
establish or expand the production of any commodity for export by
any other country if the commodity is likely to be in surplus on
world markets or the resulting production capacity will compete
with U.S. production of a similar commodity and will cause
“substantial injury” to U.S. producers of a similar commodity [12
U.S.C. 635(e)(1)]. The Bank defines risk of substantial injury as the
extension of a loan or guarantee that will enable a foreign buyer to
establish or expand foreign production by an amount that is equal
to or greater than 1% of U.S. production. The same prohibition
applies to loans or guarantees subject to U.S. trade measures, such
as anti-dumping or countervailing duties. [12 U.S.C. 635(e)(2)]
However, these prohibitions shal not apply if the Board of
Directors determines that the proposed transaction’s short- and
long-term benefits to U.S. industry and U.S. employment are likely
to outweigh the injury to U.S. producers and U.S. employment of
similar commodities. [12 U.S.C. 635(e)(3)]
Environmental
The Bank considers the potential beneficial or adverse
12 U.S.C. 635i-5
Impact
environmental effects of proposed transactions. The Bank is

authorized to grant or withhold financing support after taking into
account the environmental impact of the proposed transaction.
U.S. Flag Shipping
Products supported by Ex-Im Bank exported via ships must be
Public Resolution 17 of

transported exclusively on U.S. flagged vessels. This requirement
the 73rd Congress; P.L.
applies to any shipped exports receiving a direct loan from Ex-Im
109-304
Bank, or any shipped export over $20 million that receives an Ex-Im
Bank guarantee. Under limited conditions, a waiver on this
condition may be granted by the Maritime Administration
(MARAD).
Noncommercial or The Bank should deny applications for credit on the basis of
12 U.S.C. 635(b)(1)(B)
Nonfinancial
nonfinancial and noncommercial considerations only in cases where
Considerations
the President, in consultation with the House Financial Services

Committee and Senate Banking, Housing and Urban Affairs
Committee, determines that the denial of such applications would
advance U.S. national interests in areas such as international
terrorism, nuclear proliferation, environmental protection, and
human rights. The power to make a national interest determination
has been delegated to the Secretary of State.
Cofinancing
Ex-Im Bank supports financing with ECAs in other countries
Ex-Im Bank policy
through “one-stop-shop” co-financing facilities, which are
arrangements that al ow for Ex-Im Bank to support the U.S. content
of an export, while al owing a foreign ECA to support its portion of
the export, thereby providing greater financial coverage for the
exporter and foreign buyer through a single ECA financing package.
EXPORT FOCUS AREAS AND LIMITATIONS

Small Businesses
Congress directs the Bank to make available not less than 20% of its 12 U.S.C.

aggregate loan, guarantee, and insurance authority to finance
635(b)(1)(E)(v)
exports directly by U.S. small businesses.
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Export-Import Bank: Overview and Reauthorization Issues

Requirement Description Statutory
Basis
Renewable Energy Congress directs the Bank to promote the export of U.S. goods
12 U.S.C. 635(b)(1)(K)

and services related to renewable energy sources. Appropriations
language further has specified the Bank should make available not
less than 10% of its aggregate authority to finance exports of
renewable energy technologies or energy efficient end-use
technologies.
Sub-Saharan Africa
Congress directs the Bank to promote the expansion of its financial
12 U.S.C. 635(b)(9)(A)

commitments in sub-Saharan Africa, in consultation with the Trade
Promotion Coordinating Committee (TPCC). No quantitative
target is specified.
Country
The Bank generally is prohibited from extending credit and
12 U.S.C. 635(b)(2)
Restrictions
insurance to certain countries, including but not limited to those

that are in armed conflict with the United States, those with balance
of payment problems, or those for which a Presidential
determination has been issued.
Military Exports
Ex-Im Bank is prohibited from financing defense articles and defense 12 U.S.C. 635(b)(6)(A)

services with certain limited exceptions.
Source: CRS analysis of Ex-Im Bank charter (12 U.S.C. 635 et. seq.) and policy documents.
Financial Products
Ex-Im Bank groups its financial products into four main categories: (1) direct loans; (2) loan
guarantees; (3) working capital finance; and (4) export credit insurance (see text box at end of
section for examples of transactions).4 Its commitments and repayment periods can range from
short-term (less than one year); medium-term (one to seven years); and long-term (more than
seven years). The Bank may determine repayment terms based on variables such as buyer,
industry, and country conditions; common repayment terms that the market gives such products;
terms of international rules on export credit activity; and the matching of terms offered by foreign
ECAs. Ex-Im Bank, a demand-driven agency, charges interest, risk premia, and other fees for its
services.
Direct Loans
Ex-Im Bank provides direct loans to foreign buyers of U.S. goods and services, usually for U.S.
capital equipment and services (see Figure 1). Direct loans have no minimum or maximum size,
but generally involve amounts of more than $10 million. The Bank extends to the U.S. company’s
foreign customer a loan covering up to 85% of the U.S. contract value. Direct loans are available
for medium- and long-term transactions, but most commonly are offered on a long-term basis.
The direct loans carry fixed interest rates and generally are made at terms that are the most
attractive allowed under the provisions of the OECD Arrangement. The specific rates charged by
Ex-Im Bank are based on the Commercial Interest Reference Rates (CIRR).5

4 Information drawn from Ex-Im Bank, http://www.exim.gov/.
5 Commercial Interest Reference Rates (CIRRs) are the official lending rates of ECAs. They are calculated monthly and
based on government bonds issued in the country’s domestic market for its currency. For the U.S. dollar, the CIRR is
based on the U.S. Treasury bond rate. Ex-Im Bank, “Commercial Interest Reference Rates,”
http://www.exim.gov/tools/commercialinterestreferencerates/index.cfm/.
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Figure 1. Ex-Im Bank Direct Loan Structure

Source: CRS, based on Ex-Im Bank information.
Notes: This diagram is a general representation of Ex-Im Bank direct loans. Specifics vary by transaction.
Prior to 1980, Ex-Im Bank’s direct lending program was its chief financing vehicle. Both the
budget authority requested by the Administration and the level approved by Congress for direct
lending dropped sharply during the 1980s, reportedly as a target of budget cuts.6 In the past
decade, demand for Ex-Im Bank direct loans has been limited, because commercial interest rates
were low.7 According to the Bank, demand for direct loans increased significantly with the
international financial crisis of 2008-2009, as banking problems limited the ability of commercial
banks to originate export finance transactions at competitive rates.8
Medium- and Long-Term Loan Guarantees
Ex-Im Bank provides medium- and long-term guarantees of loans made by a lender to a foreign
buyer of U.S. goods and services, promising to pay the lender, if the buyer defaults, the
outstanding principal and accrued interest on the loan (see Figure 2). Loan guarantees are
intended to cover repayment risk. Medium- and long-term loan guarantees are typically used to
finance purchases of U.S. capital equipment and services. Unlike insurance (discussed below),
loan guarantees are unconditional—representing Ex-Im Bank’s commitment to a commercial
bank for full repayment in the event of a default. There is no limit on the transaction size for a
loan guarantee. Ex-Im Bank provides a guarantee of up to 85% or 100% of the U.S. content,

6 Ex-Im Bank, Office of the Inspector General (OIG), Export-Import Bank's Management of Direct Loans and Related
Challenges
, OIG-AR-13-05, September 26, 2013, p. 1, http://www.exim.gov/oig/upload/OIG-Final-Report-Audit-of-
Ex-Im-Bank-s-Management-of-Direct-Loans-and-Related-Challenges-09-26-13-2.pdf.
7 Ibid.
8 Ex-Im Bank, Report to the U.S. Congress on Export Credit Competition and the Export-Import Bank of the United
States, For the Period January 1, 2012 through December 31, 2012
, Washington, DC, June 2013, p. 45,
http://www.exim.gov/about/library/reports/competitivenessreports/upload/US-Ex-Im-Bank-2012-Competitiveness-
Report-to-Congress-Complete.pdf (hereinafter Ex-Im Bank, 2012 Competitiveness Report, June 2013).
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Export-Import Bank: Overview and Reauthorization Issues

whichever is lower, with a minimum 15% down payment required from the buyer. It provides
coverage for 100% of the commercial and political risks of borrower repayment.
Figure 2. Ex-Im Bank Loan Guarantee Structure

Source: CRS, based on Ex-Im Bank information.
Notes: This diagram is a general representation of Ex-Im Bank loan guarantees. Specifics vary by transaction.
Working Capital Financing
Ex-Im Bank’s working capital program is intended to facilitate finance for businesses, primarily
small businesses, which have exporting potential but need working capital funds (e.g., to buy raw
materials or supplies) to produce or market their goods or services for export.
Working capital guarantees provide repayment guarantees to lenders (primarily commercial
banks) on secured, short- and medium-term working capital loans made to qualified exporters.
They can be for a single loan or a revolving line of credit, and typically are for one year, but can
be extended to up to three years. Working capital guarantees cover up to 90% of the principal and
interest on a loan made to an exporter by a private lender for export-related accounts receivables,
and up to 75% for export-related inventory. Generally, each product must have more than 50%
U.S. content based on all direct and indirect costs for eligibility. The interest rates for working
capital loans guaranteed by Ex-Im Bank are set by the commercial lender. The working capital
guarantees are secured by export-related accounts receivable and inventory (including work-in-
process). The collateral requirement under the guaranteed loan to issue letters of credit is 25% of
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Export-Import Bank: Overview and Reauthorization Issues

the face value of the letter of credit, compared with the standard 100% cash collateral generally
required by the private sector. On a case-by-case basis, the letter of credit collateral requirement
may be lowered to 10%. Working capital loans are fixed-rate lines of credit to small business
exporters of up to $500,000 for a 6-month or 12-month period.
Export Credit Insurance
Ex-Im Bank provides insurance policies to exporters and lenders to protect against losses of non-
repayment for commercial and political reasons. Like loan guarantees, insurance is intended to
reduce the risks involved in exporting by protecting against commercial or political uncertainty.
However, in contrast, insurance is conditional on the fulfillment of various requirements for Ex-
Im Bank to pay a claim (e.g., compliance with underwriting policies, deadlines for filing claims,
payment of premiums and fees, and submission of proper documentation).9
The Bank issues short-term insurance policies to U.S. exporters to reduce their risk of
nonpayment by the foreign buyer. Insurance, for example, could allow the exporter to extend
more competitive terms of credit to foreign buyers (see Figure 3) and/or provide additional
working capital to increase the exporter’s borrowing base. Short-term exporter insurance is
available for products shipped from the United States and with at least 50% U.S. content
(excluding mark-up). Ex-Im Bank offers a renewable one-year policy that generally covers up to
180-day terms, but can be extended up to 360 days for qualifying transactions. It also maintains
short-term insurance policies for lenders. Depending on the policy, the Bank will cover 90-95%
of nonpayment losses due to commercial and political risks.
Figure 3. Ex-Im Bank Exporter Insurance Structure

Source: CRS, based on Ex-Im Bank information.
Notes: This diagram is a general representation of Ex-Im Bank exporter insurance. Specifics vary by transaction.

