Exporting more U.S. goods has become a national economic objective, and federal agencies are updating and expanding the scope, variety, and sophistication of their trade activities. Most federal programs aim to increase exports by bringing new firms into the process. Many focus on the manufacturing sector. Only about 10 percent of U.S. manufacturing enterprises export, and approximately 2,500 of them account for nearly 80 percent of all U.S. manufactured exports. Given recent advances by American producers in product development and production efficiencies, the potential exists for significant expansion of export activities — but only if key information, technical, and financial assistance needs can be met. Technical assistance providers can play an important role in that regard. The International Trade Administration estimates that more than 200,000 U.S. companies — many of them small manufacturers — produce goods with strong export potential. Yet many small and medium-sized companies are unable to mount their own international efforts. Manufacturers typically lack either the technical and managerial experience to trade internationally, or the cash to get through the export process and time frame. The federal programs outlined in this section, notably those offered by the Department of Commerce, mostly fall into one of the following categories: • counseling, seminars, and other technical assistance and information, often aimed at new or small exporters; • trade missions, trade fairs, or trade-promotion offices overseas; • building relationships among various networks involved in trade, and coordinating regional marketing efforts; or • financial assistance, usually in the form of guarantees or private underwriting, and advocacy with financial institutions. Financial assistance is the least offered incentive, but the one often most needed. Lack of capital to finance exports continues to be one of the biggest obstacles to expanding trade opportunities. Public officials and technology assistance experts need to recognize that the finance needs of exporting firms are more intricate and extensive than the capital requirements of companies producing solely for domestic markets. In addition to fixed-asset and working capital, exporters must pay for pre-shipment and nonpayment loan-loss insurance, as well as arrange for credit or a bridge loan against the foreign-generated receivables until payment is made. Unfortunately, most small and mid-sized manufacturers lack the reputation, exporting track record, and collateral needed to obtain sufficient and affordable funds from private sources.
U.S. Foreign & Commercial Service
| Objective: | To support U.S. commercial interests and help companies increase sales and market share around the world. |
| Eligibility: | Any U.S. business with an interest in exporting. |
| Cost: | No cost for initial individual counseling; fees are charged for market reports and promotional efforts. |
| Services: | Information services, export counseling, and export-readiness evaluations. |
Description
The U.S. & Foreign Commercial Service, also known as the Commercial Service, provides market information and export advice to U.S. companies seeking foreign customers. The agency provides outreach services through more than 70 domestic district offices (with at least one in every state) and 130 international offices located in 69 countries. By contacting their nearest district office, manufacturers can tap into all assistance programs available from the International Trade Administration (ITA) and all the trade information gathered by U.S. embassies, consulates, and trade offices worldwide. As indicated below, the Commerce Department, through the Commercial Service, offers a wide variety of services to U.S. business interested in exporting.
Individual Export Counseling. Trade professionals based mostly in U.S. district offices help interested businesses assess the export potential of their products, target markets, and locate and investigate potential overseas partners.
Customized Sales Survey. These custom-tailored assessments detail how a specific product will sell in a given foreign market. They also determine the types of businesses most likely to represent or purchase the product, possible marketing and distribution channels, and local regulations that could influence overseas sales or distribution. Any business may request, for a fee, such an assessment.
Foreign Market Research. Country desk officers in the Department of Commerce's International Economic Policy (IEP) office, and industry officers in the department's Trade Development division, prepare detailed analyses of the export potential to foreign markets — on both a country- and industry-specific basis. The IEP desk officers provide reports on a country's regulations, tariffs, business practices, economic and political development, trade data, and market size and growth potential. Desk officers are organized into regional areas. Interested manufacturer should call the following regional area offices for information on particular countries.
| Western Hemisphere | 202-482-5324 |
| Europe | 202-482-5638 |
| Africa, the Near East, and South Asia | 202-482-4925 |
| East Asia and the Pacific | 202-482-5251 |
| Japan | 202-482-4527 |
Industry-specific reports analyze the competitive strength of selected U.S. industries in foreign markets, providing information on the size, outlook, and characteristics of those markets. Industry specialists also conduct marketing seminars, organize trade missions and trade fairs, coordinate foreign buyer groups, and offer business counseling. Industries are grouped into the following five sectors:
| Technology and Aerospace Industries | 202-482-1872 |
| Basic Industries | 202-482-5023 |
| Textiles, Apparel & Consumer Goods | 202-482-3737 |
| Service Industries and Finance | 202-482-5261 |
| Environmental Technology Exports | 202-482-5225 |
Export Contact List Services. This database retrieval service provides U.S. exporters with the names, addresses, products, sizes, and other relevant information on foreign firms interested in importing U.S. goods and services. Similar information on U.S. exporters also is provided to foreign firms seeking U.S. suppliers. A manufacturer that would like to be included on the American Trader Index may contact the Commercial Service. To be included in the annual Yellow Page publication, at no charge, manufacturers need to request an application from the Commercial Service.
Agent/Distributor Services. Commercial Service officers abroad can facilitate product distribution partnerships between U.S. producers and foreign agents. Upon request, they will identify up to six foreign prospects that have expressed interest in representing the firm's products. The customized search takes approximately 60 to 90 days to complete.
Trade Opportunity Program (TOP). TOP provides companies with sales leads from international firms that are looking to purchase or represent products and services. TOP leads are printed daily in leading commercial newspapers and are distributed electronically via the Commerce Economic Bulletin Board.
Trade Fairs and Missions/Catalog Exhibition. The Commercial Service helps companies that are ready to export participate in trade fairs and trade missions. It provides logistical support, advanced planning and publicity, and design and management of the pavilion in which U.S. companies exhibit their products. Mission support includes pre-arranged appointments with potential buyers, detailed marketing information, and government personnel assistance. These promotional vehicles, including representation in catalog exhibits, introduce U.S. products and services to new markets. "Matchmaker" trade missions involve intensive meetings with potential clients and in-depth marketing briefings.
Foreign/International Buyer Program. This program supports major domestic trade shows for industries with high export potential. Commercial Service officers help recruit delegations of foreign buyers to attend the event, and they assist U.S. firms in matching their products, marketing objectives, and geographic targets with the needs of international business visitors.
International Commercial Centers. A new program of the Commercial Service provides an "home away from home" for companies doing business abroad, including rental office space, state-of-the- art computers, and fax and phone facilities.
Application Process
There is no application process for initial consultation with Commercial Service staff. Businesses interested in export assistance can contact a Commercial Service district office (listed below) or call 1- 800-USA-TRADE for assistance. Commercial Service staff can explain requirements for requests for additional services.
Impact
The Commercial Service was not able to provide information on program impact.
U.S. & Foreign Commercial Service
Services and Fees
| Individual Counseling | n/a | No fee for counseling |
| Market Research | ||
| Customized Sales Survey | $500 - $3,500 | Depending on country |
| Foreign Market Research | Available on NTDB, through district offices (free of charge), or at overseas port (for various fees) | |
| World Traders Data Reports | $100 | One report |
| Contact Services | ||
| Agent/Distributor Service | $250 | One report |
| Export Contact List Service | $0.25 | Per name or label |
| American Traders Index | $1,000 | Set of diskettes containing all firms |
| Trade Opportunity Program | $45 | Plus on-line fee |
| Promotional Programs | ||
| Catalog Exhibitions | $350 - $400 | Prices vary per event |
| Commercial News USA | $395 | For 1/6 page announcement |
| Foreign Buyer Program | $4,000 | Paid by organizer, events up to 5 days |
| Foreign Buyer Program | $6,000 | Paid by organizer, events more than 5 days |
| Matchmaker Trade Delegations | $2,200 - $2,500 | Depending on countries and stops |
| Gold Key Service | $100 - $800 | Depending on country |
| Certified Trade Fairs | $1,500 | Paid by show organizer |
| Certified Trade Missions | Varies per event | Paid by mission organizer |
| Multi-State Trade Days | Varies per event | Paid by event organizer |
Success Stories
1) Hagie Manufacturing Company, operating in Clarion, Iowa, makes agricultural sprayers. The company, in business since 1947, has used several agency information services (Commercial News USA, the Agent/Distributor Service, catalog shows), sought counseling about documentation and pro forma invoicing, and participated in export seminars. The Des Moines office of the Commercial Service has helped Hagie with a trade complaint in Greece, where a customer refused to clear Hagie's products through Greek customs. The office helped get the equipment out of customs and returned to the United States, and negotiated with the Greek customer to pay part of the expense of storage and transportation. More recently, the Commercial Service helped Hagie meet documentation requirements for shipments to Taiwan, Argentina, and Canada, and has processed an Agent/Distributor Service report on New Zealand. In January 1995, Hagie participated in trade shows in Monterrey, Mexico, and Tulare, California. While at the Tulare event, Hagie finalized two orders, totaling $107,000, from a Mexican company. The Des Moines office provided market research and Foreign Traders Index names prior to the events in Mexico and California.
