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Before the Subcommittees on Oversight and Investigations and 
International Monetary Policy and Trade, Committee on Financial 
Services, House of Representatives: 

United States Government Accountability Office:

For Release on Delivery: 
Expected at 4:00 p.m. EDT: 
Wednesday, September 29, 2010: 

Export Promotion: 

Observations on the Export-Import Bank's Efforts to Achieve U.S. 
Policy Goals: 

Statement of Loren Yager, Director:
International Affairs and Trade: 


[End of section] 

Mr. Chairmen and Members of the Subcommittees: 

Thank you for the opportunity to appear today before the subcommittees 
to provide our perspective on the role of the U.S. Export-Import Bank 
(Ex-Im) in promoting exports and achieving other U.S. policy goals. As 
Congress considers policies to achieve more robust growth in the U.S. 
economy, it must consider the full range of tools available to further 
growth and create new jobs for U.S. workers. Some of these tools are 
related to promoting exports, which can have broad benefits to the 
U.S. economy. As the official export credit agency of the United 
States, Ex-Im has a key role in helping many U.S. firms achieve sales 
in foreign markets. In addition to establishing Ex-Im's broad mandate 
of supporting U.S. employment through exports, Congress has laid out 
specific, targeted goals for the bank in areas such as increasing 
financing for environmentally beneficial exports and expanding 
services to small and minority-owned businesses. 

Today, I will provide some broad observations regarding Ex-Im's 
contribution to the export promotion goals announced in the 
President's National Export Initiative. I will also describe progress 
Ex-Im has made in achieving the specific targets set by Congress, as 
well as some challenges the bank faces in meeting those targets. In my 
statement, I will also provide some background information concerning 
the ways in which exports can enhance U.S. economic output, and I 
would be happy to provide insights from our recent work on other key 
agencies' export promotion efforts. 

These observations are based on a range of work that we have conducted 
for Congress over recent years on Ex-Im as well as on the numerous 
other U.S. agencies involved in export promotion.[Footnote 1] We 
conducted this work in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a 
reasonable basis for our findings and conclusions based on our audit 


The President's National Export Initiative has put forth an ambitious 
goal of doubling exports in the next 5 years. Ex-Im has been 
identified as having a key role in the initiative, and a recent 
administration report identifies a number of specific actions for Ex-
Im. Our work on Ex-Im's financing with respect to small business found 
areas where Ex-Im needed to improve its data systems for accurate 
reporting as well as its tracking of efforts to increase small 
business financing. Regarding Ex-Im's environmentally beneficial 
exports financing, we found that the bank could benefit from more 
consistently following strategic planning practices. Ex-Im has taken a 
number of steps in response to GAO recommendations, but opportunities 
for improvement remain. Additional attention to these issues will 
enable Ex-Im to develop better communication with Congress and other 
stakeholders regarding the balance between the small business and 
environmental export targets and the broader priorities in the 
National Export Initiative. 


Ex-Im's mission is to support U.S. exports and jobs by providing 
export financing on terms that are competitive with the official 
export financing support offered by other governments. It had about 
350 full-time staff positions in fiscal year 2010. Between fiscal 
years 2003 and 2008, Ex-Im authorized financing averaging $12.8 
billion annually. In fiscal year 2009, Ex-Im had a record year, 
financing more than $21 billion in 2,891 authorizations. Since fiscal 
year 2008, Ex-Im has been "self-sustaining" for appropriations 
purposes, financing its operations from receipts collected from its 

Exports, and trade more broadly, contribute to the U.S. economy in a 
variety of ways. Trade enables the United States to achieve a higher 
standard of living by exporting goods and services that are produced 
here relatively efficiently and importing goods and services that are 
produced here relatively inefficiently. An indication of this is that 
firms engaged in the international marketplace tend to exhibit higher 
rates of productivity growth and pay higher wages and benefits to 
their workers than domestically oriented firms of the same size. U.S. 
exports of goods grew from $820 billion in 2004 to $1.30 trillion in 
2008, and were $1.1 trillion in 2009.[Footnote 2] 

In addition to the longer-term benefits of trade and exports, exports 
can serve as a countercyclical force for the U.S. economy--that is, 
strengthening the economy when other parts of it are relatively 
weaker. For a number of years, as the United States increasingly 
imported more than it exported, the U.S. economy was an engine of 
growth for other nations. In contrast, from December 2007 through June 
2009--what has been officially labeled a recession period--U.S. 
economic growth was boosted by an improving trade balance. More 
recently, strong U.S. exports have been outpaced by import growth. 

