US slams India, China, Brazil’s ‘Wild West’ export financing.

New York: US Export-Import Bank Chairman Fred Hochberg said American manufacturers could lose out on exports if the US didn’t take the lead in writing global rules for export financing to rein in “unregulated” and underground state financing from countries like India, China and Brazil.

“Export finance is increasingly like the Wild West, where rules are loosely followed, if at all,” a belligerent Hochberg told the Center for American Progress on Monday.

“America needs to lead the world in developing a new framework,” he added.

Hochberg released the Ex-Im Bank’s 2012 Competitiveness Report where it examined government export credit practices around the world. It said it found a “stunning increase” in the amount of export credit agency financing that is happening “underground and in the dark.”

The report has been produced for the US Congress and is designed to get lawmakers to press for a new international pact to curb guerilla export financing practiced by countries around the world.

In 1978, the developed country club known as the Organization for Economic Cooperation and Development, or OECD, established guidelines for government export credit agencies which are out of date, said Hochberg.

“Ex-Im Bank estimates that in 2011 there was roughly $100 billion in unregulated OECD export financing and an additional $60 billion from Brazil, India, and China,” Hochberg said.

Hochberg said that unlike other countries, the US Ex-Im Bank only provides loans, guarantees and insurance to help overseas companies buy US products. But other government credit agencies loosen their purse strings to promote any number of long-term national interests. He said they spent money to secure increased access to natural resources, future inbound investment, and other strategic interests.

“It’s a wink and a nod. Finance now for future benefits,” Hochberg said as he gave an example of the Japanese softening up India.

“Japan’s Exprt Credit Agency delivered $200 million to India to finance clean energy projects, with the expectation that more Japanese technologies will eventually be used by India,” said Hochberg.

For all its bitter complaining about the aggressive practices of export import banks in other countries, the US Ex-Im Bank approved a record $32.7 billion in financing in 2011, with about $11 billion for sales of Boeing aircraft.

In fact, the US Ex-Im Bank has approved $1.3 billion in loan guarantees and $2.1 billion in preliminary commitments to support the sale of Boeing planes to Air India, including 27 Boeing 787s for delivery by 2015.

Hochberg has indicated earlier that India is likely to emerge as the largest market for the US Ex-Im Bank in the next 12-18 months. It has already committed $7 billion to India while it providing Mexico with $8.5 billion in financing.

The Congress recently signed a reauthorization bill raising the US Ex-Im Bank’s credit exposure cap to $140 billion, from $100 billion.

Source : firstpost.com