§ 635i-3. — Tied Aid Credit Fund and program.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC635i-3]
TITLE 12--BANKS AND BANKING
CHAPTER 6A--EXPORT-IMPORT BANK OF THE UNITED STATES
SUBCHAPTER I--GENERAL PROVISIONS
Sec. 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.
(July 31, 1945, ch. 341, Sec. 10, formerly Sec. 15, as added Pub. L. 99-
472, Sec. 19, Oct. 15, 1986, 100 Stat. 1205; amended Pub. L. 100-217,
Dec. 29, 1987, 101 Stat. 1454; Pub. L. 100-418, title III, Sec. 3302(b),
Aug. 23, 1988, 102 Stat. 1383; Pub. L. 101-240, title I, Sec. 101(b),
Dec. 19, 1989, 103 Stat. 2493; Pub. L. 101-513, title V, Sec. 562(d),
Nov. 5, 1990, 104 Stat. 2036; renumbered Sec. 10 and amended Pub. L.
102-429, title I, Secs. 103, 121(c)(4), Oct. 21, 1992, 106 Stat. 2187,
2199; Pub. L. 104-97, Sec. 1, Jan. 11, 1996, 109 Stat. 984; Pub. L. 104-
107, title V, Sec. 579, Feb. 12, 1996, 110 Stat. 751; Pub. L. 105-121,
Sec. 3, Nov. 26, 1997, 111 Stat. 2528; Pub. L. 106-569, title XI,
Sec. 1103(d)(2), Dec. 27, 2000, 114 Stat. 3031; Pub. L. 107-189,
Secs. 9, 10(c), (d), 24(a)(2)(E), June 14, 2002, 116 Stat. 701, 703,
704, 708.)
Prior Provisions
A prior section 10 of act July 31, 1945, ch. 341, repealed section
713b of Title 15, Commerce and Trade.
Amendments
2002--Subsec. (a)(4). Pub. L. 107-189, Sec. 10(c)(1), struck out
``and'' at end.
Subsec. (a)(5). Pub. L. 107-189, Sec. 10(c)(3), added par. (5).
Former par. (5) redesignated (6).
Pub. L. 107-189, Sec. 10(c)(2), inserted ``, or untied aid used to
promote exports as if it were tied aid,'' before ``for commercial'' in
introductory provisions and in subpar. (B).
Subsec. (a)(6). Pub. L. 107-189, Sec. 10(c)(3), redesignated par.
(5) as (6).
Subsec. (b)(2)(A). Pub. L. 107-189, Sec. 9(a)(1), added subpar. (A)
and struck out former subpar. (A) which read as follows: ``in
consultation with the Secretary and in accordance with the Secretary's
recommendations on how such credits could be used most effectively and
efficiently to carry out the purposes described in subsection (a)(5) of
this section;''.
Subsec. (b)(5). Pub. L. 107-189, Sec. 9(a)(2), added par. (5).
Subsec. (b)(6). Pub. L. 107-189, Sec. 9(b), added par. (6).
Subsec. (g)(1). Pub. L. 107-189, Sec. 24(a)(2)(E), substituted
``Committee on Financial Services of the House of Representatives'' for
``Committee on Banking, Finance and Urban Affairs of the House of
Representatives''.
Subsec. (h)(7). Pub. L. 107-189, Sec. 10(d), added par. (7).
2000--Subsec. (g)(1). Pub. L. 106-569 substituted ``The Bank'' for
``On or before October 15, 1992, and every 6 months thereafter, the
Bank'' and ``submit an annual report'' for ``submit a report''.
1997--Subsec. (c)(2). Pub. L. 105-121, Sec. 3(a), struck out
``through September 30, 1997'' after ``authorized by the Bank''.
Subsec. (e). Pub. L. 105-121, Sec. 3(b), amended first sentence
generally. Prior to amendment first sentence read as follows: ``There
are authorized to be appropriated to the Fund such sums as may be
necessary for each of fiscal years 1996 and 1997.''
1996--Subsec. (c)(2). Pub. L. 104-107, Sec. 579(a), which directed
substitution of ``1997'' for ``1995'', could not be executed because
``1995'' does not appear in text after amendment by Pub. L. 104-97. See
below.
