2012 Edition
Delphos International is proud to introduce the newly updated edition of Inside Washington (2012). Since the last edition of Inside Washington was published in 2004, there have been many changes in the policies, programs, and resources available to American businesses looking for opportunities abroad. Some government programs have been augmented, reinvented, or discontinued, while many of the services and publications are now online, making them more easily accessible and affordable. Financial innovation continues as many agencies have rolled out new small business, corporate finance, and capital markets products and services. Development finance institutions (DFIs) and export credit agencies (ECAs) have grown substantially. We have previously published two separate books on these organizations: Inside the World’s Development Finance Institutions and Inside the World’s Export Credit Agencies.1 Readers should consult these publications for in-depth coverage of these two types of agencies. Inside Washington continues to cover Ex-Im Bank, OPIC, the World Bank, Inter-American Development Bank, and the other Washington, DC–based ECAs and multilaterals.
With advances in technology, improved communication capabilities, and increased cooperation between national governments, having access to the most accurate and up-to-date information has become critical for success in the international marketplace. While it would be impossible to include every new program or service available, the 2012 edition of Inside Washington is an up-to-the-minute, user-friendly guide to the broad array of resources available to businesses looking to expand into foreign markets.
Winning Globally
The economic crisis has increased difficulties in conducting business, but global business opportunities continue to flourish. With this in mind, the importance of possessing the right information at the right time has never been clearer. As global markets and businesses begin to both recover and evolve, even the smallest companies are looking to capitalize on the benefits of overseas exports and imports. More and more, the companies that find success are the ones availing themselves of the right resources at the right time.
The Potential
By now, most executives in the United States are already aware of the potential for growth and new opportunities located beyond our domestic borders. Multinational corporations have long recognized the value of international expansion and their investments have made enormous contributions to the acceleration of trade and economic growth in many areas of the world. However, if the United States is to maintain a competitive position in global commerce, more small- and medium-sized firms must be encouraged to enter international markets, especially those in the developing world, which continue to be some of the fastest-growing customers for U.S. goods and services.
Advances in technology and transportation, combined with an increasingly supportive international business environment, have made it possible for companies to grow beyond their own borders. Capitalizing on these opportunities, however, often proves a formidable challenge to even the savviest of business executives. The maze of services, organizations, programs, and processes available seem to have no end, and as for finding the right officer in the right agency…
The Impact
To a great extent, the success or failure of these enterprises depends on their ability to cooperate and connect with the right resources and programs. The stage is currently set to host a new era of international growth for small- and medium-sized firms as long as they are able to access the financial and technical assistance required for expansion. Most of the financing options made available through the government are obtainable at a much lower cost than other funding sources, and thus provide a very appealing option to companies looking for assistance. The security, stability, financial backing, vast resources, and technical support available to projects funded by these agencies are unparalleled.
In addition to facilitating investment projects, financial institutions are beginning to emulate the World Bank and require added levels of social and environmental responsibility from borrowers interested in their services. In June of 2003, a group of 10 commercial and investment banks became the first signatories to the Equator Principles, which are a voluntary set of social and environmental principles that signing banks adhere to. By June of 2011, over 72 financial institutions in 27 countries, accounting for over 70% of project finance debt in emerging markets, had officially adopted the Equator Principles. Institutions following these voluntary standards require that the development projects they support adhere to environmentally and socially sound policies. These policies are primarily defined by the International Finance Corporation (IFC) of the World Bank and ensure that basic levels of health and safety, pollution control, land acquisition, and natural resource preservation are maintained. Guaranteeing compliance with the host country’s laws and regulations is of primary concern. This type of “corporate responsibility” is just one of the many recent trends in international business practice that is influenced by the leadership of the global development community.
