both seller and buyer to arrange total financing packages.

(6) Cooperative Financing Facility. Under the Cooperative Financing Facility, Eximbank arranges the cooperation of financial institutions abroad to extend loans at their own risk to purchasers of U.S. exports. Eximbank in turn lends these institutions half the funds and the cooperating financial institutions provide the other half from their own resources. If a cooperating institution is in a lesser developed country and wishes to borrow its half of the financing, Eximbank can assist by guaranteeing repayment to another lender of these funds.

(7) Relending Facility. A Relending Facility is a line of credit extended by Eximbank directly to a non-U.S. financial institution to use for "relending" for export loans to small and mediumsized private buyers of U.S. goods and services. Each Relending Facility will include a specific list of eligible product lines, designed either to penetrate a new market or to salvage a declining U.S. share in a particular market. No other products will be financed under this Facility.

(8) Medium-term discount program. Eximbank will lend to commercial banks and Edge Act and "Agreement" corporations, up to 100 percent of their eligible medium-term export debt obligations arising from current U.S. exports. Eximbank will also purchase on a case-bycase basis eligible export debt obligations, satisfactory to Eximbank, with full and unconditional recourse on the commercial bank.

In order to obtain a Discount Loan, a bank must have applied for and received from Eximbank an advance commitment to obtain such loan. This advance commitment will be valid for the full term of the obligation, thereby assuring the bank of liquidity, if needed. Application must be made before shipment of the products or services. Discount Loans may be prepaid at any time without penalty.

(9) Short-term discount program. Eximbank will make advance commitments for Discount Loans of up to 100 percent of the principal amount or discounted value of eligible export debt obligations having an original maturity of 364 days or shorter arising from the financing of current U.S. exports of goods and services. Eximbank will make Short-Term Discount Loans based on its advance commitment, which must be applied for before shipment of the products or serv

ices. The interest "spread" varies from 1 to 2 percent per annum depending upon the amount and term of the obligation. Packaging of certain obligations is permitted in order to expedite handling.

(10) Commercial bank exporter guarantees. Eximbank will guarantee repayment of export debt obligations acquired by U.S. banking institutions from U.S. exporters. The Eximbank guarantee covers part of the commercial credit risks and all of the political risks.

(11) Credit insurance for exporters. The Foreign Credit Insurance Association (FCIA), a group of some fifty of the principal U.S. maritime, casualty and property insurance companies, in cooperation with Eximbank, offers broad based protection for U.S. exporters' export receivables. Coverage is available for both commercial and political risk which could result in the default of payment from a foreign buyer. To meet the needs of all exporters, large and small, several types of policies are now being offered by FCIA.

(12) Lease guarantee program. Eximbank is prepared to extend to either a U.S. or a non-U.S. lessor a guarantee of payment by a lessee for the lease of U.S. equipment outside of the United States on either a non-payout or a full payout basis. The lease transaction must result in an export of the U.S. equipment. Two types of guarantees are available to the lessor: political risk coverage, or comprehensive risks coverage, including both political and commercial risks.

(13) Engineering, planning and feasibility studies. Eximbank will finance engineering, planning and feasibility studies by U.S. firms for their non-U.S. clients on large capital projects. If the contractor funds his study, Eximbank will provide a Commercial Bank Exporter Guarantee enabling the contractor to sell without recourse his debt obligation to a commercial bank. If Eximbank's assistance is to be given the client, it would be in the form of Participation Financing, consisting of a Direct Loan and a Financial Guarantee of a loan extended by a U.S. or a non-U.S. bank. By assisting U.S. engineering firms to obtain studies sponsored by clients outside of the U.S., it is anticipated that there will be larger purchases of U.S. equipment and services when the project is constructed.

(14) Equipment political risk guarantee. Eximbank will provide political risk

guarantee coverage on U.S. equipment used by U.S. contractors in their performance on contracts abroad. The policy will reimburse the owner for 75 percent of the depreciated equipment value at the time of loss, should a loss occur without compensation.

