Export-Import Bank: Reauthorization

Export-Import Bank: Reauthorization

Order Code RL33440
CRS Report for Congress
Received through the CRS Web
Export-Import Bank: Reauthorization
Updated July 28, 2006
James K. Jackson
Specialist in International Trade and Finance
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

Export-Import Bank: Reauthorization
Summary
The Export-Import Bank is an independent U.S. government agency that serves
as the chief U.S. government agency to help finance American exports of
manufactured goods. Congress exercises oversight responsibilities over the Bank in
a number of ways, including extending the Bank’s authority through reauthorizing
legislation. Currently, Congress is considering H.R. 5068, the Export-Import Bank
Reauthorization Act of 2006, which would reauthorize the Bank’s charter, which is
set to expire on September 30, 2006, for five years through September 30, 2011. The
measure was introduced by Representative Pryce on March 30, 2006, and was sent
to the House Financial Services Committee, which has jurisdiction in the House of
Representatives over the Bank. The measure was approved with four amendments
by the Committee on June 14, 2006 and passed the full House unanimously without
amendment on July 26, 2006. In the Senate, the Committee on Banking, Housing,
and Urban Affairs has jurisdiction. The Bank’s current authorization is scheduled
to expire on September 30, 2006.
The legislation would amend the Bank’s charter in four areas. First, the measure
would direct the Bank to organize a Small Business Division and would commit
more of the Bank’s resources to promoting and servicing exports from small business
concerns, particularly those owned by socially and economically disadvantaged small
business concerns and by women. Second, the measure would reauthorize the
Bank’s efforts to promote trade with sub-Saharan Africa. Third, the measure would
make the Bank’s operations more transparent. Fourth, the measure would require
the Bank to take other actions and to prepare various reports to improve the Bank’s
relative competitive position.
This report will be updated as events warrant.

Contents
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Small Business Emphasis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Small Business Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Small Business Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Reports to Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Sub-Saharan Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Eximbank Operations and Transparency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Eximbank Competitiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Annual Reports to Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Tied Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Export-Import Bank: Reauthorization
Overview
The Export-Import Bank (Eximbank) is an independent U.S. government agency
that serves as the chief U.S. government agency to help finance American exports of
manufactured goods.1 Congress has direct oversight responsibility over the Bank,
which it exercises through various methods including approving the Bank’s charter,
extending its authority through reauthorizing legislation, annual budget
appropriations, Senate confirmation of Presidential appointments to the Bank’s Board
of Directors and the Bank’s President, requests for testimony from the Bank’s
President, and amendments to the Bank’s governing statutes.
Congress is considering H.R. 5068, the Export-Import Bank Reauthorization
Act of 2006. The measure was introduced on March 30, 2006, by Representative
Pryce and sent to the House Financial Services Committee, which has jurisdiction in
the House of Representatives over the Bank. The measure was approved with four
amendments by the Committee on June 14, 2006. In the Senate, the Committee on
Banking, Housing, and Urban Affairs has jurisdiction over the Bank. As of this date,
a separate bill has not been introduced in the Senate.
H.R. 5068 would extend the Bank’s charter, which is set to expire on September
30, 2006, to September 30, 2011, and amend the Bank’s charter in four areas. First,
the measure would direct the Bank to organize a Small Business Division, which is
the first time Congress has directed the Bank to organize a specific division. In
addition, the measure would commit more of the Bank’s resources to promoting and
servicing exports from small business concerns in general and small business
concerns owned by socially and economically disadvantaged small business concerns
and small business concerns owned by women in particular. Second, H.R. 5068
would reauthorize the Bank’s efforts to promote trade with sub-Saharan Africa.
Third, the measure would require various changes in the Bank’s procedures to make
the Bank’s operations more transparent. Fourth, the measure would require the Bank
to take other actions and to prepare various reports to improve the Bank’s relative
competitive position. In addition, the measure would increase the size of the Bank’s
Advisory Committee from 15 to 17, and would require that not less than two of the
members appointed to the Advisory Committee should represent the “environmental
non-governmental organization community.”
Amendments accepted during a mark-up session in the House Financial Services
Committee on June 14, 2006 would change the proposed legislation in four ways:
1 For additional information, see CRS Report 98-568, Export-Import Bank: Background and
Legislative Issues, by James K. Jackson, and the Bank’s Internet address:
[http://www.exim.gov].

