Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2005

CONGRESSIONAL RECORD
SENATE
Sept. 23, 2004

FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS APPROPRIATIONS ACT, 2005

AMENDMENT NO. 3685

Mr. GRASSLEY. Madame President, I rise to offer an amendment. My amendment serves two purposes. First, to ensure that credit guarantees extended by the Export-Import Bank to help build an ethanol dehydration plant in Trinidad and Tobago did not violate the Bank's charter. And, second, to ensure that Congress has prior notification before similar credit is extended by the Bank in the future.

Much to my dismay, I recently learned that the Export-Import Bank approved approximately $9.6 million in taxpayer guaranteed credit insurance to help Angostura Limited finance the construction of an ethanol dehydration plant in Trinidad and Tobago. The purpose of this credit insurance was to enable Angostura Limited to purchase equipment which will be used to dehydrate up to 100 million gallons of ethanol annually from Brazil and re-export the ethanol to the United States duty-free under the current Caribbean Basin Initiative trade preference program. I am deeply concerned that the extension of this credit may have violated the letter and spirit of the Export-Import Bank's own authorizing statutes.

Section 635(e) of the authorizing statute states that the Bank is not to provide credit or financial guarantees to expand production of commodities for export to the United States if the resulting production capacity is expected to compete with U.S. production of the same commodity and that the extension of such credit will cause substantial injury to U.S. producers of the same commodity. The statute further provides that "the extension of any credit or guarantee by the Bank will cause substantial injury if the amount of the capacity for production established, or the amount of the increase in such capacity expanded, by such credit or guarantee equals or exceeds 1 percent of United States production." The total 100 million gallon capacity of the facility in question is nearly four percent of U.S. production. Thus, the capacity of this plant clearly exceeds the one percent threshold for causing substantial injury to the U.S. ethanol industry outlined in the authorizing statute. This raises serious questions as to whether it was within the Bank's authority to issue credit for the construction of the Angostura Limited facility.

Because the amount financed by the Export-Import Bank was less than $10 million dollars no detailed economic impact analysis was conducted by the Bank. Thus, the Export-Import Bank never conducted an analysis to determine whether this plant will cause substantial injury to ethanol facilities in the United States. Let's be clear-the potential economic impact of financing this facility is significant. This new facility will be able to dehydrate up to 100 million gallons of Brazilian ethanol per year for duty-free export to the United States. The capacity of this single facility far exceeds total annual U.S. imports of ethanol from the entire Caribbean region, which have never exceeded about 60 million gallons in any one year. This fact alone should have raised concerns within the Export-Import Bank as to whether it was appropriate to provide financing for this project.

It is now time to get all the facts from the Export-Import Bank. This amendment requires that the Bank conduct an economic impact analysis on this project and report within 30 days after the enactment of this bill on whether or not this facility will cause substantial injury to U.S. and Iowa producers of ethanol. If so, the Export-Import Bank may have violated its own statutory authority. If that is the case, we will evaluate what further actions to take at that time.

I also want to note that no public notice was provided in the Federal Register during the Bank's consideration of whether to provide credit financing for this project, and no written report was issued setting out the basis for the Bank's decision. I am confident that public notice and greater transparency throughout this process would have provided interested parties such as myself an opportunity to comment on this proposal. I want to make sure the general public and I have an opportunity to comment on proposals for similar projects in the future. Thus, my amendment will also require consultation with the appropriate committees before credit is extended for similar purposes.

Recently I introduced S. 2762 which would prohibit ethanol from getting duty-free access through the Caribbean Basin Initiative trade preference program unless the ethanol is produced substantially with inputs from the Caribbean Basin nations. The purpose of this legislation is to close the loophole in the Caribbean Basin Initiative which enables companies such as Angostura Limited to transship Brazilian ethanol to the United States duty-free. Sadly, the extension of credit for the facility in Trinidad and Tobago flies in the face of this goal. Instead of helping to close the loophole, the Export-Import Bank's actions actually help foreign companies exploit it. These actions seem to violate common sense. I intend to do all I can to try to determine how the Export-Import Bank came to this decision and, hopefully, to make sure the Bank does not make similar decisions in the future.

I appreciate the willingness of Chairman MCCONNELL and Ranking Member LEAHY in working with me to include my amendment as part of this legislation. Their understanding of the importance of this issue to my home state of Iowa and many others in the United States is appreciated. I also appreciate their understanding of the importance of making sure that taxpayer money is being used appropriately and that the Export-Import Bank is operating within the confines, and spirit, of its statutory authority.