CONGRESSIONAL RECORD -- SENATE

February 21, 1968

Page 3834

EXPORT-IMPORT BANK ACT OF 1945 -- CONFERENCE REPORT

Mr. MUSKIE. Mr. President, I submit a report of the committee of conference on the disagreeing votes of the two Houses on the amendment of the House to the bill (S. 1155) to amend the Export-Import Bank Act of 1945, as amended, to shorten the name of the Bank, to extend for 5 years the period within which the bank is authorized to exercise its functions, to increase the Bank's lending authority and its authority to issue, against fractional reserves, export credit insurance and guarantees, and for other purposes.

I ask unanimous consent for the present consideration of the report.

The PRESIDING OFFICER. The report will be read for the information of the Senate.

The legislative clerk read the report, as follows:

The committee of conference on the disagreeing votes of the two Houses on the amendment of the House to the bill (S. 1155) to amend the Export-Import Bank Act of 1945, as amended, to change the name of the Bank, to extend for five years the period within which the Bank is authorized to exercise its functions, to increase the Bank's lending authority and its authority to issue, against fractional reserves, export credit insurance and guarantees, to restrict the financing by the Bank of certain transactions, and for other purposes, having met, after full and free conference, have agreed to recommend and do recommend to their respective Houses as follows:

That the Senate recede from its disagreement to the amendment of the House and agree to the same with an amendment as follows: In lieu of the matter proposed to be inserted by the House amendment insert the following:

"SECTION 1. The Export-Import Bank Act of 1945 is amended

"(a) By changing 'Export-Import Bank of Washington', wherever that name refers to the legal entity created by the Export-Import Bank Act of 1945, to 'Export-Import Bank of the United States'.

"(b) Section 2 of such Act is amended by striking subsection (b) thereof and by substituting in lieu thereof the following: "'(b) (1) It is the policy of the Congress that the Bank in the exercise of its functions should supplement and encourage and not compete with private capital; that loans, so far as possible consistently with carrying out the purposes of subsection (a), shall generally be for specific purposes, and, in the judgment of the Board of Directors, offer reasonable assurance of repayment; and that in authorizing such loans the Board of Directors should take into account the possible adverse effects upon the United States economy.'

"(c) Section 2(b) of such Act is further amended by adding the following at the end thereof

"'(2) The Bank in the exercise of its functions shall not guarantee, insure, or extend credit, or participate in any extension of credit

"'(A) in connection with the purchase or lease of any product by a Communist country (as defined in section 620(f) of the Foreign Assistance Act of 1961, as amended), or agency or national thereof, or

"'(B) in connection with the purchase or lease of any product by any other foreign country, or agency, or national thereof, if the product to be purchased or leased by such other country, agency, or national is, to the knowledge of the Bank, principally for use in, or sale or lease to, a Communist country (as so defined) except that the prohibitions contained in this paragraph shall not apply in the case of any transaction which the President determines would be in the national interest if he reports that determination to the Senate and House of Representatives within thirty days after making the same.

"'(3) The Bank shall not guarantee, insure, or extend credit, or participate in the extension of credit in connection with the purchase of any product, technical data, or other information by a national or agency of any nation

"'(A) which engages in armed conflict, declared or otherwise, with armed forces of the United States; or

"'(B) which furnishes by direct governmental action (not including chartering, licensing, or sales by non-wholly-owned business enterprises) goods, supplies, military assistance, or advisers to a nation, described in subparagraph (A) ; nor shall the Bank guarantee, insure, or extend credit, or participate in the extension of credit in connection with the purchase by any nation (or national or agency thereof) of any product, technical data, or other information which is to be used principally by or in a nation described in subparagraph (A) or (B).

"'(4) The Bank shall not guarantee, insure, or extend credit, or participate in an extension of credit in connection with any credit sale of defense articles and defense services to any country designated under section 4916 of the Internal Revenue Code of 1954 as an economically less developed country for purposes of the tax imposed by section 4911 of that Code. The prohibitions set forth in this paragraph shall not apply with respect to any transaction the consummation of which the President determines would be in the national interest and reports such determination (within thirty days after making the same) to the Senate and House of Representatives. In making any such determination the President shall take into account, among other considerations, the national interest in avoiding arms races among countries not directly menaced by the Soviet Union or by Communist China; in avoiding arming military dictators who are denying social progress to their own peoples; and in avoiding expenditures by developing countries of scarce foreign exchange needed for peaceful economic progress.

"'(5) In no event shall the Bank have outstanding at any time in excess of 7½ per centum of the limitation imposed by section 7 of this Act for such guarantees, insurance, credits or participation in credits with respect to exports of defense articles and services to countries which, in the judgment of the Board of Directors of the Bank, are less developed.'

"(c) By changing in section 2(c) of that Act, '$2,000,000,000 to read $3,500,000,000'.

