SPEAKERS CONTENTS INSERTS
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44–387 CC
1997
H.R. 2064, JOBS AND EXPORTS RENEWAL ACT OF 1997
MARKUP
BEFORE THE
SUBCOMMITTEE ON INTERNATIONAL ECONOMIC POLICY AND TRADE
OF THE
COMMITTEE ON
INTERNATIONAL RELATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
JULY 16, 1997
Printed for the use of the Committee on International Relations
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COMMITTEE ON INTERNATIONAL RELATIONS
BENJAMIN A. GILMAN, New York, Chairman
WILLIAM GOODLING, Pennsylvania
JAMES A. LEACH, Iowa
HENRY J. HYDE, Illinois
DOUG BEREUTER, Nebraska
CHRISTOPHER SMITH, New Jersey
DAN BURTON, Indiana
ELTON GALLEGLY, California
ILEANA ROS-LEHTINEN, Florida
CASS BALLENGER, North Carolina
DANA ROHRABACHER, California
DONALD A. MANZULLO, Illinois
EDWARD R. ROYCE, California
PETER T. KING, New York
JAY KIM, California
STEVEN J. CHABOT, Ohio
MARSHALL ''MARK'' SANFORD, South Carolina
MATT SALMON, Arizona
AMO HOUGHTON, New York
TOM CAMPBELL, California
JON FOX, Pennsylvania
JOHN McHUGH, New York
LINDSEY GRAHAM, South Carolina
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ROY BLUNT, Missouri
JERRY MORAN, Kansas
KEVIN BRADY, Texas
LEE HAMILTON, Indiana
SAM GEJDENSON, Connecticut
TOM LANTOS, California
HOWARD BERMAN, California
GARY ACKERMAN, New York
ENI F.H. FALEOMAVAEGA, American Samoa
MATTHEW G. MARTINEZ, California
DONALD M. PAYNE, New Jersey
ROBERT ANDREWS, New Jersey
ROBERT MENENDEZ, New Jersey
SHERROD BROWN, Ohio
CYNTHIA A. McKINNEY, Georgia
ALCEE L. HASTINGS, Florida
PAT DANNER, Missouri
EARL HILLIARD, Alabama
WALTER CAPPS, California
BRAD SHERMAN, California
ROBERT WEXLER, Florida
STEVE ROTHMAN, New Jersey
BOB CLEMENT, Tennessee
BILL LUTHER, Minnesota
JIM DAVIS, Florida
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RICHARD J. GARON, Chief of Staff
MICHAEL H. VAN DUSEN, Democratic Chief of Staff
Subcommittee on International Economic Policy and Trade
ILEANA ROS-LEHTINEN, Florida, Chairperson
DONALD A. MANZULLO, Illinois
STEVEN J. CHABOT, Ohio
TOM CAMPBELL, California
LINDSEY O. GRAHAM, South Carolina
ROY BLUNT, Missouri
JERRY MORAN, Kansas
KEVIN BRADY, Texas
DOUG BEREUTER, Nebraska
DANA ROHRABACHER, California
SAM GEJDENSON, Connecticut
PAT DANNER, Missouri
EARL F. HILLIARD, Alabama
BRAD SHERMAN, California
STEVEN R. ROTHMAN, New Jersey
BOB CLEMENT, Tennessee
TOM LANTOS, California
BILL LUTHER, Minnesota
MAURICIO TAMARGO, Chief of Staff
YLEEM D.S. POBLETE, Professional Staff Member
AMOS HOCHSTEIN, Democratic Professional Staff Member
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JOSE A. FUENTES, Staff Associate
C O N T E N T S
H.R. 2064
Amendment to H.R. 2064 offered by Mr. Rohrabacher
MARKUP OF H.R. 2064, JOBS AND EXPORTS RENEWAL ACT OF 1997
WEDNESDAY, JULY 16, 1997
House of Representatives,
Subcommittee on International Economic Policy and Trade,
Committee on International Relations,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2 p.m. in room 2237, Rayburn House Office Building, Hon. Ileana Ros-Lehtinen [chairwoman of the Subcommittee] presiding.
Ms. ROS-LEHTINEN. The Subcommittee on International Economic Policy and Trade will meet today in open session, pursuant to notice to markup H.R. 2064, the Jobs and Exports Renewal Act of 1997.
This bill was introduced by my colleague, the vice chair of this Subcommittee, Mr. Manzullo, and was referred by Chairman Gilman to this Subcommittee for appropriate action.