2) Stand-Out Designs, a maker of tee-shirt designs using a patented process for four-color printing, operated for ten years in southern California, employing five people. Company owners approached the Commercial Service's San Diego office for advice on expanding sales abroad, and were encouraged to participate in overseas trade shows. Stand-Out began marketing aggressively overseas, and, within its first year of exporting, the firm's export sales increased from 2 percent to 15 percent of total sales. At present, Stand Out is exporting to six countries (France, Germany, Italy, Spain, Belgium, and the United Kingdom). The firm has appointed representatives in France and the Benelux nations, and is negotiating with a Japanese distributor. Export expansion has permitted the firm to grow to 28 employees. Stand-Out plans to increase exports to 25 percent of total sales by 1996.
Future Prospects
The Commercial Service is working on a plan to open more U.S. Export Assistance Centers, in which its offices are co-located with SBA's Small Business Development Centers and Import-Export Bank regional offices. As of October 1995, ten such centers were operating.
Contact
Below are listed the ten Export Assistance Centers, as well as the 70 Commercial Service district offices. In addition, the federal government has established the Trade Information Center (TIC) to coordinate all federal export promotion efforts and link companies to the appropriate resources. TIC can be reached at 1-800-USA-TRADE or 202-482-0843 (TDD users, 1-800-TDD-TRADE).
U.S. Export Assistance Centers (as of October 1995) LOS ANGELES -- CALIFORNIA One World Trade Center Suite 1670 Long Beach, California 90831 310-980-4550 (voice) 310-980-4561 (fax) MIAMI -- FLORIDA Trade Port Building 5600 Northwest 36th Avenue 6th Floor Miami, Florida 33166 305-526-7425 (voice) 305-526-7434 (fax) CHICAGO -- ILLINOIS Xerox Center 55 West Monroe Street, Suite 2440 Chicago, Illinois 60603 312-353-8040 (voice) 312-353-8098 (fax) BALTIMORE -- MARYLAND World Trade Center 401 East Pratt Street, Suite 2432 Baltimore, Maryland 21202 410-962-4539 (voice) 410-962-4529 (fax) ST. LOUIS -- MISSOURI 182 Maryland Avenue, Suite 303 St. Louis, Missouri 63105 314-425-3302 (voice) 314-425-3381 (fax) NEW YORK -- NEW YORK 6 World Trade Center, Room 635 New York, New York 10048 212-264-0634 (voice) 212-264-1356 (fax) CLEVELAND -- OHIO Bank One Center, Suite 700 600 Superior Avenue Cleveland, Ohio 44114-2650 216-522-4750 (voice) 216-522-2235 (fax) PHILADELPHIA -- PENNSYLVANIA 615 Chestnut Street, Suite 1500 Philadelphia, Pennsylvania 19106 215-597-6101 (voice) 215-597-6123 (fax) DALLAS -- TEXAS 2050 North Stemmons Freeway Suite 170, P.O. Box 58130 Dallas, Texas 75258 214-767-0542 (voice) 214-767-8420 (fax) SEATTLE -- WASHINGTON 3131 Elliot Avenue, Suite 290 206-553-5615 (voice) 206-553-7253 (fax) Commercial Service District Offices (as of October 1995) *Denotes trade specialist at branch office ALABAMA 950 22nd Street North, 7th Floor Birmingham, Alabama 35203 205-731-1331 (voice) 205-731-0076 (fax) ALASKA 4201 Tudor Centre Drive, Suite 319 Anchorage, Alaska 99508 907-271-6237 (voice) 907-271-6242 (fax) ARIZONA 2901 N. Central Avenue, Suite 970 Phoenix, Arizona 85012 602-640-2513 (voice) 602-640-2518 (fax) ARKANSAS 425 W. Capitol Avenue, Suite 700 Little Rock, Arkansas 72201 501-324-5794 (voice) 501-324-7380 (fax) CALIFORNIA 11000 Wilshire Blvd., Room 9200 Los Angeles, California 90024 310-235-7104 (voice) 310-235-7220 (fax) 3300 Irvine Avenue, Suite 305 * Newport Beach, California 92660 714-660-1688 (voice) 6363 Greenwich Drive, Suite 230 San Diego, California 92122 619-557-5395 (voice) 619-557-6176 (fax) 250 Montgomery St., 14th Floor, San Francisco, California 94104 415-705-2300 (voice) 415-705-2297 (fax) 5201 Great American Pkwy., #456* Santa Clara, California 95054 408-970-4610 (voice) 408-970-4618 (fax) COLORADO 1625 Broadway, Suite 680 Denver, Colorado 80202 303-844-6622 (voice) 303-844-5651 (fax) CONNECTICUT Room 610B, 450 Main Street Hartford, Connecticut 06103 203-240-3530 (voice) 203-240-3473 (fax) DELAWARE 615 Chestnut Street Suite 1500 Philadelphia, Pennsylvania 19106 215-597-6101 (voice) 215-597-6123 (fax) DISTRICT OF COLUMBIA c/o National Institute of Standards & Technology * Room A102, Building 411 Gaithersburg, Maryland 20899 301-975-3904 (voice) 301-948-4360 (fax) FLORIDA 128 North Osceola Avenue * Clearwater, Florida 34615 813-461-0011 (voice) 813-449-2889 (fax) Eola Park Centre, Suite 695 * 200 E. Robinson Street Orlando, Florida 32801 407-648-6235 (voice) 407-648-6756 (fax) 107 West Gaines Street, Rm 366G * Tallahassee, Florida 32399 904-488-6469 (voice) 904-487-1407 (fax) GEORGIA Plaza Square North, Suite 310 4360 Chamblee Dunwoody Road Atlanta, Georgia 30341 404-452-9101 (voice) 404-452-9105 (fax) 120 Barnard Street, Room A-107 Savannah, Georgia 31401 912-652-4204 (voice) 912-652-4241 (fax) HAWAII P.O. Box 50026 300 Ala Moana Blvd., Room 4106 Honolulu, Hawaii 96850 808-541-1782 (voice) 808-541-3435 (fax) IDAHO 700 West State Street, 2nd Floor * Boise, Idaho 83720 208-334-3857 (voice) 208-334-2783 (fax) ILLINOIS c/o Illinois Insti of Technology * 201 East Loop Road Wheaton, Illinois 60187 312-353-4332 (voice) 312-353-4336 (fax) P.O. Box 1747 * 515 North Court Street Rockford, Illinois 61110 815-987-4347 (voice) 815-987-8122 (fax) INDIANA Penwood One, Suite 106 11405 N. Pennsylvania Street Indianapolis, Indiana 46032 317-582-2300 (voice) 317-582-2301 (fax) IOWA Room 817, Federal Building 210 Walnut Street Des Moines, Iowa 50309 515-284-4222 (voice) 515-284-4021 (fax) KANSAS 151 N. Volutsia * Wichita, Kansas 67214 316-269-6160 (voice) 316-683-7326 (fax) KENTUCKY 601 W. Broadway, Room 636B Louisville, Kentucky 40202 502-582-5066 (voice) 502-582-6573 (fax) LOUISIANA Hale Boggs Federal Building 501 Magazine Street, Room 1043 New Orleans, Louisiana 70130 504-589-6546 (voice) 504-589-2337 (fax) MAINE 187 State Street * Augusta, Maine 04333 207-622-8249 (voice) 207-626-9156 (fax) MARYLAND c/o National Institute of Standards & Technology * Room A102, Building 411 Gaithersburg, Maryland 20899 301-975-3904 (voice) 301-948-4360 (fax) MASSACHUSETTS 164 Northern Avenue World Trade Center, Suite 307 Boston, Massachusetts 02210 617-424-5950 (voice) 617-424-5992 (fax) MICHIGAN 1140 McNamara Building 477 Michigan Avenue Detroit, Michigan 48226 313-226-3650 (voice) 313-226-3657 (fax) 300 Monroe N.W., Room 409 * Grand Rapids, Michigan 49503 616-456-2411 (voice) 616-456-2695 (fax) MINNESOTA 110 South 4th Street, Room 108 Minneapolis, Minnesota 55401 612-348-1638 (voice) 612-348-1650 (fax) MISSISSIPPI 201 W. Capitol Street, Suite 310 Jackson, Mississippi 39201 601-965-4388 (voice) 601-965-5386 (fax) MISSOURI 601 East 12th Street, Room 635 Kansas City, Missouri 64106 816-426-3141 (voice) 816-426-3140 (fax) MONTANA 700 West State Street, 2nd Floor * Boise, Idaho 83720 208-334-3857 (voice) 208-334-2783 (fax) NEBRASKA 11335 "O" Street * Omaha, Nebraska 68137 402-221-3664 (voice) 402-221-3668 (fax) NEVADA 1755 East Plumb Lane, Room 152 Reno, Nevada 89502 702-784-5203 (voice) 702-784-5343 (fax) NEW HAMPSHIRE 601 Spaulding Turnpike, Suite 29 * Portsmouth, New Hampshire 03801 603-334-6074 (voice) 603-334-6110 (fax) NEW JERSEY 3131 Princeton Pike, Bldg. #6 Trenton, New Jersey 08648 609-989-2100 (voice) 609-989-2395 (fax) NEW MEXICO c/o New Mexico Dept. of Economic Development * 1100 St. Francis Drive Santa Fe, New Mexico 87503 505-827-0350 (voice) 505-827-0263 (fax) NEW YORK 111 West Huron Street, Room 1312 Buffalo, New York 14202 716-846-4191 (voice) 716-846-5290 (fax) 111 East Avenue, Suite 220 * Rochester, New York 14604 716-263-6480 (voice) 716-325-6505 (fax) NORTH CAROLINA 400 West Market Street, Suite 400 Greensboro, North Carolina 27401 910-333-5345 (voice) 910-333-5158 (fax) NORTH DAKOTA 108 Federal Building 110 South 4th Street Minneapolis, Minnesota 55401 612-348-1638 (voice) 612-348-1650 (fax) OHIO 550 Main Street, Room 9504 Cincinnati, Ohio 45202 513-684-2944 (voice) 513-684-3200 (fax) OKLAHOMA 6601 Broadway Extension, Rm. 200 Oklahoma City, Oklahoma 73116 405-231-5302 (voice) 405-231-4211 (fax) 440 South Houston Street * Tulsa, Oklahoma 74127 918-581-7650 (voice) 918-581-2844 (fax) OREGON One World Trade Center, Suite 242 121 SW Salmon Street Portland, Oregon 97204 503-326-3001 (voice) 503-326-6351 (fax) PENNSYLVANIA 660 American Avenue, Suite 201 King of Prussia, Pennsylvania 19406 610-962-4980 (voice) 610-962-4989 (fax) 2002 Federal Building 1000 Liberty Avenue Pittsburgh, Pennsylvania 15222 412-644-2850 (voice) 412-644-4875 (fax) RHODE ISLAND 7 Jackson Walkway * Providence, Rhode Island 02903 401-528-5104 (voice) 401-528-5067 (fax) SOUTH CAROLINA Strom Thurmond Federal Bldg. Suite 172 1835 Assembly Street Columbia, South Carolina 29201 803-765-5345 (voice) 803-253-3614 (fax) c/o Charleston Trident Chamber of Commerce * P.O. Box 975 81 Mary Street Charleston, South Carolina 29402 803-727-4051 (voice) 803-727-4052 (fax) SOUTH DAKOTA Commerce Center * 200 N. Phillips Ave, Suite 302 Sioux Falls, South Dakota 57102 605-330-4264 (voice) 605-330-4266 (fax) TENNESSEE Parkway Towers, Suite 114 404 James Robertson Parkway Nashville, Tennessee 37219 615-736-5161 (voice) 615-736-2454 (fax) 22 North Front Street, Suite 200 * Memphis, Tennessee 38103 901-544-4137 (voice) 901-575-3510 (fax) 301 East Church Avenue * Knoxville, Tennessee 37915 615-545-4637 (voice) 615-523-2071 (fax) TEXAS P.O. Box 12728 * 410 E. 5th Street, Suite 414-A Austin, Texas 78711 512-482-5939 (voice) 512-482-5940 (fax) #1 Allen Center, Suite 1160 500 Dallas Houston, Texas 77002 713-229-2578 (voice) 713-229-2203 (fax) UTAH 324 S. State Street, Suite 105 Salt Lake City, Utah 84111 801-524-5116 (voice) 801-524-5886 (fax) VERMONT c/o Vermont Dept. of Economic Development * 109 State Street Montpelier, Vermont 05609 802-828-4508 (voice) 802-828-3258 (fax) VIRGINIA 700 Centre 704 East Franklin Street, Suite 550 Richmond, Virginia 23219 804-771-2246 (voice) 804-771-2390 (fax) WASHINGTON 320 North Johnson Street, Ste 350 * Kennewick, Washington 99336 509-735-2751 (voice) 509-783-9385 (fax) WEST VIRGINIA 405 Capitol Street, Suite 807 Charleston, West Virginia 25301 304-347-5123 (voice) 304-347-5408 (fax) WISCONSIN 517 E. Wisconsin Avenue, Room 596 Milwaukee, Wisconsin 53202 414-297-3473 (voice) 414-297-3470 (fax) WYOMING 1625 Broadway, Suite 680 Denver, Colorado 80202 303-844-6622 (voice) 303-844-5651 (fax)
Working Capital Guarantee Program of the Export-Import Bank
| Objective: | Encourage commercial lenders to make loans to U.S. businesses for export-related activities. |
| Eligibility: | All U.S. exporters requesting private loans in excess of $833,333. |
| Cost: | $100 application fee; up-front guarantee fee of 1.5 percent per year. |
| Services: | Financial support in the form of guaranteed loans. |
Description
Under this program, the Export-Import Bank (Ex-Im Bank) provides loan guarantees that help firms acquire financing from commercial lenders to cover pre-export activities, such as purchasing raw materials and marketing abroad. Guarantees may be used to cover working capital loans if the lender shows that the loan would not be made without the Ex-Im Bank's guarantee and if Ex-Im Bank determines that the exporter is creditworthy.
To qualify, businesses must demonstrate successful past performance, including at least one year of operations and a positive net worth. The U.S. content of the goods being exported must be at least 50 percent. The working capital guarantee covers 90 percent of the loan's principal and interest, and all guaranteed loans must be fully collateralized. Acceptable collateral includes exportable inventory, export accounts receivable, or other assets.
This program is designed for large projects and companies; to qualify for a working capital guarantee, a firm must seek a loan of at least $833,333. The Ex-Im Bank refers projects with lesser capital needs to the Small Business Administration.
A $100 processing fee is due with the application. Beneficiaries must pay what is known as a "facility fee" of 1.5 percent per year, essentially a guarantee fee based on the amount of Ex-Im Bank assistance. Loans may be either for a single transaction or a revolving line of credit. The size of assistance packages can vary widely, anywhere from $833,334 to over $100 million.
Application Process
Ex-Im Bank will accept applications for either a preliminary guarantee commitment (sought by the exporting company) or a final guarantee commitment (requested by the lender). All applicants must supply the $100 processing fee and the information requested in the SBA/Ex-Im Bank Joint Application, which can be obtained by contacting any Ex-Im Bank office or U.S. Export Assistance Center. In reviewing a loan application, Ex-Im Bank and/or the lender will determine whether a reasonable assurance of repayment exists.
Notification of preliminary commitments are made by letter to the exporter. The letter outlines the terms and conditions under which Ex-Im Bank is prepared to issue its guarantee to a lender. The exporter then has six months to find a lender and negotiate financing. Once the exporter has selected a lender, the lender applies to Ex-Im Bank, submitting a final commitment application that shows compliance with the terms and conditions of the preliminary commitment. If a company first chooses a lender, the preliminary step can be avoided and the lender can apply directly for a final commitment on behalf of the exporter. In both situations, Ex-Im Bank staff evaluate the applicant exporter primarily on their previous performance. To expedite processing time, the lender should submit its credit memorandum and financial analysis.
Impact
In fiscal year 1994, Ex-Im Bank guaranteed $12 billion in loans. Program officials anticipate $14 billion in guarantees in fiscal 1995.
Success Story
1) The Procedyne Corporation, a New Brunswick, New Jersey, manufacturer of high- temperature equipment, decided in the mid-1980s to expand dramatically the scale of its operations. Its capital structure, however, was not strong enough to attract conventional financing for large-scale projects. Procedyne then contacted Ex-Im Bank, which approved a working capital loan guarantee within six weeks. The financing allowed Procedyne to manufacture and sell its first sand core debonding unit to GM Brazil. Since then, Ex-Im Bank has supported several of the company's projects.
