U.S. EXIM board changes rules to help boost U.S. competitiveness vs. China

FILE PHOTO: Containers are seen at the Yangshan Deep Water Port in Shanghai, China, October 19, 2020. REUTERS/Aly Song

WASHINGTON (Reuters) – The Export-Import Bank of the United States said its board voted on Thursday to lower the domestic content threshold required for projects it backs from 85% to 51% for 10 sectors seen as critical to boosting U.S. competitiveness versus China.

EXIM Chairman Kimberly Reed said the change would make it easier for the Bank to back transactions in areas such as 5G wireless technology where the old U.S. content rule could not be met, and meet a congressional mandate.

“Congress wants us to advance America’s comparative leadership in the world with respect to the People’s Republic of China, neutralize China, and get going 10 transformational export sectors,” Reed told an online event hosted by the Council on Foreign Relations shortly after the board meeting.

The 10 sectors include artificial intelligence, biotechnology, biomedical sciences, wireless communication technology, including 5G, quantum computing, renewable energy, energy efficiency and storage, semiconductors, machine manufacturing, financial technology, water treatment and sanitation and high-performance computing.

The changes should help EXIM back more deals for U.S. companies, Reed said, citing concerns among Trump administration officials and Congress about China’s Belt and Road initiative and what she called its “debt trap diplomacy.”

The new rules will allow projects or procurements to qualify for EXIM financing if they meet a 51 percent U.S. content threshold and certain other requirements.

EXIM will be able to approve a transaction even if it does not meet the 51% threshold if it advances the comparative leadership of the United States relative to China, and the exporter provides a written plan for expanding U.S. based jobs in the supported sector in the subsequent three to five years.

Reed said EXIM financing could make a big difference, noting that the Bank’s support for a large LNG project in Mozambique had helped that country shift away from Russian and Chinese partners and choose a U.S. supplier instead.

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