§ 635i-3. Tied Aid Credit Fund and program
(a)
Findings
The Congress finds that—
(1)
tied aid and partially untied aid credits offered by other countries are a predatory method of financing exports because of their market-distorting effects;
(2)
these distortions have caused the United States to lose export sales, with resulting losses in economic growth and employment;
(3)
these practices undermine market mechanisms that would otherwise result in export purchase decisions made on the basis of price, quality, delivery, and other factors directly related to the export, where official financing is not subsidized and would be a neutral factor in the transaction;
(4)
support of commercial exports by donor countries with tied aid and partially untied aid credits impedes the growth of developing countries because it diverts development assistance funds from essential developmental purposes;
(5)
the Bank has, at a minimum, the following two tasks—
(A)
(i)
first, the Bank should match foreign export credit agencies and aid agencies when they engage in tied aid outside the confines of the Arrangement and when they exploit loopholes, such as untied aid;
(ii)
such matching is needed to provide the United States with leverage in efforts at the OECD to reduce the overall level of export subsidies;
(6)
there should be established in the Bank a tied aid program to target the export markets of those countries, including those that are not a party to the Arrangement, which make extensive use of tied aid or partially untied aid credits, or untied aid used to promote exports as if it were tied aid, for commercial advantage for the purposes of—
(A)
enforcing compliance with the existing Arrangement restricting the use of tied aid and partially untied aid credits for commercial purposes; and
(B)
facilitating efforts to negotiate, establish, and enforce new or revised comprehensive international arrangements effectively restricting the use of tied aid and partially untied aid credits, or untied aid used to promote exports as if it were tied aid, for commercial purposes; and
(C)
promoting compliance with Arrangement rules among foreign export credit agencies that are not a party to the Arrangement;
and such program should be used aggressively for such purposes.
(b)
Establishment of tied aid credit program
(1)
In general
The Bank shall establish a tied aid credit program under which grants shall be made from funds available in the Tied Aid Credit Fund established under subsection (c) of this section—
(A)
to supplement the financing of a United States export when there is a reasonable expectation that predatory financing will be provided by another country for a sale by a competitor of the United States exporter with respect to such export and with special attention to matching tied aid and partially untied aid credits extended by other governments—
(B)
to supplement the financing of United States exports to foreign markets which are actual or potential export markets for any country which the Bank determines—
(2)
Administration of program
The tied aid credit program shall be administered by the Bank—
(A)
in consultation with the Secretary and in accordance with the principles, process, and standards developed pursuant to paragraph (5) of this subsection and the purposes described in subsection (a)(5) of this section;
(3)
Coordination with other export financing
Under the tied aid credit program, the Bank may combine grants from the Tied Aid Credit Fund with—
(A)
any guarantee, insurance, or other extension of credit provided by the Bank under this subchapter;
in such manner and under such terms as the Bank determines to be appropriate, including combinations of export financing in the form of blended financing and parallel financing.
(4)
Information on countries which engage in official predatory export financing and impede negotiations
In order to assist the Bank to make the most efficient use of funds available for supplemental financing under paragraph (1)(B), the United States Trade Representative and the Secretary of Commerce may provide information on principal sectors and key markets of countries described in paragraph (1)(B) to the Bank, the Secretary, and the National Advisory Council on International Monetary and Financial Policies. The Bank shall also request and take into consideration the views of the private sector on principal sectors and key markets of countries described in paragraph (1)(B).
(5)
Principles, process, and standards governing use of the Fund
(A)
In general
The Secretary and the Bank jointly shall develop a process for, and the principles and standards to be used in, determining how the amounts in the Tied Aid Credit Fund could be used most effectively and efficiently to carry out the purposes of subsection (a)(6) of this section.
(B)
Content of principles, process, and standards
(i)
Consideration of certain principles and standards
In developing the principles and standards referred to in subparagraph (A), the Secretary and the Bank shall consider administering the Tied Aid Credit Fund in accordance with the following principles and standards:
(I)
The Tied Aid Credit Fund should be used to leverage multilateral negotiations to restrict the scope for aid-financed trade distortions through new multilateral rules, to police existing rules, and to seek compliance by those countries that are not a party to the Arrangement.
(II)
The Tied Aid Credit Fund will be used to counter a foreign tied aid credit confronted by a United States exporter when bidding for a capital project.
(III)
Credible information about an offer of foreign tied aid will be required before the Tied Aid Credit Fund is used to offer specific terms to match such an offer. In cases where information about a specific offer of foreign tied aid (or untied aid used to promote exports as if it were tied aid) is not available in a timely manner, or is unavailable because the foreign export credit agency involved is not subject to the reporting requirements under the Arrangement, then the Bank may decide 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.
(IV)
The Tied Aid Credit Fund will be used to enable a competitive United States exporter to pursue further market opportunities on commercial terms made possible by the use of the Fund.
(V)
Each use of the Tied Aid Credit Fund will be in accordance with the Arrangement unless a breach of the Arrangement has been committed by a foreign export credit agency.
(ii)
Process
In handling individual applications involving the use or potential use of the Tied Aid Credit Fund the following process shall exclusively apply pursuant to subparagraph (A):
(I)
The Bank shall process an application for tied aid in accordance with the principles and standards developed pursuant to subparagraph (A) and clause (i) of this subparagraph.