Future Prospects
No serious threats of program cutbacks or dissolution loom on the horizon. Many in Congress and the Clinton administration recognize how this program complements broader policy objectives aimed at increasing exports.
Contacts
Manufacturers interested in Ex-Im Bank programs may apply directly to the Bank at the address and numbers below. Potential borrowers also may obtain assistance from any of ten U.S. Export Assistance Center (USEAC) listed below. General information on Ex-Im Bank programs, recent project approvals, and fees is available on-line through the Bank's bulletin board. In addition, the federal government has established the Trade Information Center (TIC) to coordinate all federal export promotion efforts. TIC can be reached at 1-800-USA-TRADE or 202-482-0843 (TDD users, 1-800- TDD-TRADE).
Export-Import Bank of the United States
811 Vermont Avenue, NW
Washington, D.C. 20571
202-565- 3946 (voice)
202-565-3380 (fax)
Ex-Im Bank toll-free hotline:
1-800-565-EXIM
Business Development Group:
202-565-3900 (voice)
202-565-3932 (fax)
Seminar Information:
202-565-3912
Electronic access to Ex-Im Bank
Bulletin Board:
202-565-3826
National Trade Data Bank:
http://www.stat-usa.gov
U.S. Export Assistance Centers (as of October 1995) LOS ANGELES -- CALIFORNIA One World Trade Center Suite 1670 Long Beach, California 90831 310-980-4550 (voice) 310-980-4561 (fax) MIAMI -- FLORIDA Trade Port Building 5600 Northwest 36th Avenue 6th Floor Miami, Florida 33166 305-526-7425 (voice) 305-526-7434 (fax) CHICAGO -- ILLINOIS Xerox Center 55 West Monroe Street, Suite 2440 Chicago, Illinois 60603 312-353-8040 (voice) 312-353-8098 (fax) BALTIMORE -- MARYLAND World Trade Center 401 East Pratt Street, Suite 2432 Baltimore, Maryland 21202 410-962-4539 (voice) 410-962-4529 (fax) ST. LOUIS -- MISSOURI 182 Maryland Avenue, Suite 303 St. Louis, Missouri 63105 314-425-3302 (voice) 314-425-3381 (fax) NEW YORK -- NEW YORK 6 World Trade Center, Room 635 New York, New York 10048 212-264-0634 (voice) 212-264-1356 (fax) CLEVELAND -- OHIO Bank One Center, Suite 700 600 Superior Avenue Cleveland, Ohio 44114-2650 216-522-4750 (voice) 216-522-2235 (fax) PHILADELPHIA -- PENNSYLVANIA 615 Chestnut Street, Suite 1500 Philadelphia, Pennsylvania 19106 215-597-6101 (voice) 215-597-6123 (fax) DALLAS -- TEXAS 2050 North Stemmons Freeway Suite 170, P.O. Box 58130 Dallas, Texas 75258 214-767-0542 (voice) 214-767-8420 (fax) SEATTLE -- WASHINGTON 3131 Elliot Avenue, Suite 290 206-553-5615 (voice) 206-553-7253 (fax)
Export Working Capital Program of the Small Business Administration
| Objective: | To help established exporting companies obtain financing for projects smaller than $833,333, for either a specific or multiple international sale(s). |
| Eligibility: | Any small independent business that has been in business for at least 12 months. Businesses that do not export directly, but can show that they manufacture or sell products or provide services that are exported by others, also are eligible. |
| Cost: | No application fee, but a loan guarantee fee ranging from 0.25 to 2 percent is charged on approval. |
| Services: | Financial support in the form of loan guarantees. |
Description
The Small Business Administration's Export Working Capital Program (EWCP) supports export financing to small businesses, less than $833,333, when that financing is not otherwise available on reasonable terms. This program is the counterpart to the Ex-Im Bank's guarantee program for large companies. The EWCP encourages private lenders to offer export working capital loans by guaranteeing repayment of up to 90 percent of a loan amount. A loan can support a single transaction or multiple sales on a revolving basis.
The EWCP covers pre-shipment working capital, post-shipment expenses, or a combination of the two. Pre-shipment loans can be used to finance the manufacture of goods for export or to purchase finished goods or services for export. The term of these loans is usually no more than 12 months. Post-shipment loans can be used to finance receivables resulting from export sales. The term for these loans is generally six months or less. Combination loans can be used to finance the acquisition or production of export goods and services, as well as the resulting accounts receivable. The maximum term for these loans is 18 months, with the post-shipment portion not to exceed six months.
EWCP loans also can be used to support stand-by letters of credit used as bid bonds, performance bonds, or payment guarantees to foreign buyers. EWCP loans may not be used to establish operations overseas, acquire fixed assets, or pay existing debt.
Interest rates are negotiable between the applicant and the lender. The SBA charges the lender a guarantee fee of one-quarter of one percent (0.25 percent) for loans of 12 months or less. The guarantee fee for loans with terms of greater than 12 months is two percent.
Application Process
Manufacturers may access the EWCP in one of two ways — by requesting a lender to apply for the SBA guarantee; or by applying directly to SBA for a preliminary commitment, which then can be taken to a prospective lender. Valid for 60 days, the preliminary commitment states that SBA will provide the guarantee under the specified terms and conditions.
Impact
The EWCP is a new program, replacing SBA's former Export Revolving Line of Credit program. The Export-Import Bank and SBA have blended their working capital programs. Because the program is new, no information on its impact is available.
Success Stories
1) Laub Engineering produces liquid filling systems, used to fill bottles with a variety of consumer liquids. Until recently, Laub's export orders had been small. But when the 15-employee company landed a large contract to provide the packaging equipment for a new Pennzoil Company licensee motor oil plant in Jakarta, Laub obtained a joint EWCP/California Export Finance Office guarantee for $792,700, which the company applied to pre- and post-shipment needs. The firm subsequently grew to 26 employees.
2) Cardwell Manufacturing Co. of El Dorado, Kansas, won a bid from the Polish Oil & Gas Company, an agency of the Polish government, to furnish workover oil rigs valued at more than $3 million. The company needed short-term financing to fill the order. The EWCP provided an 85 percent guarantee on a loan of just over $800,000 to cover a portion of the manufacturing costs. The following year, Cardwell received a contract from the General Petroleum Company of Cairo, Egypt, and requested another advance on its revolving loan guarantee to complete the job. Cardwell, also selling to Russia and Syria, has achieved such success in exporting that its local bank now provides short-term working capital without the SBA guarantees.
SBA's programs are undergoing scrutiny in Congress. Limits on guarantee levels likely will be applied to this program, as lawmakers try to reduce the level of federal exposure and to shift more of the risk associated with all SBA guarantees to private lenders.
For more information about the EWCP, a manufacturer can contact a local SBA district office listed in the Section 7(a) Loan profile beginning on page 10 of this guidebook. Any one-stop U.S. Export Assistance Center also can provide information about the EWCP. In addition, an interested manufacturer can contact SBA's Office of International Trade at the number below, or call SBA's toll-free number (1-800-U- ASK-SBA; TDD users, 202-205-7333) for general information on SBA programs. General information also is available through SBA's on-line services.
U.S. Small Business Administration
Office of International Trade
409 Third Street SW
Washington, D.C. 20416
202-205-6720 (voice)
SBA Bulletin Board:
1-800-697-4636 (outside D.C.)
401-9600 (D.C. access)
Internet Address:
telnet SBAonline.SBA.gov
gopher http://www.sbaonline.sba.gov
U.S. Export Assistance Centers (as of October 1995) LOS ANGELES -- CALIFORNIA One World Trade Center Suite 1670 Long Beach, California 90831 310-980-4550 (voice) 310-980-4561 (fax) MIAMI -- FLORIDA Trade Port Building 5600 Northwest 36th Avenue 6th Floor Miami, Florida 33166 305-526-7425 (voice) 305-526-7434 (fax) CHICAGO -- ILLINOIS Xerox Center 55 West Monroe Street, Suite 2440 Chicago, Illinois 60603 312-353-8040 (voice) 312-353-8098 (fax) BALTIMORE -- MARYLAND World Trade Center 401 East Pratt Street, Suite 2432 Baltimore, Maryland 21202 410-962-4539 (voice) 410-962-4529 (fax) ST. LOUIS -- MISSOURI 182 Maryland Avenue, Suite 303 St. Louis, Missouri 63105 314-425-3302 (voice) 314-425-3381 (fax) NEW YORK -- NEW YORK 6 World Trade Center, Room 635 New York, New York 10048 212-264-0634 (voice) 212-264-1356 (fax) CLEVELAND -- OHIO Bank One Center, Suite 700 600 Superior Avenue Cleveland, Ohio 44114-2650 216-522-4750 (voice) 216-522-2235 (fax) PHILADELPHIA -- PENNSYLVANIA 615 Chestnut Street, Suite 1500 Philadelphia, Pennsylvania 19106 215-597-6101 (voice) 215-597-6123 (fax) DALLAS -- TEXAS 2050 North Stemmons Freeway Suite 170, P.O. Box 58130 Dallas, Texas 75258 214-767-0542 (voice) 214-767-8420 (fax) SEATTLE -- WASHINGTON 3131 Elliot Avenue, Suite 290 206-553-5615 (voice) 206-553-7253 (fax)
Export Credit Insurance Policies of the Export-Import Bank
| Objective: | To promote export of U.S. goods and services by offering insurance against export risks. |
| Eligibility: | All U.S. exporters. |
| Cost: | Charges vary by policy, depending on coverage and type of risk insured against. |
| Services: | Export support through credit insurance. |
Description
Export credit insurance policies, sponsored by the Export-Import Bank (Ex-Im Bank), protect U.S. exporters against the political and commercial risks of a foreign buyer defaulting on payment. Policies may be obtained for single or ongoing export sales, and for leases. As noted below, a wide range of policies is available to accommodate various needs.
