[House Report 106-528]
[From the U.S. Government Publishing Office]
106th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 106-528
=======================================================================
OIL PRICE REDUCTION ACT OF 2000
_______
March 17, 2000.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Gilman, from the Committee on International Relations, submitted
the following
R E P O R T
together with
SUPPLEMENTAL VIEWS
[To accompany H.R. 3822]
[Including cost estimate of the Congressional Budget Office]
The Committee on International Relations, to whom was
referred the bill (H.R. 3822) to reduce, suspend, or terminate
any assistance under the Foreign Assistance Act of 1961 and the
Arms Export Control Act to each country determined by the
President to be engaged in oil price fixing to the detriment of
the United States economy, and for other purposes, having
considered the same, reports favorably thereon with an
amendment and recommends that the bill as amended do pass.
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Oil Price Reduction Act of 2000''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) Oil producing countries, including the nations of the
Organization of Petroleum Exporting Countries (OPEC), took
concerted actions in March and September of 1999 to cut oil
production and hold back from the market 4,000,000 barrels a
day representing approximately six percent of the global
supply.
(2) OPEC, in its capacity as an oil cartel, has been a
critical factor in driving prices from approximately $11 a
barrel in December 1998 to a high of $30 a barrel in mid-
February 2000, levels not seen since the Persian Gulf Conflict.
(3) On February 10, 2000, a hearing before the Committee on
International Relations of the House of Representatives on
``OPEC and the Northeast Energy Crisis'' clearly demonstrated
that OPEC's goal of reducing its oil stocks was the major
reason behind price increases in heating oil, gasoline, and
diesel oil stocks.
(4) During this hearing, the Assistant Secretary in the
Office of International Affairs of the Department of Energy
noted that artificial supply constraints placed on the market
are ultimately self-defeating in so far as they increase
volatility in the market, lead to boom and bust cycles, and
promote global instability, particularly in developing
countries whose economies are extremely vulnerable to sharp
price increases.
(5) These price increases have caused inflationary shocks to
the United States economy and could threaten the global
economic recovery now underway in Europe and Asia where the
demand for oil is rising.
(6) The transportation infrastructure of the United States is
under stress and tens of thousands of small- to medium-sized
trucking firms throughout the Northeast region are on the verge
of bankruptcy because of the rise in diesel oil prices to more
than $2 per gallon--a 43 percent increase in the Central
Atlantic region and a 55 percent increase in the New England
region--an increase that has had the effect of requiring these
trucking firms to use up to 20 percent of their operating
budgets for the purchase of diesel oil.
(7) Many elderly and retired Americans on fixed incomes
throughout the Northeast region of the United States cannot
afford to pay the prevailing heating oil costs and all too
often are faced with the choice of paying the grocery bills or
staying warm.
(8) Several key oil producing nations relied on the United
States military for their protection in 1990 and 1991,
including during the Persian Gulf Conflict, and these nations
still depend on the United States for their security.
(9) Many of these nations enjoy a close economic and security
relationship with the United States which is a fundamental
underpinning of global security and cooperation.
(10) A continuation of the present policies put in place at
the meeting of OPEC Ministers in March and September of 1999
threatens the relationship that many of the OPEC nations enjoy
with the United States.
SEC. 3. POLICY OF THE UNITED STATES.
(a) Policy With Respect to Oil Exporting Countries.--It shall be the
policy of the United States to consider the extent to which major net
oil exporting countries engage in oil price fixing to be an important
determinant in the overall political, economic, and security
relationship between the United States and these countries.
(b) Policy With Respect to Oil Importing Countries.--It shall be the
policy of the United States to work multilaterally with other countries
that are major net oil importers to bring about the complete
dismantlement of international oil price fixing arrangements.
SEC. 4. REPORT TO CONGRESS.
Not later than 30 days after the date of enactment of this Act, the
President shall transmit to the Congress a report that contains the
following:
(1) A description of the overall economic and security
relationship between the United States and each country that is
a major net oil exporter, including each country that is a
member of OPEC.
