Getting Ukraine to become Fluent in EXIM.

How can US Exporters increase their exports to Ukraine and what do the latest developments mean for US EXIM programs there?

Featured Image -- 4182  Since the original Fluent In EXIM post was published on February 11th, several important events took place, which potentially may have an effect on how exports to Ukraine are financed by the Export Import Bank of the United States (US EXIM).

  • New President of Ukraine was inaugurated a few days ago, potentially putting the country on a different political course.
  • New, closer, date has been set for the elections of People’s Deputies into Ukrainian Rada
  • US Congress confirmed three new Board members thus opening the  way for US EXIM to finance  projects over $10 million with a duration of financing  longer than seven years

Although not on the same level of importance as the above events, in March, in partnership with the US Ukraine Business Council (USUBC), our Firm held a financing workshop in Washington DC to help participants learn about available government financing programs, with the US EXIM  representative and its authorized broker prominently prominently featured on the agenda.  We have also received numerous EXIM financing inquiries from Ukraine, particularly in the areas of agriculture, renewable energy, transportation and healthcare. A second workshop for USUBC members and invited guests will take  place in Lviv later this month.

In this post, we will examine what, if any, effect these changes shall have on the US EXIM’s programs currently in place for that country. We will  also look at the ways Ukrainian importers and US exporters can best take advantage of these programs.

Currently, US EXIM is only open in Ukraine for short (financing of trade up to one year) and medium-term (financing of $10 million per project up  to seven years)  programs. Thus reopening the US EXIM for the long-term programs will not have any effect on Ukrainian export transactions.

Election of  the new President and upcoming Rada elections also are  not expected to  affect the US EXIM programs for the foreseeable future.

Yet despite the absence of the long-term programs, US EXIM bank remains an effective tool for US exporters wishing to export goods and services to Ukraine. Under its short-term program, the Bank will insure against buyer non-payment and political risks up to 95 percent of the foreign receivables’ invoice value, thus allowing exporters to safely extend open account terms to foreign buyers (both private and  government) for periods up to one year, with 90-day, 120-day terms being most prevalent.  This is done by putting in place either a Single Buyer, or Multi-Buyer credit insurance by the exporter and then qualifying and insuring individual importers under these policies. Depending on the policy limits sought, EXIM employs different underwriting standards and requires increasingly deeper credit checks and financial documentation.IMG-1cae7e700ec217303b52f13cd14e1c96-V

Most qualified US exports, other than sales to of alcohol, tobacco and adult content, as well as sales to foreign military, may be insured; even equipment and services related to nuclear industry.  In Ukraine, larger private transactions will require a repayment guarantee from one  of the  five or so top banks and on the government side a sovereign guarantee is needed. Since it is almost impossible to obtain a UA government’s guarantee for smaller transaction amounts, the US exporters should focus selling their wares to the private sector.   The credit insurance may be obtained either from the Bank directly, or at no additional cost, through a cadre of US EXIM approved insurance brokers whose list is found on the exim.gov site.

Under its medium term programs, US EXIM can cover up to 85 percent of qualified US exports, including eligible freight and duty costs. As mentioned above, financing limit is $10 million per distinct transaction, and repayment terms of up to seven years apply.  For projects, which require local construction or installation (ex solar farms, grain silos), up to 30 percent of the financed amount maybe used to cover local costs performed by Ukrainian companies.

Depending on the project, repayment of the financing may be structured as interest only for up to two  years, with the balance of principal and interest paid out evenly over the remainder of the loan term.  Services such as engineering, architecture, design, legal and financial, all may be financed under this program.

Although US EXIM can lend funds directly at what is commonly known as a CIRR  rate, more often it  issues a its AAA rated guarantee and the exporters then approach an approved bank to secure financing rates, which are  usually more advantageous, as they are based on LIBOR and can either be variable, or fixed depending on the borrower’s preference.  Underwriting requirements of bank guarantee  for the private transactions, or sovereign guarantee for government purchases also apply. Many borrowers choose to finance the remaining 15% percent through those same  local banks  thus effectively securing 100% financing for their projects.

Since the process of securing financing and insurance coverage  through any government agency, or an international financial institution is quite complex, we always recommend  that clients engage a qualified and experienced financial adviser and a very competent law firm with extensive experience working with the US EXIM Bank.

To get more information on the upcoming Fluent In EXIM workshop in Ukraine, please  contact MorganWilliams at mwilliams@usubc.org

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World Affairs Councils of America Welcomes Broad Street Capital Group as National Affiliate Member and Sponsor

Washington, DC, May 14, 2019 — The World Affairs Councils of America (WACA) is pleased to announce that Broad Street Capital Group (www.broadstreetcap.com) has joined WACA as a National Affiliate Member, sponsor of the WACA National Conference, and member of its prestigious 1918 Society.

