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Manufacturers Testify Before House Ex-Im Panel

Yesterday, manufacturers like Boeing and FirmGreen participated in a panel hosted by House Financial Services Committee Ranking Member Maxine Waters (D-CA) to highlight the critical importance of reauthorizing the U.S. Export-Import (Ex-Im) Bank. Ex-Im Bank faces a tough reauthorization fight in Congress this year.

Manufacturers, especially small and medium-sized manufacturers, cannot afford a lapse in the financing support that helps them stay competitive in the global marketplace. Most of the Bank’s financing deals help small businesses, Ex-Im Chairman and President Fred Hochberg told the panel. Hochberg spoke with the NAM’s Member Focus magazine last year about efforts to help businesses of all sizes.

Unfortunately, manufacturers are already facing the consequences of the uncertainty surrounding Ex-Im’s reauthorization. FirmGreen CEO Steve Wilburn told lawmakers that his company lost a $57 million contract to a South Korean competitor because reauthorization legislation faces an uncertain future in Congress. “I just want you to understand the impact on people in my company, me personally and the people in the Midwest that I can’t give those jobs to,” he said. “To me, it’s unconscionable that we allow this debate to rage on a partisan basis.”

Ted Austell, Boeing’s vice president of executive, legislative and regulatory affairs, said that Ex-Im supports the company’s 160,000 employees, 15,000 suppliers and vendors, and hundreds of thousands of workers connected to the aerospace sector. “In a word, it’s jobs,” he said.

House Democratic Whip Steny Hoyer (MD) addressed the panel yesterday afternoon, and he indicated that he will make Ex-Im a legislative priority. The NAM appreciated Rep. Hoyer’s outstanding leadership during the last reauthorization of Ex-Im, and we are very pleased that he continues to make this issue a priority. It is a critical tool that allows our small, medium and larger manufacturers to compete globally. Rep. Hoyer announced at a press conference earlier today that he is including Ex-Im Bank reauthorization in his manufacturing initiative.

This evening, Rep. Denny Heck (D-WA) and other members of the New Democrat Coalition will take to the House floor to discuss the Ex-Im Bank’s positive impact on American jobs during a “special order.” You can follow along with the New Dems on Twitter here.

The NAM will continue to advocate for Ex-Im Bank’s reauthorization on Capitol Hill and with the Administration. In March, we spearheaded a letter that was joined by more than a dozen other business leaders to urge the Senate Banking, Housing and Urban Affairs Committee and the House Financial Services Committee to take immediate action on legislation. We’re also engaging our members to add their voices and influence. Click here to learn more about what manufacturers can do today.

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Ex-Im Bank Levels the Global Playing Field for U.S. Manufacturers

In the face of tough competition overseas, the Export-Import Bank (Ex-Im) is a critical tool the U.S. government has to boost U.S. exports and grow manufacturing jobs.

Opponents continue to paint Ex-Im Bank as a costly and unnecessary entity focused solely on providing credit to our nation’s largest exports. That is simply false.

Ex-Im Bank helps U.S. companies, many of them small and medium-sized manufacturers, offset some of the financing support that their foreign competitors receive from their governments. The Bank also helps U.S. companies to secure new customers and increase market share in emerging markets.

In FY2013, nearly 90 percent of Ex-Im Bank’s transactions directly supported small business — providing $5.2 billion in direct support for small business exporters. Small businesses like BTE Technologies in Maryland and Polyguard Products in Texas rely on Ex-Im export financing and insurance to grow their exports and add U.S. jobs. Lion Precision in Minnesota turned to Ex-Im Bank’s single buyer insurance program to bolster exports to countries like China and Japan. A small company with 35 employees, Lion Precision designs, manufactures, tests and ships high-tech sensors. Last year, more than 60 percent of the company’s sales were outside the United States.

