12 U.S.C. § 635i–3 — Tied Aid Credit Fund and program

(a) Findings. Congress finds that—

(1) Tied-aid and partially untied-aid credits offered by other countries are a predatory way to finance exports because they distort markets.

(2) Those distortions have caused the United States to lose export sales, economic growth, and jobs.

(3) Those practices weaken market mechanisms that would otherwise cause export purchases to be based on price, quality, delivery, and other factors directly related to the export. This assumes official financing is not subsidized and would be a neutral part of the transaction.

(4) When donor countries support commercial exports with tied-aid or partially untied-aid credits, they hinder developing countries’ growth by diverting development-assistance money from essential development purposes.

(5) The Bank has at least two tasks—

(A) (i) First, it should match foreign export-credit^* and aid agencies when they use tied aid outside the Arrangement or exploit loopholes such as untied aid. (ii) Matching is needed to give the United States leverage in OECD efforts to reduce overall export subsidies. (iii) Only by matching foreign export-credit offers can the Bank strengthen United States negotiators’ efforts to bring those loopholes under the Arrangement’s rules. (iv) To bring untied aid under those rules, the Bank should consider highly competitive financial support when it learns that foreign untied-aid offers will be made; and

(B) second, it should support United States exporters facing foreign competition that follows the Arrangement and the World Trade Organization’s Subsidies Code but puts United States exporters at a disadvantage.

(6) The Bank should have a tied-aid program aimed at export markets of countries—including countries outside the Arrangement—that extensively use tied aid, partially untied aid, or untied aid used to promote exports as though it were tied aid, for commercial advantage. The program’s purposes are—

(A) enforcing the existing Arrangement’s limits on using tied and partially untied aid for commercial purposes;

(B) helping negotiate, establish, and enforce new or revised comprehensive international arrangements that effectively limit those uses, including untied aid used as tied aid; and

(C) promoting compliance with Arrangement rules by foreign export-credit agencies outside the Arrangement. The program should be used aggressively for these purposes.

(b) Tied-aid credit program.

(1) General rule. The Bank must establish a tied-aid credit program under which it makes grants from the Fund established under subsection (c)—

(A) to supplement financing of a United States export when another country is reasonably expected to provide predatory financing for a competitor’s sale. Special attention must be given to matching other governments’ tied or partially untied aid credits when they are (i) in violation of the Arrangement or (ii) compliant with the Arrangement but the Bank decides United States trade or economic interests justify matching them, including grandfathered cases;

(B) to supplement United States exports to foreign markets that are actual or possible export markets for a country the Bank decides (i) uses predatory official export financing through tied or partially untied aid and obstructs negotiations or violates agreements meant to end commercial use of those credits, or (ii) uses predatory practices to evade international tied-aid agreements; or

(C) to supplement United States exports in other circumstances the Bank considers appropriate to carry out this section.

(2) Administration. The Bank administers the program—(A) after consulting the Secretary and following the principles, process, and standards developed under paragraph (5) and the purposes in subsection (a)(5); (B) in cooperation with United States exporters and private financial institutions or entities, and, when appropriate, after consulting other Federal agencies; and (C) after consulting the National Advisory Council on International Monetary and Financial Policies.

(3) Coordination. The Bank may combine Fund grants with (A) any Bank guarantee, insurance, or other credit extension under this subchapter; (B) export financing from a private financial institution or other entity; and (C) any other export financing, on terms the Bank finds appropriate. This includes blended and parallel financing.

(4) Country information. To help the Bank use supplemental-financing money efficiently under paragraph (1)(B), the United States Trade Representative and Secretary of Commerce may give the Bank, the Secretary, and the National Advisory Council information about the main sectors and key markets of countries described in paragraph (1)(B). The Bank must also ask for and consider private-sector views about those sectors and markets.

(5) Principles, process, and standards. (A) The Secretary and Bank must jointly develop a process, principles, and standards for deciding how to use Fund money most effectively and efficiently for subsection (a)(6)’s purposes.

(B)(i) In developing them, they must consider these principles and standards: (I) The Fund should leverage multilateral negotiations to limit aid-financed trade distortions through new rules, enforce existing rules, and obtain compliance from countries outside the Arrangement. (II) The Fund will counter foreign tied aid faced by a United States exporter bidding on a capital project. (III) Credible information about a foreign tied-aid offer is required before the Fund is used to match specific terms. If timely information about a specific tied-aid offer, or untied aid used as tied aid, is unavailable—or unavailable because the agency is not subject to Arrangement reporting rules—the Bank may rely on credible evidence of a history of similar offers or other credible evidence. (IV) The Fund will let a competitive United States exporter pursue further market opportunities on commercial terms made possible by the Fund. (V) Each use will follow the Arrangement unless a foreign export-credit agency has breached it. (VI) The Fund may be used only to defend possible sales by United States companies to an environmentally sound project. (VII) The Fund may be used in advance to counter possible foreign tied-aid offers without causing foreign tied aid to be used.