(15) Export finance counseling service. Eximbank provides a Counseling Service for exporters, banks and financial institutions seeking financing for U.S. exports. The service provides information on the availability of financing services and resources, within the U.S. and abroad, and information on each of the pertinent Eximbank programs which could be of assistance to exporters who find it necessary to offer deferred payment terms on their export sales.

(16) Credit information service for U.S. commercial bankers. Eximbank will make available to commercial bankers credit information or financial information on a specific country or individual company abroad, to assist U.S. banks in meeting the problem of investigation.

(17) Professional training in international finance for U.S. commercial bankers. Eximbank offers a six-month program of professional training for representatives of U.S. commercial banks that are involved in or might become involved in export trade financing. Trainees work in Washington and are, in fact, employees of the Federal Government during this period.

(18) Orientation program for business and industry. Eximbank conducts daylong saturation sessions in all phases of Eximbank export financing programs for representatives of various businesses and industries engaged in export trade. The selection of the trainees is the prerogative of the customer company.

(19) Commercial bank export symposia. Export symposia are meetings arranged by commercial banks in their own communities. A bank sponsoring one of these Export Symposia extends invitations to its business account customers to send representatives to the meeting. Eximbank officials explain the various ways in which financing of U.S. exports can be arranged, with emphasis upon the part that private financial institutions will play, as well as the types and extent of Eximbank export financing programs.

(20) Overseas business promotion and liaison. Eximbank has established an office to develop and coordinate the Bank's cooperation with specific trade

promotion events outside the United States. This office provides comprehensive information on export financing to prospective U.S. participants in these trade promotion events; arranges Bank staff assistance for U.S. exhibitions, trade missions and other trade promotion events abroad; and coordinates special financing procedures set up to support important trade promotions.

§ 401.2 How to apply.

Applications for the Bank's financial assistance should be submitted in the form of a letter, including sufficient information to enable the Bank to appraise the technical, economic and financial aspects of the proposed transaction.

§ 401.3

Principals, agents, certifications and covenants.

(a) Principals. Applications for credits must be signed by the principals involved. In the case of a corporation or similar entity, a duly authorized officer of the entity shall sign on its behalf. In the case of a government, a duly accredited representative of the government shall sign on its behalf. In the case of a United States exporter seeking financing of the sale of goods to a foreign buyer on credit terms, the exporter shall constitute the principal.

(b) Agents. The Bank prefers to deal with principals, especially in negotiations leading up to the granting of a loan, but the applicant has the right to engage attorneys, engineers or other qualified persons to advise and aid in preparing material required by the Bank in connection with a loan application or with the operation of a loan which has been granted.

(c) Certification. (1) Every person, including any foreign government or an agency thereof, individual, partnership, corporation or association, in whose favor the Bank authorizes the extension of financial assistance within the purview of the Export-Import Bank Act of 1945, as amended, shall, as a condition precedent to the utilization of such financial assistance, represent and certify to the Bank in such form and at such time or times as may be prescribed by the Bank that:

(i) Such person has not paid or agreed to pay to any person including any individual, partnership, corporation or association, except its regular full-time individual employees or staff members to

the extent of their regular remuneration, any commission, fee or compensation in connection with obtaining such financial assistance, except such amounts as are included in the certificate, such certificate to set forth the name and address of each such person or persons, together with the description of the services rendered, accompanied by the verification of the recipient or beneficiary of an agreement to pay named in the certificate required hereunder.

(ii) No agent or attorney of such person who was previously an officer or employee of the Bank participated personally and substantially as an officer or employee of the Bank (through decision, approval, disapproval, recommendation, the rendering of advice, investigation or otherwise) in connection with the extension of such financial assistance while so employed by the Bank.