The bill we are considering comes to us in the midst of sometimes a heated debate over the need and value of OPIC. It comes to us at a time of budgetary constraints when the need to streamline the government bureaucracy is at the top of the legislative agenda for many, making the decision over reauthorization even more difficult.
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OPIC began its operations in 1971 and has continued to function with relatively minor changes in operational emphasis, such as legislation in 1974 and in 1978, requiring OPIC to focus on developing countries. The relatively uneventful and natural process of OPIC reauthorization seemed to come to a screeching halt when last September the House failed to pass the Exports Jobs Growth Act of 1996, H.R. 3759, which would have reauthorized OPIC through the year 2001 and doubled its political risk insurance and financing statutory limits.
In the end, the program was allowed to continue for one more year only, with Congress appropriating $72 million for OPIC in fiscal year 1997, the same amount appropriated for the previous fiscal year of 1996. Furthermore, there was no expansion of the program's statutory limits on financing and political risk insurance.
This turn of events soon led to a slew of legislative and private initiatives and recommendations from both supporters and critics of OPIC. As a result, this Subcommittee has held hearings and briefings on OPIC to ensure that all views were researched, heard and considered, which in turn would enable us to make an informed decision on its reauthorization.
This brings us to the bill that we are considering this afternoon, H.R. 2064. And before I recognize Mr. Manzullo for his remarks, I would like to recognize the Ranking Member, Mr. Gejdenson, for introductory remarks, and he has many years of legislative history tied to OPIC.
Mr. GEJDENSON. Thank you, Madam Chair. It always amazes me when I find my colleagues attacking an agency that helps increase American exports, that helps carry out America's foreign policy interest, and makes a profit at the same time for the Federal Government. The assaults on OPIC, I think, often are those who seek to find a straw horse to knock over. You want to be against government, let's find something to oppose, and let's ignore the very clear facts.
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The facts are OPIC is a well-run organization, it has made a profit for the United States and the taxpayer, it has helped us increase our exports abroad, and the less we fool with it, the better off we will be.
I yield back the balance of my time.
Ms. ROS-LEHTINEN. Thank you so much.
Without further delay, the Chair lays the bill before the Subcommittee. The clerk will report the title of the bill.
The CLERK. H.R. 2064, a bill to authorize the Overseas Private Investment Corporation and for other purposes.
Ms. ROS-LEHTINEN. The clerk will read the bill for amendment.
The CLERK. Be it enacted by the Senate and the House of Representatives of the United States in Congress, assembled, section 1, this act may be cited as the Jobs and Exports Renewal Act——
Ms. ROS-LEHTINEN. Without objection, the bill will be considered as having been read and as being open to amendment at any point. Is there any objection? Without objection, it is so ordered.
[The bill, H.R. 2064, appears in the appendix.]
Ms. ROS-LEHTINEN. Mr. Manzullo, would you like to introduce your bill?
Mr. MANZULLO. Thank you, Madam Chair.
I am pleased that the markup was scheduled today. This bill has 39 very diverse bipartisan cosponsors, ranging from Bill Archer to Charlie Rangel, John Boehner to Vic Fazio, David Dreier to Tom Lantos. They all came together to agree on the need for OPIC in helping to promote U.S. exports.
As the Chair knows, and the other Members here know, OPIC is a very unique system of export promotion. OPIC provides political risk insurance, such as currency inconvertibility, sequestration of assets and political violence that would occur in a foreign nation with regard to U.S. investment. So OPIC is a very esoteric type of insurance program that is not used very frequently in the entire gamut of international financing. Yet OPIC is absolutely essential.
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The bill contains seven major reforms to OPIC. First, the appointment of Inspector General. Second, the development of transparent and public participation guidelines with regard to OPIC's environmental obligations. Third, negotiate with other foreign governments to place more limits on their OPIC's. As the Subcommittee knows, international bodies have met to put ceilings on the amount of interest spread, and we want to keep those negotiations open. A fourth reform would place a 35-day waiting period on any OPIC project greater than $200 million. Fifth, the bill would create an export promotion commission to streamline the 19 Federal agencies that are engaged in export promotion, including OPIC. Sixth, allow the President to appoint a dedicated person to be chair and vice chair of the OPIC board. And seventh, combining both the ceilings on financing and investment insurance so this bill doesn't have to raise the risk exposure limit as high as it was proposed in last year's bill.
This bill is much different from the one debated last year. Most importantly, it is only a 2-year authorization as opposed to a 5-year authorization, which will allow for more congressional input and raises the ceiling by only $6 billion as opposed to $22 billion.