(ii) The following process exclusively applies to individual applications: (I) The Bank processes an application under the developed principles and standards. (II) Twenty days before the scheduled Board meeting, unless an earlier discussion is appropriate because of the facts, the Bank must brief the Secretary and provide documents, information, or data reasonably needed for review. (III) The Secretary may request one postponement of Board consideration for up to 14 days so the Secretary can send the Board a memorandum objecting to the application. (IV) The Board decides each case. But its approval, or a commitment letter based on it, does not become final if the Secretary tells the Bank President in writing that the Secretary intends to appeal to the President of the United States and makes that written appeal within 20 days after the Board meeting. (V) The Bank may not give final approval if, within 30 days after the Secretary’s appeal, the President of the United States, after consulting the Bank President and Secretary, decides that extending the credit would materially interfere with subsection (a)(6)’s purposes. If the President makes no such decision within 30 days, the approval becomes final.

(C) As soon as practicable, but no later than six months after June 14, 2002, the Secretary and Bank must send the developed principles, process, and standards to the House Committee on Financial Services and Senate Committee on Banking, Housing, and Urban Affairs.

(D) Until that submission, the principles and standards in subparagraph (B)(i) govern Fund use.

(E) The Secretary and Bank jointly should update and revise the principles, process, and standards as needed. When they do, they must send the updated and revised version to those two committees.

(6) Reconsideration. (A) Considering transaction deadlines, the Board must quickly reconsider a denial of an application to use the Fund if the applicant asks within three months after denial and the request follows paragraph (2). (B) The applicant may be required to provide new application information.

(c) Tied Aid Credit Fund. (1) A fund called the “Tied Aid Credit Fund” is established within the Bank. It consists of amounts appropriated under subsection (e).

(2) Fund money is available for Bank grants under subsection (b) and to reimburse the Bank for an amount equal to the concessionality level of tied-aid credits the Bank authorizes.

(d) Arrangement consistency. Any export financing using a program grant must follow the Arrangement’s procedures as they exist when the financing is approved.

(e) Authorization. Congress authorizes appropriations of whatever sums are needed to carry out this section. The sums may remain available until spent.

(f) No court review. No action under this section may be reviewed by a court, except for abuse of discretion.

(g) Report to Congress. (1) After consulting the Secretary, the Bank must send an annual tied-aid-credit report to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services.

(2) The report must describe—(A) how the Arrangement limits tied and partially untied aid for commercial purposes, including notification and consultation procedures; (B) all principal foreign tied-aid offers during the previous six months, including offers notified by Arrangement participants, especially (i) grandfathered offers and (ii) notifications of Arrangement exceptions; (C) each time the Bank used the Fund to match a specific offer, including a grandfathered offer or an exception; and (D) other United States Government actions against predatory foreign-government financing, including further negotiations among Arrangement participants.

(3) If the Bank decides required information should not be public, it may submit it separately confidentially or provide it orally to the chairmen and ranking minority members of the Senate and House committees with jurisdiction over the report’s subject.

(h) Definitions. (1) “Tied aid credit” and “partially untied aid credit” mean credit that (A) has a grant element above zero percent, as determined by the OECD Development Assistance Committee; (B) is actually or effectively tied to (i) buying goods or services from the donor country, for tied aid, or (ii) buying goods or services from a limited group of countries, for partially untied aid; and (C) is financed entirely with public money or partly with public and partly with private money.

(2) “Secretary” means the Secretary of the Treasury.

(3) “Arrangement” means the Arrangement on Guidelines for Officially Supported Export Credits established through the OECD.

(4) “Blended financing” means financing combining official development assistance, official export credits, and private commercial credit in one agreement with one set of financial terms.

(5) “Parallel financing” means financing combining those types of financing without putting them in one agreement and without one set of financial terms.

(6) “Offers grandfathered under the Arrangement” means (A) financing offers made or lines of credit extended on or before February 15, 1992; or (B) offers for subloans under those lines of credit made on or before August 15, 1992, or, for Mexico, on or before December 31, 1992.

(7) The Bank, after consulting the Secretary of the Treasury, must define “market window” for this section.