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NOTES 90 order to obtain better financing. Nevertheless, the availability of this type of action would signal the United States' determination to deter predatory pricing in U.S. markets as well as in foreign markets. It should be noted that although Eximbank represents an important source of financing for export sale of aircraft, it serves many other industries as well. Consequently, actions of the type suggested below have as their objective improving the effectiveness of Eximbank in serving all of industry. In much of capital goods the terms of financing become a powerful competitive weapon that can counteract both technological strength and manufacturing efficiency. STRENGTHENING EXIMBANK'S ROLE The panel recommends that Eximbank reexamine its mode of operation and lending roles in the light of the heightened international competition facing all of U.S. civil aviation as well as all U.S. industry. Eximbank plays a critical role in the aviation industry and should make efforts to improve its ability not only to remove impediments but to strengthen the competitive position of the industry. Examples include establishing a consistent policy toward exports to ensure customer confidence; eliminating the requirement for a competitive offer from a foreign manufacturer as a condition of Eximbank financing, permitting foreign content to be included in the financing packages, and extending the term of Eximbankâguaranteed financing from 10 to 15 years. NOTES 1. Foreign Aeronautics Environment, NASA briefing data for Office of Science and Technology Policy, April 1983. 2. Thomas J. Bacher, Boeing Commercial Airplane Company, "The Economics of the Civil Aircraft Industry," Conference on The Role of Southeast Asia in World Airline and Aerospace Development, Singapore, September 24â25, 1981. 3. The Economist, March 3, 1984, p. 62. 4. (a)The Economist, October 13, 1979. (b)Aviation Magazine, January 7, 1980. 5. An informative account of this pioneering joint venture is available in Parker, Elbert C., "Foreign Transfer of Technology: A Case Study of the GE/SNECMA 10-Ton Engine Venture." A research report submitted to the faculty of the Air War College, Air University, Maxwell Air Force Base, Alabama, April 1974.
NOTES 91 6. This fee is not required by the Common line Agreement for Aircraft, an understanding reached by the export financing agencies of the United States, France, West Germany, and the United Kingdom. For other than OECD countries, Eximbank charges higher rates than for nonaircraft products. 7. The term trade-distorting mechanisms is simple in principle, but efforts to reduce it to a definition that can be applied in practice have proved to be difficult. The term refers to nontariff actions that would lead to market shares that differ from those that free market forces would create. With respect to aircraft the large leverage of financing has focused attention on efforts to remove financing as a factor that would influence the purchase decision. The goal of "market rate, market term" for interest and repayment is regarded as an important step that would be amenable to monitoring and evaluation. Even though this limited step would not address all aspects of trade distortion, its vigorous pursuit would be beneficial and consistent with the traditional position of the United States on free, fair trade. 8. Ibid.