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Broad Street’s expertise in advising on foreign direct investment (FDI) strategies in emerging and frontier market countries and WACA’s ability to convene foreign government leaders and influential audiences through its extensive network of more than 90 World Affairs Councils across the United States will provide a powerful platform for U.S. companies targeting investment opportunities and seeking policy and regulatory knowledge in these markets.

Broad Street will tap the WACA platform to conduct a national tour to educate potential U.S. investors on available U.S. Government financing options, as well as political and trade risk mitigation tools. WACA will assist Broad Street in organizing bilateral trade missions and curated foreign policy tours to highlight economic advantages of the target markets and to facilitate trade and investment opportunities.

“It is an honor and a privilege to become WACA’s newest National Member,” said Alexander Gordin, co-founder and Managing Director of the Broad Street Capital Group.  “My colleagues and I look forward to helping this prestigious 100-year old national organization to grow into the next century of its existence.  Foreign direct investment is an essential  part of sound foreign policy for any nation and having such an esteemed partnership with the WACA network’s convening power on this issue, would definitely bring significant measurable results.”

“WACA is delighted to collaborate with Broad Street and we look forward to inviting leading investors and representatives of foreign investment agencies as guests of the Broad Street Capital Group at WACA’s 2019 National Conference in Washington, DC,” said Bill Clifford, President and CEO of the World Affairs Councils of America.

Scheduled for November 6-8 at the Mayflower Hotel in DC, the WACA Conference will feature more than 50 leaders and policy experts on the theme: “The 8 Forces Reshaping the Global Economy.”

About the Broad Street Capital Group

Based in the heart of New York City’s Financial District, Broad Street Capital Group (www.broadstreetcapital.com) is an international private merchant bank, which since 1988 has served several foreign governments, multiple state-owned companies, as well as SMEs in emerging markets. Through its member companies, the Group focuses on developing project financing in the $100 million to $1 billion range, providing political risk mitigation, export management services and cross-border market development advisory. The Firm maintains a permanent presence in London, Budapest, Kyiv, Tashkent, and  Astana, .  Since its founding, Broad Street Capital Group has done business in over 35 countries, spanning the emerging markets landscape from Bangladesh to Ukraine.

The Firm works closely with all trade and development agencies of the U.S. Government and Export Credit Agencies of several European and North American countries. Since its inception, Broad Street Capital Group has been involved in multiple high-profile cross-border transactions in IT/telecom, aerospace, health care, energy generation, food security, nuclear safety, hospitality and franchising sectors. The firm’s current advisory and export management portfolio exceeds $900 million.

About the World Affairs Councils of America

The World Affairs Councils of America (www.worldaffairscouncils.org) is an independent, nonpartisan organization dedicated to engaging the public and leading global voices to better understand the world, America’s international role, and the policy choices that impact our daily lives and our future. WACA carries out its mission by:

  • Supporting more than 90 World Affairs Councils across the United States and promoting programs and educational initiatives for diverse local audiences – from classrooms to C-suites, from town-hall style community forums to conferences in the nation’s capital.
  • Developing Councils’ convening power nationwide by providing face-to-face connections and dialogue with global leaders, business executives, policy and trade experts, ​social innovators, and distinguished opinion makers.
  • Partnering with organizations that seek to reach out to “grassroots” and “grasstops” citizens, disseminate research, mutually expand networks and transform how people, enterprises, and governments think about the world.
  • Challenging the next generation to develop leadership skills and global acumen so that our communities can better compete, collaborate, and make informed decisions.

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Senate vote restores full financing capabilities of the US EXIM Bank

(story by CC Solutions)

The U.S. Senate confirms three EXIM board members, thus allowing the Bank to restore all its financing programs

Companies in Berlin, Germany; Shanghai, China; Melbourne, Australia, and Delhi, India have long enjoyed the full support of their export credit agencies, which have helped them reach new markets, grow, prosper, and increase employment in their respective countries.
Today, exporters in Berlin, Connecticut; Shanghai, West Virginia; Melbourne, Florida; Delhi, New York; and thousands of other cities and towns in the United States can finally say that they have the full support of their own export credit agency. This morning the U.S. Senate voted overwhelmingly to confirm Kimberly Reed as President of EXIM, and Spencer Bachus III and Judith DelZoppo Pryor, as Members of the agency’s Board of Directors. With the confirmation of these officials, EXIM now has a board quorum, and is now able to approve financings larger than USD 10 million and longer than 7 years, something it has not been able to do since 2015.

For those companies interested in learning more about long-term  US-EXIM programs please contact Broad Street Capital Group at info@broadstreetcap,com

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Fluent In EXIM

(or how to realistically obtain US EXIM financing for emerging markets such as Ukraine)

61ae8-exim-bank1 Recent re-opening of US EXIM Bank’s programs in Ukraine has caused a stir and a flurry of activity among US exporters, Government Agencies responsible for trade promotion, Ukrainian importers and non-governmental agencies working in that market.  Following more than a five-year hiatus, everyone has been excited to expand US-Ukraine’s trading relationship and to increase the quantities of much-needed US exports with the aid of the Bank’s financing.  After all, US exports support US jobs and help Ukraine obtain advanced goods and services needed to grow its economy.