(2) A description of the effect that coordination among the
countries described in paragraph (1) with respect to oil
production and pricing has had on the United States economy and
global energy supplies.
(3) Detailed information on any and all assistance programs
under the Foreign Assistance Act of 1961 and the Arms Export
Control Act, including licenses for the export of defense
articles and defense services under section 38 of such Act,
provided to the countries described in paragraph (1).
(4) A determination made by the President in accordance with
section 5 for each country described in paragraph (1).
SEC. 5. DETERMINATION BY THE PRESIDENT OF MAJOR OIL EXPORTING COUNTRIES
ENGAGED IN PRICE FIXING.
The report submitted pursuant to section 4 shall include the
determination of the President with respect to each country described
in section 4(1) as to whether or not, as of the date on which the
President makes the determination, that country is engaged in oil price
fixing to the detriment of the United States economy.
SEC. 6. DIPLOMATIC EFFORTS TO END PRICE FIXING.
(a) Diplomatic Efforts.--Not later than 30 days after the date on
which the President transmits to the Congress the report pursuant to
section 4, the President shall--
(1) undertake a concerted diplomatic campaign to convince any
country determined by the President pursuant to section 5 to be
engaged in oil price fixing to the detriment of the United
States economy that the current oil price levels are
unsustainable and will negatively effect global economic growth
rates in oil consuming and developing countries; and
(2) take the necessary steps to begin negotiations to achieve
multilateral action to reduce, suspend, or terminate bilateral
assistance and arms exports to major net oil exporters engaged
in oil price fixing as part of a concerted diplomatic campaign
with other major net oil importers to bring about the complete
dismantlement of international oil price fixing arrangements
described in such report.
(b) Report on Diplomatic Efforts.--Not later than 120 days after the
date of the enactment of this Act, the President shall transmit to the
Congress a report describing any diplomatic efforts undertaken in
accordance with subsection (a) and the results achieved by those
efforts.
(c) Authority To Reduce, Suspend, or Terminate Assistance.--Pursuant
to the current authorities of the President and in furtherance of
multilateral efforts, or bilateral efforts when the United States is
the sole exporter of a particular defense article or defense service,
the President is authorized, at any time after transmitting the report
pursuant to section 4, to reduce, suspend, or terminate assistance
under the Foreign Assistance Act of 1961 and the Arms Export Control
Act, including the license for export of defense articles or defense
services under section 38 of such Act, to any country determined by the
President pursuant to section 5 to be engaged in oil price fixing to
the detriment of the United States economy.
SEC. 7. DEFINITIONS.
In this Act:
(1) Oil price fixing.--The term ``oil price fixing'' means
participation in any agreement, arrangement, or understanding
with other countries that are oil exporters to increase the
price of oil or natural gas by means of, inter alia, limiting
oil or gas production or establishing minimum prices for oil or
gas.
(2) OPEC.--The term ``OPEC'' means the Organization of
Petroleum Exporting Countries.
BACKGROUND AND PURPOSE
In testimony before the International Relations Committee
on February 10, 2000, the Assistant Secretary of the Office of
International Affairs at the Department of Energy, Mr. David
Goldwyn, noted that, ``* * * oil prices have more than doubled
in the past year. Prices have increased from near historically
low levels, around $11 in December 1998, to recent levels not
seen since the Gulf crisis. This rise in price is largely
attributed to the actions taken by the Organization of
Petroleum Exporting Countries (OPEC) to restrict supplies to
the market * * *. Beginning in March of 1998, OPEC instituted
three tiers of production cuts, which eventually totaled 4.3
million barrels per day. OPEC member compliance with the third
cut, effective in April, 1999, has created an increasingly
tight market as crude oil inventories have been drawn down over
the course of the past year.''
Mr. Goldwyn went on to say that the worldwide shortfall in
crude oil last year averaged over one million barrels a day, an
amount which most observers believe has now reached two million
barrels a day. It is the view of the International Energy
Agency that oil exporting nations must close this two million
barrel a day gap in the very near future to prevent oil prices
from rising any further next month.
