How many American corporations engage in exports we'd like to think a lot of them? We think cording to Commerce Department's surveys are about 44,000 corporations in the United States, but make products or provide services that could be in the export world. But last year in the bank we did business with slightly over 2,500 companies. So not very many companies are really engaged in the export business. Now, we don't serve all of them any companies go directly to their Banks or foreign banks finance imports from u.s. Corporation so that we do not become involved at all, but I would sayThat about 80% of all u.s. Exports including grain Machinery Transformers nuclear power plants anything that we export out of this country. Is done by 250 American corporations and 50% of all our exports are done by only 100 American corporations. So they're not very many involved many employees, but not very many corporations. How do we make out on trade? Are trade last year? As Pat explain was in a deficit State the same as it's been for the past three years over 20 billion dollars. We exported about a hundred and eighty billion dollars, but we imported about 204 billion dollars last year oil imports alone accounted for something in the neighborhood of 60 billion dollars. And if we hadn't had the oil import deficit we would have had a positive trade balance on our exports give you an idea of how this is increased since 1960. Our share of World Trade is dropped from 20.7% that year to only 13.7% in 1977 and in 1978 recovered slightly to 14.1% Our exports went up in 1960 from 20.6 billion to 180 billion in 1979. But then the reverse side of the coin we began to import more. We falling in love for example with foreign automobiles. We import about 25% of all the cars now that we buy in this country and this provides a tremendous trade imbalance in that particular area. We buy a lot of Steel about 5 million 5 billion dollars of Steel and Foundry products now overseas. For the first time in our history in the last couple of years. The Machine Tool industry, which has sold record amounts of Machine Tools overseas has also seen the United States import just about as many Machine Tools as we have export for the first time. We never even came close to that position before. On the other side of the fence. We do have some positive things going for us. We still export more agricultural products by far than we import and that's the biggest single facet in our trade balance that is positive. The next biggest thing is machinery and finally aircraft last year and aircraft alone. We exported about 8.5 billion dollars more commercial aircraft and executive aircraft than we imported into the United States. Now getting back to the bank. We operate as a part of the federal budget and I think that's kind of unfortunate because being a self-sustaining institution we should be able to borrow money pay it back and not be counted against the foreign aid assistance program overthrown in with the World Bank the aid program and things like this because we're neither the World Bank nor are we in a program? We don't give our money away. We make credit studies of our customers. We fully expect and are mandated to be sure they are credit-worthy before we do lend the money. We also try to make a positive negative impact study of every major lonely make to determine that the short-range results of making the loan or not going to be offset by some big negative disadvantage of something going to be built in another country and brought back into the United States, and we've been very careful to do that. Our budget for 1979 are direct loan budget was 3.75 billion dollars not to show you how fast this is grown and how the demands on the bank of increased this figure in fiscal year 1977 was only 747 million dollars. So it's grown fivefold. We used every cent of our 1979 direct loan budget. On top of that. We had other programs supplier credit programs that I explained earlier that accounted for another bass quantity of US exports between the Direct Loan program and the supplier credit program in fiscal year 1979, which ended on September 30th 1979. We supported about 13.6 billion dollars. Of all of the US exports in this accounted for about 7% of all total exports including grain and things of that type and approximately 18% of all the capital goods exports from the United States. Are 1980 budget is still in a quandary as to what we're going to do here? We are more than four months into the 1980 fiscal year and we're operating on a joint resolution of Congress to extend the same authority to us that we had in 1979 until the 1980 fiscal year budget can be resolved the house the OMB in the Treasure have agreed to give us 4.1 billion dollars a direct loan Authority plus some increases in our supplier credit Authority. The Senate has voted to give a 6 billion dollars of thorny, which is more nearly what we're going to require. We think this is going to get resolved sort of halfway in between like things like this seem to get resolved and the actual effect on the federal budget will be almost minimal something like 71 million dollars for everybody in dollars that we do get an extra thori. So it's very small because we start to pay back rather rapidly on especially in our short-term programs. Now what's what's out on the horizon for us? We believe in 1980 and we're already seeing much of it. There were going to be called upon to support about 15 to 16 billion dollars of US exports. In many cases were the only game in town the US export who