"(d) By changing the last sentence in section 3(d) of that Act to read: 'Members, not otherwise in the regular full-time employ of the United States, may be compensated at rates not exceeding the per diem equivalent of the rate for grade 18 of the General Schedule (5 U.S.C. 5332) for each day spent in travel or attendance at meetings of the Committee, and while so serving away from their homes or regular places of business, they may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by section 5703 of title 5, United States Code, for individuals in the Government service employed intermittently.'

"(e) By changing, in section 7 of that Act, '$9,000,000,000' to read '$13,500,000,000'.

"(f) By changing, in section 8 of that Act, 'June 30, 1968' to read 'June 30, 1973'."

And the House agree to the same.

EDMUND S. MUSKIE, JOHN SPARKMAN, HARRISON WILLIAMS, JOHN TOWER,

BOURKE B. HICKENLOOPER, Managers on the Part of the Senate.

WRIGHT PATMAN, M. A. BARRETT, LEONOR K. SULLIVAN, HENRY S. REUSS, THOMAS L. ASHLEY, WILLIAM S. MOORHEAD, WILLIAM B. WIDNALL, PAUL A. FINO, FLORENCE P. DWYER, Managers on the part of the House.

The PRESIDING OFFICER. Is there objection to the present consideration of the report?

There being no objection, the Senate proceeded to consider the report.

Mr. MUSKIE. Mr. President, S. 1155 was passed by the Senate on August 11, 1967. On February 7 the House passed H.R. 6649, the companion bill to S. 1155, and then moved to strike all after the enacting clause in the Senate bill and substitute the House language.

Almost a year ago, identical companion bills were introduced in the House and Senate. The provisions of the bills as introduced were passed by both bodies virtually intact. It is in the restrictive amendments added by the Senate and the House that we find the relatively minor differences between the two versions of S. 1155 which the conference report now reconciles. It does so by accepting the House version of limitations on Exim bank support of arms sales to developing countries and support of exports to countries whose governments furnish goods or supplies to our adversaries, and by accepting the Senate amendments on exports to Communist countries and on the possible effect of Exim bank loans on the domestic economy and our balance of payments.

Both bills extend the life of the Bank by 5 years to June 30, 1973; increase its lending authority by $4.5 billion, to a total of $13.5 billion; raise by $1.5 billion, to a total of $3.5 billion, the ceiling on guarantees and insurance which can be done on a 25 percent fractional reserve basis; permit the Bank to compensate its Advisory Committee members at a higher rate; and change the name of the Bank to Export-Import Bank of the United States.

These are the provisions which were contained in the bills as originally introduced.

You will recall that the Senate added amendments which -- in the order they appear in the bill --require Exim bank to consider possible effects of its loans on the domestic economy and the balance of payments; restrict the Bank's support of U.S. exports to Communist countries; limit the Bank's financing of arms sales to developing countries; prohibit support of exports to countries with which the United States is engaged in armed conflict, or to other countries whose governments furnish goods or supplies to our adversaries; and prohibit Exim bank support of exports for use in a Soviet automobile plant.

The House bill contained only two amendments, one relating to arms sales, which is substantially similar to the Senate provision, and one relating to exports to or for use in countries with which we are engaged in conflict or countries supplying them, which is also substantially similar to the comparable Senate amendment. However, the latter House amendment is comprehensive enough in its language and practical application to preclude Exim bank financing of exports for a Soviet automobile factory.

With respect to arms sales, section (3) of the Senate version of the bill states as the policy of the Congress that the Bank shall not assist in financing, under a Department of Defense guarantee, credit sales of defense articles and services by the Government or by U.S. exporters, except when the President determines such participation would be in the national security interest and reports such determination to both the Senate and House within 30 days. The comparable House provision states that the Bank shall not participate in any credit sale of defense articles or services to any country designated as economically less developed for purposes of the interest equalization tax, except when the President determines such participation would be in the national interest and, as in the Senate version, so reports to the Congress within 30 days. The House provision, however, further requires that in making any such determination the President must take into account, "among other considerations, the national interest in avoiding arms races among countries not directly menaced by the Soviet Union or Communist China; in avoiding arming military dictators who are denying social progress to their own peoples; and in avoiding expenditures by developing countries of scarce foreign exchange needed for peaceful economic progress."

Both the Senate and House versions of the arms credit limitation place a ceiling, equal to 7½ percent of the Bank's total lending authority, on the amount of financing which may be outstanding at any one time in connection with such credit sale of arms. The House version of this amendment, adopted by the conference, thus covers the same ground as the Senate version, but is somewhat stronger in that it adds additional criteria which must be taken into account before the transaction can be consummated.

The Senate provision on arms sales, passed in August, would have to be revised in any event, since it refers to arms credits which are "guaranteed under section 503(e) and section 509(b)" of the Foreign Assistance Act of 1961, as amended. When Congress subsequently passed the Foreign Assistance Act of 1967 last November, those sections were not only renumbered but the Defense Department's guaranty authority itself was terminated effective June 30, 1968.