Simply put, our foreign competitors use every tool available to aggressively pursue greater market share by offering enticing financing terms. The playing field needs to be level, and Ex-Im Bank is crucial in achieving that. At least 59 other foreign export credit agencies provide significant support to our competitors around the world. And in some cases, foreign customers insist on official export credit agency support for projects.

In the aerospace sector, Ex-Im has helped ensure that the U.S. industry remains competitive, enabling the aerospace sector to produce a positive trade balance of trade of $73.5 billion in 2013. These exports support U.S. jobs at large companies and small, both directly and indirectly. As Ex-Im Bank Chairman Fred Hochberg noted earlier this week, aerospace is the top U.S. export after agriculture. Given the high value and high volume of sales, general aviation and commercial aircraft can — in some years — make up a large portion of Ex-Im Bank’s portfolio.

In the last five years (FY09 to FY13), Ex-Im Bank assisted in financing more than $188 billion of U.S. exports and supported 1.2 million American jobs – in a public-private partnership that actually generates revenue for the taxpayer. The Ex-Im Bank is a self-sustaining agency, generating more than $1 billion for the U.S. Treasury last year — after covering its own operating costs.

In September, the Bank’s charter will expire. Congress should act now to reauthorize Ex-Im Bank. Otherwise, U.S. manufacturers small and large will increasingly find themselves locked out of the competition in global markets, an outcome that would be bad for the economy and for jobs.

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Senate Banking Committee Examines Ex-Im Bank

The Senate Banking Committee held a hearing this morning on “Oversight and Reauthorization of the Export-Import Bank of the United States.” The NAM submitted this statement for the hearing record.

Ex-Im Bank Chairman Fred Hochberg was the sole witness, and his testimony highlighted Ex-Im Bank’s achievements in FY2013. Last year, Ex-Im supported an estimated 205,000 U.S. jobs and generated more than $1 billion for the U.S. taxpayers. While U.S. exports were up in 2013, authorizations from Ex-Im Bank were down from the previous year – demonstrating Ex-Im Bank’s countercyclical nature. As the global economy continues to strengthen, exports are being financed not only by commercial banks but also by capital markets.

Chairman Hochberg also emphasized Ex-Im Bank’s support small businesses, and touted Ex-Im Bank’s collaboration – and sometimes even co-location – with U.S. Export Assistance Centers across the country. In FY 2013, the Bank financed a record 3,413 small businesses, or nearly 90 percent of Ex-Im’s transactions.

“To address the needs of our small business customers, Ex-Im Bank has implemented a number of new financial products,” Chairman Hochberg testified. “Our most popular product, Express Insurance, received an innovation in government award from Harvard’s Kennedy School and has helped more than 800 small businesses get a prompt response to their application.”

NAM member companies across the country, from large firms to small businesses, have turned to Ex-Im Bank to take advantage of new international trade opportunities and grow their workforce. BTE Technologies, for example, is a small company in Maryland that makes sophisticated physical therapy and sports medicine equipment. BTE was able to tap into the financing tools Ex-Im Bank offers to small businesses to increase revenues from overseas sales. In 2001, the company was doing less than 2 percent of its revenue in international markets. Today, BTE exports to Russia, Japan, Korea, China, most of the European Union and other countries – nearly 40 countries in total. They were able to grow their workforce to 85 employees, up from 40 in 2001. In Texas, Polyguard Products develops and produces materials for corrosion protection and water proofing of structures and infrastructure. Founded in 1952, Polyguard started to delve into exporting in 2005. Ex-Im Bank was able to mitigate one element of uncertainty in international trade, helping Polyguard cover the credit risk of exporting. Today, the company is trading with more than 30 countries a year and has experienced a 325 percent increase in total sales. Like these companies, many small businesses have sought the assistance of Ex-Im Bank and reaped the benefits of expanded market access.

