Export Credit Agencies (ECAs) in Various Countries

ECAs differ in their goals, magnitude, and types of services. All offer medium- and long-term credits. They also provide other products and services such as short-term export credits, let­ter of credit guarantees, and bond unfair calling. (see Table 14.1). Two areas in which ECAs differ are their mission and their organizational structure. Some emphasize

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Export-Import Bank of the United States (Eximbank)

The Eximbank was created in 1934 and established under its present law in 1945, with the aim of assisting in the financing of U.S. export trade. It was originally established to finance exports to Europe after World War II. Eximbank’s role in promoting U.S. exports is likely to be more significant now than in

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Small Business Administration in International Trade

The Small Business Administration (SBA) also provides a few programs for U.S. export­ers. The SBA Act defines an eligible small business as one that is independently owned and operated and not dominant in its field of operation. To qualify for the programs, applicants must meet the definition of a small business under SBA’s size

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Overseas Private Investment Corporation (OPIC)

The Overseas Private Investment Corporation (OPIC) is a wholly owned U.S. government corporation that supports American private investment in developing nations and emerging market economies. OPIC programs are presently available for new and expanding businesses in some 150 countries worldwide. The program has generated positive net income for every year of operation since its

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Private Export Funding Corporation

The Private Export Funding Corporation (PEFCO) is a major source of capital for intermediate- and long-term fixed-rate loans for U.S. exports. It acts as a supplemental lender to traditional sources by making loans available for foreign purchasers of U.S. goods and services. PEFCO is a private corporation owned by banks and industrial and financial

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U.S. Department of Agriculture

The U.S. Department of Agriculture (USDA) provides financial support for U.S. agricultural exports through various programs, including the following: The GSM-102 program provides credit guarantees for up to three years and covers 98 percent of the export value and up to 2.8 percentage points of interest on the guaran­teed value. The GSM-103 program offers

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Trade Finance for Small and Medium-Size Enterprises in Transition Economies

Primary and intermediate commodities continue to dominate the composi­tion of exports from the Commonwealth of Independent States (CIS): Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Russia, Moldova, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan. Such exports may not need elaborate long-term financial arrangements, unlike the high value-added exports from countries of Central and Eastern Europe. According to

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Eximbank Financing: Selected Cases

1. Omni Helicopters International (OHI) of Brazil (Credit Guarantee) In December 2012, the U.S. Export-Import Bank (Eximbank) agreed to guar­antee financing to support the export of U.S.-made helicopters to Brazil. The Bank approved a final commitment to guarantee support for 85 percent of the U.S. content of the export, a portion amounting to $23.2

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Export Licensing and Administration

Governments use export controls for a variety of reasons. Such controls are often intended to achieve certain desired political and economic objectives. The first U.S. export control was introduced in 1775, when the Continental Congress outlawed the export of goods to Great Britain. Since then, the United States has restricted exports to certain countries

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Antiboycott Regulations

The U.S. antiboycott provisions of the Export Administration Act prohibits U.S. firms from participating in foreign boycotts or embargoes not authorized by the U.S. government. Even though this law was primarily aimed at the Arab boycott against Israel, it prevents U.S. firms from being used to implement foreign policies of other nations that are

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Foreign Corrupt Practices

The U.S. antiboycott provisions of the Export Administration Act prohibits U.S. firms from participating in foreign boycotts or embargoes not authorized by the U.S. government. Even though this law was primarily aimed at the Arab boycott against Israel, it prevents U.S. firms from being used to implement foreign policies of other nations that are

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Antitrust Laws and Trade Regulation

The Foreign Corrupt Practices Act (FCPA) of 1977 was enacted as a public response to the Watergate scandal of the early 1970s and to revelations of widespread bribery of foreign officials by U.S. companies. In the 1970s, Securities and Exchange Commission (SEC) in­vestigations revealed that more than 400 U.S. companies admitted making illegal payments

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Incentives to Promote Exports

From the 1870s until 1971, U.S. exports typically exceeded U.S. imports, except during World War II. Even during this period, U.S. exports fell below imports because a substantial per­centage of the exports was not sold but provided to allies under the Marshall Plan. All this began to change in the 1970s. The United States

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Export Trade Certificate of Review

1. Export Activities to Reduce Costs and Risks Export Trade Certificates of Reviews (COR) are issued by the Department of Com­merce (with the concurrence of the Department of Justice) and provide antitrust protection for certain specified export activities. Companies holding certificates can work together in the appointment of exclusive agents or distributors, the set­ting

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Import Restrictions in the United States

1. Tariffs All goods imported into the United States are subject to duty or duty-free entry, depending on their classification under the applicable tariff schedule and their country of origin. For dutiable products, three different methods are used to levy tariffs: Ad valorem duty: The duty levied is a percentage of the value of

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U.S. Free-Trade Agreements (FTAs)

The United States has fourteen FTAs in force with twenty countries. It is also in the process of negotiating a regional FTA, the Trans-Pacific Partnership, with Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, as well as the European Union (EU-US FTA). One of the prominent exceptions to the

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U.S. Trade Preferences

1. Generalized System of Preferences (GSP) The GSP is a special arrangement by developed nations, agreed to under the United Na­tions, to provide special treatment for imports from developing nations to encourage their economic growth. Under the GSP, tariff exemptions and reductions are provided by indus­trialized countries on a specified range of commodities exported

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Trade Intermediaries and Services

1. Customs Brokers Customs brokers are persons who act as agents for importers for activities involving transac­tions with the customs service concerning (1) the entry and admissibility of merchandise; (2) its classification and valuation; and (3) the payment of duties and other charges assessed by customs or the refund or drawback thereof. A customs

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Tax Deduction for Processing in Maquilas: Mere Assembly or Fabrication

The regulations of U.S. Customs and Border Protection (CBP) provide for de­duction of the costs of U.S. components or materials assembled abroad upon importation into the United States. In order to qualify for this exemption from duty assessment, the components must be exported in a condition ready for assem­bly without fabrication and have retained

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Import Penetration Rates in U.S. High-Value Industries: Focus on China

The U.S. trade deficit in goods and services declined from $560 billion in 2011 to $540 billion in 2012. This reflected a $16.8 billion improvement in the services trade surplus and a $2.7 billion improvement in the goods trade deficit. While the U.S. trade deficit in petroleum products declined, the deficit in nonpetro­leum goods

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