These successive waves of production cutbacks from OPEC
nations and their oil exporting allies were not met with strong
reaction from the administration at the time decisions were
made. Since the heating oil crisis began to affect the
Northeast, Secretary of Energy Bill Richardson has been very
active in pursuing energy-related discussions with OPEC members
to bring about a significant increase in production.
It is hard to gauge whether OPEC member states in their
upcoming meeting in Vienna on March 27 will increase production
to make up the current global shortfall of two million barrels
per day.
As heating oil and gasoline prices have mounted, our
consumers, elderly constituents, and businessmen across the
Northeast and the entire country have struggled to make ends
meet, as the administration attempts to formulate a strategy to
address this mounting threat from OPEC nations.
In the view of the Committee, the Oil Price Reduction Act,
H.R. 3822, would force the administration to undertake some
critical first steps in identifying the threats to our energy
security from OPEC and non-OPEC producers alike and in
developing options for dealing with them in a coherent and
coordinated fashion.
This bill contains a number of findings relating to the
OPEC and its efforts to limit oil production and drive prices
up from $11 a barrel to over $30 today. It notes that the price
increases have caused inflationary shocks to the U.S. economy,
have put our entire transportation infrastructure under stress,
have harmed many Americans on fixed incomes and could threaten
as well the global economic recovery now underway in Asia and
Europe. It notes that a continuation of the present OPEC
policies of withholding oil production from the market could
undermine the relationship we have with the OPEC member states
and other key net oil exporting countries.
It states that it should be the policy of the United States
to take into account the extent to which a major net oil
exporting country engages in oil price fixing as an important
determinant in our overall political, economic and security
relationship. The bill also states that the U.S. should work
multilaterally with other countries that are major net oil
importers to bring about the dismantling of oil price fixing
arrangements.
Not later than 30 days after enactment, the President shall
report on the overall relationship we have with each country
that is a major oil exporter, shall describe the nature of the
coordination between these countries in regard to the effect
that oil pricing and production has had on the U.S. economy,
and shall provide detailed information on any assistance
programs under the Foreign Assistance Act, (FAA) or the Arms
Export Control Act, (AECA) including licenses for the export of
defense articles and services, provided to every one of these
countries.
The report would include a determination by the President
on whether or not any country is engaged in oil price fixing to
the detriment of the U.S. economy.
The bill further stipulates that not later than 30 days
after the President transmits this report to Congress he should
(1) undertake a diplomatic campaign to convince those countries
identified as engaged in price fixing that current oil price
levels will have a negative impact on oil consuming and
developing countries; and (2) take necessary steps to begin
negotiations to achieve multilateral actions with other major
net oil importers, including the suspension, termination or
reduction of bilateral assistance or arms sales, with the goal
of dismantling of oil price fixing arrangements. Not later than
120 days after enactment, the President shall report to
Congress describing the results and achievements of these
diplomatic efforts.
Finally, the bill specifies that in furtherance of these
multilateral efforts, or bilateral efforts to the extent the
U.S. is the sole exporter of a particular defense article or
service, the President is authorized to reduce, suspend or
terminate assistance under the FAA or arms sales under the AECA
to any country determined to be engaged in oil price fixing.
It is not the intention of the Committee that any provision
of this bill should limit or in any way constrain the
authorities and powers of the President in protecting the
national economic security of the United States against the
activities of OPEC, and its coordination of production levels
among its member states and other major net oil exporting
countries to set prices.
The purpose of this legislation is to ensure that the
President determines whether OPEC members or other major net
oil exporters are engaged in price fixing to the detriment of
the United States economy. If the President makes such
determination for any country, then the President must
undertake a concerted bilateral and multilateral diplomatic
campaign to bring about the end of oil price fixing
arrangements.
In that regard, in testimony before the International
Relations Committee, administration officials have stated
clearly that OPEC has restricted supplies to the market driving
up prices and that its activities as a cartel are not in the
national interests of the United States.
This bill also makes clear that any determination by the
President that a country is involved in price fixing to the
detriment of the U.S. economy should also lead to (1) a review
of our relationship with those countries and (2) a
comprehensive review of those options available to the
President as part of the multilateral effort including the
suspension, termination or reduction of assistance or arms
sales to these same countries.