wants to sell for example equipment for a new plant in a developing country can't really get support from his local bank Regional Bank or national bank because they can only lend money at floating interest rates that usually run somewhere around 15 or 16% They're not willing to make fixed-rate loans foreign buyers in developing countries are being offered financing by all of our competitors around the world at rates that are even better than ours. And as long as they stay within the organization of economic cooperation development guidelines of seven and a half percent minimum interest 85% maximum cover a 15% cash down payment and certain terms for certain things like 10 years for airplanes 10 years for nuclear power plants plus the time of construction and things like that. We do not complain officially. But it's difficult to compete when you only can offer Commercial Bank rates against such financing. So we're finding more and more that we're providing more of the cover and buy cover the amount of the The financing that is required to sell the product. Last year, we averaged 63% that men of every hundred percent every dollar of the US exports that we did get involved in. We provided 63% of the financing for that. And the rest of it was a mixture of private Banks or cash or something else this year. The figure is still running over 60% but in 1977, it was clear down to 47% and in years ahead of that it more was more like forty two and a half percent. So here we are with more demands on the money and more difficult to get our hands on money that we need to help the US exporter. We support exports We believe and we've made some pretty strong surveys that for every billion dollars worth of US exports. You're going to support about 50,000 jobs in the United States either directly or once removed in the service Industries. And so on that support a plant or something like that producing the products that were financing so that if we supported close to fourteen billion dollars of exports were talking about 700,000 jobs or about one and every 9 or 10 jobs in the United States is involved in the export market now, we don't we don't do all the financing as I said of all the US exports. We only did 7% of them private banks in the United States continue to do some they also did 7% last year foreign Bank countries buying our exports supported about 42% of our exports and cash and barter did the rest accounting for the balance of the hundred percent. LOL, we're not the whole game in town where the only game if you really want to be competitive and you're trying to sell something big to another country. We used to be able to sell around the world merely because we had better technology than everyone else. We also had a lot of products are there other countries didn't make but this is not true anymore. The United States does not make a better automobile. It does not make a better steel mill or a textile plant or an orange juice processing plant or any number of things. I could recite the only things today that we seem to have a technological lead in anymore is in certain types of aircraft and we're losing even this late or computers things like you make here in Minneapolis things of this type, but very few things of that ever come before the board. Mostly what are board sees are the things are commonplace that developing countries want to set up Industries and so forth farm tractors steel mills textile mills things of this type sugar Mills and so on we do not have a lead in this so we know we don't have the Leverage To enforce our will around the world and I think we're finding that out more and more that we better get on the ball and get our research and development going again to begin to develop new families of products get leadership back that we once held because we're rapidly losing it for tickly to countries like Germany and Japan and France. These countries are also difficult to compete with in the financing world because they don't always follow the rules of the oecd. They will mix Aid programs with oecd programs. In other words officially supported financing. They'll mix it with some sort of a government aid program. We find this particularly among the French in their former colonies in Africa, Tunis Algeria Nigeria places of this type where they don't mix AA Practically a gift with maybe fifty or sixty percent financing according to the official rules that we all abide by with 24 other countries of the world. And this is tough to find out when they're doing it and it's tough to compete with it and you maybe don't even learn about it until you've lost a job that your us competitors are trying to sell. We tried to meet some of those conditions more and more but having a mandate that we must be a self-sustaining institution. We can only use our profits in so far as matching this competition until we begin to get into a negative position in the bank and then I'm wondering what Congress is going to do. Are they going to say continue on being aggressive? Are they going to say pull back and let the other fellow I have the business? Exports are not as important to the United States as they are other countries and just to recite a couple of figures in 79 US exports were about 9.4% of our gross national product in this country in Japan. This figure was 12% in France 19% And in Germany 27% in Canada, it's more like 25% We're talking about an export Market potential of about 1.2 trillion dollars and that's a thousand billion dollars in 1979 and that excludes the Imports of 200 billion into