9 U.S. Government Accountability Office (GAO), Export-Import Bank: Recent Growth Underscores Need for
Continued Improvements in Risk Management
, GAO-13-303, March 2013, p. 41, http://www.gao.gov/products/GAO-
13-303.
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Ex-Im Bank can extend medium-term insurance, generally up to five years and with a maximum
cover of $10 million, to both exporters and lenders, covering one or a series of shipments. The
Bank will insure up to 85% of the contract price prior to delivery. If the foreign content is more
than 15%, it will only support the U.S. portion. It requires the buyer to make cash payment to the
exporter equal to 15% of the net U.S. contract value. It covers 100% of nonpayment due to
commercial and political risk.
Specialized Finance Products
Ex-Im Bank’s programs include specialized finance products10, such as:
project finance, which is limited recourse project finance to newly-created
companies, usually in amounts greater than $10 million. Project finance typically
covers large, long-term infrastructure and industrial projects (e.g., airport
construction, oil and gas power sector projects, wind turbines), involving
multiple contracts for completion and operation. Sponsor support during
construction, combined with the project’s future cash flows, form the basis for
the Bank’s analysis of the creditworthiness of the project, as well as its source of
repayment (rather than repayments by foreign governments, financial institutions,
or established corporations). Repayment terms are generally up to 14 years, but
can be up to 18 years for renewable energy projects.
structured finance, which is finance to existing companies located overseas,
based on their balance sheets and other sources of collateral or security
enhancements. Through structured finance, Ex-Im Bank has financed fiber-optic
cable, oil and gas projects, air traffic control systems, satellites, and
manufacturing equipment. Repayment terms generally are for up to 10 years, but
can be up to 12 years for power transactions.
transportation finance, including for aircraft, ship, and railroad exports, based
on the guidelines set by specific sector understanding under the OECD
Arrangement.








10 The specialized finance products summarized in this section are classified under Ex-Im Bank’s loan guarantee
program on the agency’s website (http://www.exim.gov/), but may include direct loan and/or insurance support as well.
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Examples of Ex-Im Bank Transactions
Direct Loans
In May 2012, Ex-Im Bank provided a $48.6 million direct loan to Gas Verde, S.A. for a biogas project in Brazil for the
export of U.S. renewable energy technologies from FirmGreen, a smal U.S. business based in California, and other
U.S. suppliers.
In January 2013, Ex-Im Bank authorized a $155.4 million direct loan to Ghana to finance the design and construction
of a hospital expansion, which will support U.S. exports of engineering and construction services and medical
appliances by Americaribe Inc. (Miami, FL).
In September 2013, Ex-Im Bank authorized two direct loans totaling $33.6 million to Abengoa, a Spanish multinational
company, to support the export of U.S. heat-transfer fluid produced by The Dow Chemical Company for use in solar
projects in Spain and South Africa.
Loan Guarantees
In March 2013, Ex-Im Bank approved a final commitment of a $1.1 billion loan guarantee to finance the export of a
fleet of Boeing aircraft to Lion Air, a privately-owned airline in Indonesia. Apple Bank for Savings (New York)
provided the financing, with the possibility of additional funding provided by capital market investors through an Ex-Im
Bank-guaranteed bond.
In June 2013, Ex-Im Bank authorized a $19.9 million loan guarantee extended by HSBC Bank to a Nigerian company
to facilitate the export of one used liftboat provided by Offshore Liftboats LLC, a U.S. small business based in
Louisiana.
Export Credit Insurance
In September 2012, Ex-Im Bank authorized $900,000 in export credit insurance to support the export of agricultural
aircraft by Air Tractor Inc. to Brazil.
Project Finance Direct Loan
In December 2013, Ex-Im Bank authorized a $694.4 million loan to Roy Hil Holdings (Australia) contingent on the
purchase U.S. mining and rail equipment from Caterpillar Inc., General Electric, and Atlas Copco. Ex-Im Bank financing
was part of a $7.2 billion long-term financing agreement to fund a $10 billion, 55-million metric tons per year iron ore
mining project by Roy Hill. The financing agreement consists of loans and guarantees from five export credit agencies
from the United States, Japan, and South Korea and a consortium of 19 commercial banks from Australia, Japan,
Europe, China, Korea and Singapore.
Source: Various Ex-Im Bank and other press releases.
Activity Level
Focus Areas
While Ex-Im Bank is a demand-driven agency, it has certain focus areas. As previously discussed,
Congress requires Ex-Im Bank to support certain types of exports, that is, exports by U.S. small
businesses, U.S. renewable energy exports, and U.S. exports to sub-Saharan Africa. The Bank
also seeks to support U.S. exports based on Administration goals and policy initiatives. For
example, under the Obama Administration, Ex-Im Bank has been involved in efforts to boost U.S.
exports worldwide under the National Export Initiative, as well as regional initiatives focused on
sub-Saharan Africa and the Asia-Pacific region. Key focus areas for the Bank include the
following.
Geographical focus: The Bank is open to support buyers of U.S. exports in 175
countries around the world. Congress has identified sub-Saharan Africa as a
priority region. Countries subject to U.S. sanctions are ineligible for Ex-Im Bank
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support, as well as certain other countries under the charter’s current Marxist-
Leninist prohibition.
Sectoral focus: Ex-Im Bank has identified several industries with high potential
for U.S. export growth: oil and gas, mining, agribusiness, renewable energy,
medical equipment and services, construction equipment and services, aircraft,
and power generation and related services. Infrastructure development is a major
focus of the Bank’s financing. Military or defense items, as well as sales to
military buyers, generally are ineligible for support, with certain exceptions.
Focus on specific types of exporters: Ex-Im Bank has a long-standing focus on
supporting exports of U.S. small- and medium-sized enterprises (SMEs).
Authorizations
In FY2013, Ex-Im Bank approved 3,842 transactions of credit and insurance support, which
amounted to $27.3 billion in approved commitments and is estimated by the Bank to support
$37.4 billion in U.S. exports of goods and services. The number of transactions in that year
reached a record high. However, in terms of authorization value, after several years of record
highs, the amount authorized in FY2013 declined (see Figure 4). The dynamics could reflect
recovery of the financial markets in some areas; increased focus on supporting small business
export transactions (high in number, but of lower value than larger transactions); and the absence
of certain large transactions in certain markets, such as for aircraft.
Figure 4. Ex-Im Bank Authorizations, FY1997-FY2013
Billions of U.S. Dollars

Source: CRS, from Ex-Im Bank annual reports.
The Bank estimated that its FY2013 authorizations supported $37.4 billion of U.S. exports and
205,000 U.S. jobs.11 U.S. small businesses account for the majority of Ex-Im Bank’s transactions

11 Ex-Im Bank, FY2013 Annual Report, p. 4.
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by number (89% in FY2013), while larger companies represent the majority by dollar amount.
Ex-Im Bank finances around 2% of U.S. exports annually, but a significant portion of its
financing is for capital-intensive U.S. exports. Ex-Im Bank reported that 42% of its total
authorizations for FY2013 supported infrastructure projects.12
Ex-Im Bank has met its small business mandate from Congress in some years, but has fallen short
in other years (see Table 2). At the same time, the number of small business transactions
supported by the Bank continues to increase. For environmentally beneficial exports, the Bank
has been consistently well below the 10% target, closer to 2%, possibly due, in part, to limitations
in the U.S. supply of renewable energy exports.13 Nevertheless, the Bank’s authorization amounts
for renewable energy exports have increased. Ex-Im Bank’s support for sub-Saharan Africa also
reflects an overall uptick in activity, compared to previous years. While the Bank seeks to support
these export goals, its actual activity depends on alignment with commercial interests as it is
demand-driven.
Table 2. Ex-Im Bank’s Credit and Insurance Authorizations, FY2012-FY2013
Program
Number of Authorizations
Amount Authorized ($ millions)
2012
2013
2012
2013
Total Authorizations
3,796
3,842
$35,784
$27,347
Loans 24
71
$11,765.7
$6,893.8
Loan Guarantees
744
674
$18,319.3
$14,911.8
Insurance 3,028
3,097
$5,699.3
$5,542.0
Authorizations for Specific Types of Exports (Congressional Mandate)
Exports by Smal Business
3,313 3,413 $6,123 $5,223
(20% target)
Percent of Total
87.3%
88.8%
17.1%
19.1%
Environmental y Beneficial Exports
(10% target)
149
143
$615
$433
Percent of Total
3.9%
3.7%
1.7%
1.6%
Exports to Sub-Saharan Africa
163 188 $1,522 $604
(increased focus, no % target)
Percent of Total
4.3%
4.9%
4.3%
2.2%
Source: Ex-Im Bank Annual Reports data adapted by CRS.
Portfolio Exposure
Congress sets limitations in Ex-Im Bank’s charter on the aggregate amounts of loan, guarantees,
and insurance that the Bank can have outstanding at any one time (oftentimes referred to as the

12 Ibid., p. 5.
13 GAO, Export-Import Bank: Reaching New Targets for Environmentally Beneficial Exports Presents Major
Challenges for Bank
, GAO-10-682, July 14, 2010, http://www.gao.gov/products/GAO-10-682.
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Bank’s exposure cap/ceiling/limit).14 The outstanding principal amount of all loans made,
guaranteed, or insured by Ex-Im Bank is charged at the full value against the limitation.
In FY2013, the Bank reported a total portfolio exposure of $113.8 billion—below the $130
billion statutory cap for that year. Its portfolio is distributed across its financial products, as well
as geographical regions and economic sectors (see Figure 5). Ex-Im Bank’s exposure level has
been at record highs in recent years (see Figure 6), associated largely with increased demand for
Ex-Im Bank’s services during the financial crisis as commercial lending declined. Other possible
drivers could be greater demand in emerging markets for U.S. exports; increased usage of the
Bank by key customers, such as those in the satellite sector; and greater Ex-Im Bank outreach to
small businesses and exporters in key markets.15 For FY2014, the Bank’s statutory exposure limit
is $140 billion.
Figure 5. Ex-Im Bank Exposure Level by Program, Geographic Region, and Economic
Sector, FY2013
Billions of U.S. Dollars

Source: CRS, based on data from Ex-Im Bank annual reports.

