U.S. to help firms land overseas deals

August 11, 1994|By Suzanne Wooton | Suzanne Wooton,Sun Staff Writer

The Clinton administration, determined to level the playing field in international trade, will more aggressively use economic aid to help U.S. companies land contracts overseas, U.S. Trade Representative Mickey Kantor said in a downtown Baltimore speech yesterday.

FTC Historically, the U.S. government has shunned the practice -- long embraced by Japan and other countries -- of helping private companies secure contracts by promising government loans and other aid to foreign buyers in exchange for such deals.

Instead, the U.S. typically has offered so-called "tied aid" only to counter offers made by other countries in violation of international trade agreements.

Now, however, as part of its broader efforts to boost U.S. exports, the Clinton administration plans to also match legal offers made by other countries, Mr. Kantor said.

"We're not going to let our companies be disadvantaged by the practices of other countries," he told an international trade seminar at the Omni Inner Harbor Hotel.

In addition to other trade initiatives, such as the North American Free Trade Agreement and the Uruguay round of the General Agreement on Tariffs and Trade accord -- the policy shift signals more aggressive support for U.S. exports, Mr. Kantor said yesterday.

The U.S. trade representative was the keynote speaker at the Maryland Port Administration's second annual conference, known as "Forging Partnerships: International Trade in the 90s."

The policy actually began during the Bush administration, when the Export Enhancement Act of 1992 authorized the U.S. Export-Import Bank to match financial aid packages offered by other countries.

One of the first benefactors of the policy could be Ellicott Machine Corp., a Baltimore-based dredge manufacturer.

In March, the U.S. Export-Import Bank announced it was offering a $34.3 million loan to Indonesia to help Ellicott win a contract to sell the Indonesian government dredging equipment.

The move -- which countered a similar offer by the Norwegian government on behalf of a dredging company there -- significantly boosts Ellicott's chance of securing its largest contract ever.

"We as an exporter have seen a more concerted effort to promote exports through advocacy and financing," Peter A. Bowe, president of the 109-year-old South Baltimore company, said yesterday.

The $34.3 million loan -- which has a 25-year term and 3.3 percent interest rate -- would go to Indonesia's state-owned dredging company P. T. Rukinso, if it decides to buy five dredge-barges, a tugboat and other equipment from Ellicott.

Historically, a number of international competitors have made so-called "soft loans" to countries to ensure their companies receive contracts. The United States, on the other hand, has been reluctant to engage in the practice, hoping instead "tied aid" would ultimately vanish in favor of competition based more on price and quality.

The Clinton administration insists it still wants to reduce tied aid. As a result, the United States effectively has conflicting objectives, says I. M. Destler, director of the Center for International and Security Studies at the University of Maryland, College Park.

"On one hand, it is trying to reduce the amount of aid tied to contracts, while on the other hand it is using that to promote its broader economic goal of boosting exports," he said.

But the policy shift is a recognition that U.S. companies will be hurt so long as other countries do not separate trade and foreign aid policies, say U.S. officials.

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