In his opening statement, Chairman Tim Johnson (D-ND) noted that Ex-Im Bank’s current authorization expires on September 30 and stated his goal to work with Ranking Member Mike Crapo (R-ID) and other members of the committee to reauthorize the Bank. Ex-Im Bank’s most recent reauthorization, in May 2012, passed with broad bipartisan support. Ranking Member Crapo also provided an opening statement that underscored the importance of assisting small business exporters and outlined the aggressive competition that comes from foreign export credit agencies around the world. Senators Jack Reed (D-RI), Richard Shelby (R-AL), Bob Corker (R-TN), David Vitter (R-LA), Joe Manchin (D-WV), Elizabeth Warren (D-MA) and Heidi Heitkamp (D-ND) also participated in the hearing. An archived webcast is available online.

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Ex-Im Bank Policy Change Included in Omnibus Spending Bill

Last night, the Senate passed an omnibus spending bill that provides appropriations for the federal government through September 30. The FY2014 appropriations bill, passed by the House earlier this week and headed to the President for signature, also included a policy rider that will temporarily stop the U.S. Export-Import Bank and the Overseas Private Investment Corporation (OPIC) from preemptively denying support for exports of U.S. goods to most new coal-fired power plants abroad.

The provision – outlined on page 1385-87 of the legislation– states that none of the funds appropriated or otherwise made available may be obligated or expended to provide (until September 30, 2014) for the enforcement of any rule, regulation, policy, or guidelines implemented pursuant to the Supplemental Guidelines for High Carbon Intensity Projects approved by Ex-Im Bank on December 12, 2013. The bill also bars the enforcement of the modification proposed by the Overseas Private Investment Corporation (OPIC) in November 2013 to OPIC’s Environmental and Social Policy Statement relating to coal. The NAM had previously argued against Ex-Im Bank’s new guidelines, since they run contrary to the Bank’s principle mandate to support U.S. jobs through exports. Manufacturers applaud House Appropriations Committee Chairman Hal Rogers (R-KY) for tackling this issue in this important legislation.

The revisions to Ex-Im Bank’s Environmental Procedures & Guidelines, as approved by the Ex-Im Bank Board of Directors in December, would substantially deter Ex-Im support for new coal-fired power plants abroad. Although those rules provide some flexibility with respect to the poorest countries in the world, the new guidelines required carbon capture and sequestration (CCS) technology to secure Ex-Im financing for coal-fired power plants in most countries – a technology that manufacturers of CCS systems have repeatedly said is not yet ready. The changes were intended to align Ex-Im Bank’s procedures with the President’s Carbon Action Plan, announced in June. The NAM submitted comments to Ex-Im in November, in response to the first draft of proposed changes to Ex-Im Bank’s environmental guidelines.

Ex-Im Bank’s underlying carbon policy, and the updated supplemental environmental guidelines enacted last summer by a unanimous Board vote, will remain in effect. While the OECD has recommendations for common approaches on environmental and social due diligence for export credit agencies, there is not yet any international or domestic consensus on how best to address the challenges associated with climate change. Meanwhile, demand for coal and other energy sources continues to rise around the world as countries develop and millions of people are lifted out of poverty and begin to seek industrial and economic gains. Examples abound of official export credit agency (ECA) support for energy and infrastructure projects that ensure steady energy supplies to countries with these growing demands. New coal-fired power plants are also in the works in many developed countries – Japan, the Netherlands, Germany, Italy and the UK. The carbon guidelines that remain in place at Ex-Im Bank encourage and permit the Board to take into account the environmental effects of goods and services for which support is requested, without categorically barring support for U.S. exports to foreign coal-fired power plants.