14 12 U.S.C §635e.
15 GAO, Export-Import Bank: Recent Growth Underscores Need for Continued Improvements in Risk Management,
GAO-13-303, March 2013, pp. 14-20.
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Figure 6. Ex-Im Bank Exposure Levels and Exposure Cap, FY1997-FY2013
Billions of U.S. Dollars

Source: CRS analysis of data from Ex-Im Bank annual reports.
Ex-Im Bank Budget
Beginning with FY1992, Ex-Im Bank’s operations have been subject to the Federal Credit
Reform Act of 1990 (FCRA, P.L. 101-508), which was intended to measure more accurately the
cost of federal credit programs and to make the cost of such credit programs more comparable to
direct federal outlays.16 For a given fiscal year, under FCRA, the cost of federal credit activities,
including those of Ex-Im Bank, is reported on an accrual basis equivalent with other federal
spending, rather than on a cash flow basis, as used previously. Under FCRA’s rules, budget
estimates are calculated by discounting them using the rates on U.S. Treasury securities with
similar terms to maturity—which traditionally have been considered to be risk-free—and are
below the rates of commercial loans. The Bank’s estimates now allocate budgetary resources to
reserve against its estimated risk of loss.17
Between 1992 and 2008, the Bank received direct appropriations for its administrative expenses
and credit subsidy. Since 2008, Congress has recognized Ex-Im Bank as a “self-sustaining”
agency with a “net appropriations of zero” for appropriations purposes. In 2008, Congress gave
the Bank permission to use its offsetting collections (e.g., interest, premia, and other fees charged
for activities) to fund its administrative and program expenses and to retain its carryover negative
subsidy (“profit”) for a certain amount of time. Since then, for each year, the President has
requested, and Congress has approved, that offsetting collections would count against the
appropriation of operating expenses from the General Fund and that the net appropriation is

16 Ex-Im Bank, FY2013 Annual Report.
17 Presently, there is a debate about whether the cost of federal credit is appropriately priced under the Federal Credit
Reform Act (FCRA), or if fair value accounting (discussed in the “Selected Issues for Congress” section) is a more
appropriate measure. For more information, see Deborah Lucas and Marvin Phaup, “Reforming Credit Reform,” Public
Budgeting & Finance
, Winter 2008.
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expected to be $0. As part of the annual appropriations process, Congress sets an upper limit on
the level available to the Bank for operations and provides a direct appropriation for its Office of
Inspector General (OIG).
At the start of the fiscal year, the U.S. Treasury provides Ex-Im Bank with an “appropriation
warrant” for program costs and administrative expenses. The amount of the warrant is established
by the spending limits set by Congress in the appropriations process. The Bank retains the fees
that it collects during the year that are in excess of expected losses, and uses these offsetting
collections to repay the warrant, resulting in an expected net appropriation of $0. Thus, Ex-Im
Bank can receive funds from the U.S. Treasury and repay those funds as offsetting collections
come in.
Borrowings from the U.S. Treasury are used to finance medium- and long-term loans, and carry a
fixed interest rate. Ex-Im Bank repays these borrowings primarily with the repayments of
medium- and long-term loans.18
For FY2014, Congress set a limit of $115.5 million for Ex-Im Bank’s administrative expenses
and provided $5.1 million for its OIG (see Table 3). Congress did not appropriate any program
funds, as the Bank forecasted that all new authorizations will be either zero or negative subsidy
for FY2014, and did not request any positive subsidy for its program expenses.19 Congress also
allowed carryover funds of up to $10 million to remain available until September 30, 2017.
For FY2015, the President requested a limit of $115.5 million for Ex-Im Bank’s administrative
expenses and funding of $5.75 million for its OIG. The President also requested that Ex-Im Bank
be allowed carryover funds of up to $10 million to remain available until September 30, 2018.
The President’s budget request estimates that the Bank’s export credit support will total $37.6
billion, and will be funded entirely by receipts collected from the Bank’s customers. The Bank
estimates it will collect $1.2 billion in 2015 in receipts in excess of expected losses on
transactions authorized in 2015 and prior years.
Ex-Im Bank regularly contributes to the U.S. Treasury. In FY2013, Ex-Im Bank transferred $1.1
billion to the Treasury’s General Fund after covering operating expenses and loan loss reserves.




18 The charter limits the aggregate amount of Ex-Im Bank's obligations outstanding (e.g., notes, debentures, and bonds)
from the U.S. Treasury to $6 billion at any one time. FCRA has introduced changes to the Bank’s funding process, and
the Bank has proposed eliminating the corresponding language in its charter.
19 Subsidy refers to program activities (the cost of direct loans, loan guarantees, insurance, and tied aid) conducted by
Ex-Im Bank.
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Table 3. Budget of the Export-Import Bank, FY2011-FY2015
Millions of U.S. Dollars
Category FY2011
FY2012
FY2013
FY2014
FY2015


Est.
Req.
Appropriations





Inspector General Amount Requested
3 4
4.4
5.1
5.75
Inspector General Amount Appropriated
2.5
4
4
5.1
––
Total Subsidy Requested
93 76 38 –– ––
Total
Subsidy
Appropriated

58 58 58 –– ––
Total Administrative Budget Requested
106 125 104
114.9
115.5
Total Administrative Budget Appropriated
84
90
90
115.5a ––
Total Budgetary Resources Available
1,829 1,572 1,455 1,820 356
Budget Authority (net)
443 393 624
1,412 ––
Outlays (net)
158 713 939
1,491 14
Source: Office of Management and Budget, Budget of the United States Government, various issues.
Note: Subsidy refers to program activities (the cost of direct loans, loan guarantees, insurance, and tied aid)
conducted by Ex-Im Bank. Reestimates of subsidy costs refer to reestimates of direct loan and loan guarantee
subsidies and the interest on those reestimates. For FY2014 and FY2015, Ex-Im Bank forecasted that al new
authorizations will be zero or negative subsidy, and did not request any positive subsidy for program expenses.
a. This amount includes a one-time appropriation of $10.5 million for the Bank’s renovation expenses to its
headquarters.
Risk Management
Ex-Im Bank seeks to manage the risks it faces in its transactions (see text box). The basis for its
risk management function is in the Bank’s charter, which requires that all transactions supported
by the Bank have a reasonable assurance of repayment and that the Bank maintains reasonable
provisions for losses. The Bank has a system in place to mitigate risks through credit
underwriting and due diligence of potential transactions, as well as monitoring risks of current
transactions. If a transaction has credit weaknesses, the Bank will try to restructure it to help
prevent defaults and increase the likelihood of higher recoveries if the transaction does default.
Ex-Im Bank also has a claims and recovery process for transactions in default.
Ex-Im Bank’s reserves for loan losses total more than $4 billion. In recent years, the Bank’s
default rate has been less than 1%, and historically, it has been less than 2%. The Bank’s default
rate as of March 31, 2014 was 0.211%.20 According to a Government Accountability Office
(GAO) study, the ultimate impact of Ex-Im Bank’s recent business on default rates is not yet
known as it contains a large volume of transactions that have not reached their peak default
periods.21 Since 1992, Ex-Im Bank has been able to recover 50 cents on the dollar on average for
transactions in default.22 Backed by the weight of the U.S. government, Ex-Im Bank can take

20 CRS electronic communication with Ex-Im Bank, May 30, 2014.
21 GAO, Export-Import Bank: Recent Growth Underscores Need for Continued Improvements in Risk Management,
GAO-13-303, March 2013, p. 31.
22 Ex-Im Bank, FY2013 Annual Report.
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legal action against obligors for transactions in default. It is also able to recover assets because its
loans are heavily collateralized, as a high percentage of its transactions are asset-backed (e.g.,
aircraft).
Table 4. Selected Risks Faced by Ex-Im Bank
Risk Definition
Repayment
The risk that a borrower will not pay according to the original agreement and the Bank may
eventually have to write-off some or all of the obligation because of credit or political reasons.
Concentration
Risk stemming from the composition of the credit portfolio as opposed to the risks related to
specific obligors. Ex-Im Bank faces concentration risks in terms of the composition of its portfolio
by geographic region, industry, and obligor.
Foreign
Risk stemming from an appreciation or depreciation in the value of a foreign currency in relation
Currency
to the U.S. dol ar in Ex-Im Bank transactions denominated in that foreign currency.
Operational
The risk of material losses resulting from human error, system deficiencies, and control
weaknesses.
Interest Rate
Ex-Im Bank makes fixed-rate loan commitments prior to borrowing to fund loans and takes the
risk that it will have to borrow funds at an interest rate greater than the rate charged on the
credit.
Source: CRS, based on Ex-Im Bank annual reports.
Ex-Im Bank in an International Context
As international trade has grown, trade finance has expanded. Some 80-90% of world trade relies
on trade finance, and the global market for trade finance is estimated to be at around $10 trillion a
year.23 The trade finance industry consists of private lenders and insurers, who operate
commercially, and government-backed ECAs. Private lenders and insurers conduct the majority
of short-term export financing, whereas ECAs are more heavily involved in medium- and long-
term export financing, including financing for complex, multi-billion dollar sales such as aircraft
and infrastructure projects. Most developed countries and many developing countries have ECAs.
Outside of the United States, upwards of 60 ECAs exist in foreign countries. The role of ECAs
may have become more prominent, in part, due to tight credit market conditions associated with
the international financial crisis and regulatory impact of Basel III on commercial banks.24
International Rules on Official Export Credit Activity
The Organization for Economic Cooperation and Development (OECD) Arrangement on
Officially Supported Export Credits (the “OECD Arrangement”) guides the scope of certain
financing activities of Ex-Im Bank and other participating foreign ECAs (generally developed
countries)25. The United States generally opposes subsidies for exports of commercial products.

23 World Trade Organization, “Trade Finance: The Challenges of Trade Financing,”
http://www.wto.org/english/thewto_e/coher_e/challenges_e.htm.
24 Ex-Im Bank, 2012 Competitiveness Report, June 2013. For more information, see CRS Report R42744, U.S.
Implementation of the Basel Capital Regulatory Framework
, by Darryl E. Getter.
25 For more information, see CRS Report RS21128, The Organization for Economic Cooperation and Development, by
James K. Jackson.
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Since the 1970s, the United States has led efforts within the OECD to adopt international
protocols which reduce the subsidy level in export credits by raising the interest rates on
government-provided export credits to reflect market levels more closely.
The OECD Arrangement, which came into effect in April 1978, establishes minimum interest
rates and premiums, maximum repayment terms, guidelines for classifying risk, and other terms
and conditions for government-backed export financing. The Arrangement has been revised a
number of times over the years. For example, participants agreed to tighten restrictions on the use
of tied aid (see text box).26 In addition, sector understandings govern the terms and conditions of
exports of, for example, civilian aircraft, ships, nuclear power plants, renewable energy, and
railway infrastructure.
OECD member countries also have agreed to other guidelines for official export credit. For
example, in 2007, members agreed to revise guidelines on environmental procedures, referred to
as “Common Approaches on Environment and Officially Supported Export Credits.” These
environmental guidelines call for member governments to review projects for potential
environmental impacts; to assess them against international standards, such as those of the World
Bank; and to provide more public disclosure for environmentally-sensitive projects. The OECD
also adopted new guidelines on sustainable lending principles that aim to help developing
countries avoid a renewed build-up of debt after receiving debt relief, as well as an anti-bribery
agreement.

Tied Aid
Ex-Im Bank has a Tied Aid Capital Projects Fund (TACPF), often referred to as the tied aid “war chest,” to counter
specific projects that are receiving foreign official y-subsidized export financing. The 1986 Ex-Im Bank reauthorization
act (P.L. 99-472) required the Bank to establish the tied aid fund. The Bank may conduct tied aid transactions to
counter attempts by foreign governments to sway purchases in favor of their exporters solely on the basis of
subsidized financing, rather than on market conditions (price, quality, etc.). The United States ties substantial amounts
of its agricultural and military aid to purchases of U.S. goods, but generally has avoided using such financing to
promote American capital goods exports.
The amount of funds in the TACPF was $179 million at the end of FY2012. Funds for the tied aid war chest are
available to the Bank. Applications for the tied aid fund are subject to review by the Treasury Department. Between
2008 and 2012, Ex-Im Bank approved two tied aid transactions, one for a waste water treatment plant in sub-Saharan
Africa in 2010 and the other for the sale of fire trucks to Indonesia in 2011.
Ex-Im Bank abides by the “Helsinki Disciplines,” which are rules on tied aid agreed to by OECD Arrangement
participants and include notification requirements for tied aid activity. In 2012, there were 140 Helsinki-type tied aid
notifications totaling approximately $4.3 billion.
Source: Ex-Im Bank, 2012 Competitiveness Report, June 2013, pp. 93-105.