Yet, the early results of all those efforts thus far been negligible due to a dearth of local buyers able to qualify for the Bank’s financing, or trade credit insurance programs. Similar situation has been observed in a number of Central Asian markets, which have recently experienced economic resurgence and thirst for imported goods and services.

In order to enhance the ability of the US Government’s agencies to assist in export promotion and financing and most importantly in order to maximize the ability of US companies to export goods and services to emerging markets, it is vital to understand what are the services provided by the US EXIM and what external components are needed to help grow the numbers of qualified buyers and therefore real exports.

Export Import Bank of the United States (US EXIM) is the official Export Credit Agency (ECA) of the US Government, whose mission is to support export of US-manufactured goods and services with a set of export financing and trade credit insurance tools.16ae9-ex-im2bbank

Open for business in over 120 countries, the bank has been in continuous operation since 1934 and for a good number of years of its existence has been contributing profits to the US Treasury, rather than spending the US Government’s budget funds.  Although over the last several years, the Agency has become a victim of political wrangling and its long-term financing programs, those involving terms over 7 years and single transaction amounts over US$ 10 million have been temporarily crippled, the bank’s short and medium programs have continued and are fully operational.

However, when trying to finance, or insure exports to emerging and frontier market countries using US EXIM’s programs, American exporters often face additional hurdles. One of the most severe of those, is finding sufficient number of qualified, or as we call them “bankable” buyers for US goods and services. The second hurdle is often lack of the so-called “15%”, a minimum amount of funds needed from the buyer to supplement the up to 85% of the qualified export amounts financed through the US EXIM’s support.

Here are a couple of typical export frustration scenarios:

a. A large US manufacturer of agriculture equipment with an established distribution network in Ukraine seeking to supply its distributors with $5-6 million dollars in equipment to be sold to Ukrainian farmers prior to the planting season. The US supplier needs to extend open terms of 6 months to its distributors, but needs to insure its risk of non-payment. The US EXIM offers fantastic trade credit insurance products, which after assessing and accepting the buyers’ financials would insure  the US manufacturer for non-payment of up to 95% of the supplied goods.

Yet, for purchase contracts of over $1mil., US EXIM requires the buyers to present  GAAP/IFRS audited financials and in this case none of the distributors audits their financials and doing so may either be not feasible, or cost prohibitive.  Since the distributors appear very financially and reputationally solid, yet unable to meet EXIM’s cursory requirements, the question becomes how to structure the transaction in order to enhance US EXIM’s product and not lose millions of dollars in sales for the US manufacturer?

b. An established Ukrainian agri company is seeking to replace its fleet of machinery and upgrade its grain storage capacity with US manufactured equipment. Size of the transaction is $15 million. To preserve much needed operational cash, the company would like to arrange 100% financing of the acquisition for a term of six years.  The company does audit its financials to IFRS standards, but due to a fairly small transaction size and lack of knowledge of the Ukrainian market by US banks, the company is having a very difficult time, obtaining the 15% co-financing it needs. Once again, $15 million of US exports are in potential jeopardy, what does one do in a situation such as this?

To answer the above questions and to realistically address the issues, which hamper successful export financing in markets such as Ukraine, a task force consisting of a US merchant bank, international law firms, local banks, non-profits and insurance brokers has been created and effective tools developed to truly assist US exporters convert potential opportunities into real exports. Starting later this month in Washington DC, these tools will be presented in a series of workshops called “Fluent In EXIM”. The workshops also will take place both in key Ukrainian and US cities. Given the importance of the US exports to jobs creation and since US EXIM bank is operated under the the supervision of the US Congress, the workshops, in addition to expert panels, will feature members of Congress, as guest speakers. US Ukraine Business Council, a leading non-profit involved in promoting US-Ukraine economic cooperation, will be coordinating these workshops and helping to make US companies trying to export to Ukraine – Fluent In Exim(tm).

 

 

 

 

U.S. EXIM BANK reopens for transactions with Ukraine

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 “A strong international voice for business in Ukraine”U.S. EXPORT-IMPORT BANK (EXIM) NOW OPEN FOR UKRAINE

U.S.-Ukraine Business Council (USUBC), Wash. D.C., Tues, Jan 8, 2019

WASHINGTON, D.C. – The Export-Import Bank of the United States (EXIM) is now open for Ukraine. “This is great news for U.S. exporters of goods and services and for business in Ukraine. EXIM being open for Ukraine provides an additional and important tool to expand U.S.-Ukraine business relations in 2019,” said Morgan Williams, President, U.S.-Ukraine Business Council (USUBC), www.USUBC.org. The Export-Import Bank of the United States (EXIM), www.EXIM.gov, is the official export credit agency of the United States. EXIM is an independent Executive Branch agency with a mission of supporting American jobs by facilitating the export of U.S. goods and services. The EXIM country limitation schedule now includes Ukraine, https://www.exim.gov/tools-for-exporters/country-limitation-schedule