The bill is a result of much input from the business community, labor and environmental groups, and we believe the bill deserves your support.
If I can just take another minute, we have been holding hearings before the Small Business Subcommittee on Exports, which I chair, and it has become apparent that OPIC has become a leading financial arm for underdeveloped countries. For example, a lady by the name of Monique Maddy, who was born in Liberia and is now a U.S. citizen, talked about using OPIC to insure projects for her three-person corporation that resulted in projects in Ghana and in Tanzania. These projects resulted in the creation of 50 jobs in Tanzania and over 500 jobs in Ghana. So while OPIC is a very esoteric financial arm of the U.S. Government, it is absolutely essential with regard to completing international transactions.
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Ms. ROS-LEHTINEN. Thank you so much, Mr. Manzullo.
Are there any other Members who wish to speak on the bill before the Subcommittee? Mr. Campbell.
Mr. CAMPBELL. Thank you, Madam Chair. Just a couple of technical questions, if I may.
First of all, I notice in the packet an amendment by our colleague, Mr. Rohrabacher.
Ms. ROS-LEHTINEN. Yes, he is not here but if you would like to move that in his absence at the appropriate time.
Mr. CAMPBELL. At the appropriate time, I might. And that is fine for now. Well, perhaps I can speak at length.
Ms. ROS-LEHTINEN. That would be wonderful until we get a few more Members. We would really be so interested in what Mr. Campbell's thoughts are on this bill.
Mr. GEJDENSON. Or you might just give us a time certain when we can all return.
Mr. CAMPBELL. Well, I would like to describe my dissertation.
Mr. MANZULLO. That is a very nice bow tie you are wearing, by the way.
Mr. CAMPBELL. Thank you. Thank you very much. I am Simonesk.
Well, on the bill, as opposed to my dissertation, I do have concerns about OPIC, as the Chair knows. My difficulty focuses upon not that it is wasting money, I know it is not, but that we create a potential liability, it is a potential liability, much like we had with FSLIC.
When I first came to Congress and joined the Banking Committee, FSLIC was a concern to some but not the disaster that it became. So a fair way of measuring this is potential liability.
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And then there is, last, the point that I have raised before, but for this elucidation for my nonbow-tied colleague, the risk is sending the wrong message. If a country does not presently qualify for the kind of insurance that the market would provide, then I think that says something. I think the market is sending a signal that that country better straighten up so that the market might provide that kind of insurance. If it does not, we run the risk of sending the wrong signal, and possibly even delaying the date, deterring the progress that could be made in such a country and delaying the date when it would be able to——
Mr. GEJDENSON. Would the gentleman yield on that point?
Mr. CAMPBELL. I would be glad to yield.
Mr. GEJDENSON. You know, I think in some ways this is akin to some of our other assistance programs like the Public Law 480 program, where countries who are not ready to buy commercially our grain products, we gave them the grain, they are now some of our largest consumers of grain, and I would agree with the gentleman's assessment that if the countries aren't ready, if they are not perfectly stable, we ought to leave them alone, and a kind of incentive to get them into the club.
On the other hand, you have to make some value judgments here because the rest of the world is not playing by those rules. And the French and the Germans and others are ready to take markets away, and now competing with a fairly unified Europe of some 300 million people, I think that it is very dangerous to give up something as effective as this tool in making markets for Americans, in a world that is very competitive.
Mr. CAMPBELL. I appreciate the gentleman's point. I really do. I think the argument about the other countries are doing it is one of the strongest arguments.
Mr. MANZULLO. Will the gentleman further yield?
Mr. CAMPBELL. I would be pleased to yield. I was actually going to try my best to rebut my friend from Connecticut.
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Ms. ROS-LEHTINEN. Mr. Manzullo is recognized, however, if you would like to further clarify.
Mr. CAMPBELL. Madam Chair, there is no need for me or any of us to pontificate further.
Ms. ROS-LEHTINEN. Well, thank you.
Any other Members who wish to speak on the bill before the Subcommittee?
Mr. CAMPBELL. Don't forget my amendment for Mr. Rohrabacher.
Ms. ROS-LEHTINEN. I will not.
Mr. MANZULLO. I did have some rebuttal.
Mr. GEJDENSON. I suggest we vote.
Ms. ROS-LEHTINEN. Mr. Manzullo, you can speak.
