3:00 P.M. EST
NEW YORK FOREIGN PRESS CENTER, 799 UNITED NATIONS PLAZA, 10TH FLOOR
MS. WAHEIBI: Well, welcome to everyone here in New York and for those in Washington, D.C. We’re delighted to have Chairman Hochberg here from the Export-Import Bank of the United States. The Export-Import Bank of the U.S. is the official export credit agency of the United States. Its mission is to assist in financing exports of U.S. goods and services to international markets. We’re delighted to have Chairman Hochberg here, who will discuss his current priorities at the bank as well as its role in advancing President Obama’s plan to double U.S. exports by the end of 2014.
So Chairman Hochberg, we’ll begin with comments from you, and then we’ll open it up for questions and dialogue. When it’s time for questions, standard procedure, please state your name and organization for the transcript – this will be transcribed – and we’ll proceed from there.
MR. HOCHBERG: Okay. Well, thank you for coming over and spending time today. I’m excited to be here. I normally have to travel 5,000 miles to meet journalists who cover Ex-Im Bank and their respective countries, so it’s nice to do it here in New York City.
We operate similar to export credit agency. There are 60 of us around the world. I know Norway has an export credit agency, the Netherlands as well, and I believe Vietnam has an export credit – I’ve been to – and I have traveled to Vietnam a number of times. So our goal, our mission is to support U.S. exports of both goods and services, and to provide backstop financing when conventional private sector financing is either unavailable or very hard to obtain.
We have been in business for 80 years. It’s our 80th anniversary this year. And make sure that when U.S. products are being sold overseas, they compete on a level playing field. And what I mean by that is that they make sure that financing that we offer to back the U.S. export helps the buyer overseas purchase goods that – based on the attributes of the product, not because they’re specialized financing or a one-off deal or a side deal that provides advantageous financing.
To give you an example, since we have someone here from Norway, Norwegian Air Shuttle has been a client for a number of years by Boeing Aircraft. In 2002, they had about 320 employees. Today, they have just under 3,000 employees. We have financed one-third of their fleet, so probably contrary to what many people believe, U.S. exports also create jobs in the local host country. Now, we have done a lot of exports to Korean Airlines, as an example, and not only in the airspace. In Vietnam, we have done a number of products, have made a few trips to Vietnam. Our book of business there is not as large as I’d like it to be. We were – we provided backstop financing for the satellite (inaudible), but then they ultimately were able to find it through the private sector, so we – our financing wasn’t required. But that’s where we want it to be. We want it to be available that, if needed, but if there’s private sector financing, we don’t need to step forward on that.
And I think the key thing is that as the global middle class increases around the world and we’re looking at estimates as high as about 200 million people joining the middle class each and every year, that’s 200 million people who have money to spend beyond basic food and shelter, that are there for – going to be looking at a better, more balanced diet – hopefully less of a diet than we eat in the United States, I don’t know, since we eat too much food in this country – as well as better healthcare, transportation, things we take for granted such as power 24 hours a day, seven days a week. These things are really going to drive – I believe drive the global economy. In the past, we looked at U.S. consumers and the debt they accumulated to drive the global economy. This is a much more balanced way of growing the economy.
And the Export-Import Bank, in supporting U.S. products, and frankly, the other 59, 60 other export credit agencies around the world become central in providing the financing so that this infrastructure gets put in place, which raises the standard of living for people, and creates jobs – as my example with Norway – on both sides of the equation, both in the country that’s doing the exporting, and frequently – particularly when talking about infrastructure, on the actual country where the exports are destined to.
So to make this more of a conversation, we can open it up for questions.
QUESTION: Please go ahead.
QUESTION: Okay, thanks. Morten Bertelsen from Norwegian Business Daily. I’m just wondering overall if you could say something about availability of private financing in today’s market and that your – the extent to which your increase is a result of the lack of private options.
MR. HOCHBERG: Well, I would say from 2008 onward, we saw a steadily increase in demand for Export-Import Bank financing because the private sector had difficulty meeting the needs of a global economy.
Thankfully, we have seen the private sector and banks have taken a much more muscular and active role this past year. So after four years in a row of steady increasing authorizations or commitments to make export loans – we haven’t released our final numbers yet, but there’s a dip this year, which is a positive sign. It means that banks are stepping forward and able to make loans without the requirement of a guarantee from Ex-Im or some of the other banks.
So I think that’s actually a very good trend we’re seeing.
QUESTION: I know that the Obama Administration have a plan to double U.S. exports by the end of 2014. So what is the progress up to now? And do you meet the target for the 2014 --
MR. HOCHBERG: We were running ahead of schedule for about two years. We’re – right now there’s been some slowing up of exports. We still got about 15, 16 months to go. But progress has been – in certain sectors, we’re seeing great growth. In certain countries, we’re seeing – we’re meeting, doubling, but I’m not sure we’re going to be – see doubling across all sectors and all countries. So I think some are moving more quickly. Clearly, in Europe, for example, we’ve seen a market slowdown so that exports in some markets are going very strongly, but others – the global economy has taken its toll.