Manufacturers continue to strongly support Ex-Im Bank and its mission to support U.S. exports. Ex-Im authorized more than $27 billion in support of about $37 billion of U.S. exports in FY2013, supporting approximately 205,000 American jobs in communities across the country. Nearly 90% of Ex-Im Bank’s transactions were with small businesses. In the last five years, Ex-Im Bank has assisted in financing more than $188 billion of U.S. exports and supported 1.2 million American jobs – and last year, the Bank generated $1 billion in revenue for the Treasury Department. Ex-Im Bank helps level the global playing field and plays a vital role in ensuring manufacturers have access to competitive export financing. Read more about the importance of Ex-Im Bank to manufacturers at

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Manufacturers: Export Control Reform is Continuous Process

The Export Control Reform Initiative marked a second major milestone last week, with the implementation of new controls for ships, submersibles, tanks, military vehicles and auxiliary military equipment. The text of the new rules was published six months ago by the Departments of State and Commerce, with a delayed effective date.

Earlier this month, the State Department published the third major final rule implementing the Export Control Reform Initiative, outlining changes to five additional USML Categories. Those revisions will take effect in June. In all, the State Department has published proposed revisions for 13 of the 19 USML Categories – building significant momentum for the initiative. An earlier tranche of revisions, impacting controls on aircraft and gas turbine engines, went into effect in October 2013.

Manufacturers have long advocated for a new approach to export controls, aimed at today’s threats rather than yesterday’s Cold War, and the NAM is pleased to see these important steps toward a modernized U.S. export control system. The changes now underway will help strengthen the industrial base, enhance national security and improve economic competitiveness. But while the Administration’s work to update the USML and the Commerce Control List (CCL) is a positive development in the President’s Export Control Reform Initiative, these modifications are really only the first step.

“With continued leadership from the White House, and from the Cabinet, the Export Control Reform Initiative will achieve the broad objectives laid out nearly five years ago,” said Paulson Manufacturing Corporation President and NAM Board Member Roy Paulson. “Many of the infrastructure improvements required to implement these reforms have been completed, yet there is so much more to do. If the initiative halts here, the system won’t be fundamentally better for exporters. Export Control Reform needs to be thought of as a continuous process, one that is always evolving to the needs of the stakeholders and the requirements of National Security.”

Looking ahead, the NAM has urged the Administration to take an innovative approach to identifying and addressing those unilateral export controls that are ineffective at achieving foreign policy goals and stifle U.S. competitiveness in the global economy. We also strongly support much-needed management reforms – including an effective program license framework, a truly connected IT system across licensing agencies, an efficient intra-company transfer license for trusted companies and simplified encryption controls – that would further streamline licensing and system administration. Further, addressing regulatory and statutory barriers to civil nuclear exports would further boost U.S. security and competitiveness.

In 2009, President Obama announced an Export Control Reform Initiative that was intended to fundamentally reform the U.S. export control system and rationalize U.S. export laws. As part of this process, the State Department is transferring some less sensitive items from the USML to a new section of the CCL maintained by the Commerce Department, and the agencies are adopting a number of additional regulatory changes. The Commerce Department has also produced a series of tools to help exporters, as well as new tool that will guide exporters in the use of the license exceptions. The NAM provided extensive input on the proposals and on the framework of the transition period, and we will continue to work with the Administration to ensure a smooth transition over the next few months.

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WTO Ministerial Conference Seeks Breakthrough on Trade Facilitation Agreement

Trade ministers from around the world have gathered in Bali, Indonesia, for the Ninth Ministerial Conference of the World Trade Organization (WTO). In meetings that started on Tuesday, WTO negotiators are working to find consensus on a trade facilitation agreement that would simply and streamline customs procedures – cutting red tape to boost the world economy by an estimated $1 trillion. A trade facilitation agreement could help revive the WTO’s broader Doha Round of trade negotiations, which have dragged for more than a decade without any tangible outcomes.

The NAM has been working USTR and others in the business community to secure a successful outcome on trade facilitation and information technology. WTO Director General Roberto Azevêdo has also pressed WTO members to agree on a package of concessions on trade facilitation, information technology, least-developed country food issues and other topics. Earlier this year, the NAM organized a coalition letter in support of the WTO Trade Facilitation Agreement, with 16 associations from around the world joining as cosigners.