(2) Upon a determination by the Board of Directors that any commission, fee or other compensation paid or agreed to be paid in connection with the obtaining of such financial assistance and disclosed in the certification required under this subsection is unreasonable, the person in whose favor the extension of financial assistance has been authorized shall as a condition precedent to the utilization of such assistance, effect an adjustment satisfactory to the Bank in such commission, fee or other compensation.

(3) Every person including any foreign government or agency thereof, individual, partnership, corporation or association, in whose favor the Bank authorizes the extension of financial assistance within the purview of the Export-Import Bank Act of 1945, as amended, shall, as a condition precedent to each advance:

(i) If such person is the supplier of the equipment, materials or services with respect to which the advance has been requested, certify that, other than as disclosed to the Bank, no payments, allowances or charges in connection with the sale of, or obtaining the contract to sell, such equipment, materials or services have been paid or granted or agreed to be paid or granted by such person to any other person, except such person's regular full-time individual employees or staff members to the extent of their regular remuneration.

(ii) If such person is not the supplier of the equipment, materials or services

with respect to which the advance has been requested.

(a) Certify that such person has paid or agreed to pay for the equipment, materials or services with respect to which the advance has been requested, no more and no less than the amounts which such person has certified to the Bank as the purchase price and all payments, allowances and charges connected therewith.

(b) Furnish the Bank with a certificate of the supplier of the equipment, materials or services, with respect to which the advance has been requested, addressed to the Bank and setting forth that such supplier has not, other than as disclosed to the Bank, paid or granted or agreed to pay or grant to such person or any other person, except such supplier's regular full-time individual employees to the extent of their regular remuneration, any payments, allowances or charges in connection with the sale of, or obtaining the contract to sell, such equipment, materials or services.

(d) Covenants. (1) Every person, including any foreign government or an agency thereof, individual, partnership, corporation or association, in whose favor the Bank authorizes the extension of financial assistance within the purview of the Export-Import Bank Act of 1945, as amended, shall, as a condition precedent to the utilization of such financial assistance, covenant and agree with the Bank in such form as may be prescribed by the Bank that:

(i) Such person will not employ any person to appear personally before the Bank as agent or attorney in connection with such financial assistance within one year after that person's employment by the Bank has ceased if such financial assistance was under that person's official responsibility as an officer or employee of the Bank at any time within a period of one year prior to the termination of such responsibility.

(ii) Such person has not paid or agreed to pay to any person including any individual partnership, corporation or association except its regular full-time individual employees or staff members to the extent of their regular remuneration, any fee, commission or compensation in connection with obtaining such financial assistance, except for reasonable compensation, satisfactory to the Bank for bona fide professional, technical or other comparable services incident to presenting the merits of the application and

operation of the credit and such person will certify to the Bank any such amounts, such certificates to set forth the name and address of each such person together with a description of the services rendered, accompanied by the verification of the recipient or beneficiary of an agreement to pay named in the certificate required hereunder.

(2) Upon a determination by the Board of Directors that any commission, fee or other compensation paid or agreed to be paid in connection with the obtaining of such financial assistance and disclosed in the certification or covenants required under this sub-section is unreasonable, the person in whose favor the extension of financial assistance has been authorized shall, as a condition precedent to the utilization of such assistance, effect an adjustment satisfactory to the Bank in such commission, fee or other compensation.

(e) Remedies and penalties. (1) The certificates, representations and covenants provided for in this part are deemed to be material to and an inducement for the extension by the Bank of such financial assistance and falsifications in any such representation on cer¡tificate or the breach of any such cove

nant shall entitle the Bank to cancel any commitment for the extension of financial assistance to such person or such additional remedies as may be provided in the credit agreement.

(2) The remedies of the Bank provided for in this section and in the contract shall be in addition to any liability or penalty provided by law including those provided for in 18 U.S.C. 1001.1

PART 402-EXTENSION OF CREDIT Sec.

