June 27, 2022

Volume XII, Number 178

Advertisement
Advertisement

June 27, 2022

Subscribe to Latest Legal News and Analysis

June 24, 2022

Subscribe to Latest Legal News and Analysis

Biden Administration Boosts Domestic Manufacturing – EXIM to Provide Competitive Financing

For the first time, the Export-Import Bank of the United States (EXIM) will make its existing financing programs available to export-oriented domestic manufacturing facilities and infrastructure projects. The Make More in America Initiative was unanimously approved by the EXIM Board of Directors in April 2022, and had support from the National Association of Manufacturers (NAM), the American Association of Port Authorities (APPA), and the US LNG Association. US manufacturers and infrastructure project stakeholders seeking competitive financing options now have an additional resource to consider.

The Lead-Up

  • February 2021 – President Biden issued an Executive Order (EO) on America’s Supply Chains, which directed his administration to assess vulnerabilities in critical domestic supply chains.

  • June 2021 – In accordance with the EO, the White House released a report examining supply chain vulnerabilities across four key products: semiconductor manufacturing and advanced packaging; large capacity batteries; critical minerals and materials; and pharmaceuticals and advanced pharmaceutical ingredients (APIs).  Among other proposals, the report recommended the administration examine the ability of EXIM to use existing authorities to support domestic manufacturing facilities and infrastructure projects.

  • December 2021 – In response to the report recommendation, EXIM issued a Federal Register Notice soliciting stakeholder comments on the value of and proposed eligibility requirements for expanding its financing program to include domestic transactions.  The agency received 22 public comments in response to this notice, all which expressed support for the expansion of EXIM financing.

The financing is available to all sectors “with financing priority available to environmentally beneficial projects, small businesses, and transformational export area transactions, including semiconductors, biotech and biomedical products, renewable energy, and energy storage.”  In addition to EXIM’s standard due diligence procedures and other applicable financing requirements, such as additionality (the unavailability of financing from the private sector) and environmental and social criteria, EXIM will consider: (1) the project’s export nexus, and (2) the number of US jobs supported by the financing in assessing eligibility.  Financing will also be subject to various transparency measures.

Export Nexus

Transactions eligible to receive Make More in America financing must meet a required “export nexus.”  Under this requirement, a certain percentage of a project’s production (i.e. goods produced at the facility) or capacity (i.e. percent of export traffic at a port) would need to be for export.  The required export nexus is 15% (for small businesses, including minority and women-owned businesses; transformational export areas, including semiconductors biotech and biomedical products, renewable energy, and energy storage; and climate-related transactions) or 25% (for all other projects).

Export suppliers are also eligible for Make More in America financing, so long as the transaction meets the export nexus requirements.  For example, if a company sells 50% of its outputs to a domestic company, and that domestic company then uses 50% of the supplier’s inputs for exports, that supplier would satisfy the 25% export nexus threshold.

Jobs Standard

Make More in America financing will be scaled according to the number of US jobs supported during construction and over the life of the project.  Every one job per year (i.e., 50 jobs per year for five years would be counted as 250 jobs) allows for up to US$189,242 in financing.  This standard replaces the traditional US content requirement EXIM imposes on foreign buyers.

Transparency Measures

The following transparency measures will be imposed on Make More in America financing transactions:

  • Approval from EXIM’s board of directors;

  • Congressional notification for domestic finance transactions above US$50 million;

  • Annual reporting on aggregate export and jobs performance, with contractual recourse measures should projects fail to meet the export nexus requirements or jobs standard;

  • Board approval for any modifications to the initiative;

  • Required use of US flagged shipping for any EXIM-supported imports for a project;

  • Limiting EXIM support to 80% of a project’s financing; and

  • Regular initiative reviews.

 

© Copyright 2022 Squire Patton Boggs (US) LLPNational Law Review, Volume XII, Number 122
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Angela Mariana Freyre Principal Squire Patton Boggs LLP
Principal

She recently served in the US government from June 2011 to September 2017 as Senior Vice President and General Counsel of the Export-Import Bank of the United States (EXIM), responsible for the legal oversight of the bank’s international activities, including cross-border financing transactions in the billions of dollars that involved various industry sectors (including energy, telecommunications and transportation), as well as the financing of foreign governmental and private entities.

During her time at the bank, she was a member of the senior...

202-457-6107
Ludmilla Kasulke Trade Attorney Squire Patton Boggs Washington DC
Senior Associate

Ludmilla (Milla) Kasulke draws on her experience in both domestic and international policy to assist clients on trade matters. Milla provides multinational corporations, sovereign governments and entities, and quasi-government entities with advice on a wide range of trade policy, legal, and regulatory issues. She has been actively engaged in all aspects of the Section 232 process, including the exclusion petition process, and regularly advises clients on the impacts of current and potential new actions. Milla also regularly counsels clients on the impacts of current and potential new trade...

202-457-5125
Kara-Marie Urban Associate Squire Patton Boggs (US) LLP
Associate

Kara-Marie Urban is an associate in the Public Policy Practice. Among her various focuses, she monitors the evolving legislative and regulatory landscape and analyzes regulations relating to cannabis compliance, agriculture, biotechnology, food policy and healthcare that may affect clients in the public, private and nonprofit sectors. She leverages her policy and regulatory understanding and familiarity with congressional procedures, as well as her network of contacts, to provide government affairs counseling and strategic advocacy advice to help guide clients to achieve...

202-457-6509
Advertisement
Advertisement
Advertisement