The National Export Initiative Sets Ambitious Goals for Increasing 
U.S. Exports and Contains a Key Role for Ex-Im: 

The President created the National Export Initiative on March 11, 
2010, with an ambitious goal of doubling exports in the next 5 years 
to support job creation. To facilitate achieving this goal, the 
National Export Initiative established an Export Promotion Cabinet 
that includes Ex-Im as well as 15 other agencies and executive 
departments. On September 16, 2010, the White House released a report 
on the initiative that provides an overview of progress made and lays 
out a plan for reaching the President's goal. 

Ex-Im has a critical role to play in one of the report's priority 
areas--increasing export credit. The report identifies several actions 
for Ex-Im. They include, for example, launching new products designed 
to ensure credit is available to small and medium-sized enterprises 
(SME); focusing efforts on high-potential industries such as medical 
technology, renewable power, and transportation; increasing the number 
and scope of partnerships with financial intermediaries; and 
introducing a simplified application for credit insurance. GAO has not 
evaluated the report or other aspects of the National Export 
Initiative, but would welcome the opportunity to continue its work 
with the Congress on oversight of these efforts. 

Congress Has Set Targets Regarding the Composition of Ex-Im's Export 

GAO has reported on Ex-Im's efforts to achieve specific targets set by 
Congress regarding the composition of Ex-Im's export financing. For 
example, Congress has shown interest in the level of financing Ex-Im 
provides to small businesses, including those owned by women and 
minorities, and Ex-Im's efforts to increase that financing. Congress 
has also given Ex-Im directives regarding the share of its financing 
for environmentally beneficial exports, including renewable energy. 

Congress Has Asked Ex-Im to Increase Financing for Environmentally 
Beneficial Exports: 

Congressional interest in Ex-Im's financing of environmentally 
beneficial exports span many years. In 1989, Congress directed that Ex-
Im should seek to provide at least 5 percent of its energy sector 
financing for renewable energy projects and should undertake efforts 
to promote renewable energy. In 2008, Congress directed Ex-Im to 
provide not less than 10 percent of its annual financing for 
environmentally beneficial exports; in 2009-2010, Congress narrowed 
the targeted environmentally beneficial categories.[Footnote 3] 
Congress has also required Ex-Im to develop a strategy for increasing 
its environmental export financing, and to report on this financing 
and how the bank tracks it. 

GAO recently reviewed Ex-Im's environmentally beneficial export 
financing and its efforts to meet congressional directives in this 
area.[Footnote 4] We found, first, that Ex-Im had fallen far short of 
achieving the 10 percent environmentally beneficial financing targets 
set by Congress. However, we also found that Ex-Im's financing for 
renewable energy has recently increased; the level of renewable energy 
financing in the first two quarters of fiscal year 2010 exceeded its 
renewable energy financing for all of fiscal year 2009, which in turn 
represented a large increase over 2008 financing. 

We also reported that Ex-Im needs to further clarify its definitions 
and improve its reporting on environmentally beneficial exports. For 
Ex-Im, the term "environmentally beneficial exports" constitutes an 
overarching category that includes renewable energy, energy efficiency 
exports including energy efficient end-use technologies, and a mix of 
other products with beneficial effects on the environment. Ex-Im 
recently sought to clarify its definitions of energy efficiency 
exports by publicly providing examples of products it considers to be 
in that category, and it began to track its financing for those 
exports in its internal data. However, the examples Ex-Im released do 
not clearly identify which energy efficient end-use technologies would 
count towards their 10 percent financing target. Given the 
congressional interest in financing in this area, it is important that 
Ex-Im be as clear as possible in its application of terms to 
facilitate communicating financing goals to potential exporters and 
others and communicating progress in meeting targets to Congress. GAO 
recommended that Ex-Im develop and provide clear definitions for its 
subcategories of environmentally beneficial exports and report 
annually on the level of financing for each of the subcategories. 