Mr. MANZULLO. I would just say to my colleague from California that OPIC doesn't just make money on paper, it actually makes money money. Revenue comes in and it stays there, by any number of methods of calculating. I would show to my colleague from California the statement of income. Revenues are $299 million. The net income is $208 million. That is money actually coming in. If you are concerned of something akin to an S&L crisis, then you would have to get rid of VA-insured loans, guaranteed student loans.
OPIC has a very, very low default ratio. It has a huge reserve, but it is simply the type of insurance institution that can't be privatized. So it is one of those necessary evils. We really don't want it, but in light of the fact that the rest of the world doesn't work by the same rules we do internally here in the United States, we need OPIC simply as a matter of being able to compete internationally.
Ms. ROS-LEHTINEN. Thank you.
If there are no further Members seeking recognition, let us proceed with consideration of amendments.
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Are there any amendments?
Mr. CAMPBELL. Madam Chair.
Ms. ROS-LEHTINEN. Mr. Campbell.
Mr. CAMPBELL. On behalf of my colleague from California, Mr. Rohrabacher, he prepared an amendment. He is a Member of our Committee and Subcommittee. He is not here so I would like to offer it instead.
Ms. ROS-LEHTINEN. The clerk will report the amendment.
The CLERK. An amendment by Mr. Campbell——
Ms. ROS-LEHTINEN. I ask unanimous consent that further reading of the amendment be disposed with.
[The amendment appears in the appendix.]
Ms. ROS-LEHTINEN. The gentleman from California is recognized in support of his amendment.
Mr. CAMPBELL. Thank you, Madam Chair.
The amendment proposes a prohibition limiting the OPIC loans in the following way, and I am just going to read it, it won't take but 20 seconds:
''The Corporation may not provide insurance, reinsurance, or financing for any project in a country the government of which has not been chosen through free and fair elections or does not permit such elections; is engaged in acts of armed aggression in violation of international law; does not promote respect for individual and minority rights, including freedom of speech, publication, association, and organization; or does not have an independent judiciary.''
That is the entire substance of the operative phrase in the amendment. I repeat, the purpose is better explained by my colleague, Mr. Rohrabacher, but he and I largely agree on the danger of sending a signal to a country that does not fit these criteria by reason of offering U.S. Government-assisted insurance for projects in such a country. If they could not get such insurance, at least I would hold out the hope that they might then come into compliance.
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If the market is not providing insurance and if now OPIC is prohibited from doing so, perhaps they would change their view regarding the guarantee of free and fair elections or the cessation of armed aggression and violation of international law or the provision of basic civil rights, or the creation of an independent judiciary.
I would note, by the way, these are the sorts of things that, at least the first, third, and fourth, that would be quite relevant to the question of Hong Kong right now, a lot of us focusing on investment will continue in Hong Kong, and the question would be, well, what sort of guarantees of a free market society are there?
So with that in mind, I think the limitation would go a long way to ameliorate my concern about the wrong signal that might be sent by OPIC in its present composition.
And while I am taking a moment longer to explain the amendment, let me try my best to respond to my friend from Connecticut and from Illinois.
I think your points are right, it is a balance, there is no question that we can open markets, as my friend from Connecticut pointed out, and then later they become full-fledged regular customers on their own, and there is no question that in some instances, we are combating other countries' activities. It is for that reason that I don't hold the same view on trade development assistance that I do on OPIC.
But what is unique about OPIC is the potential for sending the wrong signal, that is to say the potential actually for stalling the change, and for that reason, I would have an even broader opposition but Mr. Rohrabacher's amendment focuses on specific changes that I think we would induce by insisting upon them as a precondition for OPIC's involvement.
Ms. ROS-LEHTINEN. Thank you so much, Mr. Campbell.
Is there any Member who wishes to be recognized on the Campbell-Rohrabacher amendment? Mr. Manzullo.
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Mr. MANZULLO. I wish to speak in opposition to it, Madam Chair. I understand the good intentions behind this amendment. The problem is how does one define ''democratic elections'' in countries that do not engage in aggression. The thrust of the amendment may apply to China, Burma, or the Sudan, but OPIC doesn't operate in those countries based on current Administration policy and OPIC's existing human rights standards.
I find it ironic that OPIC would be one of the few Federal agencies that would be prohibited from operating in several countries by these new standards proposed by the Rohrabacher amendment while other agencies, such as AID, which administers our foreign aid, would still be allowed to operate in those countries. It is just a glaring inconsistency. In other words, we would be able to give foreign aid to a country but we wouldn't be able to make investments in a country in order to make that country in an economic situation where it no longer would have to get foreign aid from the United States.