About the Book
Until now, businesses seeking government assistance for international projects were often forced to wander through the bureaucratic labyrinth of Washington in search of answers. With this reference guide, however, the maze of agency authority lines has been erased. It is a compilation of the scores of U.S. government-supported business assistance programs, many of which are still well-kept secrets that can connect businesspeople with the right programs and services. In order to minimize confusion and maximize results, information in this book is arranged according to the type of assistance available rather than by agency. Readers unfamiliar with the international marketplace should notice that the chapters flow logically from the “getting started” information to the nuts-and-bolts of putting together a business deal. The first three chapters focus on targeting and locating the appropriate service. Many of these products and services are now available online or outside of the Beltway through a network of regional offices. The last four chapters however, focus specifically on the products directly available to businesses and the organizations providing them. For the most part, the organizations found in these chapters are exclusive to the Washington, DC, area.
Most of the trade and investment incentive programs, which help U.S. businesses compete internationally, are administered by the federal government and multilateral organizations located in Washington, DC. Organizations that provide this type of assistance include the Export-Import Bank of the United States, Inter-American Development Bank, Overseas Private Investment Corporation, U.S. Agency for International Development, U.S. Department of Agriculture, U.S. Department of Commerce, U.S. Department of Energy, U.S. Department of State, U.S. Environmental Protection Agency, U.S. Small Business Administration, U.S. Trade and Development Agency, Office of the U.S. Trade Representative, World Bank, International Finance Corporation, Multilateral Investment Guarantee Agency, and the Millennium Challenge Corporation. Brief descriptions of these organizations and how they relate to promoting international business development can be found at the end of this section.
In addition to the contact information noted throughout the book, the book’s appendices include relevant contact information for international, state, and regional offices of many government agencies.
No single volume could fully describe the scope and diversity of the hundreds of government programs that have been used to help companies expand internationally. Nevertheless, every effort has been made to present as much information as possible in an easy-to-understand format that can help facilitate more effective and productive business decision making.
Chapter 1: Obtaining Information. This chapter outlines the wide array of information available to U.S. firms considering international operations, including market background reports, statistical profiles, country economic analyses, and international demographic data. Organizations and services that assist business in finding this information are also included.
Chapter 2: Targeting Opportunities. This chapter contains information on specific programs—publications, databases, search services, and procurement—as well as information resources and services that are designed to help businesses identify specific international trade and investment opportunities.
Chapter 3: Regulations and Requirements. This chapter explores the regulations and requirements of doing international business. It covers information on international taxation issues, including foreign sales corporations and profit repatriation, as well as information on international agreements and treaties, rules and regulations, export license assistance, and host-country incentives.
Chapter 4: Technical Assistance. This chapter provides detailed descriptions of the programs and services that help jump-start projects and provide project life-cycle assistance. This includes feasibility study funding, training, advice, and assistance.
Chapter 5: Trade Finance. This chapter describes financing and insurance programs, as well as other services that are available to support the exporting efforts of U.S. businesses. These services often improve and equalize competition for U.S. goods and provide the means needed to conduct international transactions that might not otherwise be possible.
Chapter 6: Project Finance. This chapter provides information on programs and products in support of foreign direct investment in emerging markets. Products described in this section include direct loans, which are typically provided on an off-balance sheet; limited recourse basis; equity; partial credit guarantees; and grants.
Chapter 7: Insurance. This chapter details the various types of political risk insurance and other forms of protection that are available for international ventures and transactions.
Overview of Government Agencies
Export-Import Bank of the United States (Ex-Im Bank)
Ex-Im Bank provides financing support to facilitate exports of U.S. goods and services in order to create more U.S. jobs. Products include loans, guarantees, and credit insurance for U.S. exporters and their lenders that remove or mitigate the risk of default by the foreign buyer. Ex-Im Bank also provides working capital guarantees that allow small- and medium-sized businesses to expand their export programs by investing in inventory and providing favorable terms to their overseas buyers. The agency also has a number of specialized products such as project and structured finance, aircraft finance, and environmental technologies, among others.
