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U.S. Code as of:
01/19/04
Section 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;
(iii) only through matching foreign export credit offers can
the Bank buttress United States negotiators in their efforts to
bring these loopholes within the disciplines of the
Arrangement; and
(iv) in order to bring untied aid within the discipline of
the Arrangement, the Bank should consider initiating highly
competitive financial support when the Bank learns that foreign
untied aid offers will be made; and
(B) second, the Bank should support United States exporters
when the exporters face foreign competition that is consistent
with the Arrangement and the Subsidies Code of the World Trade
Organization, but which places United States exporters at a
competitive disadvantage; and
(6) there should be established in the Bank a tied aid program
to target the export markets of those countries 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 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 -
(i) in violation of the Arrangement; or
(ii) in cases in which the Bank determines that United
States trade or economic interests justify the matching of
tied aid credits extended in compliance with the Arrangement,
including grandfathered cases;
(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 -
(i) engages in predatory official export financing through
the use of tied aid or partially untied aid credits, and
impedes negotiations or violates agreements on tied aid to
eliminate the use of such credits for commercial purposes; or
(ii) engages in predatory financing practices that seek to
circumvent international agreements on tied aid; or
(C) to supplement the financing of United States exports
under such other circumstances as the Bank may determine to be
appropriate for carrying out the purposes of this section.
(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;
(B) in cooperation with United States exporters and private
financial institutions or entities, and in consultation with
other Federal agencies, as appropriate; and
(C) in consultation with the National Advisory Council on
International Monetary and Financial Policies.
(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;
(B) any export financing provided by any private financial
institution or other entity; and
(C) any other type of export financing,
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, and to police existing rules.
(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.
(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.
(VI) The Tied Aid Credit Fund may only be used to defend
potential sales by United States companies to a project
that is environmentally sound.
(VII) The Tied Aid Credit Fund may be used to
preemptively counter potential foreign tied aid offers
without triggering foreign tied aid use.
(ii) Conclusion
Once the principles, process and standards referred to in
subparagraph (A) are followed, the final case-by-case
decisions on the use of the Tied Aid Credit Fund shall be
made by the Bank: Provided however, That the Bank shall not
approve the extension of a proposed tied aid credit if the
President of the United States determines, after consulting
with the President of the Bank and the Secretary of the
Treasury, that the extension of the tied aid credit would
materially impede achieving the purposes described in
subsection (a)(6) of this section.
(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.
(B) Procedural rules
In any such reconsideration, the applicant may be required to
provide new information on the application.
(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 -
(i) offers grandfathered under the Arrangement; and
(ii) notifications of exceptions under the Arrangement;
(C) any use by the Bank of the Tied Aid Credit Fund to match
specific offers, including those that are grandfathered or
exceptions under the Arrangement; and
(D) other actions by the United States Government to combat
predatory financing practices by foreign governments, including
additional negotiations among participating governments in the
Arrangement.
(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;
(B) is, in fact or in effect, tied to -
(i) the procurement of goods or services from the donor
country, in the case of tied aid credit; or
(ii) the procurement of goods or services from a restricted
number of countries, in the case of partially untied aid
credit; and
(C) is financed either exclusively from public funds or
partly from public and partly from private funds.
(2) Secretary
The term "Secretary" means the Secretary of the Treasury.
(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.
(6) Offers grandfathered under the Arrangement
The term "offers grandfathered under the Arrangement" means -
(A) financing offers made or lines of credit extended on or
before February 15, 1992; or
(B) financing offers extended for subloans under lines of
credit referred to in subparagraph (A) made on or before August
15, 1992, or, in the case of Mexico, on or before December 31,
1992.
(7) Market window
The Bank, in consultation with the Secretary of the Treasury,
shall define "market window" for purposes of this section.
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