the United States owe. You got a pretty big Market that you're all trying to take and wind from the other guy. No, I want to mention three issues that are seriously affecting the bank beside the fact that we don't have the leverage around the world in trade that we once had we no longer have a leading technology in major items that we are exporting. We have a problem with the protectionist issue and it's a natural outcome of some of these things. For example, we financed a and expansion of a steel mill in Taiwan in the past several months 250 million dollars of us equipment immediately the steelworkers of America the American Iron and steel Institute was in which is an organization of the 94 large steel producing companies in the United States and many of the steel companies themselves complained about our financing this when they couldn't buy equipment for their own plants in this country at the same interest rates and so forth. There was another side that nobody bothered to take a look at and that were required by law to take a look at there's a whole group of companies in the United States an engineer steel mills and build equipment for steel mills. And if they don't have steel mills to build in the United States because the steel industry here is not expanding is not modernizing to the extent that probably it should then to keep up-to-date with technology and to keep their people employed. They have to bid these jobs overseas when they do bid them. They build them in competition with Germany, Japan England, France, Italy and Switzerland of the typical countries that we compete against for steel mill technology and equipment. In this particular case the Germans and the Japanese were competing for the steel mill expansion in Taiwan. This is one country that really owes the United States. In fact, we don't even consider it a country. It's a nonentity as far as we're concerned now, but we still do business and do a lot of business with Taiwan Taiwan sell so much to the United States that there's a trade imbalance in favor of Taiwan. So we use political pressure in a way to get them to buy goods from the United States and services this case. We finally won not because we were providing better technology not because we were providing any more than reasonably competitive financing. We won partially on the basis that we finally convinced them that it's good business to buy more from us because we're buying so much from you. We don't have very many of those kind that we can sort of put the arm on to do that sort of thing. But getting back to the steel mill argument. Another thing that developed in the discourse on this subject was the fact that a major United States Steel Corporation has provided the technology and it provided the engineering and the construction management for the steel mill expansion in Taiwan only in the first phase. But in this new phase it's now going on and therefore they were one of the ones that they weren't complaining they were keeping silent on the matter, but their Institute that was representing them didn't say a word about that when this was all brought before the president before the Congress will finally I did the thing died down when we pointed out both sides of the positive negative impact. We went ahead and made the loans and there was no more heard from them, but I'm sure the next time When we Finance one in Mexico or Finance one in Brazil or somewhere else the same issue will come up when you see plants in the United States being shut down because they're not modern anymore. They can't compete and new plants built around the world. It's a big question. Should we help Finance those plants which are going to be built with or without us or should we go ahead and just ignore the market and lose the potential sale of the export. I'm one for example that came from a company that designed and built steel mills around the world in many many countries and I say go for the export because it's going to be built anyhow, but the protectionist issue is a growing one and it's a major problem. or increasing US exports abroad the second issue is the Environmental issue. I don't know how many of you here are about environmentalist. I like to see the air clean. I like to see everything safe. I want to be sure that when a nuclear power plant in Minnesota is operated. It doesn't endanger the people in Minneapolis and so on but I say all of these Technologies are under development. Boiler still Ball blow up in coal-fired Steam plants or an oil-fired plants if they're not properly maintained and if the people aren't properly trained to run them. Same is true of a nuclear plant. If people aren't properly trained and dedicated to what they're doing. Then we're going to have nuclear accidents. These can be prevented by proper training by proper indoctrination of the people and buy a proper understanding of what's going on in nuclear power field. The XM bank has financed 52 nuclear power plants around the world, which is not very far short of the 60 some power plants in operation in this country, but we've gone through this syndrome now and I won't I shouldn't use that word because it gets too familiar with The China Syndrome, which I thought was a very exciting and interesting Movie 2. But we're having difficulty for example getting licenses for nuclear power plants that we want to finance around the world in General Electric combustion engineering Westinghouse. Babcock & Wilcox are really not making very many sales these days outside the United States let alone inside