Mr. Chairman and members of the committee:
I am pleased and honored to be here today on behalf of Dr. Peter Watson, OPICís President and CEO. Dr. Watson regrets he could not be here in person due to previously scheduled travel to Africa as part of OPICís special initiative to spur development and promote investment in sub-Saharan Africa.
I want to thank you, Mr. Chairman and members of the committee, for the consistent leadership and support you have provided OPIC and its sister agencies in the Trade Promotion Coordinating Committee (TPCC). Given our commitment to the development of a unified and successful U.S. trade program, I have every confidence that the TPCC report, and our ongoing efforts to execute its recommendations, will have the desired effect: to enable U.S. companies to better compete for access to existing and emerging markets, to the benefit of American investors and exporters.
Toward that end, I want to reinforce the reportís recognition of the invaluable contributions of late Export-Import Bank Chairman John E. Robson to our cooperative endeavor. Johnís dedication to excellence should serve as both a foundation and a beacon to the efforts of the TPCC agencies.
I also wish to express OPICís appreciation for the leadership of Secretary of Commerce Don Evans, whose efforts and vision have been key in marshaling the collective resources of our agencies for TPCCís worthy mandate.
Mr. Chairman, in his introductory letter to the TPCC report, President Bush makes clear the central goal of his unified U.S. trade policy: providing American companies the information, expertise and financing they need to take full advantage of the opportunities which exist in international markets. The President expects that the TPCC agencies and departments will achieve this goal by providing customer service that is responsive, streamlined and results-oriented. While the report contains many specific recommendations, they are all in service of a single objective: providing investors and exporters "with the tools they need to compete". OPIC is committed to working with our sister agencies to meet this worthy objective.
Over the agencyís 31-year history, OPIC has promoted sustainable development and supported $138 billion worth of investment in 3,000 projects from Algeria to Zimbabwe. These same projects have generated $64 billion in U.S. exports and created nearly 250,000 U.S. jobs. The activities of these projects are as diverse as the countries that host them. Over its history, OPIC has built up reserves of over $4 billion, and as you know, accomplishes its mission at no net cost to American taxpayers.
In reiterating OPICís commitment to the goals contained in the TPCC report, I want to share with you today specific steps OPIC has taken to implement the recommendations of the report, and to outline OPICís future course of action to that end. Taken as a whole, these actions represent demonstrable progress toward better coordination between OPIC and its sister agencies; improved customer service; and more aggressive outreach to the American business community. In all these efforts, OPIC has striven in particular to improve small- and medium-sized businessesí access to international markets.
Improved coordination among TPCC agencies is a priority of the report, with the expectation that this would enable the agencies to identify investment opportunities more quickly. As the report points out, OPIC has already been working in tandem with our colleagues from the Export-Import Bank (Ex-Im) and the Trade and Development Agency (TDA) on joint initiatives. These include efforts in Indonesia, and more recently in Pakistan and Afghanistan.
New OPIC Small Business Emphasis
As another example of improved coordination and cooperation, I am also pleased to report that one of OPICís key priorities under the presidency of Peter Watson is to establish an innovative framework agreement between OPIC and the Small Business Administration (SBA). This important cooperative relationship will provide a new dimension for American small businesses currently working with the SBA by providing a vehicle to seamlessly connect interested companies with the tools and products needed to invest internationally.
The effect of the OPIC/SBA Small Business Initiative will be to leverage, through cross-training and outreach, the relative strengths of the two TPCC agencies, in order to provide U.S. small businesses with the expertise and financial wherewithal necessary to make investments in international markets. We hope to formalize this arrangement in the near future.
In the same spirit as our SBA cooperation, OPIC will also seek a new relationship with the U.S. Commercial Service that will establish a training program by which Commercial Service officers will be able to explain OPIC products and services to investors already familiar with international operations through existing relationships with the Commercial Service.
Establishing improved customer service is another goal of the TPCC report and an OPIC priority. OPICís management and staff are committed to increasing responsiveness to and streamlining business processes.
Minimizing red tape and providing responsive service to those who have an interest in the agencyís products is one of the critical links in meeting OPICís development. Towards this end, OPIC will:
OPIC is committed to servicing our customers as effectively and efficiently as possible. Indeed the work of the TPCC will complement the ongoing efforts that OPIC itself has embarked upon in assessing its programs, refocusing our efforts toward mobilizing capital where but for OPIC there would be no private investment, and in streamlining our operations.
Refocus on Developmental Mission
Our objective since coming to OPIC has been to align our products and services in a manner that supports OPICís statutorily-mandated mission, while also recognizing a robust and growing private market that has developed since OPICís founding.
As such, we have concentrated on, among other areas: refocusing OPIC on its core, developmental mission; rededicating our commitment to small business; and ensuring that OPICís products are complementary, not competitive, with the private sector. Each of these reforms will also contribute importantly to meeting the goals of the TPCC report.
