So part of what we are trying to address through the resource
scarcity issue, is to use technology more effectively. So we are look-
ing at technology as part of the answer and also facing the fact
that we may need different people in different places in the domes-
tic field.
Overseas I would say that we are very much understaffed. The
problem is a little more critical for us overseas because our com-
Eetitors are doing so much better and have so many more human
eings out there to get the information and to counsel and to com-
8
pete. So that what we have tried to look at, with the scarce re-
sources we have, is to use economies of scale in our staffing ap-
proach. That has been one of looking at foreign service nationals
effectively in how they provide — the truth is that they cost less
than Americans, they provide in-country expertise that is unique.
Americans offer certain types of services and are very important,
and of course our priority is for employing our own American peo-
ple. However, we do look at foreign service nationals as continuity,
as cost effective, and as providing the cultural, political, and eco-
nomic knowledge base that is essential in many of these countries,
and they can be supervised by a regional American officer. We can
get to the point where we have in a couple of places where foreign
service nationals become senior staff and actually manage a small
office where the American may be in another site but has regional
oversight, because we felt because we have limited resources, that
this is the most cost-effective way to approach it.
Mrs. Meyers. I appreciate your answer.
I heard last year some numbers, Mr. Chairman, on the numbers
of people that were employed in a comparable position to our For-
eign and Commercial Service and the numbers in the other indus-
trialized countries and then also those who were in the U.S. Trade
Representative's Office and the numbers from people in the other
industrialized countries, and it seemed to me that we were giving
it far less emphasis.
Maybe we are doing it better and more efficiently, and maybe we
are doing it more with technology, but they certainly had more peo-
ple, and as time goes on we may want to look at those figures.
Have you had to close any overseas posts in order to open any
new offices?
Ms. Fitz-Pegado. I believe that a couple of posts were closed
probably a little bit before I arrived on the job 2 months ago, but
I think the judgment that has been made is trying to regionalize
some of these. The post was not closed, but a foreign service na-
tional was made the head of an office in Helsinki, whereas the
American officer who was leaving was not replaced, and this goes
along with what I mentioned earlier about the concept of trying to
use foreign service nationals more effectively.
I don't know of any post that has closed recently. We have rede-
ployed some resources.
Mrs. Meyers. Can I turn for a minute to your export assistance
centers that you talked about and the fact that you are having then
regional centers and the spokes, the district centers in this country.
How many of the hubs are there going to be or are there now, the
export assistance centers you said opened in January? Are the
hubs open and functioning now?
Ms. Fitz-Pegado. There were four pilots which opened in Janu-
ary which are hubs. Those are the four pilot hubs. In the an-
nouncement that was made a couple of weeks ago, 11 more were
proposed to become hubs and a network of 77 spokes. That is phase
one. That does not complete the entire national plan.
Mrs. Meyers. I would love to see where those are. I am sure one
of them is in the Kansas City area, but I would like to see it just
the same.
Ms. Fitz-Pegado. OK.
[At the time of publication this information was not available.]
Mrs. Meyers. Finally, I just received information about the
World Symposium on Trade Efficiency sponsored by the U.N. Con-
ference on Trade and Development. Will the Foreign Commercial
Service be promoting these various trade points that they talk
about in this? How will businesses have access to the North Amer-
ican trade points? Do you know what I am talking about?
Ms. Fitz-Pegado. Yes. It is a conference in Columbus, Ohio, in
October, and Secretary Brown is, I believe, one of the cochairs or
the chairman. He will be addressing the conference, and our dis-
trict office in Columbus is very much involved.
Yes, we share those goals, and we plan to participate fully in the
conference.
Mrs. Meyers. If I could ask one more question, Mr. Chairman.
Mr. Gejdenson. However, you can ask as many questions as you
want. We were concerned at this end of the table, what do they
make in Kansas.
Mrs. Meyers. Well, I can list them.
Mr. Gejdenson. You don't have to do it now.
Mrs. Meyers. All right. I'll do it at another time.
Mr. Gejdenson. One member suggested it was just tornadoes,
but I knew that wasn't right. [Laughter.]