“At the end of December, the Export Import Bank of the United States (EXIM) reopened its short and medium term programs in Ukraine for both private and public sector Ukrainian borrowers,” said Alexander Gordin, Managing Director, Broad Street Capital Group, www.BroadStreetCap.com, a long-time member of USUBC. “The reopening  of EXIM’s programs in Ukraine, after more than five years, sends a terrific signal to U.S. companies seeking to supply the Ukrainian market with U.S. goods and services. It also sends an encouraging message to investors on the improving economic condition in Ukraine,” according to Gordin. “The U.S.-Ukraine Business Council (USUBC) will be working the Broad Street Capital Group and the law firm of Brown Rudnick (www.BrownRudnick.com), both members of USUBC, to organize and conduct a series of workshops titled “Fluent In EXIM” in the near future in the USA and Ukraine,” said USUBC President Williams. “These workshops will feature experts from the public and private sector who will present the most effective strategies for structuring export transactions, submitting applications for export credit insurance and financing, as well as passing due diligence and compliance procedures,” Williams announced. 

ABOUT: EXPORT-IMPORT BANK OF THE UNITED STATES (EXIM) —– The Export-Import Bank of the United States (EXIM), www.EXIM.gov, is the official export credit agency of the United States. EXIM is an independent Executive Branch agency with a mission of supporting American jobs by facilitating the export of U.S. goods and services.
When private sector lenders are unable or unwilling to provide financing, EXIM fills in the gap for American businesses by equipping them with the financing tools necessary to compete for global sales. In doing so, the Bank levels the playing field for U.S. goods and services going up against foreign competition in overseas markets, so that American companies can create more good-paying American jobs.

Because it is backed by the full faith and credit of the United States, EXIM assumes credit and country risks that the private sector is unable or unwilling to accept. The Bank’s charter requires that all transactions it authorizes demonstrate a reasonable assurance of repayment; the Bank consistently maintains a low default rate, and closely monitors credit and other risks in its portfolio.==========================================================
NEWS: For the latest news about Ukraine go to the KYIV POST website: www.KyivPost.com.The Kyiv Post is a member of the U.S.-Ukraine Business Council (USUBC). 
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U.S.-Ukraine Business Council (USUBC) 
1030 15th Street, N.W., Suite 555 W, Washington, D.C.  
Morgan Williams, mwilliams@usubc.orgwww.USUBC.org
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Power Corrupts..Absolute Power Corrupts Absolutely

Trump scrambles Ex-Im Bank politics

The politics around the Export-Import Bank just got much weirder.

President Donald Trump is reaching for a compromise in the debate raging around the bank, aiming to keep the agency open while putting an outspoken, ultra-conservative opponent of the institution at the helm.

In doing so, Trump has confused the politics around the export credit agency, which had been a major boost to American manufacturers such as Boeing, GE and Caterpillar before Republicans took steps to crimp the flow of financing.

The formerly anti-Ex-Im Trump abruptly changed his tune on the bank last week when he called it “a very good thing” and announced plans to nominate two board members. That was a major step toward bringing the agency back to its full working capacity.

Then, two days later, he nominated for the chairmanship former Rep. Scott Garrett (R-N.J.), a vocal foe of the bank who has also come under fire in the past for his comments about homosexuality. That set up a political tightrope that both supporters and detractors of the agency may have trouble navigating.

Democrats who champion the agency because they say it creates jobs and promotes manufacturing are uneasy about supporting a social conservative who might try to hamstring the bank from within. Sen. Chris Van Hollen (D-Md.), a member of the Banking Committee, which will vet the nominees, said appointing Garrett as chair would put thousands of American jobs at risk.

Then there are conservative Republicans who have been critical of the bank and are now cheering Garrett’s nomination.

“For too long, the bank has been a clear example of corporate welfare run amok — benefiting special interests and foreign companies at the expense of U.S. taxpayers,” said Sen. Pat Toomey (R-Pa.), who also sits on the Banking Committee. “I am confident that Congressman Garrett will chart a new course for the bank that puts U.S taxpayers first.”

The result is a 180-degree flip-flop, where lawmakers and interest groups who had expended significant resources and political capital to rein in the bank could shift to support Trump’s nominees, while its biggest champions could be left behind.

“We’re encouraged and optimistic that [Garrett] would be able to substantively reform the Export-Import Bank, make it work better in the meantime,” said Chrissy Harbin, vice president of external relations at the conservative advocacy group Americans for Prosperity. “And then when the reauthorization comes up again … we’d encourage D.C. to have the same conversation about the possibility of letting it expire once and for all.”