Inter-American Development Bank (IDB)
IDB, headquartered in Washington, DC, is currently the primary lender to its members in the Latin American and Caribbean regions. Through the Structured and Corporate Finance Department (SCF), IDB has become more involved in recent years in promoting private sector development. In addition to SCF, which deals with private sector transactions generally above $20 million, the IDB has created the Inter-American Investment Corporation (IIC) and the Multilateral Investment Fund (MIF), both of which support economic growth and poverty reduction in the region through support of the private sector. Typically, IIC handles deals involving loan sizes from $3 million to $20 million.
Overseas Private Investment Corporation (OPIC)
OPIC is a U.S. government agency that promotes private investment in developing countries through financing, political risk insurance, and private equity funds. These programs are available for development projects that involve U.S. investment and that have strong, positive benefits for the host country. Projects must not have an adverse impact on the U.S. economy, employment, or the environment. OPIC operates its programs in more than 150 developing countries.
U.S. Agency for International Development (USAID)
USAID supports assistance projects to further economic and social development in developing countries. This is done through specific development projects, debt-for-equity swaps, loans, and grants given on concessional terms to less developed countries. Areas of assistance include agriculture, health, population control, education, human resources, housing, as well as support for private voluntary organizations. USAID also provides funding for population assistance, economic reform, and stabilization and for other poverty alleviation programs. USAID maintains posts at dozens of U.S. embassies abroad. (See appendix A for a list of USAID contacts.)
U.S. Department of Agriculture (USDA)
Through its Commodity Credit Corporation, the Department of Agriculture administers export sales and donations for foreign use through other agencies and provides export guarantees to foreign buyers. Its Foreign Agricultural Service gathers worldwide information through representatives stationed in 70 U.S. embassies, develops data to support trade, and works to reduce trade barriers. The Office of International Cooperation and Development is responsible for international and technical cooperation for development assistance programs. (See appendix D for a listing of USDA trade offices.)
U.S. Department of Commerce (DOC)
DOC promotes domestic job creation, economic growth, sustainable development, and improved living standards by working in partnership with businesses, universities, communities, and workers. Primarily domestic-oriented financing mechanisms are made available through various DOC departments (see appendix B). The International Trade Administration (ITA) department coordinates issues relating to trade programs and export policies, along with providing assistance and information for U.S. exporters. ITA units (see appendix C) are staffed by trade specialists in district offices and branch offices in industrial and commercial centers nationwide and include domestic and overseas commercial officers, country and industry experts that promote products and offer services and programs for the U.S. exporting community.
Through commercial sections located in U.S. embassies and consulates, the U.S. and Foreign Commercial Service (USFCS) operates in more than 100 cities and in commercial offices in 75 countries. It is composed of over 1,400 U.S. officers and nationals of the various host countries. The USFCS is principally charged with assisting U.S. businesses through one-on-one counseling, collecting, and disseminating market insight information, representing U.S. commercial interests to host-country governments and an array of international trade shows and missions, as well as supporting other U.S. agencies’ international programs. The DOC also houses the Advocacy Center, which seeks to ensure that sales of U.S. products and services have the best possible chance competing abroad.
U.S. Department of Energy (DOE)
DOE is a valuable source of technical, market, and financial assistance for U.S. firms specializing in energy-related industries, especially those with a positive environmental impact. The DOE’s primary mission is to ensure America’s security and prosperity, which it does by addressing its energy, environmental, and nuclear challenges through transformative science and technology solutions. The DOE also provides information, statistics and reports on international trends and issues, and resources for the energy industry.
U.S. Department of State
Several offices of the U.S. Department of State offer both assistance for exporters and valuable information resources. The Bureau of Economic, Business, and Agricultural Affairs provides export assistance to U.S. businesses on market conditions and export regulations for other countries and assists U.S. companies with protecting patents, trademarks, and copyrights against infringement while working in a foreign marketplace. Country desk officers (see appendix A) can provide information on the current state of political, economic, and social affairs in a specific country, as well as provide contact information and advice for people visiting a foreign country for the first time.
