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duction ventures. The Export Trad- ing Company Act (15 U.S.C. section 4011 et seq) provides a limited anti- trust exemption for export trade and related activities. In evaluat- ing joint conduct under the anti- trust laws, the Department of Jus- tice will take into account efficien- cies that the venture will produce as well as the existenqe of global com- petition in relevant markets.

Financing Ship Sales Through

Title XI Loan Guarantees

Title XI now provides U.S. buy- ers of ships built in both major and second-tier yards with guarantees for long-term loans at fixed rates covering up to 75 percent of the loan value. In order to encourage foreign carriers to come to the U.S. to build ships, the Administration proposes to extend coverage to foreign buy- ers. Loan guarantees for foreign buyers would have to conform to

OECD provisions governing export credits. While loans under these provisions are also available through the Export/Import bank, MarAd's greater expertise in shipping and shipbuilding justifies extending its involvement to the financing of the export of ships.

MarAd now charges a fee of .5 to one percent on the outstanding bal- ance of the loan guarantee. To gain greater leverage from federal funds in this increasingly tight budget en- vironment, that fee would be raised to the range of one to 1.5 percent, reducing the federal risk exposure.

That level should provide an in- ducement to a substantial number of carriers to buy ships in U.S. yards.

In FY '93, $48 million was appro- priated, of which $47 million re- mains available for commitment in

FY'94 and beyond. The department of transportation will support addi- tional funding of $50 million in FY '95, $30 million in FY '96, and $20 million in FY '97. This could guar- antee an additional $2 billion in loans. Consistent with the Admin- istration's intent to facilitate the transition to international competi- tiveness, any funds so appropriated and not spent within five years would expire. Consistent with the empha- sis on the international commercial market, certification of military util- ity would no longer be required.

If an agreement is concluded in the ongoing international negotia- tions on subsidies, any conditions of the Title XI loan guarantee pro- gram that were inconsistent with the agreement would have to be modified or eliminated.

Assisting International

Marketing

The Administration will use ex- isting organizations to assist ship- yards in their international mar- keting efforts (e.g., the U.S. Foreign

Commercial Service, American em- bassy personnel, and MarAd) and to facilitate cooperative arrangements and allegiances between U.S. and foreign yards. Organizations that previously have not devoted much effort to the shipping market will increase their level of activity.

Challenge for the Industry

Shipbuilding and repair are in- herently global in nature, and ship- yards face fierce competition from

November, 1993 abroad. In the face of that reality, the Administration has developed a two-pronged plan to help American yards compete in this arena. The first prong is to insure fair treat- ment for the U.S. shipbuilding in- dustry in the international market- place. The second prong is to pro- vide assistance to U.S. shipyards in the transition from dependence on defense contracts to commercial competitiveness. The Administra- tion's plan provides important as- sistance to U.S. shipyards as they prepare to take advantage of the significant opportunities provided by this decade's rapidly expanding international market. Yards will have to be — and no doubt will be - - aggressive in their own efforts to develop competitive designs and market them world wide; to estab- lish a stronger relationship with their suppliers; to improve produc- tivity in order to drive down costs and shorten delivery times; to ob- tain competitive labor packages and remain competitive in wages; and to seek private financing sources and joint venture partners here and abroad. Building on their recent success in military construction, there is every reason to believe that

American ingenuity can meet these challenges. The Administration looks forward to working with Con- gress and the industry in establish- ing a basis for the industry to enter the international market place. • V :

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