Democrats on the Banking Committee have reservations about Garrett, including Sens. Heidi Heitkamp (D-N.D.), Joe Donnelly (D-Ind.) and Catherine Cortez Masto (D-Nev.).

Cortez Masto said she was pleased that Trump was committing to making the bank functional. Still, she has concerns about Garrett, “given his past opposition to Ex-Im’s mission, not to mention his divisive rhetoric toward LGBT families.”

“This Garrett nom is a Catch-22,” one Senate Democratic aide said. “We need to confirm him to have a quorum, but he could be a cancer inside the agency.”

Last November, Garrett lost a seat he had held since being elected to Congress in 2002. A key moment in the race came in 2015, when POLITICO reported that he told fellow GOP members that he wouldn’t support the National Republican Congressional Committee because it backed gay candidates.

Financial companies that had been campaign backers during his years as a senior member of the House Financial Services Committee pulled back.

Garrett later denied that he objected to gay candidates and said his problem was with support for same-sex marriage.

He lost to a well-funded Democratic challenger, Josh Gottheimer, but stayed plugged in to the emerging Trump team. While in Congress, Garrett served with Vice President Mike Pence and is said to be close with the former Indiana congressman. He also counted White House counselor Kellyanne Conway as a constituent and campaign donor. A December meeting at Trump Tower was well-publicized.

Garrett could not be reached to comment on this story.

Beyond Congress, his nomination also puts big American manufacturers in an awkward spot. They need more board members at the bank to provide a quorum that’s necessary to approve deals with more than $10 million. Yet they are unsure what changes might be in store given Garrett’s past comments and promises from senior administration officials like White House Budget Director Mick Mulvaney to put “reformers” at the helm.

For now, major users of the bank are focusing on the fact that Trump has put forward any nominees rather than worrying about who they are.

“Generally speaking, between the president’s comments and naming of two nominees, it’s really encouraging,” said Kate Bernard, a Boeing spokeswoman. Boeing, she added, has experienced the loss or delay of three satellite sales since the bank first fell victim to political crossfire in 2015, so giving the bank back its quorum to “shake loose” projects that remain in the pipeline is the most crucial step at this point.

There’s no question, however, that the Garrett nomination “raises some eyebrows in the business community” and “sends some mixed messages given his previous history in the House,” said one bank proponent who asked not to be named.

Garrett established himself as a consistent and outspoken opponent of the bank while in Congress, twice voting against its reauthorization in the past five years. In 2014, he expressed skepticism that attempts at reform would ever be successful, and he pushed hard the following year to let the charter expire.

“We have the opportunity to save capitalism from cronyism and to fulfill a promise to the American people to work for them instead of a select few with special connections in Washington,” Garrett said in May 2015.

“For the sake of the American taxpayer and the preservation of the free enterprise system, Congress should put the Export-Import Bank out of business.”

The White House noted that history of opposition toward the bank in discussing his appointment, saying Trump chose him “to both usher in reforms and prioritize small businesses.”

“Former Rep. Scott Garrett has passionately spoken out on some of the problems that the Bank’s previous activities created,” a White House spokeswoman said in an email. “He will be a key voice for reform.”

61ae8-exim-bank1The current nominees represent only a temporary fix: Garrett and former House Financial Services Chairman Spencer Bachus (R-Ala.), who Trump picked to sit on the board of directors, would both have to be approved to restore the bank to full working capacity. What’s more, they’ll provide a quorum that will only last until July 19, when acting Vice Chairman Scott Schloegel’s term expires. At that point, the bank would lack a quorum once again if no additional members have been confirmed before then.

But in the meantime, major users of the bank fear that the administration is trying to reshape the agency in a way that would hurt large companies that have traditionally benefited from it. Various administration officials have hinted at their own ideas for reform.

Mulvaney, who was a critic of the bank while a member of Congress, told CNBC last week that Trump’s nominees would make sure the bank “sticks to its knitting.” Commerce Secretary Wilbur Ross told the network in a separate interview that he wanted a reformed bank to “help small businesses more.”

Some reforms will be put into place as soon as Garrett and Bachus — or any two nominees — are confirmed and a board with at least three members votes to approve them. The bank’s 2015 charter included a slate of changes for the bank, and while a majority have been completed, a handful require a board quorum to be implemented — something the bank has lacked since its reauthorization was passed almost a year and a half ago.

Two of the outstanding requirements involve appointing a chief ethics officer and chief risk officer. A third involves the bank’s lending to small businesses and “increases the authority of staff to approve applications for up to $25 million in export financing for small business working capital and insurance products.”

But beyond that, bank observers say there is little a chairman can do on his own to change the bank’s operations.

And while he could attempt to direct export credit assistance more often to smaller businesses, “there’s not a ton of discretion,” said Peter Cohn, an analyst with Height Securities.

“So I don’t know that we’re going to see a whole lot more than window dressing on that front,” he said.

