International Collaboration: Banking, US And Japan.

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Every so often The Internationalist Page Blog provides updates from Ex-Im Bank when they are internationally significant in their implications. Japan is the US' second-greatest creditor, but both the US and Japan face similar problems in terms of their respective levels of exports versus their respective levels of imports.

In this specific case, two government-sponsored banks have created a "treaty" which will not only bode well for trade relations between the two countries, but will also help each of the two countries in terms of its balance of trade with the other countries in the international community.

The Release follows:

FOR IMMEDIATE RELEASE                                                                    

October 24, 2012
Media contact: Phil Cogan – (202) 565-3200

Ex-Im Bank, Japan Bank for International Cooperation
Sign Co-financing Agreement to Facilitate U.S., Japanese Export Sales 

WASHINGTON, D.C. --- Officials from the Export-Import Bank of the United States (Ex-Im Bank) and the Japan Bank for International Cooperation (JBIC) today signed a co-financing agreement that will facilitate future export transactions involving companies in both the United States and Japan.

The agreement enables Ex-Im and JBIC to provide “one-stop-shop” export finance services to buyers in third countries purchasing both U.S. and Japanese goods and services. The two nations’ export credit agencies (ECAs) will provide a one-stop-shop financing package, creating administrative efficiencies for foreign buyers. The agreement complements one signed in 2004 between Ex-Im Bank and Japan’s Nippon Export and Investment Insurance (NEXI).

JBIC Chief Operating Officer and Senior Managing Director Fumio Hoshi, representing JBIC Governor Hiroshi Okuda and Ex-Im Senior Vice President for Policy James C. Cruse , representing Ex-Im Bank Chairman and President Fred P. Hochberg, signed the agreement at Ex-Im’s headquarters in Washington, D.C..

“This arrangement paves the way for Ex-Im Bank and JBIC to co-finance projects, enabling exporters in both the U.S. and Japan to select the best mix of price and technology to strengthen their overseas bids and support jobs,” said Hochberg. “At the same time, exporters will be able to provide their buyers with only one set of terms and conditions covering both countries’ exports.”

This is the first “One-Stop Shop” co-financing agreement signed by JBIC with another ECA.

JBIC is a policy-based financial institution of Japan, and conducts lending, investment and guarantee operations while complementing the private sector financial institutions.

In addition to the JBIC and NEXI co-financing agreements, Ex-Im Bank currently has signed bilateral one-stop-shop agreements with ASHR’A (Israel), Atradius (The Netherlands), Coface (France), ECGD (U.K.), EDC (Canada), EFIC (Australia), EKF (Denmark), Euler Hermes (Germany), and SACE (Italy) and is in discussions with other ECAs to sign additional bilateral agreements. Ex-Im Bank will consider co-financing transactions without a formal bilateral agreement on a case-by-case basis. In fact, Ex-Im Bank has concluded a number of one off co-financing arrangements with GIEK (Norway), H-EXIM (Hungary) and ONDD (Belgium). 

About Ex-Im Bank

Ex-Im Bank is an independent federal agency that helps create and maintain U.S. jobs by filling gaps in private export financing at no cost to American taxpayers. In the past five years (from Fiscal Year 2008), Ex-Im Bank has earned for U.S. taxpayers nearly $1.6 billion above the cost of operations. The Bank provides a variety of financing mechanisms, including working capital guarantees, export-credit insurance and financing to help foreign buyers purchase U.S. goods and services.

Ex-Im Bank approved $35.8 billion in total authorizations in FY 2012 – an all-time Ex-Im record. This total includes more than $6.1 billion directly supporting small-business export sales – also an Ex-Im record. Ex-Im Bank's total authorizations are supporting an estimated $50 billion in U.S. export sales and approximately 255,000 American jobs in communities across the country. For more information, visit www.exim.gov.

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What is interesting to note is that these treaties and economic agreements are being spearheaded by government-sponsored banks instead of by other agencies or diplomatic arms of these countries, or by the United Nations. 