1. Short-Term Multi-Buyer. The Short-Term Multi-Buyer policy insures short-term sales with repayment terms of up to 180 days. Sales with terms up to 360 days also can be covered for capital goods and certain consumer durables. Coverage applies to credit sales for any goods produced in and shipped from the United States during the policy period. Participants may choose from two coverage options: (a) 100 percent for losses due to political risks and 90 percent for commercial risks, or (b) 95 percent losses due to either political or commercial risk.
2. Short-Term Single Buyer. For those exporters who do not want to insure all their short-term export credit sales, the single-buyer policy is available to cover single sales. The policy offers 90 percent to 100 percent coverage for both political and commercial risks of default, and it has no deductible. The maximum term for the insurance policy is 180 days for most goods, and 360 days for consumer durables, capital goods, and agricultural commodities. Premiums are determined individually by risk, but special reductions are available to small businesses. Minimum premiums are $1,000 for small businesses, $2,500 for sovereign buyers, $10,000 for private-sector buyers, and $5,000 for Letter-of-Credit or bank- guaranteed transactions.
3. Medium-Term Single Buyer. Medium-term insurance is available for exporters of capital goods or services in amounts less than $10 million and for terms up to five years. Ex-Im Bank offers 100 percent commercial and political risk protection. Eligible repayment terms are generally between one and five years, depending on the product and contract price. There must be a 15 percent cash payment by the foreign buyer. Premiums are determined individually by risk.
4. Small Business. Ex-Im Bank offers a short-term (up to 180 days) insurance policy geared to meet the credit requirements of smaller, less experienced exporters. Products typically supported under short-term policies are spare parts, raw materials, and consumer goods. Under the policy, Ex-Im Bank assumes 95 percent of the commercial and 100 percent of the political risk involved in extending credit to the exporter's overseas customers. This policy frees the exporter from "first loss" commercial risk deductible provisions that usually are required by insurance companies. It is a multi-buyer type policy, which requires the exporter to insure all export credit sales. The policy also offers a special "hold- harmless" assignment of proceeds, which makes the financing of insured receivables more attractive to banks. The special coverage is available to companies that have an average annual export credit sales volume of less than $3 million for the two years prior to application, and that meet the Small Business Administration's definition of a small business. There is a minimum annual premium of $500, and the premium varies with each sale according to the repayment term and type of buyer.
5. Bank Letter of Credit. This policy offers coverage for letters of credit issued by foreign banks and used to support overseas transactions. Ex-Im Bank issues a written credit approval in the form of a policy endorsement. There is equalized coverage for political and commercial risks: 100 percent protection for sovereign banks and 95 percent protection for all other banks. Terms up to 180 days are available for consumer items, parts and raw materials. On a case-by-case basis, capital equipment, agricultural commodities, and quasi-capital equipment may be insured for up to 360 days. The minimum annual premium is $2,000; premiums are determined individually by risk.
6. Leasing. This policy covers single transactions with a single lessee. The operating lease policy insures both a specified number of lease payments and fair market value of leased products. The finance lease policy covers total payments under a lease. There is equalized coverage for political and commercial risks. Maximum repayment periods are up to five years, determined by product, contract value, and type of lease. Longer terms also receive consideration. The premium is individually determined by risk and paid in advance of shipment.
Application Process
Applications for these export credit insurance policies are available from the Ex-Im Bank and its offices.
Impact
The bank was not able to provide any data on program impact.
Success Stories
No case studies were available from the Bank.
Contacts
Manufacturers interested in any Ex-Im Bank programs may apply directly to the Bank at it main office in Washington, D.C., or to any of the ten U.S. Export Assistance Centers (USEACs) listed below. The USEACs are one-stop centers for the services of the Ex-Im Bank, U.S. & Foreign Commercial Service, and the SBA. General information on Ex-Im Bank programs, recent approvals, and fees is available on-line through the Bank's bulletin board. In addition, the federal government has established the Trade Information Center (TIC) to coordinate all federal export promotion efforts. TIC can be reached at 1-800-USA-TRADE or 202-482-0843 (TDD users, 1-800-TDD-TRADE).
Export-Import Bank of the United States
811 Vermont Avenue, NW
Washington, D.C. 20571
202-565-3946 (voice)
202-565-3380 (fax)
Ex-Im Bank toll-free hotline:
1-800-565-EXIM
Business Development Group:
202-565-3900 (voice)
202-565-3932 (fax)
Seminar Information:
202-565-3912
Bulletin Board:
202-565-3826
National Trade Data Bank:
http://www.stat-usa.gov
U.S. Export Assistance Centers (as of October 1995) LOS ANGELES -- CALIFORNIA One World Trade Center Suite 1670 Long Beach, California 90831 310-980-4550 (voice) 310-980-4561 (fax) MIAMI -- FLORIDA Trade Port Building 5600 Northwest 36th Avenue 6th Floor Miami, Florida 33166 305-526-7425 (voice) 305-526-7434 (fax) CHICAGO -- ILLINOIS Xerox Center 55 West Monroe Street, Suite 2440 Chicago, Illinois 60603 312-353-8040 (voice) 312-353-8098 (fax) BALTIMORE -- MARYLAND World Trade Center 401 East Pratt Street, Suite 2432 Baltimore, Maryland 21202 410-962-4539 (voice) 410-962-4529 (fax) ST. LOUIS -- MISSOURI 182 Maryland Avenue, Suite 303 St. Louis, Missouri 63105 314-425-3302 (voice) 314-425-3381 (fax) NEW YORK -- NEW YORK 6 World Trade Center, Room 635 New York, New York 10048 212-264-0634 (voice) 212-264-1356 (fax) CLEVELAND -- OHIO Bank One Center, Suite 700 600 Superior Avenue Cleveland, Ohio 44114-2650 216-522-4750 (voice) 216-522-2235 (fax) PHILADELPHIA -- PENNSYLVANIA 615 Chestnut Street, Suite 1500 Philadelphia, Pennsylvania 19106 215-597-6101 (voice) 215-597-6123 (fax) DALLAS -- TEXAS 2050 North Stemmons Freeway Suite 170, P.O. Box 58130 Dallas, Texas 75258 214-767-0542 (voice) 214-767-8420 (fax) SEATTLE -- WASHINGTON 3131 Elliot Avenue, Suite 290 206-553-5615 (voice) 206-553-7253 (fax)
Project Finance Program of the Export-Import Bank
| Objective: | To increase U.S. exports by financing exportable U.S. goods and services. |
| Eligibility: | All U.S. exporters. |
| Cost: | Assorted fees for services; interest rates vary depending on project risk. |
| Services: | Financial support in the form of direct loans and loan guarantees. |
Description
The Export-Import Bank's project finance program consists of direct loans and loan guarantees to firms that export capital equipment and related services for projects whose repayment depends on project cash flows. Ex-Im Bank assistance, either as a direct loan or a loan guarantee, can cover up to 85 percent of the contract amount. A 15 percent cash payment by the foreign buyer is required.
Ex-Im Bank's fees vary depending on the amount of risk involved with the project. The interest rate is subject to change on the 15th of each month and is determined by adding 100 basis points to the corresponding U.S. Treasury interest rate. To screen potential projects, the bank hires a financial consultant; the applicant must pick up this cost. In addition, fees must be paid for independent legal counsel, engineers, and insurance advisors.