Specifically, it is the intent of the Committee that the
administration provides complete and accurate information about
the price-fixing activities of all major net oil exporting
nations, including those OPEC member states and non-OPEC
members which have held production off the world market with
the aim of driving up prices to the detriment of the U.S.
economy. By all accounts, the U.S. economy has been harmed by
the rapid rise of prices from $11 a barrel in early 1999 to
over $32 a barrel in mid-March.
High energy prices helped push the U.S. Labor Department's
producer price index up 1 percent in February as prices paid to
our nation's producers posted the biggest increase since the
Iraqi invasion of Kuwait in October of 1990. Other key prices,
including those for autos and computers actually fell
indicating that inflationary pressures are largely oil-related.
The Center for Global Energy Studies has estimated that $30
a barrel oil cuts the U.S. growth rate by nearly 1 percent. But
millions of Americans driving to and from work found that the
dramatic rise in gasoline prices--up 12 cents in the past two
weeks alone--is beginning to cut into their disposable income.
For thousands of American trucking firms the dramatic rise in
diesel oil prices has already driven up their operating costs
forcing many into bankruptcy.
COMMITTEE ACTION
H.R. 3822 was introduced by Representative Gilman on March
2, 2000. The bill was referred to the Committee on
International Relations.
The Committee has held two hearings on the issue of oil
price fixing since the beginning of 2000. On February 10, 2000,
the Committee took testimony from the Assistant Secretary for
International Affairs of the Department of Energy, from a
Deputy Assistant Secretary of State for Economic Affairs in the
Department of State, and from private witnesses. On March 1 the
Committee took testimony from the Secretary of the Department
of Energy, the Honorable Bill Richardson.
The Committee on International Relations marked up the bill
in open session, pursuant to notice, on March 15, 2000. During
its consideration, the Committee agreed to an amendment in the
nature of a substitute offered by Mr. Gilman. Prior to the
final vote on the amendment in the nature of a substitute, an
amendment was offered by Mr. Gejdenson to the pending
amendment. The Gejdenson amendment replaced certain language
relating to Presidential authority to reduce, suspend, or
terminate assistance. The Gejdenson amendment provided, in
essence, that the only bilateral efforts to reduce, suspend, or
terminate assistance under the Foreign Assistance Act or Arms
Export Control Act shall be with respect to a particular
defense article or service if the United States is the sole
exporter of such an article or service. The Gejdenson amendment
was agreed to by a record vote of 21 to 15.
Subsequently, the Committee agreed to a motion offered by
Mr. Bereuter to favorably report the bill, as amended, to the
House of Representatives, by voice vote, a quorum being
present.
Record votes on amendments and motion to report
Clause (3)(b) of rule XIII of the Rules of the House of
Representatives requires that the results of each record vote
on an amendment or motion to report, together with the names of
those voting for or against, be printed in the committee
report. The following record vote was taken during
consideration of H.R. 3822:
Description of amendment, motion, order, or other proposition (votes
during markup of H.R. 3822--March 15, 2000)
Vote No. 1.-- Gejdenson amendment to the Gilman substitute
amendment.
Voting yes: Manzullo, Houghton, Campbell, Gejdenson,
Berman, Ackerman, Faleomavaega, Payne, Menendez, Brown,
Hastings, Danner, Hilliard, Sherman, Wexler, Rothman, Davis,
Pomeroy, Delahunt, Meeks and Lee.
Voting no: Gilman, Goodling, Bereuter, Smith, Gallegly,
Ros-Lehtinen, Ballenger, Rohrabacher, Royce, King, Chabot,
McHugh, Brady, Cooksey and Tancredo.
Ayes, 21. Noes, 15.
OTHER MATTERS
Committee oversight findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee reports the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
Committee on Government Reform findings
Clause 3(c)(4) of rule XIII of the Rules of the House of
Representatives requires each committee report to contain a
summary of the oversight findings and recommendations made by
the Government Reform Committee pursuant to clause (4)(c)(2) of
rule X of those Rules. The Committee on International Relations
has received no such findings or recommendations from the
Committee on Government Reform.
