Biden Administration Boosts Domestic Manufacturing – EXIM To Provide Competitive Financing – Government Contracts, Procurement & PPP

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.

We have an extensive and diverse team of experts to assist US
and foreign companies with their EXIM Bank transactions, including
proposals under this new initiative. Angela Mariana (Manana) Freyre, the General
Counsel of EXIM Bank from 2011 to 2017, has deep knowledge and
expertise of EXIM Bank operations, policies and procedures and has
maintained her strong relationships with members of senior
management of EXIM Bank. She brings unique insight to any approach
US and foreign companies could make to the EXIM Bank.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.