Export credit financing that is covered by the OECD Arrangement generally is exempt from the
World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures (SCM),
which disciplines the use of export subsidies and the actions countries can take to counter the

26 According to Ex-Im Bank, tied aid is a “concessional, trade-related aid credit provided by a donor government to
induce the borrower to purchase equipment from suppliers in a donor’s country,” and “can distort trade flows when the
recipient country makes its purchasing decisions on the bidder offering the cheapest financing rather than the best price,
quality or service.” Ex-Im Bank, 2012 Competitiveness Report, June 2013, p. 93,
http://www.exim.gov/about/library/reports/competitivenessreports/upload/US-Ex-Im-Bank-2012-Competitiveness-
Report-to-Congress-Complete.pdf (hereinafter Ex-Im Bank, 2012 Competitiveness Report, June 2013).
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effects of these subsidies. The SCM Agreement is interpreted to indicate that, for non-agricultural
products, an export credit practice in conformity with the OECD Arrangement on export credits
shall not be considered as an export subsidy prohibited by the SCM Agreement.27
Growth in Unregulated Financing
The OECD Arrangement does not cover all of the officially supported export credit activity
conducted by non-member countries. Emerging markets such as China, Brazil, and India are not
members of the OECD, but are increasingly active providers of government-backed export credit
financing.28 In 2012, medium- and long-term financing conducted by the 34 members of the
OECD as a whole stood at $120 billion (see Figure 7; see Appendix for expanded data). In
contrast, the combined medium- and long-term financing provided by China, Brazil, and India, at
$58 billion, was almost one-half of the OECD amount. Notably, China alone accounted for at
least $45 billion of new official medium- and long-term export credit financing in 2012.29
Figure 7. Medium- and Long-Term Government-Backed Export Credit Volumes for
Selected Export Credit Agencies, 2012
Billions of U.S. Dollars

Source: Ex-Im Bank, Report to the U.S. Congress on Export Credit Competition and the Export-Import Bank of the
United States, For the Period January 1, 2012 through December 31, 2012
, Washington, DC, June 2013.
Notes: The OECD amount totaled $119.6 billion, and the emerging market amount totaled $58.3 billion. Data
subject to analytic assumptions and limited by availability of information.

27 The relationship between the OECD Arrangement and the SCM Agreement is established by section (k) of Annex I
to the SCM. See http://www.wto.org/english/res_e/booksp_e/analytic_index_e/subsidies_05_e.htm.
28 These emerging markets, while not members of the OECD, may have observer status during some OECD meetings.
The OECD has offered them “enhanced engagement” with a view towards possible accession. Brazil, furthermore, is a
member of the OECD Aircraft Sector Understanding.
29 Ex-Im Bank, 2012 Competitiveness Report, Washington, DC, June 2013.
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The government-backed export credit activities of these non-OECD countries may not comply
with international export credit standards.11 China, Brazil, and India may offer below-market and
concessionary financing alternatives with which it is difficult for ECAs of OECD members to
compete (see text box). For example, in 2011, Brazil’s largest landline telephone company
reportedly chose to purchase network equipment from China’s Huawei Technologies because of
access to China Development Bank’s $30 billion credit line, a two-year grace period on
payments, and an interest rate of two percentage points below the London interbank offered rate
(LIBOR).30 Officially-backed export credit activity by emerging economies may increase in
strategic markets, such as oil and gas, renewable energy, and natural resources extraction. For
instance, Chinese ECAs “have shown strong signs of growing usage of export credits for export
promotion purposes, especially in Africa, where they were offering preferential loans either in
exchange for much needed resources (e.g., oil) or low cost loans on very extended repayment
terms on projects in order to gain market share.”31

Comparison of Repayment Terms for Rail Exports
The new OECD Rail Sector Understanding, concluded in September 2013, sets guidelines for railway infrastructure
exports. It provides repayment terms up to 12 years for transactions in high-income OECD countries, subject to
conditions aimed at complementing the private sector, and up to 14 years for transactions in all other countries. The
guidelines are applicable to a market expected to exceed $120 billion annually over the 2015-2017 period.32 In
contrast to OECD repayment terms, various studies suggest that China’s repayment terms for its rail exports, such as
for infrastructure projects in sub-Saharan Africa, can exceed 20 years.33

The ECAs of OECD member countries also conduct export credit financing and other activities
that fall outside of the Arrangement. One form of unregulated financing is the “market window,”
which is a government-owned entity or program that offers export credits on market terms.
Market windows generally do not operate on purely commercial terms, as they tend to receive
benefits from their government status that commercial lenders cannot access. Many ECAs operate
market windows, such as Canada, Germany, and Italy; Ex-Im Bank does not have a market
window. It is difficult to obtain data on market window operations of foreign countries. Another
form of unregulated financing is untied lending support, which is credit support extended by a
government entity to a recipient for the purpose of providing credit for strategic interests of the
donor country. Because the untied loan is not tied to exports, it is not subject to the OECD export
credit guidelines.

30 Gary Clyde Hufbauer, Meera Fickling, and Woan Foong Wong, Revitalizing the Export-Import Bank, Peterson
Institute for International Economics (IIE), Number PB11-6, May 2011, http://www.iie.com/publications/pb/pb11-
06.pdf. “Huawei’s $30 Billion China Credit Opens Doors in Brazil, Mexico,” Bloomberg, April 24, 2011.
31 Ex-Im Bank, Report to the U.S. Congress on Export Credit Competition and the Export-Import Bank of the United
States, For the Period January 1, 2009 through December 31, 2009
, Washington, DC, June 2010.
32 OECD, “New export credit rules will boost railway development and help countries achieve greener growth, OECD
says,” press release, September 1, 2014, http://www.oecd.org/trade/new-export-credit-rules-will-boost-railway-
development-and-help-countries-achieve-greener-growth-oecd-says.htm.
33 AidData, Tracking Chinese Development Finance to Africa; Kevin P. Gallagher, Amos Irwin, and Katherine
Koleski, The New Banks in Town: Chinese Finance in Latin America, Inter-American Dialogue, March 2012,
http://www.thedialogue.org/PublicationFiles/TheNewBanksinTown-FullTextnewversion.pdf.
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Developments in International Export Credit Negotiations
As stated previously, the United States historically has led efforts to impose international
disciplines on government-backed export credit activity. The 2012 Ex-Im Bank reauthorization
act went further, directing the Secretary of the Treasury (which takes the lead on U.S.
international export credit negotiations) to negotiate to reduce and eliminate government-backed
ECA financing altogether. Congress also required the Secretary of the Treasury to negotiate with
all countries that finance air carrier aircraft through funds from a state-sponsored entity to reduce
and eliminate aircraft export credit financing for all aircraft covered by the 2007 OECD Aircraft
Sector Understanding. These efforts reportedly have run into difficulty in the OECD. While
exports play an important role in the U.S. economy, the economies of other countries are far more
reliant on exports, constituting a larger share of their respective gross domestic product (GDP).
Moreover, other OECD countries presumably would be reluctant to terminate their export credit
programs while countries outside of the OECD, such as China, Brazil, and India, could continue
their financing programs.
Separately, the United States has been engaged in efforts to negotiate export credit guidelines
with China. During Chinese Vice President Xi Jinping’s visit to the United States in February
2012, the United States and China announced that they would establish an international working
group composed of export financing providers, with the goal of completing a new set of export
credit guidelines by 2014. These new guidelines would be aimed at replacing the current OECD
Arrangement.34 Progress reportedly has been uneven and, most recently, has focused on a sectoral
approach.
Selected Issues for Congress
Renewal of Ex-Im Bank
Over time, Congress has debated the acceptability of federal support for private firms to export,
with the debate growing more complex as the international ECA landscape has become more
competitive. Supporters of Ex-Im Bank have called for reauthorization of the Bank in its current
form, while critics have called for privatizing or terminating the Bank’s functions.
Proponents argue that Ex-Im Bank is a demand-driven agency that is critical in addressing market
failures (such as imperfect information and barriers to entry) and leveling the playing field for
U.S. exporters by countering foreign governments’ export financing efforts. They say that the
U.S. government backing of the Bank’s activity can make certain transactions (e.g., for large,
infrastructure projects or for small business exports) more commercially attractive by mitigating
risks and can give the Bank leverage to guarantee repayment or recover assets in a way not
available to the private sector. Ex-Im Bank supporters may raise questions about the feasibility of
selling the Bank’s assets in financial markets under a privatization proposal. The Administration’s
legislative proposal submitted in April 2014 requests a renewal of the Bank’s current authority.

34 “Export Credit Pact Sought by U.S., China Would Replace OECD Guidelines,” Inside U.S. Trade's World Trade
Online
, February 24, 2012. Doug Palmer, “U.S., China Agree to Negotiate Export Credit Deal,” Reuters, April 14,
2012.
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Critics of Ex-Im Bank may concede that the Bank’s programs can help individual firms, but hold
that its programs shift production among sectors within the economy and do not add permanently
to the overall level of U.S. exports.35 They contend that the Bank competes with, or crowds out,
private sector activity; the Bank picks “winners and losers” through its support; and that the
private sector is more efficient and better suited than the federal government to finance exports.
Critics of the Bank may also call for intensified U.S. efforts through the OECD, as well as other
venues, to eliminate all government-backed export credit activity internationally. Some Members
have proposed terminating the Bank’s authority.36
From an effectiveness or efficiency standpoint, reorganization of Ex-Im Bank’s functions may be
considered as an alternative to reauthorization, privatization, and termination. For example,
President Obama previously proposed reorganizing the business- and trade-related functions of
Ex-Im Bank and certain other federal entities into one department in an effort to streamline the
federal government and make it more effective.37 Trade reorganization discussions have rekindled
policy debates about whether reorganization would reduce costs and improve the effectiveness of
trade policy programs, or undermine the effectiveness of federal agencies, given their differing
missions.
Length of Reauthorization
If Congress chooses to reauthorize Ex-Im Bank, a related issue is the length of time to extend the
Bank’s authority. A shorter renewal period, requiring reauthorizations more often, could provide
more opportunity for more active congressional oversight of the Bank’s activities (though
Congress can weigh in on Ex-Im Bank anytime). In contrast, a longer renewal period or a
permanent extension of authority could enhance the Bank’s ability for long-term planning and
provide more assurance to U.S. exporters, foreign buyers, and lenders of Ex-Im Bank’s services.
In the most recent reauthorization, passed in 2012 (P.L. 112-122), Congress extended the Bank’s
authority for about two years through FY2014. The length of past reauthorizations was typically
four or five years.38 The Administration’s legislative proposal submitted in April 2014 requests a
five-year renewal of Ex-Im Bank’s authority.
According to Ex-Im Bank, if its authority were to lapse, no new commitments (including new
loan, guarantee, or insurance transactions) could be approved by the Board of Directors or under
delegated authority, but prior obligations (including disbursements on already approved final
commitments) would continue. The Bank would continue to make expenditures in operations
(including salary, rent, etc.) while developing a plan for orderly liquidation.39 Uncertainty over
whether Congress will renew Ex-Im Bank’s authority reportedly has led, in some instances, to