A trade facilitation agreement would be the first multilateral agreement since the creation of the WTO. At the Opening Plenary Session yesterday, U.S. Trade Representative Michael Froman acknowledged that “leaving Bali this week without an agreement would deal a debilitating blow to the WTO as a forum for multilateral negotiations.”

WTO negotiators made significant progress on the customs text last week, but the difficult issue of limiting agricultural subsidies remains seemingly intractable. India has rejected an earlier, tentative deal to include a temporary “peace clause” that would shield agricultural subsidies that breach the WTO limits from any challenges for four years. Indian Commerce Minister Anand Sharma drew a hard line on his country’s food security program this week, saying yesterday that the food security issue is “non-negotiable” for his nation, which has recently enacted a food security law to provide $22 billion in grain subsidies, contrary to WTO rules.

Froman told CNBC yesterday that the package “we all reached in Geneva was a well-balanced agreement that dealt with the legitimate concerns about food security but also was designed to ensure that it didn’t cause greater food insecurity, and that’s the deal that was on the table when we got here in Bali.”

Formal and informal statements from a wide range of WTO members have cited the importance of reaching an agreement in Bali. In his opening statement on Tuesday, Director General Azevêdo noted that the future of the WTO and the multilateral trading system is at stake. “I believe that the package we have brought from Geneva – that is before you today – contains measures which are of great significance, both to Members individually, and to the world economy as a whole,” Azevêdo said. “It would enable the multilateral system to move forward – and it would enable the WTO to breathe again.”

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WTO Fails to Conclude Negotiations on a Trade Facilitation, Trade Package

Earlier today, the head of the World Trade Organization (WTO) acknowledged that negotiators had “failed to find convergence” on a complete a trade package – including a Trade Facilitation Agreement – ahead of the Ninth Ministerial Conference in Bali next week. “Failure in Bali will have grave consequences for the multilateral trading system,” WTO Director General Roberto Azevedo said in his remarks to the WTO General Council.

U.S. Ambassador to the WTO Michael Punke said, in his remarks today, the United States agreed with Director General Azevedo’s assessment that the Geneva process has run its course – with a handful of countries blocking the majority from achieving success on a trade facilitation deal that could boost global economic output by close to $1 trillion dollars through improved customs procedures. “I must say it is with a great deal of sadness that I deliver this statement today,” he said. Hopes were high that the WTO would address trade facilitation and information technology liberalization to cut red tape and unnecessary costs at the border. Manufacturers, who have pushed for this trade facilitation pact, are also disappointed at the stalemate.

Much of the blame falls at the feet of India, which has pushed for a change in WTO rules that would allow the nation to exceed the current cap on trade-distorting farm subsidies. Last week, negotiators were poised to reach a compromise that would allow India to exceed its spending cap for four years without challenge from WTO members. India, however, wanted a commitment for a permanent solution.

Earlier this year, the NAM sent a coalition letter in support of the WTO Trade Facilitation Agreement with 16 associations from around the world joining as cosigners. New research is demonstrating the value of trade facilitation policies, and the NAM will continue to push for binding multilateral trade facilitation commitments, as well as improved trade facilitation outcomes in the TPP and TTIP agreements.

Director General Azevedo also noted that the Trade Facilitation Agreement “would deliver jobs and opportunities in times of unemployment and slow growth. It would also deliver technical assistance and capacity building for the better integration of developing and least developed countries into global trade flows.”

No more talks are planned this week in Geneva, and it remains unclear how negotiators could resolve differences before the Bali meetings scheduled to start on December 3. Nevertheless, Director General Azevado urged WTO members to continue working toward a resolution. “If we are to get this deal over the line it will need political engagement — and political will,” he said.


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Foreign Investment Great News for Manufacturers

The SelectUSA Investment Summit, a two-day event designed to encourage foreign direct investment (FDI) in the United States, is wrapping up today. With 1,200 participants from 58 different countries and 47 states, the summit highlighted the benefits of investing in the United States and linked business leaders with global investors, state and local representatives, and high-level government officials.