Pub. L. 104-97, Sec. 1(a), substituted ``1997'' for ``1995''.
Subsec. (e). Pub. L. 104-107, Sec. 579(b), which directed
substitution of ``1996 and 1997'' for ``1993, 1994, and 1995'', could
not be executed because that language does not appear in text after
general amendment by Pub. L. 104-97. See below.
Pub. L. 104-97, Sec. 1(b), substituted ``There are authorized to be
appropriated to the Fund such sums as may be necessary for each of
fiscal years 1996 and 1997.'' for ``There are authorized to be
appropriated to the Fund $500,000,000 for each of fiscal years 1993,
1994, and 1995.''
1992--Subsec. (a). Pub. L. 102-429, Sec. 103(c)(1), (2), substituted
``predatory'' for ``predacious'' in par. (1), struck out ``temporary''
before ``tied aid program'' in introductory provisions of par. (5), and
substituted ``existing Arrangement'' for ``existing arrangement'' in
par. (5)(A).
Subsec. (b)(1). Pub. L. 102-429, Sec. 103(c)(3)(A), substituted
``The'' for ``To carry out the purposes of subsection (a)(5) of this
section, the''.
Subsec. (b)(1)(A). Pub. L. 102-429, Sec. 103(c)(1), (3)(B),
substituted ``predatory'' for ``predacious'' and inserted before
semicolon ``and with special attention to matching tied aid and
partially untied aid credits extended by other governments--'' followed
by cls. (i) and (ii).
Subsec. (b)(1)(B). Pub. L. 102-429, Sec. 103(c)(1), (3)(C), in cl.
(i) substituted ``predatory'' for ``predacious'' and ``partially untied
aid credits, and impedes negotiations or violates agreements on tied aid
to eliminate the use of such credits for commercial purposes; or'' for
``partially untied aid credits; and'', added cl. (ii), and struck out
former cl. (ii) which read as follows: ``impedes negotiations to
eliminate the use of such credits for commercial purposes; or''.
Subsec. (b)(2). Pub. L. 102-429, Sec. 103(c)(4), (5), struck out
``of the Treasury'' after ``Secretary'' in subpar. (A) and substituted
``United States exporters and private financial institutions or
entities, and in consultation with other Federal agencies'' for
``private financial institutions or entities'' in subpar. (B).
Subsec. (b)(4). Pub. L. 102-429, Sec. 103(c)(6), inserted at end
``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).''
Subsec. (c)(2). Pub. L. 102-429, Sec. 103(a), substituted
``September 30, 1995'' for ``fiscal year 1992''.
Subsec. (e). Pub. L. 102-429, Sec. 103(b), amended subsec. (e)
generally, substituting present provisions for provisions which
authorized appropriations for fiscal years 1987 through 1992 and
provided authority for Presidential rescission.
Subsec. (g)(1). Pub. L. 102-429, Sec. 103(c)(7), amended par. (1)
generally. Prior to amendment, par. (1) read as follows: ``Report
required.--Before the end of the 6-month period beginning on October 15,
1986, and every six months thereafter, the Bank, in consultation with
the Secretary, shall prepare and transmit a report on tied aid credits
to the President of the Senate and the Speaker of the House of
Representatives.''
Subsec. (g)(2). Pub. L. 102-429, Sec. 103(c)(7), amended par. (2)
generally. Prior to amendment, par. (2) read as follows: ``Contents of
report.--Each report required by paragraph (1) shall contain a
description of--
``(A) the principal offers of predacious financing by foreign
countries during the course of the previous 6 months;
``(B) steps taken by the United States to combat specific
predacious financing practices of foreign countries;
``(C) any use by the Bank of the Tied Aid Credit Fund to match
specific predacious financing practices of foreign countries and to
initiate tied aid credit offers;
``(D) any additional steps the United States may take in the
future to discourage use of predacious financing practices; and
``(E) the progress achieved by negotiations conducted to carry
out the purposes described in subsection (a)(5) of this section.''