MS. WAHEIBI: We’ll go with our question from Washington.
Yeah, you need to press the button again.
MS. WAHEIBI: There you go.
QUESTION: Can you hear me?
MS. WAHEIBI: Yes, I can.
QUESTION: Okay. My name is Andrei Sitov. I am a Russian reporter here in Washington, D.C. with Tass. I have a question about Russia. The Ex-Im actually used to work quite a lot with Russia, but then the activity waned a little bit in recent years. But I think a year or two ago, you did a major deal with the Russian Sperbank on the Boeing aircraft. So my question is about the deal. How is it going forward in your opinion? And also whether you have any further plans or deals in the making with the Russians. Thank you.
MR. HOCHBERG: The deal you reference is with Sperbank for the financing of the U.S.-built aircraft. The Russian market is a very strong market. There’s going to be a large fleet overhaul and we have done work in the past year with Sperbank and with – I know if I’m pronouncing perfectly – Vnesheconombank as well in the aircraft space. There was a time we did a lot more farm equipment. That’s – that has not been as active of late. But we’re anxious to continue to do a lot more business in Russia. I was at the St. Petersburg Economic Forum not this past year, but the previous year, to move that forward.
QUESTION: Okay. Thank you, sir.
MS. WAHEIBI: Questions here in New York.
QUESTION: Hi. Okay.
MS. WAHEIBI: Please state your name and organization.
QUESTION: Yes. My name is Mucahit Oktay, Anadolu Agency, the Turkish news agency. I am wondering --
MR. HOCHBERG: From what country?
MR. HOCHBERG: Turkey. Okay. I couldn’t hear you.
QUESTION: Turkish news agency, yeah, AA. I’m just wondering how the transatlantic agreement process will affect the U.S. exports, if I didn’t miss in the beginning?
MR. HOCHBERG: The TTIP, as it’s referred to, the Transatlantic Trade and Investment Partnership – I think that generally, the United States believes that we have – less trade barriers will open more goods and services moving freely between countries. The advantages of the Transatlantic – the TTIP is really going to be in some harmonization of regulations and conditions of sale, which sometimes can be also large trade barriers. I mean, the duties are not as high with the United States and Europe, but it’s more on the regulatory side and the licensing side. So I think that if we look at the global economy, the United States and Europe encompasses a vast majority of the global economy. And the benefits from that plus the Trans-Pacific Partnership would be enormous in terms of keeping a freer flow of trade, of goods and services, and of the belief which I subscribe to that if we have a better flow of goods and services and trade, we’ll improve the global standing much better than if – than without that.
QUESTION: Thank you.
QUESTION: My name is Gerben van der Marel, Dutch Financial Daily. A little bit about the numbers, which – because you said you would probably see a dip in this year, and if I’m correct, 2007 was eight billion total loans and guarantees, and in 2012, 31 billion. So how much of a debt would that be? Because that’s a huge increase --
MR. HOCHBERG: Right. Well, first of all, last year was actually --
QUESTION: Are we going back to pre-crisis levels or --
MR. HOCHBERG: No. Last year was at actually 36 and a half, not 31.
QUESTION: Okay. I’ll check that. Yeah.
MR. HOCHBERG: It was about 36 and a half. So we’ll see a reduction, but we’ll still – it’d still be the second largest year in our history.
MR. HOCHBERG: So not at all going back to those pre-crisis days.
QUESTION: But could you give me a little bit more guidance on where that number would be?
MR. HOCHBERG: Well, we’re just dotting the I’s and crossing the T’s. We’re going to have that available probably within the week.
QUESTION: Yeah. I will – I’ll email you the --
QUESTION: -- as soon it’s out.
QUESTION: It’s actually talking about around thirty or something, like more or less.
MR. HOCHBERG: It’ll be a strong number. It’s not going back to eight.
QUESTION: Well, that’s (inaudible). The other question I have is you said you see major shifts in certain regions and certain sectors. Could you elaborate on that?
MR. HOCHBERG: Well, the infrastructure sector has been very strong. And this is everything from power to petrochemicals, to oil and gas, construction of airports, aircraft, mining and so forth, has really been very robust over the last few years. Yes, we’ve seen some pullback in the mining sector this past year or two, but basically these industries are growing very rapidly. LNG and – we’re in the midst of an energy boom that is, one, bringing down the cost of manufacturing in the United States, and two, also fostering far more sources of energy around the world. And American companies have the expertise, be it exploration, refining, petrochemicals, that we’re also exporting globally.