35 Critics may point to a combination of domestic macroeconomic factors and global economic developments that
influence a nation’s export levels in the long-run, in other words, supply and demand, reflecting world economic
forces.
36 For example, H.R. 2263 and S. 1102, introduced in the 113th Congress, propose a termination of the Bank three years
after the act’s enactment.
37 The White House, “Government Reorganization Fact Sheet,” press release, January 13, 2012,
http://www.whitehouse.gov/the-press-office/2012/01/13/government-reorganization-fact-sheet.
38 For example, the 2002 reauthorization act (P.L. 107-189) extended Ex-Im Bank’s authority for four years through
FY2006, and the 2006 reauthorization act (P.L. 109-438) renewed its authority for five years through FY2011.
39 CRS electronic communication with Ex-Im Bank, May 1, 2014.
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foreign buyers selecting other suppliers over U.S. suppliers for certain export contracts, out of
concern about financing.40
Exposure Limit
If Congress decides to reauthorize Ex-Im Bank, it may consider whether to revise the Bank’s
exposure cap. When Congress established the Bank as an independent agency in 1945, it
authorized a limit on the Bank’s outstanding aggregate credit and insurance authority that was no
greater than three and one-half times the Bank’s authorized stock of $1 billion.41 Since then,
Congress has periodically raised the Bank’s exposure cap (see Table 5). The 2012 reauthorization
act increased the Bank’s exposure cap from the previous limitation of $100 billion incrementally
to $140 billion in FY2014, with the increase in the exposure cap contingent on the Bank
maintaining a default rate of less than 2% and on meeting various reporting requirements. The
Administration’s legislative proposal submitted in April 2014 to reauthorize the Bank requests an
incremental increase of the Bank’s exposure cap to $160 billion in FY2018. Some stakeholders
favor increasing Ex-Im Bank’s exposure cap, based on its role in supporting U.S. exports. Others
favor maintaining or reducing the exposure cap, based on concerns over Ex-Im Bank’s ability to
prudentially manage its growing portfolio (see discussion below).
Table 5. Legislative Changes to the Export-Import Bank’s Limit on Outstanding
Aggregate Credit and Insurance Authority
Year Legislation New
Limit
Resulting from Legislation
1945
P.L. 79-173
Three and one-half times the authorized stock of $1 billion
1951
P.L. 82-158
Four and one-half times the authorized stock of $1 billion
1954 P.L.
83-570 $5
billion
1958 P.L.
85-424 $7
billion
1963 P.L.
88-101 $9
billion
1968
P.L. 90-267
$13.5 billion
1971
P.L. 92-126
$20 billion
1975
P.L. 93-646
$25 billion
1978
P.L. 95-630
$40 billion
1992
P.L. 102-429 $75 billion
2002
P.L. 107-189 Incremental increases in limit to $100 billiona
2012
P.L. 112-122 Incremental increase in limit to $140 billion, contingent on certain requirementsb
Source: U.S. Code notes; Lexis Nexis; and Jordan Jay Hillman, The Export-Import Bank at Work (Westport 1982).
a. The 2002 reauthorization (P.L. 107-189) increased the Bank’s exposure cap to $80 billion in FY2002, $85
billion in FY2003, $90 billion in FY2004, $95 billion in FY2005, and $100 billion in FY2006.

40 Lauren Airey, “Manufacturers Testify Before House Ex-Im Panel,” National Association of Manufacturers (NAM),
April 9, 2014, http://www.shopfloor.org/2014/04/manufacturers-testify-before-house-ex-im-panel/31055.
41 Ex-Im Bank initially was capitalized with a stock of $1 billion in 1934.
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b. The 2012 reauthorization act (P.L. 112-122) increased the Bank’s exposure cap to $120 billion in FY2012,
$130 billion in FY2013, and $140 billion in FY2014—with the increases for FY2013 and FY2014 contingent
on the Bank maintaining a “default rate” of less than 2% and on submitting various reports.
Ex-Im Bank Policies
Ex-Im Bank’s policies could be part of the reauthorization debate. Congress could choose to pass
a “clean reauthorization” that introduces no major changes to the Bank’s policies. Proponents
may argue that Congress has struck a fair balance among the various stakeholder interests—such
as business and labor interests—in its present requirements of Ex-Im Bank and that adjustments
to this balance are unwarranted. However, a number of long-standing debates concerning the
Bank’s policies remain. Should Congress consider revisions to Ex-Im Bank’s policies, at issue is
the extent to which potential changes would: (1) balance Ex-Im Bank’s core mission to boost U.S.
exports and jobs with supporting other policy interests; and (2) compare to the policies of foreign
ECAs, which may have different mandates and priorities, but nevertheless serve as competitors to
Ex-Im Bank. Certain policies that may be debated are summarized below.
Domestic Content
The OECD Arrangement contains no specific guidelines regarding content requirements, which
relate to the amount of domestic and foreign content (e.g., labor, materials, and overhead costs)
associated with the production of an export. Each ECA generally establishes its own guidelines in
this area.
Ex-Im Bank bases its content policy on its congressional mandate to support U.S. jobs and views
content to be “a proxy to evidence support for U.S. jobs.”42 The policy is intended to encourage
U.S. companies to maximize their sourcing of U.S. content. However, Ex-Im Bank recognizes
that U.S. export contracts may contain goods and services that are foreign-originated, and it
allows financing support for such contracts, subject to certain restrictions and limitations. Under
its content policy, for all medium- and long-term transactions, Ex-Im Bank limits its support to
the lesser of: (1) 85% of the value of all goods and services contained within a U.S. supply
contract; or 100% of the U.S. content of an export contract. In effect, the Bank requires a
minimum of 85% U.S. content and a maximum of 15% foreign content for an export contract to
receive the fullest extent of financing available by the Bank. If the foreign content exceeds 15%,
the Bank’s support would be reduced proportionally.43 For short-term export contracts, the
minimum U.S. content requirement for full Ex-Im Bank financing is generally 50%.
In contrast to Ex-Im Bank, foreign ECAs generally have lower domestic content requirements
and some even have no domestic content requirements. ECAs of other countries have revised
their content policies to reflect the changing nature of manufacturing, including the rise of global
supply chains and the sourcing of inputs from multiple countries (see Table 6).
In the 2012 reauthorization legislation, Congress required Ex-Im Bank to review its domestic
content policy for medium- and long-term transactions to “examine and evaluate the effectiveness
of the Bank’s policy in maintaining and creating jobs in the [United States]; and in contributing to

42 Ex-Im Bank, 2012 Competitiveness Report, June 2013, p. 119.
43 See Ex-Im Bank’s content policies for more details: http://www.exim.gov/products/policies/foreign_medium-
long.cfm.
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a stronger national economy through the export of goods and services” by taking into account
various factors, including U.S. employment considerations and competitiveness to foreign ECAs.
Following the review, Ex-Im Bank announced certain policy updates. For example, in an effort to
increase U.S. services exporters’ access to its financing, Ex-Im Bank provided clarification on
how its content policy determines the eligibility of a U.S. services provider and a U.S. services
contract, as well as how foreign-developed technology and the tools or equipment used to execute
a services contract are treated on a content basis. According to Ex-Im Bank, it made no changes
to its underlying content policy with these clarifications.
In the past, some stakeholders have argued that the Bank’s definition of national content does not
take into account “the high value U.S. jobs in R&D [research and development], supply chain
management, software design engineering, business development, and marketing, IP [intellectual
property] support, branding, and profit,”44 which have been considered as limitations to U.S.
service providers’ ability to use Ex-Im Bank financing.
Table 6. Foreign Content Requirements of Selected Country ECAs
Maximum Allowable Foreign Content to Receive
Country
Full Medium- and Long-Term Financing
Australia 15%

Canada Support
will be given if the transaction benefits national interest
France
40%; however, may al ow more foreign content in transactions that advance
strategic/national interests
Germany
30% combined local and foreign (non-domestic) content; however may allow more
non-domestic content in transactions that advance strategic/national interests
Italy Support
will be given if the transaction benefits national interest
Japan
70%; however, foreign content may be higher on a case-by-case basis
United States
15%
United Kingdom
80%; however, may al ow more foreign content in transactions that advance
strategic/national interests
Sources: Ex-Im Bank, Report to the U.S. Congress on Export Credit Competition and the Export-Import Bank of the
United States, For the Period January 1, 2012 through December 31, 2012
, Washington, DC, June 2013; meeting with
Ex-Im Bank officials, May 5, 2011; House Committee on Financial Services, Subcommittee on International
Monetary Policy and Trade, The Role of the Ex-Im Bank in U.S. Competitiveness and Job Creation, opening statement
by Chairman Gary Miller, 112th Cong., 1st sess., March 10, 2011; OECD, Export Credit Financing Systems in OECD
Member Countries and Non-Member Economies
, May 1, 2008; and Coalition for Exports through Employment
document.
Notes: These data should not be considered definitive; rather, they are intended to give an idea of the range of
ECA content requirements. ECAs may not apply their content requirements on an absolute basis, and may
consider requests for export financing on a case-by-case basis or may apply flexibility to their content rules, for
example, in terms of definition, percentage of foreign content, or interpretation of national benefit.
Given the proliferation of global supply chains and foreign ECA policies, many U.S. businesses
continue to call for additional flexibility in Ex-Im Bank’s content requirements. For example,
industry proposals have included recommendations that Ex-Im Bank lower its domestic content

44 U.S. Congress, House Committee on Financial Services, Subcommittee on International Monetary Policy and Trade,
Statement for the Record from the Coalition for Employment through Exports, 112th Cong., 1st sess., March 10, 2011.
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requirement, such as to 50% (the policy for short-term financing); match the average among
OECD countries; or adopt a policy similar to the European Union ECAs and “automatically cover
non-U.S. content for U.S. FTA [free trade agreement] partners who offer reciprocity for U.S.
content under their export credit agencies.”45 Other industry recommendations include Ex-Im
Bank expanding the definition of domestic content to include, for instance, R&D or other
elements that support high-value additions to the U.S. economy. However, labor groups tend to be
concerned about the impact that lowering national content requirements may have on
employment in the home country. From their point of view, reducing these requirements may
result in an outsourcing of labor to other countries. Others counter that the current requirements
may induce firms to use other ECAs for alternative sources of financing, which may cause them
to shift production overseas.
Economic Impact Analysis
Ex-Im Bank is required to have regulations and procedures to insure that full consideration is
given to the extent that any loan or guarantee is likely to have an adverse effect on U.S. industries
and U.S. employment.46 These regulations and procedures are in support of the congressional
policy that in authorizing any loan or guarantee the Board of Directors shall take into account any
serious adverse effect of such loan or guarantee.47 Furthermore, the Bank is prohibited from
extending any loan or guarantee that would establish or expand the production of any commodity
for export by any other country if the commodity is likely to be in surplus on world markets or
the resulting production capacity will compete with U.S. production of a similar commodity and
will cause “substantial injury” to U.S. producers of a similar commodity.48 The Bank defines risk
of substantial injury as the extension of a loan or guarantee that will enable a foreign buyer to
establish or expand foreign production by an amount that is equal to or greater than 1% of U.S.
production.49 The same prohibition applies to loans or guarantees subject to U.S. trade measures,
such as anti-dumping or countervailing duties.50 However, these prohibitions shall not apply if the
Board of Directors determines that the proposed transaction’s short- and long-term benefits to
U.S. industry and U.S. employment are likely to outweigh the injury to U.S. producers and U.S.
employment of similar commodities.51
Like Ex-Im Bank, other G-7 ECAs have a broad mandate to support transactions that benefit their
domestic economy, and base their decision to provide support on economic impact. However, Ex-
Im Bank is the only ECA that is required by law to use an economic impact analysis to weigh the
costs and benefits of support to an export transaction and to use this analysis as a basis for support
or denial of financing.52