Subsec. (h). Pub. L. 102-429, Sec. 103(c)(8), substituted ``For
purposes of this section, the following definitions shall apply:'' for
``For the purpose of this section--'' in introductory provisions and
added par. (6).
1990--Subsec. (c)(2). Pub. L. 101-513, Sec. 562(d)(2), substituted
``1992'' for ``1991''.
Subsec. (e)(1). Pub. L. 101-513, Sec. 562(d)(1), substituted ``for
fiscal year 1990, $300,000,000, and for each of fiscal years 1991 and
1992, $500,000,000'' for ``and for fiscal years 1990 and 1991,
$300,000,000''.
1989--Subsec. (a)(5). Pub. L. 101-240, Sec. 101(b)(1), substituted
``for the purposes of--'', pars. (A) and (B), and concluding provisions
for ``for the purpose of facilitating the negotiation of a comprehensive
international arrangement restricting the use of tied aid and partially
untied aid credits for commercial purposes, and such program should be
aggressively used until such an arrangement is established.''
Subsec. (b)(1). Pub. L. 101-240, Sec. 101(b)(2), inserted
introductory provisions and struck out former introductory provisions
which read as follows: ``For the purpose of facilitating the negotiation
of a comprehensive international arrangement restricting the use of tied
aid and partially untied aid credits for commercial purposes, 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--''.
Subsec. (b)(2)(A). Pub. L. 101-240, Sec. 101(b)(3), substituted
``carry out the purposes described in subsection (a)(5) of this
section'' for ``promote the negotiation of a comprehensive international
arrangement restricting the use of tied aid and partially untied aid
credits for commercial purposes''.
Subsec. (c)(2). Pub. L. 101-240, Sec. 101(b)(4), substituted
``amount equal to the concessionality level'' for ``cost'' and ``through
fiscal year 1991'' for ``during fiscal years 1986, 1987, 1988, and
1989''.
Subsec. (e)(1). Pub. L. 101-240, Sec. 101(b)(7), which directed the
insertion of ``, and for fiscal years 1990, 1991, and 1992,
$200,000,000'' after ``$300,000,000'' was not executed in view of
earlier amendment by section 101(b)(5) of Pub. L. 101-240, which
inserted ``, and for fiscal years 1990 and 1991, $300,000,000'' after
``$300,000,000'', and in view of Senate floor amendment of the bill
which added the authorization contained in section 101(b)(5) and was
intended to replace the authorization now appearing in section
101(b)(7). See Cong. Rec., Vol. 135, pt. 22, pp. 31199, 31203.
Pub. L. 101-240, Sec. 101(b)(5), inserted ``, and for fiscal years
1990 and 1991, $300,000,000'' after ``$300,000,000''.
Subsec. (g)(2)(E). Pub. L. 101-240, Sec. 101(b)(6), amended subpar.
(E) generally. Prior to amendment, subpar. (E) read as follows: ``any
progress achieved in negotiations to establish a comprehensive
international arrangement restricting the use of tied aid and partially
untied credits for commercial purposes.''
1988--Subsecs. (c)(2), (e)(1). Pub. L. 100-418 substituted ``1988,
and 1989'' for ``and 1988''.
1987--Subsec. (c)(2). Pub. L. 100-217 substituted ``during fiscal
years 1986, 1987, and 1988'' for ``during fiscal year 1986''.
Use of Fund To Discourage Predatory Financing Practices
Section 3302(a) of Pub. L. 100-418 provided that: ``The Congress
finds that--
``(1) negotiations have led to an international agreement to
increase the grant element required in tied aid credit offers;
``(2) concern continues to exist that countries party to the
agreement may continue to offer tied aid credits that deviate from
the agreement;
``(3) in such cases, the United States could continue to lose
export sales in connection with the aggressive, and in some cases,
unfair, tied aid practices of such countries; and
``(4) in such cases, the Export-Import Bank of the United States
should continue to use the Tied Aid Credit Fund established by
section 15(c) [now 10(c)] of the Export-Import Bank Act of 1945 [12
U.S.C. 635i-3(c)] to discourage the use of such predatory financing
practices.''
Section Referred to in Other Sections
This section is referred to in section 635 of this title.