QUESTION: Mm-hmm. But if you talk about robust growth in this industry, you mean it’s also the growth of your own role, or could it become even more independent, actually, from --
MR. HOCHBERG: Well, both. What I’m trying to say is, one, I think that I’ve said a lot of the global economy was reliant on U.S. consumers for a long time. This is a much more balanced, and I think a much more sustainable model for global growth based on infrastructure, because we’re seeing more people enter the middle class. And as more people enter the middle class and more people enter the formal economy – and that’s certainly true when I think about in Asia and Southeast Asia people coming off of the agrarian economy, joining a much more formal economy – is creating a lot of economic benefits and a lot more demand for goods and services. And I think that that’s something that becomes a very sustainable – more sustainable model for future growth.
And partly, I think, that as the banking sector’s recovered, what I was trying to say is I think that banks in some ways have said to me repeatedly, they are, quote-unquote, “underlent” – they have more capital that they’re willing to lend, so that – and that’s one reason we’ve seen a little bit of a relaxing of demand for our goods and services, or our financial services.
QUESTION: Could you give me further details on the financing to have the export – to have and promote trade between U.S. and Vietnam Government?
MR. HOCHBERG: Well, we’ve been – Vietnam has been looking at a number of power sectors – I mentioned satellites, I know that Vietnam Airlines is looking at some aircraft purchases, also Jet Airways operates in Vietnam. So these are a number of areas that U.S. companies are bidding on, and that we’re frequently part of that bid package.
When you’re purchasing large capital goods, the financing becomes integral to the closing of the sale. You’re not going to purchase a power plant and afterwards decide how to pay for it. That becomes part of the contract.
PARTICIPANT: As a general rule, we can’t comment on deals in the pipeline, but as soon as things come to the board and come out, I’ll be sure to email you details as they become public.
QUESTION: I just have an additional question.
MS. WAHEIBI: Certainly.
QUESTION: The first one. Then considering the TTIP process, how do you think Turkey and the U.S. export any portable effect upon this? Because – although the Turkish position is not yet clear for the TTIP.
MR. HOCHBERG: I don’t – I’m not the best person to talk to about TTIP. Ambassador Froman, the United States Trade Representative, really is central to that negotiation, and he would know more specifically where Turkey is in that negotiation and mix.
QUESTION: Really a country-specific question, but could you say anything more about the deal with Norwegian and Norwegian air carriers, about the Boeing deal, and also the Sikorski S-92? I think you’re part of that deal, too. I mean, are there any other thing that you --
MR. HOCHBERG: Well, most recently, in the last 10 days we approved the purchase financing for Norwegian Air Shuttle of two 787s, so they can be – for their service both to the U.S. and to Bangkok. And so we’re very excited by that transaction. That’s the first time that Norwegian will be taking delivery of a 787. It’s also the first time they’re going to be offering low-cost service between the U.S. and Norway, and Norway and Thailand. And that is somewhat uncharted waters in recent years. We had Freddie Laker cross from London to the U.S., but that’s in the last century.
And I think that – one of the reasons I mentioned the Norwegian transaction, and it applies in many of these, is that, again, these – when you’re talking about infrastructure, we’re actually creating jobs on both sides of the equation. Whether it’s building a power plant – I was in India at a very large petrochemical plant, and it’s going to put 75,000 people working to construct it, and then about – once it’s finished, about 4,500 people will be actually working there. So these are really strong ways of creating jobs, not only in the United States but also in the countries that are receiving the export.
QUESTION: In your Europe report, I read that there are two Dutch companies, KLM, for a small amount and Transavia for a bigger amount --
MR. HOCHBERG: Right.
QUESTION: -- for $80-something million? Where is that for?
MR. HOCHBERG: Well, both of them purchased a Boeing aircraft.
QUESTION: Yes. Yeah.
MR. HOCHBERG: So, I mean, when you say --
QUESTION: Well, yeah. Is it both purchased one aircraft and one company got a certain credit while the other one got a far more smaller subsidy?
MR. HOCHBERG: It really had to – it has to do with what was the need. So sometime, depending on what was their purchase of Boeing versus, say, Airbus in their order book --
MR. HOCHBERG: -- and to what extent that our financing is needed. Now, if our financing is not needed and they’re able to get it from the private sector, we’d just as soon – we don’t want to push our way into a deal; we only want to be there if we’re needed.
MR. HOCHBERG: So it really depends on the balance sheet of the purchaser --
MR. HOCHBERG: -- and what the needs are, whether they need our assistance in closing a financing deal or not.
QUESTION: And is – what does Airbus think about this? Do they have their own --
MR. HOCHBERG: They have their own --
QUESTION: -- channels and (inaudible)?
MR. HOCHBERG: Yes, precisely. We – Boeing and Airbus compete head to head.