Mrs. Meyers. I'm sure that wasn't Mr. Bereuter.
Mr. Gejdenson. No, of course not. It absolutely could not have
been Mr. Bereuter.
Mrs. Meyers. And I'm equally convinced it wasn't Mr. Roth.
Mr. Gejdenson. You are right there, too.
Mrs. Meyers. Has there been any coordination between the For-
eign Commercial Service and the Small Business Administration's
Office of International Trade? Because I am very concerned that we
don't put enough emphasis on small manufacturing firms in this
country that I think should be exporting and probably would if
there were the right assistance to help them cut through the red
tape.
Ms. Fitz-Pegado. Absolutely. That is what is behind these one-
stop shops. It is the colocation of SBA and Eximbank, and that has
only been done through full cooperation and coordination with
SBA, and also this network in the domestic field primarily services
small and medium-sized businesses. That is our client base in the
domestic field.
Of course we assist large companies, but they have a different
need. Much of their need is for advocacy and is for opportunities
for information regarding new markets or expansion of their exist-
ing operations, but the growth potential for our country in exports
is among small and medium-sized companies, and that is where
our focus is.
Mrs. Meyers. Thank you very much, Mr. Chairman.
Mr. Gejdenson. Thank you.
Mr. Bereuter.
Mr. BEREUTER. Thank you very much, Mr. Chairman.
Ms. Fitz-Pegado, thank you very much for your testimony.
Can you tell me what is status of the effort to establish the Mul-
tilateral Development Bank operations or office?
10
Ms. Fitz-Pegado. Yes. In the TPCC report last September there
was a recommendation for the consolidation and centralization of
the procurement outreach efforts within the U.S. and Foreign Com-
mercial Service. There will be an office that will be opened late in
September, which will be the launching of the centralization of
those services. That will mean that we will have access to data
banks and we will have electronic connections to our domestic field
operations and to the banks from this center.
We also have placed officers for the first time, senior commercial
officers, at the Inter-American Development Bank. That officer has
been there for several months, a senior level officer. We already
had one person there working with the U.S. executive director.
We have plans within the next few weeks to have a senior level
officer at the World Bank. We do have one GS employee there now
working with the U.S. executive director. We have and have had
for a couple of years senior commercial officers at the European
Bank for Reconstruction and Development, at the Asian Develop-
ment Bank, and the African Development Bank.
We have a pilot program under way with the Inter-American De-
velopment Bank that is a series of seminars and information dis-
semination, particularly through our domestic field, to help small
and medium-sized businesses compete more effectively for projects
at the banks, and we realize that that creates tremendous potential
for the future growth of exports and of project competition if we can
get the information out more effectively to small and medium-sized
enterprises.
Mr. Bereuter. Thank you very much. That is a good report. I
was anxious to hear about that. I am the author of the mandate
that you have those commercial officers serving as procurement of-
ficers at the MDB's. It was very slow in coming about, but at this
point you have only one to go among the major MDB's. Is that cor-
rect?
Ms. Fitz-Pegado. Yes, sir, and that should be filled within
weeks.
Mr. Bereuter. Now I hope these people are devoting full duties
to that and they are not sharing their duties; I mean tney are not
involved in a whole range of other activities in addition to the focus
on procurement and export promotion.
Ms. Fitz-Pegado. It is full-time responsibility for that senior
commercial officer.
Mr. Bereuter. Good.
Let's see. I am not sure that you mentioned the African Develop-
ment Bank. Did you?
Ms. Fitz-Pegado. Yes, I did. Well, if I didn't, I'm sorry. There is
an officer there.
Mr. Bereuter. Good.
Can you give us some indication of your experience with, for ex-
ample, the EBRD where you apparently had had one the longest
period of time?
Ms. Fitz-Pegado. The officer there has made tremendous
progress such that we are hoping he is going to help us with a cou-
ple of the other positions. Tom Kelsey has done exemplary work.
We think that program is way ahead and can be used as a model
to help us with some of the other programs.
11
But we are using the African Development Bank, and we have
been in close consultation with Alice Dear who has been in and out
as the U.S. executive director. We have a new officer going in
there, and we have a second officer — we actually have two. We
have a part-time officer at a midlevel, and we have a fully devoted
senior commercial officer at the African Development Bank.