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1) An amendment offered by Subcommittee Chairman Pryce would require the
Bank to provide timely notice of an application receipt; encourage the Bank to
ensure that qualified minority and women applicants are considered when filling
any position at the Bank; ensure the protection of sensitive information upon
public disclosure of environmental reports and assessments; and establish an
office on renewable energy promotion.
2) An amendment offered by Representative Crowley would prohibit the Bank
from participating in projects to develop certain rail connections.
3) An amendment offered by Representative Walters would establish formal
mechanisms to determine the effectiveness of the Bank’s small business
activities.
4) An amendment offered by Representative Davis would prohibit the Bank from
circumventing requirements that the Bank complete an economic impact analysis
on large projects by breaking the project into several small ones to avoid the
dollar amount threshold that triggers an analysis.
Small Business Emphasis
Since 1975, Congress has taken an active interest in the way Eximbank supports
small business.2 Congress has emphasized this support by directing that not less than
one of the five members of the Bank’s Board of Directors should be selected from
among the small business community and represent the interests of small businesses.3
Furthermore, Congress has directed the Bank to disseminate information about the
Bank’s medium-term financing program to small business concerns,4 and it has
directed that the terms and conditions it offers should be fully competitive with terms
set by other countries to support U.S. firms, including small business.5
In 1983, through P.L. 98-181, Congress provided additional support for small
business by directing that three of the Bank’s Advisory Committee represent the
small business community.6 Congress also expanded on a previous directive to the
Bank to “aid, counsel, assist, and protect” the interests of small business, and directed
the Bank to: 1) encourage small business;7 2) give fair consideration to small
2 See also CRS Report RS22091, Export-Import Bank: Legislative Mandate for Small
Business, by James K. Jackson.
3 12 USC 635a (c)(8)(B); provision was first added in P.L. 93-646, Export-Import Bank
Amendments of 1974.
4 12 USC Sec 635 (a)(2)(B)
5 12 USC Sec 635 (b)(1)(B)
6 12 USC 635a (d)(2)(A)
7 12 USC Sec 635 (b)(1)(E)(i)(I)

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business;8 3) aid, counsel, assist, and protect small business concerns;9 4) designate
an officer of the Bank responsible for small business concerns;10 5) ensure that 6%
of the Bank’s authority is available to small business concerns;11 6) offer competitive
financing terms;12 7) provide lines of credit or guarantees to consortia of small or
medium size banks, export trading companies, State export finance agencies, export
financing cooperatives, small business investment companies, or other financing
institutions or entities in order to finance small business exports;13 8) promote small
business exports and small business export financing programs;14 9) urge the Foreign
Credit Insurance Association to provide coverage against 100% of any loss for
exports valued at less than $100,000;15 10) inform high technology small business
concerns about exporting to countries in transition to market based economies;16 and
11) provide information to small and rural companies.17
In 2002, through P.L. 107-189, Congress directed the Bank to give particular
attention to certain types of small business concerns and directed the Bank to set
aside not less than 20% of its aggregate authority for small business. Congress also
directed the Bank to conduct “outreach and increasing loans to socially and
economically disadvantaged small business concerns, small business concerns owned
by women, and small business concerns employing fewer than 100 employees, and
for maintaining liaison with the Small Business Administration and other
departments and agencies in matters affecting small business concerns.”18 Congress
also required the Bank to submit an annual report detailing its efforts to involve small
businesses.19
Small Business Division
H.R. 5068 would provide additional support to small business by directing the
Bank to establish a Small Business Division and it would amend various sections of
the current statute governing the operations of the Bank. In particular, the bill would
8 12 USC Sec 635 (b)(1)(E)(i)(II)
9 12 USC Sec 635 (b)(1)(E)(ii)
10 12 USC Sec 635 (b)(1)(E)(iii)(I)
11 12 USC Sec 635 (b)(1)(E)(iv) and (v); P.L. 98-181 provided for a graduated increase
from 6% in 1984 to 10% in 1986. Amended by P.L. 102-429, Export Enhancement Act of
1992, which set the share at not less than 10%. P.L. 107-189, the Export-Import Bank
Reauthorization Act of 2002, raised the share to not less than 20%.
12 12 USC Sec 635 (b)(1)(E)(vi)
13 12 USC Sec 635 (b)(1)(E)(vii)(I)
14 12 USC Sec 635 (b)(1)(E)(viii)
15 12 USC Sec 635 (b)(1)(F)
16 12 USC Sec 635 (b)(1)(H)(iii)
17 12 USC Sec 635 (b)(1)(I)
18 12 USC Sec 635 (b)(1)(E)(iii)(II)
19 12 USC Sec. 635g(b)(1) - (3), (c), (d)