45 U.S. Congress, House Committee on Financial Services, Subcommittee on International Monetary Policy and Trade,
Statement of Karan Bhatia, Vice President & Senior Counsel, International Law & Policy, General Electric, 112th
Cong., 1st sess., March 10, 2011. Also see Gary Clyde Hufbauer, Meera Fickling, and Woan Foong Wong, Revitalizing
the Export-Import Bank
, IIE, Number PB11-6, May 2011.
46 12 U.S.C. 635a-2.
47 12 U.S.C. 635(b)(1)(B).
48 12 U.S.C. 635(e)(1).
49 See Ex-Im Bank, Economic Impact Procedures and Methodological Guidelines, April 2013,
http://www.exim.gov/generalbankpolicies/economicimpact/.
50 12 U.S.C. 635(e)(2).
51 12 U.S.C. 635(e)(3).
52 Ex-Im Bank, 2012 Competitiveness Report, June 2013, p. 118.
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Among the key issues in the 2012 reauthorization debate was whether Ex-Im Bank’s economic
impact analysis sufficiently analyzes the potential impacts to U.S. industry of Ex-Im Bank
transactions, including downstream effects (see text box). The 2012 reauthorization act required
Ex-Im Bank to develop and make publicly available methodological guidelines to be used by the
Bank in conducting economic impact analyses. In April 2013, Ex-Im Bank published revised
economic impact analysis procedures and guidelines, including for aircraft exports.

U.S. Airlines’ Lawsuits Against the Ex-Im Bank
Debate about the economic impact of Ex-Im Bank activities has been driven in part by a charge by Delta Airlines,
Hawaiian Airlines, and the Airline Pilots Association that Ex-Im Bank financing for Boeing aircraft exports to India and
other countries has resulted in to an oversupply of airline seats that has had an adverse effect on their businesses.
The group also has charged that Ex-Im Bank’s economic impact analysis procedures are inconsistent with the Bank’s
charter. In 2011, operating through the Air Transport Association of America (ATAA), but with the express
exclusion of most of the members of that association, Delta filed a legal challenge against Ex-Im Bank seeking an
injunction on Ex-Im Bank loan guarantees to Air India. In July 2013, a federal appeals court rejected the airlines’
request, but required Ex-Im Bank to explain how its approval of the transactions has complied with its statutory
mandate.
According to Ex-Im Bank, its economic impact analysis adequately takes into account U.S. economic effects of
transactions. From the Bank’s perspective, a lack of Ex-Im Bank financing for an aircraft export contract may not
deter a foreign airline carrier from buying aircraft; however, in the absence of Ex-Im Bank financing, a foreign aircraft
manufacturer may win the deal over a U.S. aircraft manufacturer.
Delta, Hawaiian and APA filed three subsequent lawsuits against the Bank, all of which are currently pending. Initial y,
the plaintiffs claimed that Ex-Im Bank financing support for the purchase of U.S.-manufactured aircraft by foreign
airlines provided more favorable financing terms than were available to U.S. airlines. The later lawsuits dropped this
assertion and instead claimed that Ex-Im Bank financing provides more favorable financing terms than might otherwise
be available to the foreign airlines, but not necessarily better than financing terms available to U.S. airlines.
U.S. companies may obtain financing from the ECAs of other countries. For example, Delta has used government-
backed export financing for its purchases of airplanes, such as from Canada’s Bombardier Inc. or Brazil’s Embraer S.A.
Sources: “Airlines Press Ahead With Ex-Im Bank Lawsuit After Judge Denies Injunction,” Inside U.S. Trade's World
Trade Online
, February 9, 2012; Josh Mitchel and Corey Boles, “Boeing, Delta Clash on Exports,” The Wall Street
Journal
, March 16, 2012; Ted Reed, “Delta, Leader Of The U.S. Airline Industry, Chal enges Boeing And Export-
Import Bank,” Forbes, April 13, 2014; and Ex-Im Bank.

Supporters of Ex-Im Bank maintain that the economic impact analysis requirements ensure that
the Bank meets its congressional mandate. At the same time, some U.S. exporters are concerned
that the economic impact policies may be overly burdensome, detract from its core mission to
support U.S. exports and jobs, and not be competitive to the policies of other ECAs. Other critics
continue to be concerned that the economic impact policy does not adequately take into account
downstream effects of Ex-Im Bank support.
Environmental Impact Analysis
Ex-Im Bank’s charter authorizes the Bank to grant or withhold financing support after taking into
account the potential beneficial and adverse environmental effects of goods and services for
which Ex-Im Bank direct lending and guarantee support is requested. The Bank must conduct an
environmental review of all transactions greater than $10 million. Recent developments in Ex-Im
Bank’s environmental policies related to high-carbon projects, including support for exports for
coal-fired power plants, has been subject to congressional action (see text box). According to Ex-
Im Bank, its environmental disclosure requirements (e.g., tracking and publishing greenhouse gas
emission data associated with projects), have expanded over time, compared to many other
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ECAs.53 In addition, Ex-Im Bank faces competition from ECAs outside of the OECD, such as
China, which tend to be less rigorous in their environmental requirements for financing than
OECD countries.
Supporters of Ex-Im Bank’s environmental policy argue that the Bank must balance U.S.
exporting interests with environmental policy considerations, per its mandate. However, some
U.S. exporters are concerned that Ex-Im Bank’s environmental impact policies may be overly
burdensome and detract from its core mission to support U.S. exports and jobs. From this
standpoint, situations in which Ex-Im Bank denies financing for projects that do not meet
environmental requirements are contrary to its mission because it may result in lost export and
employment opportunities.

Recent Developments
Following the announcement of President Obama’s Climate Action Plan, Ex-Im Bank’s Board of Directors approved
revisions to the Bank’s Supplemental Guidelines for High-Carbon Projects In December 2013. As revised, the
Supplemental Guidelines state that “the Bank will not provide support for exports of high carbon intensity plants,
except for high carbon intensity plants that (a) are located in the world’s poorest countries, utilize the most efficient
coal technology available and where no other economically feasible alternative exists, or (b) deploy carbon capture
and sequestration (CCS), in each case, in accordance with the requirements set forth in these Supplemental
Guidelines.” However, Section 7081(4)(C) of the FY2014 appropriations act (P.L. 113-76) prohibits the use of Ex-Im
Bank funds, until September 30, 2014 and under certain conditions, for the enforcement of any rule, regulation,
policy, or guideline implemented pursuant to the Supplemental Guidelines. While some stakeholders may be critical
of the appropriations language from an environmental perspective, others may argue that it provides greater flexibility
for Ex-Im Bank to more effectively meet its export and jobs mandate while also contributing to U.S. foreign policy
goals with respect to development in the world’s poorest countries.
Shipping
Ex-Im Bank’s seaborne shipping policy is based on Public Resolution 17 (PR-17, approved
March 26, 1934, by the 73rd Congress), whose purpose is to “support the U.S. strategic objective
of maintaining a merchant marine sufficient to carry a substantial portion of its waterborne export
and import foreign commerce.”54 Under the shipping policy, most products supported by the Ex-
Im Bank must be transported exclusively on U.S. vessels (e.g., direct loans of any amount,
guarantees above $20 million, and products with repayment periods of more than seven years).
Under limited conditions, a waiver on this requirement may be granted on a case-by-case basis by
the U.S. Maritime Administration (MARAD).
Supporters contend that maintaining U.S. flag vessels is “critical to U.S. national security” and
“essential to maintaining a commercial U.S.-flag merchant marine.”55 They argue that, from a
budgetary standpoint, cargo preference is a “highly cost efficient way” to support a privately-
owned U.S.-flag commercial fleet. Because the goods will be shipped regardless of which ship

53 Ex-Im Bank, 2012 Competitiveness Report, June 2013, p. 75.
54 Ex-Im Bank, Ex-Im Bank Policies: Shipping Requirements (MARAD), http://www.exim.gov/products/policies/
shipping.cfm. Maritime Administration, U.S.-Flag Waterborne Domestic Trade and Related Programs,
http://www.marad.dot.gov/ships_shipping_landing_page/domestic_shipping/Domestic_Shipping.htm. Codified as 46
U.S.C. 55304, by P.L. 109-304, October 6, 2006.
55 U.S. Congress, House Committee on Financial Services, Subcommittee on International Monetary Policy and Trade,
Statement of USA Maritime, Hearing on the Role of the Export-Import Bank in U.S. Competitiveness and Job Creation,
112th Cong., 1st sess., March 11, 2011.
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carries them, and therefore the cost will be incurred regardless, “requiring that some of the
cargoes be shipped on U.S.-flag vessels leverages that basic transportation expense to provide
other benefits to the nation at a fraction of direct cost purchase.” The concern under this view is
that otherwise, the U.S. government would have to “duplicate sealift capacity at enormous
expense with government-owned vessels.”56 These merchant U.S.-flag vessels are then available
to transport U.S. troops and military equipment. Proponents also argue that the cargo preference
requirements help to support the U.S. shipping industry and the employment of shipboard crew.
Critics of the shipping policy argue that “both U.S. strategic requirements and the global shipping
market have changed dramatically.”57 U.S. business groups contend that the shipping
requirements can make U.S. goods less competitive relative to foreign goods for a host of
reasons. While one or more countries used to have similar shipping requirements in the past, the
United States appears to be the only country that continues to impose such requirements.58 There
may also be capacity constraints because there are a limited number of U.S. bulk cargo carriers.
According to lenders and exporters, the higher rates and the route scheduling challenges
associated with shipping with U.S.-flagged vessels can make it difficult for them to use Ex-Im
Bank support. For example, in one transaction with Ex-Im Bank, the cost of U.S. shipping
reportedly was five times the cost of non-U.S. shipping,59 raising competitiveness concerns. In
addition, some businesses express concern about processing time and outcomes.60
Co-Financing
Ex-Im Bank introduced the co-financing program in 2001. Co-financing arrangements enable
export credit financing from multiple ECAs. They allow goods and services from two or more
countries to be marketed to a buyer under a single ECA financing package. According to U.S.
exporters and lenders, co-financing arrangements allow Ex-Im Bank to participate with other
ECAs on the non-U.S. content portion of an export contract. Otherwise, Ex-Im Bank would be
limited to supporting the U.S. portion of the export contract and, from this view, the U.S. exporter
may not win the sale because the ECA supported portion was insufficient or the terms and
conditions were disadvantageous. In 2012, Ex-Im Bank conducted 71 co-financed transactions.
According to the Bank, 99% of the volume, approximately $8 billion, involved some type of
aircraft, with the exception of medical equipment and a communications equipment transaction.
The Bank states that, in most aircraft transactions, without co-financing, the exporter would not
have been able to offer the maximum 85% support to its customers in one financing package.61
Following a review of its content policy, Ex-Im Bank announced changes to its co-financing
arrangements. Under the revised co-financing policy, the Bank is willing to co-finance export
contracts with a range of ECAs, if the proposed transaction complies with its statutory and policy
requirements and benefits the U.S. economy. Some supporters call for more flexibilities in Ex-Im
Bank’s co-financing arrangements.