We are particularly looking at southern Africa as a focus of some
of the African Development Bank activities. In West Africa we
know that there are tremendous opportunities through our min-
ister counselor in South Africa in the Southern African Program,
and the bank in the Philippines is working closely with our TPCC
committee particularly on the ASEAN initiatives, APEC initiatives,
and on our Indonesia BEM initiative — Big Emerging Market initia-
tive.
Mr. Bereuter. That is very good to hear. I am convinced, of
course, that there is a tremendous opportunity for us to make big
gains in the procurement field and promote our exports through
these multilateral development banks. I come at this from my other
committee assignment on the Banking Committee, but I do think
that if we had some evidence of the progress that these officers are
able to make, it would be very helpful when we take up the replen-
ishment authorization legislation for the multilateral development
banks.
Members do not understand, I think, the potential — generally do
not understand the potential for our exports if we more aggres-
sively pursue the opportunities at the multilateral development
banks. I do hope we are not understaffed when it comes, for exam-
ple, to the Asian Development Bank because I think that is the
area where we probably have the most to gain and where we are
most outstripped by the competition, particularly in Southeast Asia
and places like Indonesia.
You just mentioned the Big Emerging Markets initiatives. Per-
haps I didn't see it in your testimony because I wasn't here when
you began. If you have already covered it, forgive me and just don't
repeat it, but would you say a few more words, if you haven't al-
ready, about the Big Emerging Markets initiative.
Ms. Fitz-Pegado. Yes. We have identified 10 markets in the
world as offering particular potential, growth potential, for the
United States. These markets have been determined through anal-
ysis that has been conducted that has looked at the size of those
markets.
Mr. BEREUTER. Are these geographical or functional markets? "
Ms. Fitz-Pegado. These are geographical. They are in 10 coun-
tries. They are China, South Korea, Indonesia, India, Argentina,
Brazil, and Mexico, Poland, Turkey, and South Africa. Those are
the 10, and the thought behind it is that by the year 2000 exports
to those markets will exceed either Europe or Japan alone — ei-
ther — and by the year 2010 they will exceed Europe and Japan to-
gether, so tnat the thought is that it is important to look toward
developing programs and putting financial and human resources in
those markets to work toward the inevitable future opportunity
that these markets provide, and this is not to the detriment of our
programs in the Newly Independent States, in Europe and Japan,
12
those are very important markets, will always be, but we thought
we needed to plan for the future.
Mr. BEREUTER. What about the Export Mexico initiative? How
does it differ from our export promotion programs for Latin Amer-
ica and the Caribbean generally? Is it related to the NAFTA initia-
tive?
Ms. Fitz-Pegado. In the sense that everything that we do must
have some degree of coordination and focus. We saw an opportunity
for Mexico as one of the largest growing markets for us in the
world to focus our efforts in the domestic field not just toward —
we are going to be looking at all the Big Emerging Markets, but
we looked at Mexico first.
Clearly, NAFTA provided an opportunity for us to look at Mexico,
and we did that as our first BEM-focused effort, and while it is not
anything terribly new, it is a repackaging and it is a refocus on
trade finance that we needed to be sure that our materials and our
seminars and all of our efforts with Exim and SBA were coordi-
nated to help companies to take advantage of opportunities in that
market.
We plan to create similar team efforts and strategies for all of
the Big Emerging Markets through team structures in the domestic
field. We will have BEM teams for each country, and some of that
is under way already.
Mr. BEREUTER. Ms. Fitz-Pegado, would it be possible for your de-
partment and your component within the department to do a staff
orientation day on the Hill?
Ms. Fitz-Pegado. Of course.
Mr. BEREUTER. To put together a display and presentation for a
couple of hours for legislative staffers, for Members of the House
generally?
Ms. Fitz-Pegado. Of course. We would be happy to.
Mr. Bereuter. I think that there should be a significant interest
in what you are doing, the new initiatives that you have, and the
services that might be made available to the businesses in mem-
bers' districts. I think it would be part of an effort to really build
support for a program that should have high payoff.