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remove section (iii) of 12 U.S.C. 635(b)(1)(E) that requires the Board of Directors
of the Bank to designate an officer of the Bank who is responsible to the President
of the Bank for all matters concerning “small business concerns.” In its place, H.R.
5068 would direct the Bank to establish a Small Business Division whose sole
function would be to carry out such activities as outreach to small business, including
feedback, product improvement, and transaction advocacy; advise and seek feedback
from small business; and maintain liaison with the Small Business Administration.
The Bank officer designated to administer the Small Business Division would be
required to have “substantial experience” in financing exports by small business;
have the sole duty of ensuring that the division carries out its functions for small
business; advise the Board of Directors, and particularly the Director on the Board
who is responsible for small business; rank no lower than a Senior Vice President;20
and that the officer report directly to the President of the Bank.
To offer additional support to the Small Business Division, H.R. 5068 would
require the President of the Bank to ensure that the staff and budgetary resources of
the Division be devoted solely to carrying out the functions of the Small Business
Division. In addition, the staff of the Division would be dedicated “exclusively” for
performing outreach, training, and providing advice to, seeking feedback from, and
advocating on behalf of small business concerns “regarding Bank financing
opportunities, products, and programs.” In handling and processing applications of
small business for programs of the Export-Import Bank, the Bank would be required
to obtain the same kind of “reasonable assurance of repayment for each transaction”
that the Bank is required to receive under current statute. The Bank, however, would
be required to establish and maintain “transaction standards tailored to the special
circumstances of small business concerns” and then use the standards to evaluate
applications by small business concerns. The Bank would also be required to ensure
that “each appropriate division” of the Bank has staff dedicated to the processing of
transactions involving small business concerns.
Small Business Committee
H.R. 5068 would also require the Bank to establish and maintain a Small
Business Committee that would focus on small business concerns and would
coordinate the efforts of the Bank with respect to small business concerns. The
chairman of the Committee would be the Senior Vice President of the Bank who is
responsible for administering the Small Business Division. The Committee would
also include officers and employees from throughout the Bank who have
responsibilities that involve small business. In addition, the Committee would
prepare a report for the President of the Bank. Currently, the Bank is required to
provide lines of credit or guarantees to consortia of small or medium size banks,
export trading companies, State export finance agencies, financing cooperatives,
small business investment companies to finance small business exports. H.R. 5068
would require the Bank to work in cooperation with the aforementioned entities to
streamline the processing of applications for Bank financing and to provide training
20 The current Bank officer who is responsible for administering the Bank’s small business
programs is a Senior Vice President.

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and advice on “the needs and benefits of export financing for small business
concerns.”
Reports to Congress
The Bank would also be required to report annually to Congress on the fees it
charges and the transactions costs it incurs through its activities with small and
medium business. In particular, the Bank would be required to report on three
activities. The first area is the interest and fees the Bank charges exporters, including
small business concerns, for each type of Bank transaction (insurance, guarantee,
direct financing) and each financing program for small business concerns, buyers,
and other applicants, and the highest, lowest, and average fees charged by the Bank
for short term insurance transactions. The second area of reporting would be on the
effects of the fees on the ability of the Bank to achieve the objectives of the Bank
relating to small business. The third area would be the fee structure of the Bank
compared with that of other foreign export credit agencies.
H.R. 5068 would also require the Bank to report annually to the Congress on the
following three activities:
1) The extent to which the Bank is able to use its authority to: develop a program
which gives “fair consideration to making loans and providing guarantees for the
export of goods and services” by small business; and to “ aid, counsel, assist, and
protect, insofar as is possible, the interests of small business concerns in order
to preserve free competitive enterprise.” The Bank would also report on the
extent to which the Bank would have been unable to utilize fully these authorities
and to report on the obstacles that prevent the Bank from utilizing these
authorities and on what actions the bank is taking to overcome any obstacles.
2) The extent to which financing is made available to small business concerns to
enable them to participate in exports by major contractors, including across the
supply chain of the contractors through direct or indirect financing.
3) A strategic plan of action describing what specific measures the Bank would
take to achieve the small business objectives of the Bank, including expanded
outreach, product improvements, and related actions.
H.R. 5068 would also require the President of the Bank to establish in the Small
Business Division an office that would be responsible for increasing the total amount
of loans, guarantees, and insurance provided by the Bank to support exports by
“socially and economically disadvantaged small business concerns and small
business concerns owned by women.” The bill would require the Bank to have a goal
of having not less than 10 percent of the amount available for financing exports
available to small business concerns and to report annually on the efforts the Bank
would have taken to reach this goal.
Sub-Saharan Africa
H.R. 5068 would also require the Bank to do more to work with financial
institutions in sub-Saharan Africa to improve the ability of financial institutions in