Advisory Committee statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to the legislative branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Constitutional authority statement
In compliance with clause 3(d)(1) of rule XIII of the Rules
of the House of Representatives, the Committee cites the
following specific powers granted to the Congress in the
Constitution as authority for enactment of H.R. 3822 as
reported by the Committee: Article I, section 8, clause 1
(relating to providing for the common defense and general
welfare of the United States); Article I, section 8, clause 3
(relating to the regulation of commerce with foreign nations);
and Article I, section 8, clause 18 (relating to making all
laws necessary and proper for carrying into execution powers
vested by the Constitution in the Government of the United
States or in any Department or Officer thereof).
Preemption clarification
Section 423 of the Congressional Budget Act of 1974
requires the report of any committee on a bill or joint
resolution to include a committee statement on the extent to
which the bill or joint resolution is intended to preempt state
or local law. The Committee states that H.R. 3822 is not
intended to preempt any state or local law.
New budget authority and tax expenditures, Congressional Budget Office
cost estimate, and Federal mandates statements
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives requires each committee report that accompanies
a measure providing new budget authority, new spending
authority, or new credit authority or changing revenues or tax
expenditures to contain a cost estimate, as required by section
308(a)(1) of the Congressional Budget Act of 1974, as amended,
and, when practicable with respect to estimates of new budget
authority, a comparison of the estimated funding level for the
relevant program (or programs) to the appropriate levels under
current law.
Clause 3(d) of rule XIII of the Rules of the House of
Representatives requires committees to include their own cost
estimates in certain committee reports, which include, when
practicable, a comparison of the total estimated funding level
for the relevant program (or programs) with the appropriate
levels under current law.
Clause 3(c)(3) of rule XIII of the Rules of the House of
Representatives requires the report of any committee on a
measure which has been approved by the Committee to include a
cost estimate prepared by the Director of the Congressional
Budget Office, pursuant to section 403 of the Congressional
Budget Act of 1974, if the cost estimate is timely submitted.
Section 423 of the Congressional Budget Act requires the
report of any committee on a bill or joint resolution that
includes any Federal mandate to include specific information
about such mandates. The Committee states that H.R. 3822 does
not include any Federal mandate.
The Committee adopts the cost estimate of the Congressional
Budget Office as its own submission of any new required
information with respect to H.R. 3822 on new budget authority,
new spending authority, new credit authority, or an increase or
decrease in the national debt. It also adopts the estimate of
Federal mandates prepared by the Director of the Congressional
Budget Office pursuant to section 423 of the Unfunded Mandates
Reform Act. The estimate and report which has been received is
set out below.
U.S. Congress,
Congressional Budget Office,
Washington, DC, March 17, 2000.
Hon. Benjamin A. Gilman,
Chairman, Committee on International Relations,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3822, the Oil
Price Reduction Act of 2000.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Sunita
D'Monte.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
H.R. 3822--Oil Price Reduction Act of 2000
H.R. 3822 would require the President to report to Congress
on the economic and security relationships between the United
States and major oil exporting countries (including members of
the Organization of Petroleum Exporting Countries) and whether
those countries have engaged in price fixing that has harmed
the U.S. economy. The bill would authorize the President to
reduce, suspend, or terminate foreign assistance to any country
that engages in price fixing that has harmed the U.S. economy
and would require him to make diplomatic efforts to end the
price fixing.
CBO estimates that H.R. 3822 would have insignificant costs
resulting from the reporting requirements and possible increase
in diplomatic activity. The authorization to terminate,
suspend, or reduce U.S. foreign assistance to specific
countries would have no budgetary impact because the President
has that authority under current law. Because H.R. 3822 would
not affect direct spending or receipts, pay-as-you-go
procedures would not apply.
H.R. 3822 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, and tribal
governments.
The estimate was prepared by Sunita D'Monte. This estimate
was approved by Peter H. Fontaine, Deputy Assistant Director
for Budget Analysis.
