FOREIGN ASSISTANCE AND RELATED PROGRAMS APPROPRIATIONS FOR FISCAL YEAR 1984 THURSDAY, MARCH 10, 1983 U.S. SENATE, SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, D.C. The subcommittee met at 10 a.m., in room S-126, the Capitol, Hon. Alfonse M. D'Amato presiding. Present: Senators Kasten, D'Amato, and Rudman. NONDEPARTMENTAL WITNESSES SUBCOMMITTEE PROCEDURE Senator D'AMATO. The subcommittee will come to order. Today the Senate Foreign Operations Appropriations Subcommittee will hear from public witnesses who have requested the opportunity to present their views on the fiscal year 1984 foreign assistance programs. First of all, I would like to welcome all of you here on behalf of the subcommittee and express our appreciation for your taking your time to express your views. Again this year there has been a gratifying turnout of witnesses. However, we also operate under time constraints. As a result, it will be necessary to limit the amount of time for each witness. So we are going to ask that you summarize your statements. It is important that you keep in mind the entire statement will be inserted into the record. In addition, we wish to advise you that, although not all of the subcommittee members are here, the record will be made available to them, and it will be carefully reviewed by staff so that those Senators unable to personally attend today will have the opportunity to be informed of your views and every possible consideration will be given to them. The first witness today is Evan Werling of the French Oil Mill Machinery Co. Mr. Werling, we are delighted you are here. You may proceed. (665) FRENCH OIL MILL MACHINERY CO. STATEMENT OF EVAN A. WERLING, VICE PRESIDENT-FINANCE, FRENCH OIL MILL MACHINERY CO. COMPETITIVE EXPORT PROGRAM Mr. WERLING. Thank you very much for the opportunity to appear before your subcommittee, Senator. I have submitted for the record a copy of my written testimony. However, I would like to give verbal testimony which will summarize that, and also relate to what Chairman Draper of the Export-Import Bank had to say last Tuesday. First of all, our company is an American company, operated out of Piqua, Ohio. We have been in business for 83 years. We export approximately 50 percent of the equipment that we manufacture which is used to extract vegetable oils from oil-bearing seeds. On Tuesday, Senator Kasten made the comment to the chairman of the Bank that he was a bit confused about what was really going on over at the Eximbank regarding whether or not their programs were competitive. I will say quite frankly that I am also very confused, as a small businessman, because 2 years ago when the President of the United States gave his inaugural address, he said he was going to help put America back to work through a strong competitive export program. Subsequent to that, we saw the programs of the Eximbank go through a period of time where there was no financing available at all, to a period of time over the past 2 years where the financing has been just totally and literally noncompetitive. Again, in the 1983 state of the Union address by the President, and I quote you, "We must have adequate export financing to sell American products overseas." Amen. The President really hit the nail on the head. EXPANSION OF U.S. EXPORTS Just recently, the President also, speaking before a public group, said one of the best jobs programs we can have in this great Nation is to expand our exports. And that is the start of our program. Exports will put a great dent in the soaring budget deficits of this country. And he also pointed out that 90 percent of all small- and medium-sized businesses presently are not involved in the export market. At that same time, he encouraged small- and medium-sized businesses to get out there and outplan, outproduce, outsell, and basically whip the pants off of our foreign trade competition. I will tell you, as far as small business is concerned, we have the products. We have the manufacturing capability, and we have the technology to do just that. But we cannot compete against foreign government competition. I am not talking about foreign competition, I am talking about the foreign government export financing programs. We especially cannot compete against it when our Government goes out and negotiates a new trade agreement and lending agreement with the OECD countries, and then comes back and refuses to offer American companies those same types of export financing terms and conditions, because at the present time the Eximbank is not competitive in their programs, and they have not been for the past 2 years. I have been working with the National Federation of Independent Businesses, the National Association of Manufacturers, the U.S. Chamber of Commerce, the Coalition for Employment Through Exports. I can say that I am not aware of anyone in those organizations that would come before this committee and say that the programs to support U.S. exports at the Eximbank are competitive, because they simply are not competitive. In fact, in the recent February issue of the NFIB magazine, which was just issued here in February, they have an article on page 2 which says, In a surprising move, Eximbank cut interest rates charged to U.S. exporters for their loans. The move came as quite a surprise, in light of the Bank's earlier assertions by the Chairman, Mr. Draper, who denied allegations that the Eximbank charged a higher rate than banks in any of the other U.S. trading companies belonging to the OECD organization. In fact, a scant 2 days prior to the rate reduction which came January 18, Chairman Draper said, and I quote, "We are right there where everybody else is." It is no wonder that Senator Kasten and myself and a lot of other people in the United States are very confused as to what is going on at the Eximbank when the President of the United States tries to promote a strong competitive export financing program, but the programs are not there in fact when it comes to competition. During the past 2 years our company-and we are small business-we have lost every international export sale where competitive financing was an issue. Everything that we have had to finance, we have lost. Our company has never had a layoff in its 82-year history. This year, because of noncompetitive financing, we had to terminate one-third of our total employment. I am getting tired of hearing the statements from the Eximbank that their programs are competitive, because they are not competitive at all. The other day Mr. Draper, Chairman of the Bank, said that the business just is not there. Well, if the business is not there, then why does he not make his programs fully competitive to give American exporters an equal opportunity to compete for the business that is there? He came before your subcommittee and said we do not need the appropriations that are being recommended by various groups. Well, I fully suggest that they are given the lending authorizations that have been recommended and make their programs fully competitive to give U.S. manufacturers an equal opportunity. The demand may not be as great as it was 2 years ago, but demand is still there. But American businesses and American workers are not going to get to share in that demand unless we have competitive export financing for our products. We are mindful of the fact that the Eximbank has a responsibility to equate the cost of their financing with what the lenders make their loans at for foreign buyers. However, I would like to remind this committee that the Bank also has a direct, given its charter, that wherever they perceive subsidies to exist in the export financing market, they have got the responsibility for going out and negotiating an end to those subsidies. My point is, as a small businessman, if the present administration, including the Bank, does not have the ability to go out and negotiate an end to foreign subsidized financing, then they should not take it out on small business and American labor by putting us out of business and transferring our jobs over to our foreign trade competitors because of unsuccessful negotiations. [The statement of Mr. Werling follows:] PREPARED STATEMENT OF EVAN A. WERLING VICE PRESIDENT-FINANCE FRENCH OIL MILL MACHINERY COMPANY INTRODUCTION Mr. Chairman, members of the Senate Subcomittee on Foreign Operations I am Evan A. Werling from the French Oil Mill Machinery Company, which is located in Piqua, Ohio, a community of approximately 20,000 people. French Oil is a small company (employing approximately 250 people) which exports approximately 50% of its sales volume. Our company designs and manufactures machinery used in the extraction of edible vegetable oils (such as soybean oil, corn oil, sunflower oil, etc.), separation of water from sugar cane, dewatering of natural rubber and synthetic polymers as well as the molding of rubber into various products, from tennis balls to automotive engine gaskets. Our company is a technological leader in its various product lines and is known for its high quality workmanship and product durability. We export to many of the developing countries of the world where there is a dire need for our products, which are used to process raw agricultural products into edible oils and foods for the countries' inhabitants and for animal production. Without this machinery, developing countries are forced to sell their raw agricultural products as commodities thus lessening their ability to be self-sufficient and viable importers of other American-made goods. SMALL BUSINESS EXPORT FINANCING During the past two years, the French Oil Mill Machinery Company has not been able to obtain competitive financing from the U.S. Export-Import Bank for any of its potential export sales, and has lost more than $15 16-524 0-83-43 |