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Why Weak Currencies Have a Smaller Effect on Exports

Because manufacturers increasingly use components from abroad to make things, exports now incorporate a lot more imports

Workers at a Robert Bosch GmbH plant in Blaichach, Germany, use touchscreen panels on the automobile gasoline direct injector valve assembly line. Germany is an export powerhouse.
Workers at a Robert Bosch GmbH plant in Blaichach, Germany, use touchscreen panels on the automobile gasoline direct injector valve assembly line. Germany is an export powerhouse. PHOTO: KRISZTIAN BOCSI/BLOOMBERG NEWS

As various central banks loosened monetary policy this year, some economists predicted another cycle of beggar-thy-neighbor currency wars, in which countries race each other to become the cheapest exporter.

But it hasn’t panned out that way, and now a growing body of evidence suggests why: A shift in trade dynamics is blunting the impact of a weak local currency.

This could be all the more relevant now, when the monetary policies of the world’s most powerful central banks—the Federal Reserve and the European Central Bank—are heading in very divergent directions, possibly taking the value of their currencies along with them.

When a country loosens its monetary policy, interest rates fall and investors tend to pull their money out in search of higher yields elsewhere, pushing down the currency’s value.

That is still happening. But the dynamic isn’t affecting trade flows as much as expected. What has changed is where businesses source the things they need to make the products they export. Manufacturers once found most components needed to make their goods at home. Now they increasingly look abroad for such inputs. As a result, exports now incorporate a lot more imports.

It is still the case that when a currency such as the euro weakens, it reduces the price of goods sold by German manufacturers in the U.S. But it also increases the price of the things that German manufacturers import to make those exported goods.

Containers at the Port Newark Container Terminal in Newark, N.J.
Containers at the Port Newark Container Terminal in Newark, N.J. PHOTO: JULIO CORTEZ/ASSOCIATED PRESS

Measuring the impact of global supply chains on trade flows is the task of a project undertaken by the Organization for Economic Cooperation and Development and the World Trade Organization.

Using detailed figures from economies around the world, economists at the two bodies have measured how much foreign content there is in each nation’s exports, confirming a significant increase since the mid-1990s. The foreign content of Switzerland’s exports, for instance, increased to 21.7% in 2011 from 17.5% in 1995, while the imported content of South Korea’s exports almost doubled, to 41.6% in 2011 from 22.3% in 1995.

Economists at the International Monetary Fund and the World Bank have used those measures to assess whether currency movements have the same impact they once did on exports and imports. They found that the effect has in fact reduced over time, by as much as 30% in some countries.

Policy makers are beginning to take note. “As countries become more vertically integrated via global value chains, exchange-rate variations will have a diminishing impact on the terms of trade,” said Benoît Coeuré, a member of the European Central Bank’s executive board and one of its thought leaders, speaking in California last month. He concluded the process will reduce the role of currency moves as “shock absorbers” that direct global demand toward weaker economies from stronger ones.

Japan offers the clearest indication that big currency depreciations don’t deliver the export boost they once did. In early 2013, the Bank of Japan launched a massive stimulus program that increased the supply of yen and led to the currency’s sharp depreciation against the dollar and the euro.

That strategy was a key element of Japan’s package of measures designed to lift the economy out of a long period of stagnant growth. But what followed was something of an anticlimax. The yen’s weakening had little impact on Japanese exports, and failed to restart economic growth. Puzzled policy makers pointed to the weak state of demand in the global economy, but even if that were the case, Japanese exporters should have gained market share.

A similar pattern has emerged in the wake of the ECB’s January decision to launch its own program of quantitative easing. Like the yen, the euro weakened, continuing a decline against the dollar that started in early 2014 and now amounts to roughly 20%.

In early 2015, the launch of QE was expected to boost eurozone growth by aiding exports. But once again, the impact of a weakened currency has been modest. Indeed, in the three months to September, eurozone growth was held back by a more rapid growth of imports over exports, while industrial output flatlined.

Experts believe it takes about 12 to 18 months for foreign-exchange moves to have their full impact on trade flows, so the effect would have been felt by now in both the eurozone and Japan. The euro started weakening against the dollar in early 2014, while Japan is about three years into its currency depreciation.

Those disappointments don’t mean currency movements caused by the great divergence between the Fed and the ECB won’t have any impact. That is a key concern for U.S. businesses in the wake of the Fed’s decision this month to raise interest rates for the first time in almost a decade—just weeks after the ECB moved its policy in the opposite direction. Many economists still expect the U.S. to suffer some slowdown in exports, while the eurozone enjoys some pickup. Already in the first 10 months of 2015, the U.S. trade deficit widened by 5.3% from a year earlier, reflecting a decline in exports.

And as the economists from the IMF and World bank have noted, the degree to which a currency movement boosts or reduces exports depends on how large their foreign content is. For the economy as a whole, the foreign share of U.S. exports is at the lower end of the global range, at around 15%, compared with more than 25% in Germany.