MR. HOCHBERG: The Airbus sales are financed by Britain, France, and Germany, owing to their respective contributions to an Airbus plane. And so you have the three export credit agencies financing Airbus, and you have Ex-Im financing Boeing. And mostly it’s to make sure when – whether it’s Norwegian Air Shuttle or KLM are making a decision, it’s on a level playing field, because the fees we charge are the same fees that the Airbus ECAs will charge. And we can go no longer than 12 years; they can go no longer than 12 years.
And the point of the OECD is to keep it a level playing field so that we make export finance less – not the issue, but the product is the issue.
QUESTION: Well, I was a bit surprised because Delta is a partner of KLM, and Delta is suing, or wants to sue.
MR. HOCHBERG: Oh, they’re suing. (Laughter.)
QUESTION: They’re suing. (Laughter.) On the other hand, KLM is a recipient of one of the loans.
MR. HOCHBERG: I agree with you. It’s very puzzling.
QUESTION: Very puzzling.
MR. HOCHBERG: (Laughter.) You should ask Delta that question.
QUESTION: Yeah, that’s (inaudible). And maybe to – well, I had one more question. That was last year. What about this year? Are there any Dutch companies involved in high-flying deals or any deals that have been –
MR. HOCHBERG: Announced?
QUESTION: -- (inaudible) or announced? Yeah.
MR. HOCHBERG: We don’t do a lot of business in Europe outside of some aircraft to Ryanair – or a lot on the Winton air shuttle or KLM – mostly because Europe, similar to the United States, has very well-developed capital markets and there’s great depth there. So they’re able to finance a lot of the trade between countries, within Europe and the United States. We’re much more active relatively in sub-Sahara Africa, Asia, Latin America, than we would be within Europe. And that’s as it should be. We’re really there as a backstop to provide financing when conventional financing is either too hard to come by or simply unobtainable.
MS. WAHEIBI: We have time for one or two more questions. And if there’s any other questions in Washington, please go to the podium.
MR. HOCHBERG: Love that empty podium. (Laughter.) All right.
MS. WAHEIBI: If not --
QUESTION: Yeah. Well, if –
MR. HOCHBERG: Sure.
QUESTION: Just in general about this, the doubling of the exports. You said a little bit about it, that you were a little bit aheads, but now you see tougher --
MR. HOCHBERG: Some headwind.
QUESTION: -- some headwind, maybe because the dollar is strong?
MR. HOCHBERG: I just think global – the global economy has slowed. There was some concerns with China. The growth rate in Brazil is cut more than in half. So we have some of those issues. The national export initiative also, as part of it, was adding jobs, up to two million jobs. We were at 1.3 million when I last looked at it, so it had both an export number and also a number of jobs.
QUESTION: Two million or 2.5 --
MR. HOCHBERG: Two million jobs.
QUESTION: I believe there was a U.S. business summit quite recently with a press conference.
MR. HOCHBERG: Yes, on Thursday and Friday.
QUESTION: Exactly. Did you get any new signals from the parties that were attending or --
MR. HOCHBERG: Well, that – the conference last week – it was called SelectUSA --
MR. HOCHBERG: -- was primarily focused on having a more coordinated effort in the United States to attract foreign-domestic – foreign investment.
MR. HOCHBERG: So it was less focused on exports but more on OTI.
QUESTION: I get it.
QUESTION: So what do you think of the critique of – that Ex-Im put out to Germany as a major exporting country, that that’s bad for relations within Europe? What’s your personal opinion about that?
MR. HOCHBERG: Well, I have no personal opinions in this job. (Laughter.)
QUESTION: Well, no, but just --
MR. HOCHBERG: Clearly, countries that have a surplus – Saudi Arabia has a surplus, China has a surplus, Germany has a surplus – I don’t think I – have an opportunity to help with some rebalancing. And that’s to the benefit of one and all. It’s ultimately to the benefit – it’s to the benefit of the global economy, which it will certainly accrue to – those with a surplus. But some rebalancing is just healthy.
China is looking to rebalance its economy and make it more consumer, less focused on investment. We’re trying to make our economy more focused on investment laws, on the consumer, and all of us moving in that direction will just make for a stronger economy.
QUESTION: Do you have any expectation on TPP and in Asia Pacific to have more balanced trade with the U.S. and the area?
MR. HOCHBERG: Well, I think that’s the goal of TPP is to, again, to remove barriers and to make for a greater flow of trade, and to try and do this on a multilateral basis versus, as we have in the past – U.S. and Korea, U.S. and Panama, U.S. and Colombia – but say, let’s think more broadly so it will have a bigger impact. And so that’s the goal of both TTIP and TPP.
PARTICIPANT: And if anybody has any follow-up on specific deals or questions, you have my contact info. I’m happy to get any numbers or facts and figures.
MR. HOCHBERG: Thank you.
QUESTION: Thank you very much.
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