I haven't talked to the ranking member or the chairman about
this, but it seems to me, after they think about it a while and you
have a chance to think about it, it seems like a good idea to all of
us. I would like to suggest that we examine the potential for doing
that.
Mr. Gejdenson. Would the gentleman yield for a moment?
Mr. Bereuter. I would be pleased to yield.
Mr. Gejdenson. Thinking on a similar line, my thought actually
started in the district offices, but I think we would like to combine
what Mr. Bereuter is proposing, and really we should do this at
both ends because I think you can look at it as more than just edu-
cating members and their staff, which is always helpful, but also
as resources for the one-stop shops in your operation in general to
utilize.
I mean there is nobody that has more contact with the small
businesses and medium-sized businesses in their districts than
members, and as we and our staffs go around to make sure that
we are fully knowledgeable of what you do, I think it would be a
13
great service to business in this country and exports and the jobs
that it leads to.
One of the things I find as we go around, the fact that we know
which agency to go to and where to go is very, very helpful, and
I would suggest the committee staff would be happy to help you
with this, that we set up a session here for staff dealing with ex-
port and trade and business back in the district and then figure out
a model.
I think SBA does this and some of the other agencies where they
come in with district staff— Social Security I think does it; I think
they all do it — that deal with that particular issue and have a
workshop. We don't want to tie up all your time doing workshops,
but I think that if you were to do regional workshops for our area;
and in different parts of the country it is different, but if you did
one in new England I think you would find most staff members
that cover the area would want to come, and that deal with busi-
ness and exports back home, and I know we have got a lot of them
in my district, and being able to better serve them will help bring
in the people you need to serve. So we should do that.
Mr. Bereuter. I think that is absolutely true. Most members do
a number of business visits in the course of a year, and I know we
spot opportunities, and if we had more information to share with
them — I think we have a fair amount, but members who don't deal
with these export issues as much as we do probably are unaware
of how much progress has been made over the last few years.
Mr. Chairman, I want to thank you and the ranking member,
Mr. Roth, for supporting, and Mr. Roth for offering, my amendment
in the previous markup. I was prevented from being here, and I ap-
preciate your support and assistance.
Thank you. I yield back.
Mr. Gejdenson. Thank you.
And we thank you, and we look forward to working with you. As
you can sense here, this is not a partisan issue. This subcommittee
has worked together on export programs such as the one-stop shop
and the environmental export bills for years, and it is the place
where I think we can get a lot done because we don't have political
fights.
Ms. Fitz-Pegado. Thank you.
Mr. Gejdenson. Thank you very much.
The hearing is adjourned.
[Whereupon, at 12:24 p.m., the subcommittee was adjourned.]
MARKUP OF THE JOBS THROUGH TRADE
EXPANSION ACT OF 1994
WEDNESDAY, AUGUST 10, 1994
House of Representatives,
Committee on Foreign Affairs,
Subcommittee on Economic Policy,
Trade and Environment,
Washington, DC.
The subcommittee met, pursuant to call, at 1:35 p.m. in room
2200, Rayburn House Office Building, Hon. Sam Gejdenson (chair-
man of the subcommittee) presiding.
Mr. Gejdenson. We meet today to mark up the Jobs Through
Trade Expansion Act of 1994, which will improve the effectiveness
of U.S. export promotion programs and creation of jobs here at
home.
The bill significantly enhances the ability of the U.S. Govern-
ment to provide grants, loans, loan guarantees, and risk insurance
for U.S. export projects and investments overseas, provides specific
programs for the expansion of U.S. environmental exports, and to
protect U.S. intellectual property overseas. A conservative estimate
of the jobs created from this package of bills is 100,000 jobs.
I would like to now walk members through these titles. Title I
is a rewrite of the authorities of the Overseas Private Investment
Corporation. The language is similar to legislation which passed
the House in last year's foreign aid bill. OPIC offers U.S. investors
assistance in finding overseas investment opportunities, insurance
to protect those investments, and loans and loan guarantees to help
finance the projects. OPIC cannot insure or finance projects that
would displace American workers. In fact, OPIC helped create over
24,000 jobs in 1993 alone.