Application Process
Interested firms should contact Ex-Im Bank for an application. Ex-Im Bank staff give completed applications a preliminary review within five business days. Applicants are notified whether or not they will receive assistance within 45 days. Approvals are subject to Ex-Im Bank's environmental procedures and standards.
Impact
The Bank was not able to provide information on the program's impact.
Success Stories
Program staff could not provide project examples.
Contacts
Manufacturers interested in any Ex-Im Bank programs may apply directly to the Bank's main office in Washington, D.C., or to any of the ten U.S. Export Assistance Centers (USEACs) listed below. The USEACs are one-stop centers for the services of the Ex-Im Bank, U.S. & Foreign Commercial Service, the Small Business Administration, and other export-related federal and state agencies. General information on Ex-Im Bank programs, press releases, fact sheets, recent approvals, and fee is available on-line through the Bank's bulletin board. In addition, the federal government has established the Trade Information Center (TIC) to coordinate all federal export promotion efforts. TIC can be reached at 1-800-USA-TRADE or 202- 482-0843 (TDD users, 1-800-TDD-TRADE).
Export-Import Bank of the United States
811 Vermont Avenue, NW
Washington, D.C. 20571
202-565-3946 (voice)
202-565-3380 (fax)
Ex-Im Bank toll-free hotline:
1-800-565-EXIM
Business Development Group:
202-565-3900 (voice)
202-565-3932 (fax)
Seminar Information:
202-565-3912
Bulletin Board:
202-565-3826
National Trade Data Bank:
http://www.stat-usa.gov
U.S. Export Assistance Centers (as of October 1995) LOS ANGELES -- CALIFORNIA One World Trade Center Suite 1670 Long Beach, California 90831 310-980-4550 (voice) 310-980-4561 (fax) MIAMI -- FLORIDA Trade Port Building 5600 Northwest 36th Avenue 6th Floor Miami, Florida 33166 305-526-7425 (voice) 305-526-7434 (fax) CHICAGO -- ILLINOIS Xerox Center 55 West Monroe Street, Suite 2440 Chicago, Illinois 60603 312-353-8040 (voice) 312-353-8098 (fax) BALTIMORE -- MARYLAND World Trade Center 401 East Pratt Street, Suite 2432 Baltimore, Maryland 21202 410-962-4539 (voice) 410-962-4529 (fax) ST. LOUIS -- MISSOURI 182 Maryland Avenue, Suite 303 St. Louis, Missouri 63105 314-425-3302 (voice) 314-425-3381 (fax) NEW YORK -- NEW YORK 6 World Trade Center, Room 635 New York, New York 10048 212-264-0634 (voice) 212-264-1356 (fax) CLEVELAND -- OHIO Bank One Center, Suite 700 600 Superior Avenue Cleveland, Ohio 44114-2650 216-522-4750 (voice) 216-522-2235 (fax) PHILADELPHIA -- PENNSYLVANIA 615 Chestnut Street, Suite 1500 Philadelphia, Pennsylvania 19106 215-597-6101 (voice) 215-597-6123 (fax) DALLAS -- TEXAS 2050 North Stemmons Freeway Suite 170, P.O. Box 58130 Dallas, Texas 75258 214-767-0542 (voice) 214-767-8420 (fax) SEATTLE -- WASHINGTON 3131 Elliot Avenue, Suite 290 206-553-5615 (voice) 206-553-7253 (fax)
Financial Guarantees of the Export-Import Bank
| Objective: | To assist large exporters finance their export of U.S. goods and services. |
| Eligibility: | All U.S. exporters. |
| Cost: | $100 application fee, up-front exposure fee, and commitment fee. |
| Services: | Financial support in the form of guarantees on fixed- or floating-interest rate export loans. |
Description
The Export-Import Bank (Ex-Im Bank) administers a financial guarantee program that provides assurance of repayment on fixed- or floating-interest rate export loans for capital equipment, services, and projects. The program supports both medium- and long-term export sales. The guarantee is unconditional and transferable, and may be for any amount. The program provides 100 percent coverage, of both principal and interest owed, against commercial and political risks. A 15 percent cash payment is required by the foreign buyer. This program is best utilized by banks, other lenders, and large exporting companies financing their own transactions.
A $100 processing fee is due with the application. In addition, there is an up-front exposure fee, tallied on the basis of the repayment term, type of buyer, and country risk rating; this fee is paid at the time each guarantee is issued. The Ex-Im Bank also levies an annual commitment fee of 0.125 percent of the remaining balance of the guaranteed loan.
Application Process
Interested firms should contact the Ex-Im Bank or one of its district offices for an application.
Impact
No information is available; the program is only used by large manufacturers and other exporting companies.
Success Stories
Program staff were not able to provide any examples.
Contacts
Manufacturers interested in any Ex-Im Bank programs may apply directly to the main office, or to the ten U.S. Export Assistance Centers (USEACs) listed below. The USEACs are one-stop centers for the services of the Ex-Im Bank, U.S. and Foreign Commercial Service, and SBA. General information on Ex-Im Bank programs, press releases, fact sheets, recent approvals, and fee is available on-line through the Bank's bulletin board. In addition, the federal government has established the Trade Information Center (TIC) to coordinate all federal export promotion efforts. TIC can be reached at 1-800-USA-TRADE or 202-482-0843 (TDD users, 1-800-TDD-TRADE).
Export-Import Bank of the United States
811 Vermont Avenue, NW
Washington, D.C. 20571
202-565-3946 (voice)
202-565-3380 (fax)
Ex-Im Bank toll-free hotline:
1-800-565-EXIM
Business Development Group:
202-565-3900 (voice)
202-565-3932 (fax)
Seminar Information:
202-565-3912
Bulletin Board:
202-565-3826
National Trade Data Bank:
http://www.stat-usa.gov
U.S. Export Assistance Centers (as of October 1995) LOS ANGELES -- CALIFORNIA One World Trade Center Suite 1670 Long Beach, California 90831 310-980-4550 (voice) 310-980-4561 (fax) MIAMI -- FLORIDA Trade Port Building 5600 Northwest 36th Avenue 6th Floor Miami, Florida 33166 305-526-7425 (voice) 305-526-7434 (fax) CHICAGO -- ILLINOIS Xerox Center 55 West Monroe Street, Suite 2440 Chicago, Illinois 60603 312-353-8040 (voice) 312-353-8098 (fax) BALTIMORE -- MARYLAND World Trade Center 401 East Pratt Street, Suite 2432 Baltimore, Maryland 21202 410-962-4539 (voice) 410-962-4529 (fax) ST. LOUIS -- MISSOURI 182 Maryland Avenue, Suite 303 St. Louis, Missouri 63105 314-425-3302 (voice) 314-425-3381 (fax) NEW YORK -- NEW YORK 6 World Trade Center, Room 635 New York, New York 10048 212-264-0634 (voice) 212-264-1356 (fax) CLEVELAND -- OHIO Bank One Center, Suite 700 600 Superior Avenue Cleveland, Ohio 44114-2650 216-522-4750 (voice) 216-522-2235 (fax) PHILADELPHIA -- PENNSYLVANIA 615 Chestnut Street, Suite 1500 Philadelphia, Pennsylvania 19106 215-597-6101 (voice) 215-597-6123 (fax) DALLAS -- TEXAS 2050 North Stemmons Freeway Suite 170, P.O. Box 58130 Dallas, Texas 75258 214-767-0542 (voice) 214-767-8420 (fax) SEATTLE -- WASHINGTON 3131 Elliot Avenue, Suite 290 206-553-5615 (voice) 206-553-7253 (fax)
| Objective: | To encourage firms to shift various manufacturing activities from off-shore to plants in the U.S., and to promote product exports from these sites. |
| Eligibility: | Any private or public for-profit corporation. |
| Cost: | None. |
| Services: | Tax advantaged treatment of manufacturing operations within FTZs, including the elimination or reduction of federal customs duties, excise taxes, and various state/local levies. |
Description
Foreign trade zones (FTZs), commonly called duty-free zones, benefit those firms that either produce goods within them for export, or import parts for assembly and re-export. Rules and eligible activities are determined locally and vary from zone to zone, but in general FTZs encourage exports by improving the cost- competitiveness of firms engaged in their manufacture and processing. Federal law has defined five instances in which FTZ exports are considered duty-free:
Congress has authorized two types of FTZs: general purpose zone and subzone. The general purpose zone usually can be found near typical ports of entry, such as an airport, seaport, or other border crossing. These zones usually serve as industrial parks, and the zone operator leases space to participating companies. Firms primarily interested in warehousing and distribution activities would be well served by this type of zone. If a firm's primary interest is manufacturing, particularly on a large scale, subzones offer all the benefits of a general purpose zone. Nearly 90 percent of all subzone activity is related to manufacturing. An individual manufacturer can maintain a subzone for their own purposes, but subzones still must be administratively and legally attached to a general purpose zone. Automobile manufacturing accounts for 70 percent of all subzone activities. A subzone need not be limited to manufacturing, but may serve other business activities in areas served minimally by a general purpose zone. Subzones can be designated almost anywhere. General purpose zones can extend their area of coverage, subject to approval, to an area with a radius of no greater than 60 miles from a port of entry.