the United States. Are we going to keep our technology up-to-date? How are we going to compete in the long run with France, which is developed a very sophisticated nuclear industry. In fact France has an operation now and is expanding a nuclear fuel processing facility the equivalent of Oak Ridge, Tennessee. They are now out not only bidding for the plants, but they are bidding for the fuel and if we don't wake up pretty soon and get our act together. We're going to lose this business. Anyhow, de France Japan and Germany who are all active in this field of providing components for nuclear power plants. I'm not saying one way or the other that we should really go all out on nuclear power. But if we're going to do anything, this is one of the big items of dollar value of US exports that can provide many many jobs in the United States as well as relieve the world's oil shortage and is probably the quickest way to do that and get us out from under the thumb of the OPEC countries. The environmental issue gets so ridiculous. Sometimes that the bank was sued in 1977 by a couple of environmental groups in the United States over are having Finance the railroad in a country called Gabon in Africa. Here are the right away the building of the right away. The railroad was supposed to interfere with alliteration of a rare species of crocodile. And after taking one look at a crocodile and a zoo. I couldn't really care less whether it was interfered with or not. But in this case, we were sued and the suit against the five board members in the bank was a well-written suit by the plaintiff many many pages, and it was to be heard in a federal court in the District of Columbia. Well this issue got so overheated over this case and others that finally it came up in our 1978 extension of our Charter every five years we go back to the government Congress and they have to extend our Charter for another five years and this languished for many many months over this environmental issue. In fact, we almost didn't get our Charter extended and the bank would have gone out of business. Finally the president United States invoked his rights and he issued an executive order which allowed XM bank and other any other agencies of government which do business overseas to an effect write their own regulations as to win or were they when they will or will not do environmental impact studies in regard to loans to foreign countries. It's kind of difficult when you're competing with other countries of the world that have equal technology in most of the things we sell for us to impose our EPA regulations on a country that wants to buy say a new Mill for let's say is steel mill. We know today no country is going to put a male in that doesn't have Environmental Protection equipment in it, but maybe they don't want to carry to the extent that we do with 99.3% collection. Well, we do now decide among ourselves when we do make an impact study or not accepting cases of nuclear power plants or in the case of 20, irritant or toxic toxic chemicals or materials such as asbestos Mercury Vinyl chloride things of that type. And we're sure to be sued again. But at least we're beginning to get the ground straighten out a little bit and get the ground rules so that we know a little better what to do with this environmental issue. I give you one example of a job that it cost the United States in the project went ahead. Anyhow, we refused to finance while we were going through this controversy a power plant in Mexico a coal-fired power plant 12 miles from the Texas border because the winds during much of the Year prevailed toward the United States toward, Texas 12 miles away. EPA said we had to have an assurance that they would provide dust collection of 99.3% the standard EPA figure. They had bids from other countries that were providing 96% and I'm not sure you can tell the difference between 99.3 and 96 looking at a stack. But of course there will be a little more admission at the at the lower figure of collection. We lost that job to Sweden which had the capability to build the plant and they had numerous bids. So the plant is Bill anyhow, and it is in operation. It is emitting the extra 4% to the state of Texas one way or the other whether we like it or not. We did not share in the export of all that equipment in that plant was worth about 250 million dollars now should we or shouldn't wait but that's kind of questions to come before the board all the time. The other thing we get into constantly is an argument about human rights. I believe in human rights, I believe in freedom of speech and I believe in all the other things is all of you. I'm sure do but we seem to be the only country in the world that applies the moral and the morale and so on of Human Rights issue to trade and we'll use it in effect as a weapon rather than a help in countries like Chile right now. We're off cover. The export-import bank is prohibited from doing business in Chile over this levity a case in Washington DC the bombing of the former Ambassador where we tried extradite the three army officers from Chile or have them try to coordinate our rules down there and the Supreme Court of chili as much as told us to mind her own business. So right now even though chili is credit-worthy. We're not allowed to do business with chili in any form. Argentina was another case where Allis Chalmers and Milwaukee Corporation almost was refused a right to bid on a job in a big power plant a hydroelectric plant called yacyreta about a 775 million-dollar potential us export