U.S. Environmental Protection Agency (EPA)
While known domestically as a federal regulatory agency, the EPA is a leading advocate of the U.S. environmental industry’s interests in the world market. EPA is also a primary source of manuals, directories, clearinghouses, and databases, as well as other information on environmentally sound technologies. EPA sponsors and participates in technology cooperation programs, many of which involve international development projects. Through the EPA, companies can obtain information on the implementation of environmental regulations in developing countries, learn about EPA’s technology transfer and technical assistance programs, and access computerized information on environmental technologies and regional environmental development projects.
U.S. Small Business Administration (SBA)
In addition to its domestic support programs, the SBA offers financial assistance, counseling, export workshops, and training to help small- and medium-sized U.S. firms enter international markets. It provides loans and loan guarantees to U.S. companies for equipment, facilities, materials, working capital, and business development support for selected export market development activities. Export assistance (see appendix I) and marketing information are available at no cost from the agency’s Service Corps of Retired Executives and by university students who participate in the Small Business Institute Program. In addition, Small Business Development Centers (see appendix H) based at universities offer business counseling and assistance. Contact information for SBA district offices can be found in appendix G.
U.S. Trade and Development Agency (USTDA)
The USTDA funds project identification missions, feasibility studies, orientation visits and reverse trade missions, technical symposia, training, information dissemination, and procurement promotion for major development projects in developing and middle-income countries. USTDA funding is geared toward introducing foreign government officials and private companies to U.S. companies and technology in the hope that they would be used during project implementation.
U.S. Trade Representative (USTR)
The office of the USTR is a cabinet-level agency that is responsible for the direction of trade negotiations, formulation of overall trade policy, and bilateral and multilateral negotiations pertaining to international environmental trade. USTR represents the United States in meetings with the World Trade Organization, the Organisation for Economic Co-operation and Development, as well as negotiations with the United Nations Conference on Trade and Development. USTR is also responsible for administering trade cases that provide relief from unfair trade practices.
The World Bank/International Bank for Reconstruction and Development (IBRD)
IBRD or World Bank, headquartered in Washington, DC, is responsible for providing both financial and technical assistance to developing countries to stimulate economic development. Owned by more than 140 member governments, the Bank makes structural adjustment loans to help developing countries effect policy changes and lends funds to creditworthy countries or their agencies, generally for specific development projects. Through its procurement program, contract opportunities for suppliers of goods and services are available through international competitive bidding.
International Finance Corporation (IFC)
IFC, a member of the World Bank Group, is a multilateral development institution that promotes productive private investment that will contribute to the economic growth of its developing member countries. Its principal objective is to provide the financing, technical assistance, and management needed to develop productive investment opportunities. The IFC seeks to encourage the flow of private capital, both domestically and internationally, through the establishment or expansion of local capital markets and financial institutions.
The Multilateral Investment Guarantee Agency (MIGA)
This arm of the World Bank Group offers political risk insurance and guarantees to investors and lenders in order to promote and facilitate foreign direct investment in emerging markets. MIGA products and services encourage and foster the growth of local businesses and investments in order to provide countries with the resources necessary for reducing poverty.
Millennium Challenge Corporation (MCC)
MCC is a U.S. government corporation designed to work with some of the poorest countries in the world. MCC’s mission is to reduce global poverty through the promotion of sustainable economic growth and is based on the idea that aid becomes transformative only when it reinforces good governance, economic freedom, and investments in people. MCC considers a country’s performance on 17 independent and transparent policy indicators before a country can become eligible to receive financial assistance from MCC. Based on reaching satisfactory levels for each policy indicator, MCC selects eligible countries, which then submit proposals to MCC. As a result, eligible countries may receive a grant from MCC under an agreement called a millennium challenge compact (a “Compact”). Once an eligible country signs a Compact with MCC, the country establishes an accountable entity that is responsible for implementing the Compact.