Fueling business ventures [reference CrowdFunding Incubator LLC and The CrowdFunding Incubator Blog ] is a common denominator in international politics that every nation seems to understand. The banks are strong diplomats and policy-makers indeed. Many of us in the United States will recall that old expression (a classic) about "Put your money where your mouth is!" A timeless demand.

Douglas E. Castle

 

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U.S.And China: 'Til Debt Do Us Part

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When I was very young, and dinosaurs roamed the Earth, a smart fellow in a pin-striped suit told me this: " Boy...If you owe the bank a hundred thousand dollars, you're in trouble; but if you owe a bank several billion dollars, they're in trouble." Then he walked off, puffing on his cigar and glancing quickly at his pocket watch.

He was quite right. Right now the United States' two largest creditors, respectively are China and Japan. Yes, the U.S is a debtor nation. Yes, the Chinese (in particular) hold a great deal of debt denominated in U.S Dollars.

Instead of creating a problem, in the most real terms, it creates an increasingly growing area of intersection common interests. Putting aside pride and politics, the Chinese don't want to lose money on their investment in U.S debt so they have to measure that factor into every foreign policy move that they make in dealing with the United States. If our economy suffers, we cannot consume their goods, and their holding of U.S. debt further decline in value.

This indebtedness is (no pun intended) a bond which actually ties us together. It's the flip side of the ages old 'Mutually Assured Destruction' Mexican standoff paradigm that has kept large nuclear-strike capable nations from launching warheads at each other. It simply doesn't make sense when you think about it socioeconomically instead of emotionally.

Readers of The Internationalist Page Blog: Great Indebtedness To A Small Group Of Creditors Has Them Just As Worried About You As You Are About Them. The U.S. is in an awkward partnership with China and Japan. Indeed.

I would like to share an article with you which appears here courtesy of Yahoo Finance's Daily Ticker. It is informative, but it speaks of a peril that is much more emotional than actual:

Who Owns America’s Debt?

By Henry Blodget | Daily Ticker – Thu, Oct 18, 2012 3:11 PM EDT

As the U.S. continues to rack up more than $1 trillion of new debt every year, Americans are beginning to worry about who we owe this money to and how much power our creditors have over us.

According to Barry P. Bosworth, a senior fellow at the Brookings Institution, our two biggest foreign creditors are Japan and China.

Although it may seem as though our debt to these countries renders us a puppet on strings, Bosworth says this fear is overblown. The U.S. market is very important to China's economy, so China would be loathe to do anything that might exacerbate tensions or disrupt trade between the two countries. And the same can be said for Japan. China owns $1.15 trillion of U.S. government debt -- more than any other country -- but U.S. taxpayers actually owe less money to China compared to recent years. China holds 10% of U.S. Treasuries, down from 12% two years ago.

Related: China's Slow Growth 'Marks An End of an Era' But No Hard Landing
And what about all the anti-China rhetoric that we hear about on the campaign trail?
Republican Presidential Nominee Mitt Romney has been promising the country that he will declare China a "currency manipulator" on the first day of his presidency--and then enact tariffs as necessary until he forces China to level the trading playing field. Is that something that Romney is actually likely to do if he gets elected?

No, says Bosworth.

Tough talk with respect to China has become standard rhetoric for any presidential challenger. If and when Romney becomes president, his position will likely mellow.
Bosworth also says that the problem with the U.S.-China trade relationship is not, as is commonly believed, that China doesn't play fair. China has actually addressed lots of its unfair practices over the past decade, Bosworth says, while the U.S. is still pursuing the same old self-destructive habits. Until we stop consuming so much and start producing more, Bosworth says, we're in no position to demand anything.

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Our mutual dependencies, from an Internationalist perspective, are what make us think twice before we threaten too much instead of coming to the negotiating table. The visions of menace and threat are principally political fear-mongering ploys and foolish scorekeeping in a game that is not truly relevant.

Douglas E. Castle for The Internationalist Page Blog, The Global Futurist Blog and The Mad Marketing Tactics Blog.

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