one of the United States senators heard about this because it was in his state that most of this equipment was going to be produced in Pennsylvania and he got into the act and working behind the scenes. He did let the bank go ahead and make an offer to Argentine and I think in the next few months will see that Allis Chalmers or another us company did succeed in getting that this job since that one. We've approve 28 loans d'argentine. Oh and yet we've asked for cooperation of other countries in the world and we've had none whatsoever business as usual They Don't Really refuse business unless a country is absolutely uncredited worthy. They don't take into account the environment and human rights. They don't worry about protectionist issues or things like that. They just worry about doing business. South Africa's another country that were really prohibited from doing business unless the government importer or the private importer in South Africa can assure the Secretary of State or the president United States that they follow all the concepts of the Sullivan principles equal pay for equal work equal opportunity for promotion and so on and so on down the line, no other country of the world really does not do business for South African on the other hand williamport about 75% of all the Chrome or and chromium that this country uses in its hole stainless steel business its defense Industries and so on Williamsport much of our uranium many of our industrial diamonds and so forth, but we can't do business the other way with them even though they're a very credit where they country And lastly, I can't let the US exporter get off the hook either without a few comments. I have found being a US exporter and having plenty of experience over the years watching many of these deals fall through today. It's not because of lack of financing. It's because many of our exporters are setting their prices higher for exports than they would charge for the domestic market for the same commodity. Many of our us exporters. I find a rather arrogant in dealing with other countries of the world are don't know local Customs or something and they also have a lot of strikes against them. I'm not sure how much they strict interpretation of the questionable payments at Cost them or section 911 of how much state taxes are paid by expatriates in the United States working in foreign countries and so on. We got a lot of obstacles thrown away in some of these have to be cleared up. But the US exporters are basically in many cases not losing exports because of competitive financing. They're losing it because of bad pricing or bad practices in dealing with the customers on the other side. They've got to learn how to do a better job. I just want to give you a couple of examples recently that we have one to leave things on a positive note. I went over to Korea in April and again in September with people from general telephone and AT&T to try to help them sell electronic switching for an addition of 10 million telephones to the Korean telephone system, which now has 2.1 million telephones being an engineer very completely with both companies on what they had to offer technically got familiar with electronic switching pulse code modulation and all the fancy things and terms they used and then got our ambassador clued-in. Mr. Gleysteen our ambassador, Korea. When we finally got their teams over there in April and again in September. We were able to sell the United States as a total package in to convince. The Koreans that for once the United States had better technology. And even though we couldn't provide better financing or even competitive financing to the Japanese or the Germans who were doing some kind of mixed credit financing on a private basis 20 year financing 6% interest in Japan seven and a half percent in Germany. The best we could do was 8 3/8 per cent for the 10 years required for this loan. We finally won the job and AT&T got a billion dollar contract, which they hope to see you sometime this month in New York City for this job and we're going to finance 640 $1000000 out of it in the export-import bank. So that was one on the plus side. In Venezuela Allis Chalmers who has not sold a cement plant outside the United States in four years finally won a contract for a big cement plant where we supplied 46 million dollars of financing and even agreed to finance 15 million 15% local cost which is unusual for us to do and we provide at 8% interest and they find anyone that job over competition because we said in our final offer that will match any officially supported financing offer of any other country of the world and that was the clinch line and we got the job. And I did mention the 250 million dollars of us business for China steals expansion and the last two nuclear plants that were built in are being built in Korea. We won those what we had to go to 8% interest for 1.4 billion dollars for a. Of 23 years 85% covered a win that job against the Germans the French and the Japanese. So that's what kind of competition were facing but I thought today you like to hear a little bit about the bank and how we work and how we think and some of the problems that faced the United States because we do have plenty of problems there too many factions in this country working really against each other even business doesn't get together with its lobbying in Washington and do a very good job, but we've got to find some way to get her act together and increase our exports to offset this horrendous oil trade deficit. Thank you.