56 Ibid.
57 Coalition for Employment through Exports (CEE), Ex-Im Bank 2011 Reauthorization: CEE Position Paper.
58 Ex-Im Bank, 2012 Competitiveness Report, June 2013, p. 127.
59 U.S. Congress, House Committee on Financial Services, Subcommittee on International Monetary Policy and Trade,
Statement for the Record from the Coalition for Employment through Exports, 112th Cong., 1st sess., March 10, 2011.
60 Ex-Im Bank, 2012 Competitiveness Report, June 2013, p. 131.
61 Ibid., p. 70.
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Tied Aid
Some U.S. exporters and lenders believe that Ex-Im Bank’s tied aid policies may place them at a
competitive disadvantage. U.S. exporters have expressed concern that increased tied aid activity
by other countries, coupled with the more flexible tied aid rules of other ECAs, has threatened
certain U.S. exporter sales prospects. Some groups argue that the tied aid war chest funds should
be increased and that the Bank should have more flexibility and authority in initiating tied aid to
compete with foreign ECAs for export contracts, rather than limiting its use to a defensive tool. In
some cases, it may be difficult for exporters and lenders to make a case for receiving matching
support to counter foreign tied aid competition, because of challenges in “obtaining credible
evidence of case-specific financing terms from non-OECD ECA competitors.”62
Mandates Targeting Ex-Im Bank Activity to Specific Sectors
Congressional mandates that require the Bank to focus support on specific exports may raise a
number of questions, including the following.
Should Congress mandate that Ex-Im Bank seek to finance specific types of exports? On one
hand, congressional mandates may enable Ex-Im Bank to support strategic, high-growth U.S.
economic sectors; U.S. exporters that may need the financing assistance the most (e.g., small
businesses); and sectors where federal support can make the most difference (e.g., for renewable
energy exports that rely on newer forms of technology and for which commercial banks may be
unwilling to provide financing on their own because of actual or perceived risks). On the other
hand, such targeted forms of export assistance may be viewed as a mechanism whereby the
federal government determines “winners and losers” in the market, and, from this standpoint, may
lead to economic distortions and harm other productive U.S. firms. Although such requirements
give Congress a greater role in guiding Ex-Im Bank’s activities, under this view, they may
obscure the Bank’s core mandate to support U.S. exports and employment.
To what extent has Ex-Im Bank been able to fulfill congressional mandates? On one hand,
there is concern that the Bank has not been able to consistently meet its congressional mandates
to support specific exports. Some critics express concern that Ex-Im Bank’s prioritization of
activities, allocation of resources to support policy goals, policies, and application process and
approval system may limit its support for such policy goals. On the other hand, some stakeholders
express concern that such mandates may not be feasible to achieve, based on market limitations,
such as for renewable energy.63 Given its demand-driven nature, Ex-Im Bank can make financing
available for certain purposes, but its actual composition of financing portfolio depends on
commercial interest and demand.
What is the appropriate measure of success? Debates over whether Ex-Im Bank is fulfilling its
congressional mandates often has centered on small businesses. Some stakeholders may argue
that the focus on the dollar value of Ex-Im Bank support to small businesses is misleading,
because larger corporations naturally conduct business activity requiring greater amounts of
support. In addition, the data may not reflect all of the small businesses who benefit from Ex-Im
Bank services through their role in the supply chain, such as by supplying parts and services to

62 Ibid., p. 105.
63 For instance, see U.S. Congress, House Committee on Financial Services, Ex-Im Bank Oversight: The Role of Trade
Finance in Doubling Exports over Five Years
, Fred P. Hochberg, President and Chairman of the Export-Import Bank,
111th Cong., September 29, 2010.
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larger companies that are the direct beneficiaries of Ex-Im Bank financing, or by operating at sub-
levels of the supply chain and serving as “suppliers to the suppliers.”64 Others express concern
over the amount of Ex-Im Bank financing, by dollar value, that has been directed to large U.S.
corporations that they believe are capable of shouldering the risks of exporting to developing
countries.65 For instance, some have criticized the fact that Boeing Corporation, a U.S. aerospace
company, historically has been the single largest beneficiary of its support.66 In addition, some
critics do not make a distinction between large and small business support, remaining opposed to
taxpayer funds being directed toward private benefits.
Risk Management and Financial Accounting
Congressional interest in Ex-Im Bank’s financial soundness and risk management has been
longstanding. It has been motivated, in part, by interest in the impact of Ex-Im Bank’s activity on
U.S. taxpayers, given that the Bank’s activities are backed by the full faith and credit of the U.S.
government. In recent years, Ex-Im Bank’s growing exposure levels have heightened
congressional scrutiny in its financial soundness and risk management practices.
The 2012 reauthorization act required Ex-Im Bank to monitor its default rate, report it on a
quarterly basis to Congress, and to develop a plan to reduce the default rate if it exceeds 2%
(sometimes called “the 2% rule”). The Bank’s default rate as of March 31, 2014 was 0.211%.67
Among other things, the 2012 act also required Ex-Im Bank to submit a written report to
Congress and the Comptroller General containing: (1) a Business Plan estimating appropriate
exposure limits for 2012, 2013, and 2014; and (2) an analysis of the potential for increased or
decreased risk of loss to the Bank as a result of the estimated exposure limit.
Pursuant to the 2012 reauthorization act, the Government Accountability Office (GAO) published
reports in March 2013 and May 2013 that reviewed Ex-Im Bank’s risk management and reporting
practices. The GAO found that Ex-Im Bank is moving toward a more comprehensive risk
management framework and has made certain improvements over time, including enhancing
credit loss modeling with qualitative factors. At the same time, the GAO also identified remaining
weaknesses and considered continued improvement to be needed based on Ex-Im Bank’s
continued exposure growth. The GAO identified deficiencies in a number of areas, and provided
recommendations to Ex-Im Bank (see Table 7).
Ex-Im Bank has accepted all of the GAO’s recommendations and begun implementing them. The
Bank also notes other changes it has made in recent years, including appointing a Chief Risk
Officer in 2013 to ensure prudential risk management, as well as establishing an Enterprise Risk

64 For example, see U.S. Chamber of Commerce Coalition Letter to Members of the United States Congress on Ex-Im
Bank, February 13, 2012, https://www.uschamber.com/letter/coalition-letter. See also Coalition for Employment
through Exports, Supplier Study of 2011, which analyzed the supply chains of five large companies (Bechtel, Boeing,
Case New Holland, General Electric, and Siemens Power Corporation) that are the “exporters of record” for Ex-Im
Bank, and identified more than 33,000 SMEs that supplied parts and services to these large companies for their exports.
65 For example, see Sallie James, Time to X Out the Ex-Im Bank, CATO Institute, July 6, 2011,
http://www.cato.org/publications/trade-policy-analysis/time-x-out-exim-bank.
66 In FY2013, about 65% of Ex-Im Bank’s authorizations of long-term guarantees, by dollar value, were for the sale of
Boeing aircraft to foreign countries. CRS analysis of data in Ex-Im Bank annual reports.
67 CRS electronic communication with Ex-Im Bank, May 30, 2014.
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Committee, modernizing its credit monitoring, creating a Special Assets unit to address emerging
credit issues, expanding pro-active monitoring efforts, and improvement underwriting criteria.68
Nevertheless, debate continues over Ex-Im Bank’s risk management and accounting practices,
with key questions including the following.
Does Ex-Im Bank manage its risk adequately and balance it properly with other
considerations?
Supporters of Ex-Im Bank contend that the Bank has adequate systems and
staffing in place to manage its risk and poses low risk to U.S. taxpayers. They argue that the Bank
has a strong mandate to manage risk under its charter, which requires the Bank’s transactions to
have a “reasonable assurance of repayment” and for the Bank to have reasonable provisions for
losses. They further note Ex-Im Bank’s low default rate and high recovery rate.69 Critics hold that
there are weaknesses in the Bank’s risk governance and question the methodology used to
calculate Ex-Im Bank’s expected losses and contributions to the Treasury. They express concern
that the Bank’s growing exposure and concentrations in that exposure, such as in aircraft, pose a
risk to U.S. taxpayers and the federal budget, and point to certain findings in studies by the GAO
and Ex-Im Bank’s own Office of Inspector General (OIG) over time.70
Other stakeholders caution that the Bank may be becoming too risk-averse. Of particular interest
has been heightened credit standards, including higher collateral requirements, introduced by Ex-
Im Bank for its medium-term program, whose default rate is higher than that of Ex-Im Bank’s
overall portfolio.71 These tighter standards have been associated with a decrease in Ex-Im Bank
medium-term lending in recent years,72 and have raised concerns about the appropriate balance in
Ex-Im Bank’s risk management with its overall mandate to support U.S. exports.
Does Ex-Im Bank have adequate human capital to prudentially manage its growing
portfolio?
Supporters contend that the Bank, with around 400 full-time equivalents in FY2013, is
effective and efficient, and that in areas where weaknesses in risk management have been
identified, the Bank is taking corrective measures, such as increasing resources devoted to due
diligence and asset monitoring. Critics argue that the Bank does not have enough expertise
devoted to underwriting and due diligence. They point to an assertion by Ex-Im Bank’s OIG in
2012 that, “Ex-Im Bank’s current risk management framework and governance structure are not
commensurate with the size, scope, and strategic ambitions of the institution.”73
Is the cost of federal credit by Ex-Im Bank appropriately priced? Some stakeholders argue
that rules under the Federal Credit Reform Act (FCRA) may understate the cost of loan programs

68 U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, Oversight and Reauthorization of the
Export-Import Bank of the United States
, Written Testimony of Fred P. Hochberg - President and Chairman of Ex-Im
Bank, 113th Cong., 2nd sess., January 28, 2014.
69 For example, see NAM, Facts on the Export-Import (Ex-Im) Bank,
http://www.nam.org/~/media/5AF9A722407E46D6A1264820B2208860.ashx.
70 For example, see Diane Katz, U.S. Export-Import Bank: Corporate Welfare on the Backs of Taxpayers,” The
Heritage Foundation
, April 11, 2014, http://www.heritage.org/research/reports/2014/04/us-exportimport-bank-
corporate-welfare-on-the-backs-of-taxpayers.
71 GAO, Export-Import Bank: Additional Analysis and Information Could Better Inform Congress on Exposure, Risk,
and Resources
, GAO-13-620, May 2013, p. 22.
72 Based on data from Ex-Im Bank annual reports.
73 Ex-Im Bank, OIG, Semiannual Report to Congress, April 1, 2013 to September 30, 2013, p. 11,
http://www.exim.gov/oig/upload/OIG_Report_FA13_508.pdf.; and Ex-Im Bank, OIG, Report on Portfolio Risk and
Loss Reserve Allocation Policies
, OIG-INS-12-02, September 28, 2012, http://www.exim.gov/oig/upload/Final-
20Report-20Complete-20Portfolio-20Risk-20120928-1.pdf.
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managed by federal credit agencies, and express interest in moving to a fair value system of
accounting. As previously noted, under FCRA’s rules, budget estimates are calculated by
discounting them using the rates on U.S. Treasury securities with similar terms to maturity—
which traditionally have been considered risk-free—and are below rates on commercial loans. In
contrast, fair value accounting would factor in the market risk, which the Congressional Budget
Office (CBO) says “provides a more comprehensive measure of federal costs.” On a fair value
basis, Ex-Im Bank’s programs may be less profitable than under FCRA rules. According to
CBO’s analysis, in FY2013, under FCRA, Ex-Im Bank generated a negative subsidy of $1 billion
(i.e., “profit”). In contrast, under fair value, the negative subsidy is estimated to be much lower, at
$0.1 billion.74 In a separate study, CBO estimated that between FY2015-2024, Ex-Im Bank’s
activities would generate a negative subsidy of $14 billion under FCRA (i.e., budgetary savings),
but would generate $2 billion in positive subsidy during this period on a fair value basis (i.e.,
budgetary costs).75 However, some stakeholders question the assumptions used by CBO in its
methodology, including for risk, and assert that CBO’s assumptions overlook Ex-Im Bank’s
actual record, for example, in terms of its contributions to the U.S. Treasury and low default
rate.76