Section-by-Section Analysis
Section 1. Short title
The bill may be cited as the ``Oil Price Reduction Act''.
Section 2. Findings
This bill contains a number of findings relating to the
Organization of Petroleum Exporting Countries and its efforts
to limit oil production and drive prices up from $11 a barrel
to over $30 today. It notes that the price increases have
caused inflationary shocks to the U.S. economy, have put our
entire transportation infrastructure under stress, have harmed
many Americans on fixed incomes and could threaten as well the
global economic recovery now underway in Asia and Europe.
It notes that several key oil producing nations relied on
the U.S. military for their protection in 1990 and 1991 and
that these nations still depend on the U.S. for their security.
Finally, it finds that a continuation of the present OPEC
policies of withholding oil production from the market could
undermine the relationship we have with the OPEC member states
and other key net oil exporting countries.
Section 3. Policy of the United States
It states that it should be the policy of the United States
to take into account the extent to which a major net oil
exporting country engages in oil price fixing as an important
determinant in our overall political, economic and security
relationship. The bill also states that the U.S. should work
multilaterally with other countries that are major net oil
importers to bring about the dismantling of oil price fixing
arrangements.
Section 4. Report to Congress
Not later than 30 days after enactment, the President shall
report on the overall relationship we have with each country
that is a major oil exporter, shall describe the nature of the
coordination between these countries in regard to the effect
that oil pricing and production has had on the U.S. economy,
and shall provide detailed information on any assistance
programs under the Foreign Assistance Act, FAA, or the Arms
Export Control Act, AECA, including licenses for the export of
defense articles and services, provided to every one of these
countries.
Section 5. Determination by the President on major oil exporting
countries engaged in price fixing
The report would include a determination by the President
on whether or not any country described in Section 4 is engaged
in oil price fixing to the detriment of the U.S. economy.
Section 6. Diplomatic efforts to end price fixing
The bill further stipulates that not later than 30 days
after the President transmits this report to Congress he should
(1) undertake a diplomatic campaign to convince those countries
identified as engaged in price fixing that current oil price
levels will have a negative impact on oil consuming and
developing countries and (2) take multilateral actions with
other major net oil importers, including the suspension,
termination or reduction of bilateral assistance or arms sales,
with the goal of dismantling of oil price fixing arrangements.
Not later than 120 days after enactment, the President
shall report to Congress describing the results and
achievements of these diplomatic efforts.
Finally, the bill specifies that in furtherance of these
multilateral efforts or bilateral efforts when the U.S. is the
sole exporter of a particular defense article or service, the
President is authorized to reduce, suspend or terminate
assistance under the FAA or arms sales under the AECA to any
country determined to be engaged in oil price fixing.
Section 7. Definitions
The bill defines ``oil price fixing'' as participation in
any agreement with other oil exporting countries to increase
the price of oil by limiting production or establishing minimum
price levels. It defines OPEC as the Organization of Petroleum
Exporting Countries.
SUPPLEMENTAL VIEWS
I voted to move the ``Oil Price Reduction Act of 2000''
from the International Relations Committee to the floor of the
House of Representatives for the purpose of giving the
President the authority to restrict or stop foreign aid from
the United States to countries involved in fixing the
production limits of oil.
The Organization of Petroleum Exporting Countries (OPEC),
which includes Algeria, Indonesia, Iran, Iraq, Kuwait, Libya,
Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and
Venezuela, and the other major oil producing nations of Mexico,
Norway, Oman, and Russia all agreed to restrict the production
of oil, resulting in a marked increase in fuel prices.
According to a memo prepared for the committee from the
Congressional Research Service (CRS), countries receiving
direct U.S. foreign aid include Algeria, Indonesia, Nigeria,
Venezuela, Mexico, Oman, and Russia.
This conspiracy has caused multiple problems in our
country. First, it will cost farmers paying sky high prices for
diesel fuel more to put in and harvest their crops at a time
when the price of crops is at an all time low. Second, it hurts
consumers because the high cost of fuel increases the cost of
transportation of food and consumer items. Third, it hurts all
Americans because the inflationary spiral of increased fuel
costs may spur the Federal Reserve to increase interest rates.