We reported that while Ex-Im has taken steps to increase financing for 
environmentally beneficial exports, it could benefit from more 
consistently following strategic planning practices such as involving 
stakeholders and realigning resources. Ex-Im routinely shares 
information with stakeholders such as other U.S. agencies and lending 
institutions, but has not generally involved them in communicating 
goals or discussing strategies for achieving them. Ex-Im has 
considered reorganizing some staff into more focused teams to target 
priority industries and countries, but this effort has not included an 
analysis of the resources required to accomplish the goal of 
increasing certain types of environmentally beneficial exports. On the 
other hand, Ex-Im has taken some steps to assess factors that affect 
its financing of environmentally beneficial exports such as conducting 
analysis of the renewable energy markets to identify the best sectoral 
and geographic opportunities for Ex-Im financing. In order for Ex-Im 
to provide valuable information for the Congress and key stakeholders, 
GAO recommended that the bank consistently implement key practices for 
effective strategic planning, including clearly communicating the 
bank's priorities for increasing financing of renewable energy and 
energy efficient end-use technologies to both internal and external 
stakeholders. Ex-Im agreed with our recommendations and stated that it 
would strive to implement them promptly. 

Small Business Exports Are a U.S. Trade Priority, and Congress Has 
Required Ex-Im to Provide a Certain Level of Support for These Exports: 

Promoting exports by small business has been a long-time priority of 
Congress as well as the executive branch, given these exports' role in 
generating growth and employment. While many small businesses export, 
it is widely recognized that they face a number of challenges in 
exporting. For example, they typically do not have overseas offices 
and may not have much knowledge regarding foreign markets. Export 
promotion agencies have developed various goals with respect to their 
small business assistance, and in some cases Congress has mandated 
specific requirements for supporting small businesses. 

Since the 1980s, Congress has required that Ex-Im make available a 
certain percentage of its export financing for small business. In 
2002, Congress established several new requirements for Ex-Im relating 
to small business, including increasing from 10 to 20 percent the 
proportion of Ex-Im's aggregate loan, guarantee, and insurance 
authority that must be made available for the direct benefit of small 
business. When reauthorizing the bank's charter in 2006, Congress 
again established new requirements for Ex-Im. These included creating 
a small business division with an office of financing for socially and 
economically disadvantaged small business concerns and small business 
concerns owned by women, designating small business specialists in all 
divisions, creating a small business committee to advise the bank 
president, and defining standards to measure the bank's success in 
financing small business. 

For the past 4 fiscal years--2006-2009--Ex-Im has met the 
Congressional requirement to make available not less than 20 percent 
of its financing authority for small businesses. Percentages have 
ranged from almost 27 percent in fiscal year 2007 to about 21 percent 
in fiscal year 2009. The financing amount for small business was 
actually highest in 2009, given Ex-Im's overall record financing that 
year. In fiscal years 2002-2005, Ex-Im did not reach the goal, with 
its small business financing share ranging from 16.9 percent to 19.7 

GAO has reported on several aspects of Ex-Im's financing for small 
business exports. In 2006, we identified weaknesses in Ex-Im's data 
systems for tracking and reporting on its small business financing and 
made recommendations for improvement.[Footnote 5] Ex-Im has 
implemented those recommendations. For example, Ex-Im moved to an 
electronic, web-based process that allows exporters, brokers, and 
financial institutions to transact with Ex-Im electronically. This 
contributed to more timely and accurate information on Ex-Im's 
financing, and thus a greater level of confidence in Ex-Im's reporting 
on its efforts relative to congressional goals. 

More recently, we reported on the performance standards that Ex-Im 
established for assessing its small business financing efforts. 
[Footnote 6] We found that Ex-Im had developed performance standards 
in most, although not all, of the areas specified by Congress, ranging 
from providing excellent customer service to increasing outreach. We 
also found that some measures for monitoring progress against the 
standards lacked targets and time frames, and that Ex-Im was just 
beginning to compile and use the small business information it was 
collecting to improve operations. 