74 Congressional Budget Office (CBO), Fair-Value Estimates of the Cost of Federal Credit Programs in 2013, June
2012, http://www.cbo.gov/sites/default/files/cbofiles/attachments/06-28-FairValue.pdf.
75 CBO, Fair-Value Estimates of the Costs of Selected Federal Credit Programs for 2015 to 2024, May 2014,
http://www.cbo.gov/sites/default/files/cbofiles/attachments/45383-FairValue.pdf.
76 For example, see Gary Clyde Hufbauer, “The [Export-Import] Bank Loses Almost $200 Million a Year.” Really?,
IIE, RealTime Economic Issues Watch, May 13, 2014, http://blogs.piie.com/realtime/?p=4311; and Christopher Wenk,
A Fair Accounting of the Ex-Im Bank’s Benefits and Costs, U.S. Chamber of Commerce, May 29, 2014,
https://www.uschamber.com/blog/fair-accounting-ex-im-bank-s-benefits-and-costs.
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Table 7. Risk Management: GAO Studies and Ex-Im Bank Action
Area
GAO Finding
GAO Recommendation
Ex-Im Bank Response
Exposure
Ex-Im Bank’s justification that the
The Bank should: (1) compare
The Bank agreed with the
Forecasting
exposure limits it forecast in its 2012 previous forecasts and key
recommendation and
Business Plan were appropriate has
assumptions to actual results
stated it would
weaknesses, because the model is
and adjust its forecast models
incorporate these steps
sensitive to key assumptions.
to incorporate previous
into preparation of
Forecasting errors could have more
experiences; and (2) assess the
updated and revised
significance since the Bank’s
sensitivity of the exposure
forecasts provided to
exposure level is closer to its cap
forecast model to key
Congress by September
than historically, and could require,
assumptions and estimates and
30, 2013.
for example, the Bank to delay
identify and report the range
financing for projects, to avoid
of forecasts based on its
exceeding the limit.
analysis.
Stress
The Bank has begun addressing the
The Bank should report these
The Bank agreed with the
Testing
OIG’s recommendations on portfolio findings to Congress.
recommendation and
stress testing, thresholds for
intends to report stress
portfolio concentrations, and risk
test scenarios and results
management.
quarterly to Congress.
Risk
Improvements could be made in Ex-
Ex-Im Bank should assess
Ex-Im Bank agreed with
Modeling
Im Bank’s risk modeling, which uses
whether it is using the “best
the recommendation and
historical data but may not use “best
available data” for adjusting
said it would conduct an
available data.” The Bank’s portfolio
loss estimates for longer-term
assessment as part of its
contains a large volume of recent
transactions.
2013 reevaluation of its
transactions that have not reached
loss estimation model.
their peak default periods.
Financial
Improvements could be made in the
Ex-Im Bank should retain
Ex-Im Bank agreed to the
Performance Bank’s analysis of financial
point-in-time performance data recommendation and said
of Portfolio
performance. For instance, the Bank
to compare performance of
it has begun retaining such
does not have point-in-time
newer and older business and
data.
performance data to compare
enhance loss modeling.
performance of newer books of
business with more seasoned books
at comparable points in time.
Sub-portfolio Improvements could be made in the
Ex-Im Bank should routinely
Ex-Im Bank agreed with
Reporting
Bank’s reporting of performance of
report financial performance of the recommendation and
sub-portfolios subject to
subportfolios supporting
began reporting such
congressional mandates (e.g., small
congressional mandates.
information with its June
business, renewable energy, and sub-
30, 2013 report to
Saharan Africa).
Congress.
Operational
Ex-Im Bank faces potential
The Bank should develop
Ex-Im Bank concurred
Risks
operational risks because
benchmarks to monitor and
with both
administrative budgets and staff levels manage workload levels and
recommendations.
have not kept pace with growth in
provide Congress with
portfolio.
additional information on
resources associated with
meeting mandated targets.
Source: CRS analysis of GAO, Export-Import Bank: Recent Growth Underscores Need for Continued Improvements in
Risk Management
, GAO-13-303, March 2013; and GAO, Export-Import Bank: Additional Analysis and Information
Could Better Inform Congress on Exposure, Risk, and Resources
, GAO-13-620, May 2013.
Notes: The findings and recommendations listed in this table are those of GAO. CRS does not take any position
on these.
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Effectiveness of International Rules on Government-Backed Export
Credit Activity

Stakeholders have debated whether the OECD Arrangement on Officially Supported Export
Credits is effective in leveling the playing field for exporters in the current trading environment.
By some estimates, the OECD Arrangement has saved U.S. taxpayers $800 million annually.
According to the Office of the U.S. Trade Representative, the minimum interest rate rules set by
the OECD Arrangement limit subsidized export financing and reduce competition based on
below-cost interest rates and long repayment terms by ECAs, and the minimum exposure fees for
country risks also reduce costs. The further leveling of the playing field created by the OECD tied
aid disciplines is estimated by USTR to have boosted U.S. exports by $1 billion a year.77
At the same time, there are growing questions about the relevance of the OECD Arrangement and
its effectiveness, particularly in light of the growing official export credit activity of non-OECD
members such as China, Brazil, and India, who are not obligated to comply with the OECD
limitations on the terms and conditions of export credit activity and may not be “playing by the
rules.”78 To the extent that the ECAs of China and other non-OECD countries provide financing
on terms that are more advantageous than those allowed within the OECD Arrangement, Ex-Im
Bank and other OECD export credit agencies may find it difficult to compete with such export
credit programs. Concerns about the effectiveness of the OECD Arrangement are further
heightened due to unregulated financing being conducted by OECD member countries, such as
through market windows, which are not subject to the Arrangement.
Congress could examine and seek to strengthen the international disciplines guiding ECA activity,
working to “update” these disciplines to reflect current trends in ECA activity by both developed
and developing countries. For example, Congress could direct the United States to encourage
greater engagement by the OECD with non-OECD emerging market economies on official export
credit activity; negotiate rules in the OECD that limit government-backed export credit financing
in other developed countries; or pursue a greater role for the WTO in disciplining international
ECA activity. On one hand, such efforts may help to level the playing field for U.S. exporters by
reducing trade-distorting export credit competition and associated economic losses. On the other
hand, changes to the international export credit rules, if achieved, may be slow to materialize,
given the complex nature of multilateral and plurilateral negotiations. In addition, developing
high-standard, comprehensive rules that cover both developed and developing countries may be a
challenge.
Rather than strengthening international rules, others have called for renewed efforts by the U.S.
Treasury to negotiate to eliminate all government-backed export financing internationally. This
perspective often is found with critics of Ex-Im Bank, while supporters of the Bank contend that
even if all countries agree to eliminate government-backed export credit activity, there would still
be a need for Ex-Im Bank to fill in gaps in private sector financing due to market failures.

77 Office of the U.S. Trade Representative, The Organization for Economic Cooperation and Development (OECD),
http://www.ustr.gov/trade-agreements/wto-multilateral-affairs/oecd.
78 Thought not a member of the OECD, Brazil is a participant of the OECD Aircraft Sector Understanding.
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Congressional Outlook
While congressional views on Ex-Im Bank differ, historically, Congress has reauthorized Ex-Im
Bank on a bipartisan basis, including by voice vote in the House and unanimous consent in the
Senate and with support from both Republican and Democrat Administrations. In the 112th
Congress, discussion of whether to reauthorize Ex-Im Bank and raise its exposure cap, among
other issues, dovetailed with debates about the agency’s role in supporting U.S. exports and the
appropriate size and scope of the U.S. government. The changing export finance landscape,
including the international financial crisis and the growth of government-backed export financing
being conducted by emerging markets, as well as increased questions about Ex-Im Bank’s
financial soundness and risk management, have intensified congressional interest in Ex-Im Bank.
Many of these issues continue to be focal points in the Ex-Im Bank reauthorization debate in the
113th Congress.

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Appendix. International Government-Backed
Export Credit Activity

Officially Supported Medium- and Long-Term Export Credits
Billions of U.S. Dollars
Country
2007 2008 2009 2010 2011 2012
OECD ECAs



110.9 119.6
G-7 Countries
34.6 43.7 64.0 70.2 74.0 73.9

Canada
0.5 1.5 2.0 2.6 1.9 1.7

France
10.1 8.6 17.8 17.4 15.9 13.0

Germany
8.9 10.8 12.9 22.5 16.7 15.3

Italy
3.5 7.6 8.2 5.8 8.0 5.2

Japan
1.8 1.5 2.7 4.9 5.9 4.4
United Kingdom
1.6
2.7
3.4
4.1
4.2
2.9
United States
8.2
11.0
17.0
13.0
21.4
31.3
Selected Other OECD ECAs




32.4 40.7
Austria



0.7 1.4
Denmark



2.2 3.9
Finland



3.0 2.0
Netherlands



2.9 2.2
Norway



3.0 2.2
South Korea



9.8 22.6
Spain



4.4 1.4
Sweden



6.3 5.1
Other OECD ECAs




4.5 5.0
Emerging Economies (non-OECD) ECAs
42.1
60.9
64.5
56.0
52.8
58.3

Brazil
0.6 0.2 6.1 3.5 4.8 2.7

China

33.0 52.0 51.1 43.0 35.0 45.0
India
8.5
8.7
7.3
9.5
13.0
10.6
Source: Data on export credit volumes from Ex-Im Bank, Report to the U.S. Congress on Export Credit Competition
and the Export-Import Bank of the United States, For the Period January 1, 2012 through December 31, 2012
,
Washington, DC, June 2013.
Notes: Data subject to analytic assumptions and limited by availability of information. Unregulated financing
conducted by OECD ECAs may be omitted. Ex-Im Bank Competitiveness Reports have included data for G-7
ECAs for many years, and in 2012, expanded the scope of OECD ECAs assessed beyond the G-7 ECAs. Further
refinements may occur.

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Author Contact Information

Shayerah Ilias Akhtar

Specialist in International Trade and Finance
siliasakhtar@crs.loc.gov, 7-9253


Acknowledgments
The author would like to acknowledge Jamie Hutchinson’s assistance with several of the graphics in this
report.
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