(II)
Twenty days prior to the scheduled meeting of the Board of Directors at which an application will be considered (unless the Bank determines that an earlier discussion is appropriate based on the facts of a particular financing), the Bank shall brief the Secretary on the application and deliver to the Secretary such documents, information, or data as may reasonably be necessary to permit the Secretary to review the application to determine if the application complies with the principles and standards developed pursuant to subparagraph (A) and clause (i) of this subparagraph.
(III)
The Secretary may request a single postponement of the consideration by the Board of Directors of the application for up to 14 days to allow the Secretary to submit to the Board of Directors a memorandum objecting to the application.
(IV)
Case-by-case decisions on whether to approve the use of the Tied Aid Credit Fund shall be made by the Board of Directors, except that the approval of the Board of Directors (or a commitment letter based on that approval) shall not become final (except as provided in subclause (V)), if the Secretary indicates to the President of the Bank in writing the Secretary’s intention to appeal the decision of the Board of Directors to the President of the United States and makes the appeal in writing not later than 20 days after the meeting at which the Board of Directors considered the application.
(V)
The Bank shall not grant final approval of an application for any tied aid credit (or a commitment letter based on that approval) if the President of the United States, after consulting with the President of the Bank and the Secretary, determines within 30 days of an appeal by the Secretary under subclause (IV) that the extension of the tied aid credit would materially impede achieving the purposes described in subsection (a)(6). If no such Presidential determination is made during the 30-day period, the approval by the Bank of the application (or related commitment letter) that was the subject of such appeal shall become final.
(C)
Initial principles, process, and standards
As soon as is practicable but not later than 6 months after June 14, 2002, the Secretary and the Bank shall submit to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate a copy of the principles, process, and standards developed pursuant to subparagraph (A).
(D)
Transitional principles and standards
The principles and standards set forth in subparagraph (B)(i) shall govern the use of the Tied Aid Credit Fund until the principles, process, and standards required by subparagraph (C) are submitted.
(E)
Update and revision
The Secretary and the Bank jointly should update and revise, as needed, the principles, process, and standards developed pursuant to subparagraph (A), and, on doing so, shall submit to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate a copy of the principles, process, and standards so updated and revised.
(6)
Reconsideration of decisions
(A)
In general
Taking into consideration the time sensitivity of transactions, the Board of Directors of the Bank shall expeditiously pursuant to paragraph (2) reconsider a decision of the Board to deny an application for the use of the Tied Aid Credit Fund if the applicant submits the request for reconsideration within 3 months of the denial.
(c)
Tied Aid Credit Fund
(1)
In general
There is hereby established within the Bank a fund to be known as the “Tied Aid Credit Fund” (hereinafter in this section referred to as the “Fund”), consisting of such amounts as may be appropriated to the Fund pursuant to the authorization contained in subsection (e) of this section.
(2)
Expenditures from Fund
Amounts in the Fund shall be available for grants made by the Bank under the tied aid credit program established pursuant to subsection (b) of this section and to reimburse the Bank for the amount equal to the concessionality level of any tied aid credits authorized by the Bank.
(d)
Consistency with Arrangement
Any export financing involving the use of a grant under the tied aid credit program shall be consistent with the procedures established by the Arrangement, as in effect at the time such financing is approved.
(e)
Authorization
There are authorized to be appropriated to the Fund such sums as may be necessary to carry out the purposes of this section. Such sums are authorized to remain available until expended.
(f)
Nonreviewability
No action taken under this section shall be reviewable by any court, except for abuse of discretion.
(g)
Report to Congress
(1)
In general
The Bank, in consultation with the Secretary, shall submit an annual report on tied aid credits to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives.
(2)
Contents of reports
Each report required under paragraph (1) shall contain a description of—
(A)
the implementation of the Arrangement restricting tied aid and partially untied aid credits for commercial purposes, including the operation of notification and consultation procedures;
(B)
all principal offers of tied aid credit financing by foreign countries during the previous 6-month period, including all offers notified by countries participating in the Arrangement, and in particular—
(3)
Confidential information
To the extent the Bank determines any information required to be included in the report under this subsection should not be made public, such information may be submitted separately on a confidential basis or provided orally, rather than in written form, to the Chairmen and ranking minority Members of the Committees of the Senate and the House of Representatives with jurisdiction over the subject matter of the report.
(h)
Definitions
For purposes of this section, the following definitions shall apply:
(1)
Tied aid and partially untied aid credit
The terms “tied aid credit” and “partially untied aid credit” mean any credit which—
(A)
has a grant element greater than zero percent, as determined by the Development Assistance Committee of the Organization for Economic Cooperation and Development;
(3)
Arrangement
The term “Arrangement” means the Arrangement on Guidelines for Officially Supported Export Credits established through the Organization for Economic Cooperation and Development.
(4)
Blended financing
The term “blended financing” means financing provided through any combination of official development assistance, official export credits, and private commercial credit which is integrated into a single agreement with a single set of financial terms.
(5)
Parallel financing
The term “parallel financing” means financing provided by any combination of official development assistance, official export credits, and private commercial credit which is not integrated into a single agreement and does not have a single set of financial terms.