Additionally, in the case of Kuwait and Saudi Arabia, the
United States, a little less than a decade ago, helped ensure
their sovereignty during the Persian Gulf War. Have they
forgotten the sacrifice of our fighting men and women?
But in supporting this bill, I wanted to express my point
of view that I do not believe our export promotion programs
should be included in the definition of ``foreign aid'' in this
legislation. Technically, the Overseas Private Investment
Corporation (OPIC) and the Trade Development Agency (TDA) are
authorized by Congress under the overall statutory framework of
the Foreign Assistance Act of 1961. Thus, they are lumped in
with other foreign aid programs.
As the prime author of the Export Enhancement Act of 1999,
which reauthorized OPIC and TDA and was signed into law by the
President last year (P.L. 106-158), I know that these programs
are not give-aways to foreign governments. In fact, they are
two of the many critically important tools that helps U.S.
workers win export opportunities which otherwise would have
gone to foreign competitors.
For 29 years, OPIC has been the U.S. government agency
providing political risk insurance and financing or projects
that help America compete abroad and promote stability and
development in strategic countries and economies around the
world. OPIC's political risk insurance covers three main
areas--expropriation (loss of an investment due to
nationalization or confiscation by a foreign government);
currency inconvertibility (inability to remit profits from
local currency to US dollars); and political violence (loss of
assets or income due to war, revolution or politically-
motivated civil strife, terrorism or sabotage). Since 1971,
OPIC supported projects have generated $61 billion in U.S.
exports and created more than 242,000 American jobs. And,
unlike other foreign aid programs, OPIC operates totally on a
user-fee self-sustaining basis by charging U.S. companies for
their services, which results in no cost to the taxpayer. OPIC
brought in $144 million in revenue to the U.S. Treasury last
year and they expect a $220 million surplus this year. And,
OPIC has $3.7 billion in reserves.
Last year, OPIC had nine projects worth $601.7 million in
three countries (Indonesia, Venezuela, and Russia) potentially
targeted by H.R. 3822. Foreign competitors may have won these
projects if it wasn't for OPIC. By reducing, suspending, or
terminating OPIC's operations in these targeted countries to
show our disgust with OPEC's price fixing scheme will only
boomerang on future U.S. export opportunities to these
countries.
TDA develops feasibility studies designing in American
specifications so that U.S. exporters can win major
infrastructure projects in developing countries and emerging
economies later down the road. This 43 person agency has
generated $16 billion in exports since its inception in 1981.
Every $1 in spending for TDA projects has led to the export of
$37 in U.S. goods and services overseas. In the law that I
authored, the Export Enhancement Act requires, to the maximum
extent possible, the imposition of ``success fees'' on
companies that win export deals thanks to the groundwork laid
by a feasibility study conducted by the TDA. Thus, more and
more companies will pay to use these services. This is
certainly not an ``aid'' program.
Since the early 1990's TDA has been involved in 284
projects (funding feasibility studies, organizing visits to the
United States, match-making conferences, etc.) worth $81.6
million in eight nations potentially covered by H.R. 3822
(Algeria, Nigeria, Oman, Saudi Arabia, Indonesia, Russia,
Mexico, and Venezuela). Using TDA's calculus, the impact of
these efforts will result in $3 billion of U.S. exports to
these countries. It makes no sense, then, to cut off our
exports by halting TDA programs in these countries to protest
OPEC's behavior.
In my opinion, OPIC and TDA are not ``foreign aid''
programs. U.S. companies pay to use these services. They are
primarily a tool to help U.S. exporters win sales that would
have otherwise gone to our foreign competitors. Thus, as the
Executive Branch tries to discern the will of Congress on this
issue, I want to make it clear from my perspective that OPIC
and TDA should be excluded from the definition of foreign
assistance under the Foreign Assistance Act of 1961. These
programs simply help Americans by increasing exports and job
growth in this country.
Donald A. Manzullo.