“It’s more complicated as a story for the U.S. because of the low foreign content,” saidSebastian Miroudot, a trade economist at the OECD.

Write to Paul Hannon at paul.hannon@wsj.com

Export-Import Bank Near Showdown in Congress

Senator Maria Cantwell, Democrat of Washington, tied a vote on trade to a vote on extending  the Export-Import Bank.CreditAndrew Harnik/Associated Press

WASHINGTON — In 2013, the impoverished African nation Cameroon teamed with General Electric and the Environmental Chemical Corporation, which is based in Burlingame, Calif., to begin work on a $668 million drinking water project for its thirsty capital, financed with loan guarantees from the Export-Import Bank of the United States.

But as the project moves toward its larger second phase, the threatened demise of the Export-Import Bank, a 70-year-old federal export credit agency, is rippling across Cameroon. The water project is a potential victim of an effort by conservative Republicans to kill the bank.

The Ex-Im Bank reaches a critical moment on Friday: Congress must be notified 35 days in advance of all projects of more than $100 million, and with powerful Republicans bent on letting the bank die when its authorization expires on June 30, all the projects frozen over that review period would die with the bank.

While the bulk of the Ex-Im Bank’s financing is used to support the sale of things like Boeing jetliners to companies abroad, projects like Cameroon’s are also animating a dispute in Congress that is reaching a critical juncture this week.

Senators Maria Cantwell, Democrat of Washington; Heidi Heitkamp, Democrat of North Dakota; and Lindsey Graham, Republican of South Carolina, halted Senate consideration of a major trade bill Wednesday, saying they would try to block a final vote on granting President Obama expanded trade negotiation power until they secured a vote on extending authorization for the Ex-Im Bank beyond June.

Their stand threatens the trade bill. Ms. Cantwell and Ms. Heitkamp are among fewer than a dozen Democrats supporting trade promotion authority. Mr. Obama needs their votes to break a filibuster supported by most Senate Democrats.

Ms. Cantwell and the other senators in her group accuse conservatives of sacrificing American jobs on the altar of what they portray as an ideological crusade.

“I don’t plan to start moving ahead until we stop catering to this minority group that doesn’t support the basic tools that the American people want,” Ms. Cantwell pledged.

She faces an uphill fight. Senator Mitch McConnell, Republican of Kentucky and the majority leader, said he personally opposed Ex-Im’s reauthorization, but he has promised a vote on the matter, which  would pass if it comes to a vote in the Senate.

In the House, though, conservatives say a majority of Republicans now oppose reauthorizing the bank. On Thursday, the 170-member Republican Study Committee — a conservative House group — will come out formally in favor of its extinction.

“All we have to do is nothing,” said Representative Raúl Labrador, Republican of Idaho. “I feel pretty good about our prospects.”

Virtually every Republican presidential candidate has been pulled into the campaign to kill the bank.

Representative Justin Amash, Republican of Michigan, said House Speaker John A. Boehner of Ohio could join Democrats to save the bank, but, Mr. Amash warned, “he does so at his own peril.”

Supporters of the Ex-Im Bank say the toll of that campaign is beginning to come into focus. G.E. said this week that a $350 million deal to build locomotives for Angola in Erie, Pa., is about to be lost, with 1,800 jobs.

Boeing says that it will be forced to cede deals in Asia to its only competitor in the wide-body passenger jet business, Airbus, which is based in France.

The looming cutoff of money could compel Cameroon to turn to China, which has already made a competing $850 million bid complete with financing from Beijing’s export credit agency. Executives at G.E. are scrambling for a Plan B, moving the work from its water technology facility in Minnesota to Canada or Hungary, where the company has other plants supported by those countries’ credit agencies.

“You’re talking about a country in sub-Saharan Africa,” said Heiner Markhoff, president and chief executive of G.E.’s water and process technology unit. Commercial banks “aren’t willing to take the risk without an export credit agency. It’s almost contingent on getting to the table.”

The Cameroon project shows the complexity of the issue. Ex-Im opponents say companies as large and powerful as G.E. and Boeing do not need a federal backstop to persuade private banks to finance export projects.

Mr. Markhoff said to some degree that was true — but that conservatives were missing the consequences for American companies that lack G.E.’s deep pockets and connections around the world.

The Environmental Chemical Corporation, with G.E.’s help and Ex-Im loan guarantees, struck the $668 million, three-phase deal with Cameroon’s government, which wanted an American government entity involved as well in what is a public water project.

The first phase — 10 mobile water treatment plants installed in Yaoundé, the capital, as an emergency measure — is done.

Phase 2 — a $532 million effort to move the mobile facilities to where they are needed in southwestern Cameroon while building permanent water plants in the capital — was scheduled to begin soon.