That foreign investment in the United States is good news for manufacturing. According a report released yesterday by the White House, about one third of the jobs created by FDI are in manufacturing – totaling nearly 2 million jobs. The United States has been the recipient of $1.5 trillion in FDI since 2006. Foreign-headquartered manufacturing companies make important investments in R&D, provide good-paying jobs and help grow the U.S. economy.

President Obama addressed the SelectUSA summit today, calling for new investments in the United States as well as increased exports. “I want more American products being sold in your countries, and I want your companies investing more here in the United States of America,” President Obama said. “Because it advances my top priority as President: creating good-paying American jobs and strengthening and broadening our middle class.”

President Obama also noted that companies like Caterpillar, Ford and Intel are making new investments in the United States while companies like Honda, Siemens and Samsung are expanding U.S. production. U.S. Trade Ambassador Michael Froman also spoke at the Summit today. The President promised to make U.S. advocacy more efficient and more effective, and he echoed Secretary of Commerce Penny Pritzker’s pronouncement that “America is open for business.”

The NAM has been a longtime proponent of an open investment policy for the United States, and manufacturers believe that the SelectUSA summit is a positive move forward. FDI and other pro-trade policies benefit the global economy and U.S. manufacturers. Secretary Pritzker’s welcoming remarks  at the SelectUSA summit mentioned two other important initiatives that would strengthen the global economy: the Trans-Pacific Partnership (TTP) and the Transatlantic Trade and Investment Partnership (TTIP). Manufacturers will continue to engage with leaders in Washington to move forward on TPP and TTIP.


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NAM Calls For Senate Committee to Move Customs Reauthorization Legislation

Predictable and efficient customs procedures help U.S. manufacturers compete effectively in a global marketplace. The U.S. Customs and Border Protection (CBP) has the dual mission of both facilitating trade and bolstering national security, and a strong CBP reauthorization bill will help expedite the ever-increasing volume of legitimate trade between the United States and its trading partners while also more effectively helping to halt illicit trade. Today, the NAM called for the Senate Finance Committee to mark up its CBP reauthorization legislation and move it to the Senate floor this year.

The Trade Facilitation and Trade Enforcement Act of 2013 (S. 662) was introduced by Chairman Max Baucus and Ranking Member Orrin Hatch earlier this year to help reduce costs and delays at the border by modernizing U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE), two key trade-related agencies. The Senate Finance Committee held a hearing on the topic in May.

The bill would facilitate trade, advance cooperation among government agencies, strengthen intellectual property and trade remedy enforcement, and set the global standard for border management. In particular, the provisions in Title III of S. 662 would help strengthen CBP’s authority to enforce antidumping and countervailing duty orders and to investigate effectively alleged evasion of those orders.

Improvements to trade facilitation are critical for achieving the President’s goal of doubling exports in five years. Imports and exports are intrinsically linked, as manufacturers import parts and components that are incorporated into final products that are then exported out of the United States.

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Ex-Im Bank Generates $1 Billion in Profits

Earlier this week, the U.S. Ex-Im Bank announced that it was transferring more than $1 billion to the U.S. Treasury’s General Fund for FY2013. The Bank transferred the revenue – primarily generated from the fees from its customers for loan guarantees, export credit insurance and other services – after covering its own operating costs and contributing to loan loss reserves. In 2012, Ex-Im Bank’s authorizations supported about $50 billion in U.S. export sales and approximately 255,000 American jobs. The Bank has been consistently profitable since 1992, returning billions of dollars in profits to taxpayers over the years and contributing to federal deficit reduction.

The ability of U.S. companies to export has always been a critical issue for the NAM, and exports are increasingly important to the U.S. economy and to the success of domestic manufacturing. Ex-Im Bank as one of the most important tools the U.S. government has to help grow U.S. exports and jobs, and the only tool that American manufacturers have to counter the approximately $1 trillion in export financing that other governments provide their exporters.

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