We have updated OPIC's original language and eliminated out-
dated programs. The legislation extends OPIC's authority and pro-
gram levels in order for the corporation to work effectively in the
former Soviet Union. We have also clarified the procedures for
ceasing OPIC operations in countries that are no longer eligible for
OPIC programs. In addition, we have extended the direct loan pro-
gram to include all businesses. It had previously been limited to
small businesses.
Under this bill, OPIC will use its own earnings to pay for pro-
grams instead of drawing funds appropriated from the Treasury. In
Title II we double the size of the trade and development agency au-
thorization from $45 million in 1995 to $90 million in fiscal year
1996.
(15)
16
This agency simultaneously promotes economic development and
exports of U.S. goods and services to developing countries. The
agency estimates that for every $1 it spends it generates $25 in
U.S. goods and services.
The bill authorized the director of the Trade and Development
Agency to provide funds for feasibility studies and other activities
related to the development projects wnich provide opportunities for
the use of U.S. exporters. This bill expands the mandate of the
agency to include environmental assessments.
In title III, the bill reauthorizes the export promotion programs
within the International Trade Administration, reauthorized $250
million for fiscal year 1995 and $275 million for fiscal year 1996.
In report language we will state that it is the subcommittee's in-
tention that the bulk of these increases be provided to the U.S. and
Foreign Commercial Service.
Title IV promotes the export of U.S. environmental technologies
and products. It is the text of H.R. 3813 which has already passed
the subcommittee and the House of Representatives.
The last title involves intellectual property. It has already been
introduced as H.R. 4239. Title V requires AID in conjunction with
Commerce Patent and Trademark Office to establish a program of
training and technical assistance. The program is aimed to coun-
tries that have expressed the willingness to improve their record on
intellectual property protection but lack the expertise or resources
to do so.
Mr. Roth, do you have any additional comments?
Mr. Roth. Well, Mr. Chairman, the focus of this subcommittee
is to promote jobs for American workers by expanding exports of
American products, and this bill, which I am cosponsoring with
you, will create at least 100,000 new jobs here at home. This is the
third job creating measure that our subcommittee has produced in
this Congress, a record that no other subcommittee can surpass.
Our bill expands the financing and insurance available to Amer-
ican companies so they can exploit international markets. We ex-
pand the Trade and Development Agency which helps American
companies get on the ground floor of overseas construction projects,
and TDA returns $25 in exports for every dollar we invest in this
agency. We augment the U.S. and Foreign Commercial Service, our
front line agency for helping American companies search out export
opportunities and beat the competition, and we take another step
toward redirecting our foreign aid money into helping U.S. export-
ers with intellectual property problems in overseas markets.
Each of these provisions will increase American exports,
strengthen our competitive position in world markets, and create
new jobs for our workers.
Mr. Chairman, I commend you for the work that you have done
on this bill, and I look forward to bringing this bill to the House
and seeing it through to enactment this fall. As I say, I also com-
mend you for passing now this our third jobs bill through the Con-
gress. I think this speaks well for the work that you are doing on
this committee, and I just want to thank you for that.
I also, Mr. Chairman, would like, on behalf of Mr. Bereuter, to
offer an amendment to keep TDA at its current authorized level.
17
I believe that he has discussed this with you and the majority, and
I ask that the amendment be adopted.
Mr. Gejdenson. If we can just hold off on the amendment, I
want to thank you for all the help you have obviously been on this
and other bills.
But first, before considering the bill and amendments to it, would
any other members of the committee like to comment?
If not, staff director, please read the bill.
Mr. Scheibel. To extend the authorities of the Overseas Private
Investment Corporation and for other purposes.
Mr. GEJDENSON. Without objection, the bill will be considered as
read.
[The bill appears in the appendix.]
Mr. Gejdenson. Are there any amendments?
Mr. Roth.
Mr. Roth. At this time I would again, on behalf of Mr. Bereuter,
offer the amendment to keep TDA at its current authorized level.
Mr. Gejdenson. Do you have the amendment before us?
Mr. Roth. Yes, the amendment is here. On page 56, line 4, strike