OPIC is open in places like Egypt and Indonesia where it is questionable that there are free and open elections, but foreign aid freely flows there. The Rohrabacher amendment could preclude OPIC from operating there. OPIC is open in places like Peru and Ecuador where there was a border war. In fact, there was a war between Sierra Leone and Liberia. Liberia is not receiving OPIC aid but Sierra Leone is. Who is the aggressor there? When we make that determination who the aggressor is, some of the other foreign countries would simply move in there, make the investment and take away the opportunity for the United States.
The whole point of OPIC is to help prod economic and political reforms of these developing nations. If these nations met the criterion here, chances are they would not need OPIC. OPIC is a very rare tool that is used. One of the statements here says the corporation may not provide insurance, reinsurance and financing for any project in the country, the government of which is engaged in acts of armed aggression. Well, which government? Sometimes governments change hands very readily and yet there is enough economic stability that people are willing to make investments, such as in Cambodia.
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If the government does not promote respect for individual minority rights, freedom of speech, publication, association, and organizations, that might even apply to the United States. How do you go about making that determination? And OPIC would be in a position of making a determination every time there is an application that the investment could be banned.
In my earlier remarks, I talked about Monique Maddy, who made the investment in Tanzania. That is not exactly the freest country in the world and yet OPIC went ahead with very stringent guidelines.
One of the things OPIC does is in the event there is a loss, they will take a look at how to recoup that loss from the government that caused the loss on, for example, sequestration of assets or currency inconvertibility. Somewhere down the line when that country is on its feet again and wants better relations with the United States, it has to settle with OPIC. It has always been a bargaining tool for OPIC in order to be able to do that.
With regard to an independent judiciary, whatever that means, I think our judiciary in this country is too independent. It is making laws. They are going nuts. They are imposing taxes and running school districts. In my congressional district, there are 17 Federal court orders that are running the Rockford school system. Is it good to have that much of an independent judiciary? I would rather have the judiciary responsible to the people.
So I just can't see how these amendments offered by Mr. Rohrabacher would actually do anything to number 1, guarantee a better solvency rate for OPIC or, number 2, to further foreign policy.
Ms. ROS-LEHTINEN. Thank you.
The Chair will put the question of the Campbell-Rohrabacher amendment.
As many as are in favor of the amendment, say aye.
As many as are opposed to the amendment, say no.
The ayes appear to have it. The ayes do have it and the amendment is agreed to.
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Mr. SHERMAN. Madam Chair, can we have a recorded vote? I would like to confer with my more senior Member.
Ms. DANNER. Madam Chairman, in the interim, while they are conversing, perhaps you or some other member of the panel, or even the staff, can help me. Lines 10 through 17 seem so familiar. I have seen this language recently.
Ms. ROS-LEHTINEN. This is on the amendment, clauses 1, 2, 3, and 4.
Ms. DANNER. Yes, they are very familiar. We have seen those recently. In the past few weeks I have read this and I haven't read the Rohrabacher amendment.
Ms. ROS-LEHTINEN. And you wonder if they are mirrored on some other legislation?
Mr. CHABOT. The Declaration of Independence.
Ms. DANNER. I will inquire about that, but I have seen this language.
Ms. ROS-LEHTINEN. We will find out for you before it goes to the Full Committee. I am sorry Mr. Rohrabacher is not here to fully explain this.
Mr. CAMPBELL. I would say, if I might, in his absence——
Ms. ROS-LEHTINEN. It seems to be fairly ingrained in a lot of international documents.
Mr. CAMPBELL. I do think Mr. Rohrabacher will be in the best ability to explain it. I apologize, I cannot.
Ms. ROS-LEHTINEN. Thank you. Perhaps Mr. Sherman——
Mr. SHERMAN. I withdraw my request.
Ms. ROS-LEHTINEN. Thank you. Mr. Sherman withdraws his motion.
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If there are no further amendments or further Members seeking recognition, the Chair recognizes Mr. Manzullo to offer a motion.
Mr. MANZULLO. Madam Chair, I move the Subcommittee report the bill H.R. 2064 to Full Committee and recommend the bill, as amended, be favorably considered in the Full Committee.
Ms. ROS-LEHTINEN. The question is now on the motion of the gentleman from Illinois.
As many as are in favor of the motion, say aye.
As many as are opposed to the motion, say no.
The ayes appear to have it. The ayes do have it, and the motion is agreed to.
Thank you very much, to all of our Members, and this bill will now travel to the Full Committee where I think there just may be a roll call vote next time. Thank you.
The Subcommittee is adjourned.
[Whereupon, at 2:25 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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