Turning to the amendments relating to Communist countries or countries trading with our enemies, you will recall that it is the Byrd amendment which prohibits Exim bank support of the export of any product to first, any nation with which the United States is engaged in armed conflict; or, second, any nation the government of which is furnishing goods or supplies to a nation with which we are engaged in armed conflict. It is the Mundt amendment which expressly prohibits the Bank from assisting exports to or for use in the construction of an automobile plant in the Soviet Union -- which of course means the proposed Fiat loan.

On the House side, the Fino amendment prohibits the Bank from supporting the export of "any product, technical data, or other information" to or for use in first, any nation with which we are

engaged in armed conflict, or second, any nation which furnishes “by direct governmental action (not including chartering, licensing, or sales by non-wholly-owned business enterprises) goods, supplies, military assistance or advisers" to any nation with which we are engaged in armed conflict. Since this version applies to exports which are "to be used principally by or in" the proscribed recipient countries, it covers the Fiat case.

The House amendment thus in effect incorporates the provisions of both the Byrd and the Mundt amendments in the Senate bill. It also clarifies the kinds of government involvement in the furnishing of goods or assistance to our adversaries which are intended to be covered by the amendment. Members will recall that this was an area of some concern during debate on the Byrd amendment last year. As I have said, the House version clearly covers such transactions as the Fiat case, but in my opinion would not include, for example, countries in which the governmental involvement is limited to such matters as the issuance of export licenses, sales by business enterprises not wholly owned by the government, or the use of privately owned vessels registered under its laws to transport non-government cargoes. The restriction would cease to have effect after hostilities cease, or after a particular government stops sending goods or assistance to our adversaries.

The conferees have adopted the House version of this restriction.

Section (c) of the Senate bill prohibits the Bank from supporting U.S. exports to or for use in any Communist country, except when the President determines such support to be in the national interest and reports such determination to Congress within 30 days. Although there was no identical provision in the House version, the Fino amendment outlined above clearly prohibits Exim bank support of exports to or for use in all Communist countries, except Yugoslavia, for the duration of the Vietnamese conflict or, in the case of individual Communist countries, until the government stops supplying North Vietnam. Nevertheless the conferees have written into the conference bill section (c) from the Senate bill. We did so because we believe that after the termination of hostilities, when the Fino restriction would cease to be operative, the extension of Exim bank support of exports to Communist countries should be subject to a Presidential policy decision. This amendment, of course, is patterned after a similar limitation which has been included annually for the past 5 years in the Export-Import Bank portion of the Foreign Assistance and Related Agencies Appropriation Act.

There is only one other difference between the Senate and House versions of S. 1155, and that is that the House version contains no provision comparable to the so-called Holland amendment in the Senate bill. This provision expresses as the policy of the Congress that in making loans the Bank's "Board of Directors should take into account the possible adverse effects upon the U.S. economy and the desirability of safeguarding the international balance-of-payments position of the United States."

The conferees have included an amendment which provides that in making loans the Bank's "Board of Directors should take into account the possible adverse effects upon the U.S. economy." The Senate conferees did not insist upon the reference to the international balance-of-payments position in view of the assurances received in a letter dated February 16 from Mr. Harold F. Linder to the chairman of the committee, the Senator from Alabama [Mr. SPARKMAN].

I ask unanimous consent that a copy of the letter be printed in the RECORD.

There being no objection, the letter was ordered to be printed in the RECORD, as follows:

EXPORT-IMPORT BANK OF WASHINGTON,

Washington, D.C.,

February 16, 1968.

Hon. JOHN SPARKMAN,

Chairman, Committee on Banking and Currency,

U.S. Senate,

Washington, D.C.

DEAR Mr. CHAIRMAN: You will recall that last August when the Senate passed S. 1155, an act to amend the Export-Import Bank Act of 1945, as amended, it adopted an amendment which states as the policy of the Congress that in authorizing loans Eximbank's "Board of Directors should take into account the possible adverse effects upon the United States economy and the desirability of safeguarding the international balance of payments position of the United States".

No comparable provision was adopted by the House in its consideration last week of the companion bill to S. 1155. I understand that in the interest of expediting final enactment of the bill you may propose that the Senate adopt the House passed version of S. 1155, which would result in the omission of this amendment from the bill as finally passed. I wish to assure you, on behalf of the Board of Directors of the Bank, that if this should happen the Board would nevertheless adhere to the policy expressed in this amendment.

Sincerely yours,

HAROLD F. LINDER.

Mr. MUSKIE. Mr. President, the provisions of S. 1155 as recommended by the committee of conference include the substance of all of the provisions contained in the legislation as it passed both the Senate and the House. The provisions in the conference bill clarify the language and intent of the restrictions adopted by the Senate and otherwise strengthen the bill.

For these reasons, I move that the Senate adopt the conference report on S. 1155.

The PRESIDING OFFICER. The question is on agreeing to the conference report.

The report was agreed to.