402.1 Basic principles.

402.2 Cash Payment, maturities, interest rates and participation.

402.3 Marine transportation and insurance.

1 Section 18 U.S.C. 1001 provides: "Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, shall be fined not more than $10,000 or imprisoned not more than five years, or both" (June 25, 1948, ch. 645, sec. 1, 62 Stat. 749).

amended; 12 U.S.C. 635.

SOURCE: 38 FR 21489, Aug. 9, 1973, unless otherwise noted.

§ 402.1 Basic principles.

The Export-Import Bank is guided in its operations by the following basic principles:

(a) The basic purpose of the Bank is to aid in financing and to facilitate exports and imports and the exchange of commodities between the United States or any of its Territories or insular possessions and any foreign country or the agencies or nationals thereof. To accomplish this purpose, the Bank extends loans, guarantees or other forms of financial assistance. This foreign trade may be assisted, for example, by financing specific exports of United States products or by financing exports of equipment, materials and services required for specific developments abroad. Foreign trade may also be promoted through financing to build up the economy, increase employment and raise income levels in foreign countries, which thereby afford better markets for American products or become better suppliers of imports required by the United States. Imports can usually be financed through normal commercial channels; but in exceptional cases where private financing is not available the Bank may assist in their financing.

(b) The Bank generally makes loans only for specific purposes. A corollary of this principle is that disbursements under a commitment by the Bank are made only upon receipt of satisfactory evidence that the purposes of the loan have been or are being carried out.

(c) As a general rule, the Bank makes only loans which offer reasonable assurance of repayment. This assurance usually involves not only the creditworthiness of the borrower but also the ability of the borrower to obtain the necessary dollar exchange to service the loan.

(d) As a general rule, the Bank extends credit only to finance purchases of materials and equipment produced or manufactured in the United States together with technical services of American firms and individuals, as distinguished from expenditures for goods and services in the borrowing country or for purchases in third countries.

(e) The Bank supplements and encourages the utilization of private capital in export and import trade. Financial assistance is not extended by the Bank for any purpose if capital for the same purpose is believed to be obtainable from private sources on reasonable terms.

(f) The Bank is prepared to consider proposals for the purchase of portions of its portfolio by commercial banks or other private investors.

§ 402.2

Cash payment, maturities, interest rates and participation.

(a) Cash payment. The Bank ordinarily requires a foreign purchaser to make a cash payment of not less than 10 percent of the invoice value on or prior to the time of delivery of the goods. In its direct lending program, the cash payment must be made either prior to or pari passu with disbursements by Eximbank.

(b) Maturities. The maturities of credits granted by the Export-Import Bank are arranged in accordance with the circumstances in each case. Generally speaking they are commensurate with those customarily extended in international trade for similar goods or projects. Principal amounts are generally repayable in equal semiannual installments.

(c) Interest rates. The Bank normally charges interest on its loans at a rate of 6 percent per annum. However, such rate of interest is subject to change upon review of the Bank with the approval of the National Advisory Council on International Monetary and Financial Policies. Interest is computed on the outstanding principal balance and is usually payable semiannually.

(d) Participation. The exporter may be required to participate in the financing if in the Bank's judgment the circumstances warrant such participation. § 402.3 Marine transportation and in

surance.

(a) Marine transportation. Public Resolution No. 17, Seventy-Third Congress, requires that exports of agricultural or other products fostered by loans made by any instrumentality of the United States Government shall be carried exclusively in vessels of United States registry unless a waiver is granted by the United States Maritime Administration. When appropriate the Bank is prepared to finance United States inland freight and ocean freight on vessels of United States registry under the relative credit.

Official information may be classified only if its unauthorized disclosure could reasonably be expected to result in some degree of damage to the national security (national defense or foreign relations). Each document or item of material to be classified shall be assigned the lowest classification consistent with the proper protection of the information contained therein. If there is any doubt as to which security classification is appropriate, or as to whether the material should be classified at all, designate the less restrictive treatment. Overclassification, the classification of documents on