The competing Chinese proposal is part of an effort by Beijing to gain strategic influence in Africa. Its $850 million bid was substantially higher than the cost of the American project, but its financing is not in doubt.

Cameroon’s prime minister, Philémon Yang, has asked the Chinese and American teams to present side-by-side studies of the remaining work, Mr. Eber said. Environmental Chemical Corporation officials have tried to play down the Ex-Im developments in Washington, but he noted that the American study was now delayed pending the showdown.

G.E. officials said that without the support of the Ex-Im Bank, the company could still leverage its global operations to attract government financial backing elsewhere, probably in Hungary or Canada. But that would lead to moving work to the countries where that financing is available.

That could mean leaving a midsize company like the Environmental Chemical Corporation and much smaller suppliers behind. “We have 43 different suppliers in different states for this project,” Mr. Markhoff of G.E. said. “This is not about ‘big corporate welfare.’ ”

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Export Champions! webinar – Transforming Your Company into an Export Powerhouse with Cutting-edge Financing.

Export Champions! – Transforming Your Company into an Export Powerhouse with Cutting-edge Financing.

Join us for a webinar on July 07, 2015 at 3:00 PM EDT.

Register now!

https://attendee.gotowebinar.com/register/4402376754828717314

Fi3E BadgeExport Champions™ is a new program, which allows small and mid-size US manufacturing companies to vastly boost their export sales by utilizing cutting-edge export credit and capital markets financing for international opportunities.

Using actual case studies of the three US companies, whose export revenues from just three projects total over $525 million, as the result of their foresight to deploy financing techniques traditionally reserved for large companies and mega projects, Broad Street Capital Group and representatives of various US Government and private trade and project financing institutions, will empower other US small and midsize companies to successfully compete for large export business opportunities.
“Today, we are witnessing a paradigm shift in the way US small and mid-size companies are able take advantage of sales opportunities, which are two or three times their annual revenue.” said Alexander Gordin, Managing Director of the Broad Street Capital Group. “The key, is a carefully structured project, which is developed with specific long-term, low-cost financing solution in mind from the beginning” said Gordin. Featured Image -- 2741

The Export Champions™ webinar is a one hour introductory presentation during which participants will learn: 
which foreign markets and buyers to target, 
how to correctly develop a financeable transaction, 
which financing tools and programs to utilize, 
how to put together a correct team of advisers, 
utilizing external economic and political factors to gain an advantage, 
how to mitigate risks along the entire transaction life cycle

After registering, you will receive a confirmation email containing information about joining the webinar.

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Export Champions!™ With help of cutting-edge financing, four small and mid-size US companies are poised to export over $525 million of goods and services!

With the help of cutting edge financing, four small and mid-size US companies are poised to export over $525 million in just three individual transactions! 

Fi3E Badge(April 23, 2015, Washington, DC) During US EXIM Bank’s Annual Conference, Export Champions!™, a new program, which allows small and mid-size US manufacturing companies to vastly boost their export sales by utilizing cutting-edge export credit and capital markets financing for international opportunities, was announced by the Broad Street Capital Group.

Using actual case studies of the three US companies, whose export revenues from just three projects total over $525 million, as the result of their foresight to deploy financing techniques traditionally reserved for large companies and mega projects,  Broad Street Capital Group and representatives of various US Government and private trade and project financing institutions, will empower other US small and midsize companies to successfully compete for large export business opportunities.

“Today, we are witnessing a paradigm shift in the way US small and mid-size companies are able take advantage of sales opportunities, which are two or three times their annual revenue.” said Alexander Gordin, Managing Director of the Broad Street Capital Group. “The key, is a carefully structured project, which is developed with specific long-term, low-cost financing solution in mind from the beginning” said Gordin.

The Export Champions! program will offer monthly half-day web based programs and live training events to help companies learn:

  • which foreign markets and buyers to target,
  • how to correctly develop a financeable transaction,
  • which financing tools and programs to utilize,
  • how to put together a correct team of advisers,
  • utilizing external economic and political factors to gain an advantage,
  • how to mitigate risks along the entire transaction life cycle

The first Export Champions! event to take place in New York on May 8th.  Companies seeking to boost their international sales opportunities should send their inquiries to info@broadstreetcap.com , or call  + 1 212 705 8765 ext 702

About Broad Street Capital Group

Based in the heart of the New York City, Broad Street Capital Group is an international private merchant bank with extensive experience in developing and financing exports and infrastructure projects in emerging markets. The firm works closely with a number of international Export Credit Agencies, as well as with all trade and development agencies of the U.S. Government.   For over 25 years, Broad Street Capital Group has successfully served a broad array of private and state-owned clients in multiple countries and has been involved in several high-profile cross-border transactions in energy, IT/telecom, aerospace, healthcare, hospitality and franchising sectors. The firm’s hallmark is its proprietary Develop, Finance, Supply and Insure™ approach to help clients achieve their international business goals For more information, please visit www.broadstreetcap.com

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