GAO made several recommendations to Ex-Im for improving its 
performance standards for small business. Ex-Im has provided to GAO 
information on actions and specific steps it is taking to implement 
certain of these recommendations. For example, Ex-Im has identified 
targets for reducing the average turnaround time for processing 
certain types of small business transactions. GAO looks forward to 
continuing to work with Ex-Im in documenting that the recommendations 
have been implemented. 


Mr. Chairmen, the National Export Initiative has focused the spotlight 
on U.S. agencies that assist U.S. exporters as a way of expanding 
economic growth and creating jobs in the United States. As the 
nation's export credit agency, the Export-Import Bank is a key part of 
the initiative, and there are a number of detailed initiatives related 
to export credit in the report that was released on September 16, 
2010. However, the goal of doubling U.S. exports in 5 years is an 
ambitious goal and would require not only increased activity by 
agencies such as Ex-Im but also increases in demand in key nations 
around the world. 

This heightened emphasis on overall exports and increasing the level 
of Ex-Im financing takes place in the context of specific 
congressional directives regarding the composition of that financing. 
Our work on Ex-Im's financing with respect to small business--
including minority and women-owned businesses--and environmentally 
beneficial exports has demonstrated that substantial steps have been 
taken, and Ex-Im continues to face substantial challenges. While Ex-Im 
has had more success in achieving the congressional targets for small 
business than for environmentally beneficial exports, opportunities 
remain for a more strategic use of resources and for better 
communication with Congress and other stakeholders. More broadly, Ex-
Im faces the challenge of contributing to the doubling of U.S. exports 
along with meeting other congressional requirements, including 
operating at little or no cost to the taxpayer. How any sharp increase 
in Ex-Im financing levels will affect specific targets we have 
described is not clear, and is likely to be an area requiring further 
discussion on how to balance these overall priorities. 

Chairman Moore, Chairman Meeks, Ranking Member Biggert, and Ranking 
Member Miller, this concludes my prepared remarks. I appreciate the 
opportunity to discuss these issues with you today. I would be pleased 
to respond to any questions you or other members of the subcommittees 
may have at this time. 

For further information about this testimony, please contact Loren 
Yager at (202) 512-4347 or by e-mail at Contact points 
for our Offices of Congressional Relations and Public Affairs may be 
found on the last page of the statement. Individuals who made key 
contributions to this testimony include Celia Thomas, Shirley 
Brothwell, Karen Deans, Emily Suarez-Harris, Richard Krashevski, 
Justine Lazaro, Valerie Nowak, and Jennifer Young. 

[End of section] 


[1] See, for example, GAO, Export Promotion: Increases in Commercial 
Service Workforce Should Be Better Planned, [hyperlink,] (Washington, D.C.: Aug. 31, 
2010); GAO, Export-Import Bank: Reaching New Targets for 
Environmentally Beneficial Exports Presents Major Challenges for Bank, 
[hyperlink,] (Washington, D.C.: 
July 14, 2010); GAO, International Trade: Effective Export Programs 
Can Help in Achieving U.S. Economic Goals, [hyperlink,] (Washington, D.C.: Mar. 17, 
2009); GAO, Export-Import Bank: Performance Standards for Small 
Business Assistance Are in Place but Ex-Im Is in the Early Stages of 
Measuring Their Effectiveness, [hyperlink,] (Washington, D.C.: July 17, 
2008); GAO, Export Promotion: Export-Import Bank Has Met Target for 
Small Business Financing Share, [hyperlink,] (Washington, D.C.: Jan. 17, 
2008); and Export-Import Bank: Changes Would Improve the Reliability 
of Reporting on Small Business Financing, [hyperlink,] (Washington, D.C.: Mar. 3, 

[2] Service exports were an additional $502 billion in 2009. 

[3] For each of fiscal years 2009 and 2010, Congress specified a 10 
percent target for Ex-Im financing but changed the targeted exports to 
renewable energy technologies or energy efficient end-use technologies. 

[4] [hyperlink,]. 

[5] [hyperlink,]. 

[6] [hyperlink,]. 

[End of section] 

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