Application Process
The Department of Commerce designates FTZs and regulates their activities. Firms wishing to take advantage of the benefits of general purpose zones need only establish occupancy within the zone, by buying or renting space. Companies wishing to establish their own subzone must submit an application package that contains the following: a cover letter showing the firm's eligibility, type of authority required, a description of the proposed site or facility, project background, the need for a zone, relationship of the zone to community interests in economic development, and how the firm will operate and finance the project. In subzones where manufacturing activity will be the focus, the application must include the following additional information: products and components, tariff rates, benefit to the operator and the community, or public benefits such as employment. A federal filing fee must be included with the application. Applications are considered within ten to 12 months of initial filing. Prefiling reviews generally are completed within 45 days. The Federal Trade Zone Board makes all decisions concerning approval of applications, petitions for FTZ expansions, hearing of appeals, monitoring zone operations, and imposing activity restrictions.
Success Stories
1) Many manufacturing firms have reduced their operating costs by establishing facilities within FTZs. General Electric saves millions of dollars in state and local inventory taxes just on the materials it stores at its plant in a Kentucky zone.
2) Because of the nature of the operations within them, some FTZs offer benefits not available outside such zones. The Battle Creek, Michigan, FTZ is home to at least 20 firms that cooperate in the distribution and inspection of each other's products. The FTZ in Mount Olive, New Jersey, uses a data system to handle inventory control and reporting for all of its business tenants, saving firms much of the cost associated with preparing customs documents and record keeping.
Impact
Approximately 20 new FTZs are created each year. According to Department of Commerce estimates, this amounts to an annual increase of roughly $9 billion worth of goods entering the zones. More than 200 U.S. communities now have trade zones, compared to 67 in 1980. Subzones in 1994 brought in 90 percent of all goods received within all trade zones, compared to just nine percent in 1970. This growth is primarily due to auto manufacturing and high-technology industries. Nationally, employment at active zone facilities is more than 225,000.
Contact
The best information on FTZs is available from the Department of Commerce district offices, or from the individual trade zones listed below. The Department of Commerce, along with the states, oversees and enforces program regulations and reporting requirements. For such information, contact the central office in Washington, D.C.
Office of the Executive Secretary
Foreign Trade Zones Board
14th and Pennsylvania Avenue, NW, Room 3716
Washington, D.C. 20230
202-482-2862
Current U.S. Foreign Trade Zones (as of September 1995) ALABAMA Zone No. 98: Birmingham, 205-251-7188 Zone No. 82: Mobile, 205-433-1222 ALASKA Zone No. 160: Anchorage, 907-343-4804 Zone No. 195: Fairbanks, 907-452-2185 Zone No. 159: St. Paul, 907-546-2331 Zone No. 108: Valdez, 907-835-4313 ARIZONA Zone No. 60: Nogales, 602-281-4695 Zone No. 75: Phoenix, 602-262-5040 Zone No. 174: Pima County, 520-323-9759 Zone No. 139: Sierra Vista, 602-458-6948 Zone No. 48: Tucson, 602-746-3692 ARKANSAS Zone No. 14: Little Rock, 501-490-1468 CALIFORNIA Zone No. 50: Long Beach, 310-437-0041 Zone No. 202: Los Angeles, 310-732-3846 2Zone No. 56: Oakland, 415-568-8500 Zone No. 191: Palmdale, 805-267-5100 Zone No. 205: Port Hueneme, 805-488-3677 Zone No. 153: San Diego, 619-236-8005 Zone No. 3: San Francisco, 415-391-0176 Zone No. 18: San Jose, 408-277-5880 Zone No. 143: West Sacramento, 916-372-8322 COLORADO Zone No. 112: Colorado Springs, 719-471-8183 Zone No. 123: Denver, 303-371-2511 CONNECTICUT Zone No. 76: Bridgeport, 203-576-8229 Zone No. 208: New London, 203-447-5203 Zone No. 162: North Haven, 203-469-1391 Zone No. 71: Windsor Locks, 203-627-1444 DELAWARE Zone No. 99: Wilmington, 302-739-4271 FLORIDA Zone No. 136: Brevard County, 407-783-7831 Zone No. 166: Homestead, 305-245-2211 Zone No. 64: Jacksonville, 904-630-3053 Zone No. 169: Manatee County, 813-722-6621 Zone No. 32: Miami, 305-350-7700 Zone No. 180: Miami (Wynwood), 305-576-0440 Zone No. 42: Orlando, 407-825-2213 Zone No. 135: Palm Beach Co., 407-842-4201 Zone No. 65: Panama City, 904-763-8471 Zone No. 193: Pinellas County, 813-539-0200 Zone No. 25: Port Everglades, 305-523-3404 Zone No. 79: Tampa, 813-229-5552 Zone No. 198: Volusia and Flagler Cos 904-248-8030 GEORGIA Zone No. 26: Atlanta, 404-361-6000 Zone No. 144: Brunswick, 912-267-7181 Zone No. 104: Savannah, 912-964-0904 HAWAII Zone No. 9: Honolulu, 808-586-2509 IDAHO Zone No. 192: Meridian, 208-888-4433 ILLINOIS Zone No. 22: Chicago, 312-646-4400 Zone No. 31: Granite City, 618-288-9890 Zone No. 146: Lawrence County, 618-943-5219 Zone No. 114: Peoria, 309-676-7500 Zone No. 133: Quad-City, 309-788-7436 Zone No. 176: Rockford, 815-965-8639 INDIANA Zone No. 152: Burns Harbor, 317-232-9200 Zone No. 170: Clark County, 317-232-9200 Zone No. 177: Evansville, 812-464-3180 Zone No. 182: Fort Wayne, 219-427-1127 Zone No. 72: Indianapolis, 317-487-7200 Zone No. 125: South Bend, 219-232-9357 IOWA Zone No. 175: Cedar Rapids, 319-362-3131 Zone No. 107: Des Moines, 515-243-6251 KANSAS Zone No. 161: Sedgwick County, 316-268-7575 KENTUCKY Zone No. 47: Campbell County, 513-579-3122 Zone No. 29: Louisville, 502-935-6024 LOUISIANA Zone No. 154: Baton Rouge, 504-342-1660 Zone No. 124: Gramercy, 504-652-9278 Zone No. 87: Lake Charles, 318-439-3661 Zone No. 2: New Orleans, 504-897-0189 Zone No. 145: Shreveport, 318-861-4981 MAINE Zone No. 58: Bangor, 207-945-4400 Zone No. 179: Madawaska, 207-728-4273 Zone No. 186: Waterville, 207-873-5171 MARYLAND Zone No. 74: Baltimore, 410-631-7121 Zone No. 73: BWI Airport, 410-859-7813 Zone No. 63: Prince George's County, 301-985-5002 MASSACHUSETTS Zone No. 27: Boston, 617-478-4100 Zone No. 201: Holyoke, 413-532-7991 Zone No. 28: New Bedford, 508-979-1488 MICHIGAN Zone No. 43: Battle Creek, 616-968-8197 Zone No. 70: Detroit, 313-259-1166 Zone No. 140: Flint, 313-766-7346 Zone No. 189: Kent/Ottawa/Muskegon Counties, 616-788-5558 Zone No. 16: Sault Ste. Marie, 906-635-9131 MINNESOTA Zone No. 51: Duluth, 218-727-8525 Zone No. 119: Minneapolis-St. Paul, 612-297-4811 MISSISSIPPI Zone No. 92: Harrison County, 601-863-5951 Zone No. 158: Vicksburg/Jackson, 601-638-6914 MISSOURI Zone No. 15: Kansas City, 816-421-7666 Zone No. 17: Kansas City, 816-421-7666 Zone No. 102: St. Louis, 314-889-7663 MONTANA Zone No. 190: Butte-Silver Bow, 406-723-4321 Zone No. 88: Great Falls, 406-727-3404 Zone No. 187: Toole County, 406-434-5203 NEBRASKA Zone No. 59: Lincoln, 402-476-7511 Zone No. 19: Omaha,, 402-444-5272 NEVADA Zone No. 89: Clark County, 702-361-4190 Zone No. 126: Sparks, 702-331-6500 NEW HAMPSHIRE Zone No. 81: Portsmouth, 