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Africa to utilize the Bank’s programs. H.R. 5068 would extend to 2011 the authority
of the advisory committee that has been established by the Bank to promote the
Bank’s financial commitments to sub-Saharan Africa. The Bank would also be
required to improve its working relationship with African financial institutions by
having in place one year after this measure become law that there is a contract
between each approved lender in Africa and the Bank which specifies the Bank’s
guarantee undertakings and related obligation between the Bank and the African
lender.
In addition, the Bank would be required to report annually on the efforts of the
Bank to improve its working relationship with the African Development Bank, the
Africa Export-Import Bank, and other institutions in the region. The Bank would be
required to coordinate closely with the U.S. Foreign Commercial Service and the
overall strategy of the U.S. Government on economic engagement in Africa relative
to the African Growth and Opportunity Act. The Bank would also be required to
coordinate with the African Development Bank, the Africa Export-Import Bank, and
other financial institutions to seek greater flexibility in the due-diligence procedures
of the Bank in order to qualify a greater number of appropriate African entities for
participation in the programs of the Bank and to develop policies that would allow
the Bank to finance certain African programs in local currencies.
Eximbank Operations and Transparency
Procedures
H.R. 5068 would require the Export-Import Bank to take a number of measures
to improve the transparency of the Bank’s operations, including increasing
requirements on the Bank to report to Congress. The Bank’s Board of Directors
would be required to meet at least twice a week and the Board would be required to
vote within 60 days of completing an economic impact analysis whether or not to
proceed with a proposed loan or guarantee. The Bank would also be required to
establish a clearly defined process for handling applications. These measures would
be to:
1) acknowledge that it has received an application for one of the Bank’s
programs;
2) inform applicants of the adequacy of the material provided and indicate any
changes that might be made to make the application eligible for consideration;
and
3) keep applicants informed of the status of the application and the reason for
any disapproval.
The Bank would be required to notify applicants within 45 days of applying for
a Bank program of the status of the application. In addition, the Bank would be
required to establish and maintain a website through which any Bank product could
be applied for and which would include information concerning the Small Business

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Division of the Bank and any incentives, targets, or goals relating to small business
concerns.
Reports
The Bank would be required to report to Congress within 60 days after
enactment of the act on two major areas:
1) the Bank’s efforts to provide medium-term risk protection coverage through
creditworthy trade associations, export trading companies, State export finance
companies, export finance cooperatives, and other multiple-exporter
organization; and
2) the Bank’s progress in implementing an electronic system designed to track
all pending transactions of the Bank.
In those instances in which the Bank has been unable to comply with these two
requirements, the Bank would be required to provide an analysis of the reasons why
it has not been able to comply, what the Bank was doing to achieve compliance and
the date by which the Bank would expect to achieve compliance, and the name of
each Bank officer who would be responsible for ensuring that the Bank achieved
compliance and the supervisor of such officers
Subsequent to the initial report, the Bank would be required to report annually
on the Bank’s efforts to carry out the two requirements listed in the preceding
paragraph. The report would include the total amount the Bank expended during the
fiscal year to carry out the requirements, and how the Bank’s efforts were assisting
small business concerns. In those instances in which the Bank had not been able to
comply it would be required to provide an analysis of the reasons why it had not
complied, a description of what the Bank was doing to achieve compliance, the date
by which it expected to be in compliance, and the name of each Bank officer who is
responsible for ensuring that the Bank is in compliance and the supervisor of the
Bank officer. The Inspector General of the Export-Import Bank would be required
to file a report similar to the initial report that would be required under this section.
Eximbank Competitiveness
The Bank also would be required to report more extensively on its efforts to
improve the competitiveness of its programs. The bill would make a number of
changes to the Bank’s tied aid program that could lessen the influence of the
Secretary of the Treasury on the tied aid program and could broaden the scope of the
Bank’s tied aid program. The bill would also raise the importance of environmental
issues within the Bank by mandating the presence of officials on the Bank’s Advisory
Committee who would be representative of environmental concerns.
Annual Reports to Congress
The Bank would be required to report annually to Congress on the Bank’s
efforts to be competitive with other foreign official export credit agencies in two

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major areas. First, the Bank would be required to report on its mandate to “provide
guarantees, insurance, and extensions of credit at rates and on terms and other
conditions which are fully competitive with the Government-supported rates and
terms and other conditions available for the financing of exports of goods and
services from the principal countries whose exporters compete with United States
exporters.” Second, the Bank would be required to report on its efforts to work in
“cooperation with the export financing instrumentalities of other governments” and
to “seek to minimize competition in government-supported export financing and
shall, in cooperation with other appropriate United States Government agencies, seek
to reach international agreements to reduce government subsidized export financing.”

