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US Ex-Im Bank held a public hearing to discuss its new proposed procedures for determining if a financing has an adverse effect | Norton Rose Fulbright
Changes in how the bank lends are required by the “Export- Import Bank Reauthorization Act of 2002” that became law in June. The act reauthorized the bank’s operations for an additional four years. It also both codified and broadened existing restrictions that prevent the bank from supporting transactions deemed detrimental to the US economy.
The economic impact procedures were first ordered by Congress in 1968 to help the bank more efficiently weigh the competing priorities of supporting US exports but not doing so in a manner that threatens longrun adverse economic consequences in the United States.
The new law would effectively block Ex-Im Bank financing in two specific situations in the future. The first is where a financing would support production of a product that is the subject of either a countervailing duty or antidumping order under title VII of the “Tariff Act of 1930.” Under this restriction, the Ex-Im Bank may not finance foreign projects whose products have been found to have been sold at unfairly low prices with an adverse effect on the US market. An example is steel. The second is where, following a global investigation into an industry, called a “section 201 investigation,” the US International Trade Commission has determined that the US economy has been injured by excess supply in the market.
The Ex-Im Bank is now reviewing its economic impact procedures to comply with these new requirements. Likely innovations include requiring notice and comment periods for all financings exceeding $10 million to an entity that either is subject to a preliminary anti-dumping or countervailing duty determination or that produces products for which a section 201 investigation has been initiated. Other possible revisions involve requiring the bank to consider section 201 investigations as indicative of an oversupply condition when making economic impact determinations. Another currently debated revision would require a 14-day notice and comment period before the Ex-Im Bank board could act on financings supporting products that are subject to a final antidumping or countervailing duty order or a section 201 injury determination. The deadline for comments on the proposals is October 10.
The Ex-Im Bank is an independent US government agency that helps finance the sale of US exports — primarily to emerging markets — by providing loans, guarantees, and insurance.
Keith Martin