We are working actively to strengthen OPICís consciousness of its historical developmental mission. We look to assess the investments that OPIC ultimately supports by more than simple dollar flows; that is, to critically examine and benchmark the added value of a particular investment to the host country, or as we say, to assess the additionality the project represents.
Our goal is to ensure that OPICís participation "adds value" by measuring the extent to which there is a market failure, the degree to which OPIC can leverage its resources for a broader economic impact, and the extent to which the project in question contributes to the overall economic development of the host country.
Our ability to refocus on the developmental nature of our projects is made possible in part by the growth and success of private market financing and insurance mechanisms. This growth allows OPIC, with its unique strengths as a government agency, to complement the private markets by working in countries in which the private sector would otherwise not participate.
Indeed, OPICís role is to do things that the private market will not, such as offering more tolerance for higher risk countries or projects, longer tenure, or larger per project capacity, which will help fulfill our development mandate, but to do so by accepting only prudent financial risk, as OPIC has consistently practiced over its history.
The TPCC report also calls for member agencies to formalize cooperation in pilot investment countries, such as Mexico, South Africa, Brazil and Turkey. I am pleased to report that OPIC has been active in each of those countries, and looks forward to working with our sister agencies as part of a unified trade program.
The TPCC report notes that U.S. exporters wanted a coordinated response to crisis regions that would enable them to take advantage of emerging commercial opportunities. Among TPCC agencies, OPIC is uniquely positioned to provide such coordination.
Special Foreign Policy Initiatives
Since the events of September 11, OPIC has announced a series of initiatives in support of the frontline states in the international war against terrorism, the cumulative effect of which is to demonstrate to potential U.S. investors the opportunities that exist in countries rebuilding from strife.
Last October, OPIC announced an initiative for Pakistan, which included the extension of a $300 million special line of credit for US companies interested in investing in Pakistan.
As part of the Bush Administrationís commitment to the economic reconstruction of post-Taliban Afghanistan, OPIC announced in January that it would establish an initial $50 million line of credit to support U.S. investment in that country. OPIC has also encouraged U.S. investment in the neighboring states of Uzbekistan and Kazakhstan.
We have made significant progress in each of these areas, and expect that within a reasonable period of time, we can fulfill the commitments we have made.
Before closing, I want to note that the TPCC report pays special attention to the needs of U.S. small- and medium-sized enterprises (SMEs). Despite its small staff, OPIC has done remarkably well in reaching out to small and medium-sized business that constitute a growing percentage of project participants. Of the 37 new insurance and finance projects that OPIC supported in FY 2001, approximately 57 percent (21 projects) involved American small businesses. In addition, thousands of SMEs participate as suppliers to OPIC-supported projects. By comparison, 40 percent of all projects OPIC supported in FY 2000 involved U.S. small businesses.
Data on the specific U.S. companies that will provide goods and services to OPIC-assisted projects for the seven fiscal years 1994 through 2000 show the specific U.S. suppliers for $11.4 billion in expected procurement for OPIC-assisted projects. These U.S. companies are located in 46 states. It is estimated that approximately 62 percent of these identified suppliers to OPIC-backed projects are U.S. small businesses.
OPICís focus is increasingly on those countries where the needs are greatest and on the U.S. small and medium businesses that otherwise would hesitate to expand overseas without OPIC financing or insurance. Fortuitously, these are the same markets where our nationís trade assistance programs as implemented by fellow members of the TPCC can also have significant impact. It is the developing country markets that will continue to grow the fastest and it is those same markets where our exports are in demand.
Small businesses often do not meet the profile that private sector financial institutions and insurers are looking for in their overseas clients. This is where the development goals of the United States government, the needs of small business, and OPICís programs intersect. With OPICís assistance, the proven dynamism of U.S. small businesses can be mobilized to produce viable projects in the developing world.
In conclusion, the measures outlined above speak to OPICís strong commitment to a leadership role in providing American companies the kind of unified trade program President Bush expects of the TPCC agencies. They represent significant progress toward better coordination between OPIC and its sister agencies; improved customer service; and more aggressive outreach to the American business community, all with a specific eye toward assisting small and medium-sized businessesí efforts to access international markets.
I would be remiss in closing without noting that recommendations in the report were based on a survey of U.S. exporters, which identified their expectations and needs. It is vital for we the member agencies always to keep in mind the investorís understanding of the global marketplace, its vagaries and opportunities, in formulating our unified trade program. In that context, we at OPIC have much more to accomplish before we have made our full contribution to this process, but we are confident that our attention to investorsí needs has placed us on the right path.
Thank you, Mr. Chairman.
I will be pleased to respond to your questions.
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