603-436-8500 NEW JERSEY Zone No. 200: Mercer County, 609-989-6518 Zone No. 44: Morris County, 201-648-3518 Zone No. 49: Newark/Elizabeth, 212-435-6727 Zone No. 142: Salem, 609-757-4905 NEW MEXICO Zone No. 110: Albuquerque, 505-768-3269 Zone No. 197: Dona Ana County, 505-524-1745 Zone No. 194: Rio Rancho, 505-891-7201 NEW YORK Zone No. 121: Albany, 518-393-1715 Zone No. 23: Buffalo, 716-856-6525 Zone No. 54: Clinton County, 518-563-3100 Zone No. 111: JFK Int'l Airport, 718-244-3648 Zone No. 141: Monroe County, 716-428-5301 Zone No. 1: New York City, 718-834-0400 Zone No. 34: Niagara County, 716-731-4900 Zone No. 118: Ogdensburg, 315-393-4080 Zone No. 172: Oneida County, 315-736-0888 Zone No. 90: Onondaga, 315-470-1800 Zone No. 37: Orange County, 914-294-5151 Zone No. 52: Suffolk County, 516-588-5757 Zone No. 109: Watertown, 315-785-3226 NORTH CAROLINA Zone No. 57: Mecklenburg, 704-587-5573 Zone No. 67: Morehead City, 919-763-1621 Zone No. 93: Raleigh/Durham, 919-549-0551 Zone No. 66: Wilmington, 919-763-1621 NORTH DAKOTA Zone No. 103: Grand Forks, 701-746-2580 OHIO Zone No. 181: Akron-Canton, 216-499-4059 Zone No. 46: Cincinnati, 513-579-3122 Zone No. 40: Cleveland, 216-241-8004 Zone No. 101: Clinton County, 513-382-5591 Zone No. 100: Dayton, 513-226-1444 Zone No. 151: Findlay, 419-424-7095 Zone No. 138: Franklin County, 614-492-1401 Zone No. 8: Toledo, 419-243-8251 OKLAHOMA Zone No. 164: Muskogee, 918-682-7886 Zone No. 106: Oklahoma City, 405-297-3836 Zone No. 53: Rogers County, 918-266-2291 OREGON Zone No. 132: Coos County, 503-267-7678 Zone No. 184: Klamath Falls, 503-883-5361 Zone No. 206: Medford-Jackson County, 503-776-7269 Zone No. 45: Portland, 503-731-7537 PENNSYLVANIA Zone No. 35: Philadelphia, 215-492-9800 Zone No. 33: Pittsburgh, 412-471-3939 Zone No. 24: Pittston, 717-655-5581 Zone No. 147: Reading, 215-376-6766 RHODE ISLAND Zone No. 105: Providence and North Kingstown, 401-277-3134 SOUTH CAROLINA Zone No. 21: Dorchester Co., 803-577-8185 Zone No. 38: Spartanburg Co., 803-577-8185 Zone No. 127: West Columbia, 803-822-5010 TENNESSEE Zone No. 134: Chattanooga,, 615-752-4300 Zone No. 83: Huntsville, 205-772-3105 Zone No. 148: Knoxville, 615-694-6772 Zone No. 77: Memphis, 901-576-7107 Zone No. 78: Nashville, 615-862-6029 Zone No. 204: Tri-City, 615-323-8288 TEXAS Zone No. 183: Austin, 512-452-8848 Zone No. 115: Beaumont, 409-722-0251 Zone No. 62: Brownsville, 210-831-4592 Zone No. 155: Calhoun/Victoria Counties, 512-987-2813 Zone No. 122: Corpus Christi, 512-882-5633 Zone No. 168: Dallas/Fort Worth, 214-991-9955 Zone No. 39: Dallas/Fort Worth, 214-574-3079 Zone No. 97: Del Rio, 210-774-8552 Zone No. 96: Eagle Pass, 512-773-6166 Zone No. 68: El Paso, 915-772-1343 Zone No. 150: El Paso, 915-599-1122 Zone No. 113: Ellis County, 214-723-5522 Zone No. 196: Forth Worth, 817-890-1000 Zone No. 149: Freeport, 409-233-2667 Zone No. 36: Galveston, 409-766-6117 Zone No. 84: Harris County, 713-670-2400 Zone No. 94: Laredo, 210-722-4933 Zone No. 171: Liberty County, 409-336-7074 Zone No. 12: McAllen, 210-682-4306 Zone No. 165: Midland, 915-580-2200 Zone No. 117: Orange, 409-722-0251 Zone No. 116: Port Arthur, 409-722-0251 Zone No. 178: Presidio, 915-229-3724 Zone No. 80: San Antonio, 210-299-8088 Zone No. 95: Starr County, 512-487-5606 Zone No. 199: Texas City, 409-948-3111 Zone No. 156: Weslaco, 210-968-3181 UTAH Zone No. 30: Salt Lake City, 801-535-7120 VERMONT Zone No. 55: Burlington, 802-862-5726 Zone No. 91: Newport, 802-748-5181 VIRGINIA Zone No. 185: Culpepper Co., 703-825-8628 Zone No. 207: Richmond, 804-226-3000 Zone No. 20: Suffolk, 804-934-2386 Zone No. 137: Washington Dulles Int'l Airport, 703-661-8040 WASHINGTON Zone No. 129: Bellingham, 206-676-2500 Zone No. 130: Blaine, 206-676-2500 Zone No. 120: Cowlitz County, 206-423-9921 Zone No. 85: Everett, 206-383-5841 Zone No. 173: Grays Harbor, 206-533-9506 Zone No. 203: Moses Lake, 509-762-5363 Zone No. 5: Seattle , 206-728-3628 Zone No. 131: Sumas, 206-676-2500 Zone No. 86: Tacoma, 206-383-5841 Zone No. 128: Whatcom County, 206-734-8180 Zone No. 188: Yakima, 509-575-6149 WISCONSIN Zone No. 167: Brown County, 414-448-4001 Zone No. 41: Milwaukee, 414-769-2956 WYOMING Zone No. 157: Casper, 307-472-3521
Other Export Assistance Programs
The federal government supports numerous programs that provide indirect support to manufacturers through general economic development or broad-based business assistance. Manufacturers and those working with them should be aware of the programs listed below. Short descriptions and contact phone numbers are given.
National Trade Data Base (NTDB) is a comprehensive resource of export promotion and international trade data collected by 17 U.S. government agencies. The data base is updated monthly and available on CD-ROM disks or through on-line subscription. The NTDB contains: (a) the latest Census data on U.S. imports and exports by commodity and county; (b) the complete CIA World Factbook; (c) current market research reports compiled by the U.S. & Foreign Commercial Service; (d) the complete Foreign Traders Index; (e) State Department country reports on economic policy and trade practices; and (f) the publications: Export Yellow Pages, A Basic Guide to Exporting, and the National Trade Estimates Report on Foreign Trade Barriers, as well as many other data series. Contact: 202-482-1986 (voice), 202-482-2164 (fax).
Reach Strategic Venture Partners (RSVP), managed by the Small Business Administration, is a new computerized database system designed to provide international joint venture opportunities for small and mid-sized companies. RSVP contains profiles of foreign companies seeking U.S. joint venture partners. U.S. small businesses can access this database online. Profiles can be sorted by country of interest, product of interest, or cross referenced by both country and product. Profiled companies can track businesses that have accessed their leads. Contact: 202-205-6720 (voice), 202-205-7272 (fax).
Export Legal Assistance Network (ELAN), supported by the Small Business Administration, is a nationwide group of attorneys with experience in international trade who provide free initial consultations to small businesses on export-related matters. ELAN services are available through SBA district offices, SCORE, and Small Business Development Centers. Contact: 1-800-U-ASK-SBA for the nearest office, or call the ELAN national coordinator at 202-778-3080.
Regional Business Centers, operated by the International Trade Administration of the U.S. Department of Commerce, provide information to U.S. businesses interested in exporting to the Newly Independent States of the former Soviet Union, Eastern Europe, Japan, and Asia. The centers' specialists provide information on export opportunities, trade contacts, government programs supporting regional trade, and export regulations. Contacts: 1-800-USA-TRADE for the U.S.-Asia Environmental Partnership; 202- 482-4655 for the Business Information Service for the Newly Independent States; 202-482-2645 for the Eastern Europe Business Information Center; and 202-482-2425 for the Japan Export Information Center.