In addition to reporting on the actions the Bank would have taken to comply
with the two aforementioned requirements, the Bank would be required to include
a survey of all major export-financing facilities available from other governments and
government-related agencies through which foreign exporters compete with United
States exporters. The Bank would be required to report in specific terms on the ways
in which the Bank’s rates, terms, and other conditions compared with those offered
directly or indirectly by other governments. The Bank would also be required to
include a survey of U.S. exporters and U.S. commercial lending institutions that
provide export credits to determine the experience of the exporters and institutions
in meeting financial competition from other countries whose exporters compete with
U.S. exporters.
The Bank also would be required to report on:
1) The role of the Bank in implementing the strategic plan prepared by the Trade
Promotion Coordinating Committee.
2) The tied aid credit program of the Bank, including a description of the
implementation of the OECD Arrangement on Guidelines for Officially
Supported Export Credits, all principal offers of tied aid financing by foreign
countries, offers grandfathered under the Arrangement, notifications of
exceptions, any use by the Bank of tied aid funds, and other actions by the U.S.
Government to combat predatory financing practices by foreign governments.
3) A description of all Bank transactions classified according to their principle
purpose.
4) Efforts of the Bank to promote exports of goods and services that are related
to sources of renewable energy.
5) The size of the Bank’s program account compared with that of other major
export-financing facilities of foreign governments. The bank would also be
required to offer recommendations relative to the size of the Bank’s program
account, including an assessment of the merits of the size of the accounts and the
impact on the “best interests” of the U.S. taxpayer.
6) The co-financing programs of other major export-financing facilities and
include a list of which countries have a memorandum with the United States
relating to export credit agency co-financing and an explanation of why such a
memorandum is not in effect with other countries.

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7) The Bank’s participation in providing funding, guarantees, or insurance for
after-market services, including information on the involvement of other major
export-financing facilities in providing such support and an explanation of any
differences among the facilities in providing this support.
8) Detailed information on cases of export financing that are not in compliance
with the OECD Arrangement on Guidelines for Officially Supported Export
Credits, or that exploit loopholes in the Arrangement for the purpose of obtaining
a competitive commercial advantage.
9) A description of the extent to which the activities of foreign export credit
agencies are not in compliance with the OECD Arrangement and the WTO
Agreement on Subsidies and Countervailing Measures.
The Bank would be required to have the Board of Directors approve and sign
each report required by this section of H.R. 5068. The reports would also be required
to include dissenting views. The Bank also would be required to include in its annual
report to Congress information on and analysis of regional multi-buyer insurance
programs and working capital guarantee programs operated by the Bank and the
effectiveness of the programs overall and the effectiveness of the programs in
increasing export-related jobs in the United States. In addition, the Bank would be
required to report on the size of similar programs of other major export-financing
facilities available from other governments and a detailed explanation of the working
relationship between the Bank and the Small Business Administration, the
Department of Commerce, and other U.S. Government agencies that are concerned
with increasing the number of export-related jobs in the United States.
Tied Aid
The Bank’s current statute authorizing the tied aid fund would be amended to
authorize the use of tied aid credits against countries that are not a party to the OECD
Arrangement. In addition, the Bank would no longer be required to consult with the
Secretary of the Treasury in operating the tied aid fund. In those cases where
information about a specific offer of tied aid is not available, the Bank would be free
to use the Tied Aid Credit Fund based on “credible evidence” of a history of such
offers under similar circumstances or other forms of credible evidence. The
President of the United States would be required to notify Congress within 30 days
of the Bank’s determination to use the tied Aid Credit Fund under these
circumstances.
Furthermore, in order to improve the competitiveness of its programs, the Bank
would be required to establish a mixed credits program that would consist of longer
term financing and other forms of more flexible repayment terms, financing of
transactions in local currencies, and other forms of concessional financing that meets
the needs of the product sector and the foreign markets involved, while also
conforming to the OECD Arrangement and in consultation with U.S. Government
agencies and appropriate multilateral institutions.
H.R. 5068 also would provide guidance from the Congress to the Secretary of
the Treasury regarding negotiations on the OECD Arrangement. In particular, the
Secretary would be required to inform the other participants to the negotiations that

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the U.S. goals would be to: 1) seek compliance with the Arrangement among
countries with significant export credit programs that are not parties to the
Arrangement; 2) identify within the World Trade Organization the extent to which
countries that are not a party to the WTO Agreement on Subsidies and
Countervailing Measures are not in compliance with the terms of the Arrangement;
and 3) implement new disciplines on the use of untied aid, market windows, and
other forms of exports finance that seek to exploit loopholes in the Arrangement.