Federal financial assistance for overseas trade;

              In these days of worldwide monetary uncertainty, with
the seemingly never-ending threat of devaluations and
revaluations, one might think international trade would
be declining. But, quite the contrary, it is growing at an
impressive pace, as more and more American business­men
seek faster earnings growth through overseas ex­pansion.
For those braving the rigors of international
finance, a quick review of economic assistance offered
by the U.S. Government may be of some help.
The Export-Import Bank of the U.S. (Eximbank) and
The Agency for International Development (AID) ad­minister
the Government's major programs for overseas
financing assistance.
• Eximbank, established in 1934 as an independent
agency for the sole purpose of boosting U.S. exports,
fulfills its goal in three ways: It makes long-term loans
for the purchase of U.S. goods and services, guarantees
medium-term export credits and underwrites short- and
medium-term export insurance issued by the FCIA.
• AID was set up in 1961 to centralize the administra­tion
of most of the Government's foreign aid programs.
Two such programs guarantee American corporate over­seas
investments and make long-term development
loans to less-developed countries for the purchase of
U.S goods and services.
• The Foreign Credit Insurance Association (FCIA),
an association of over 70 insurance companies and
Eximbank, insures short- and medium-term export
credits.
FEDERAL
FINANCIAL ASSISTANCE
FOR
OVERSEAS TRADE
by Wilford H. Hughes
Export Assistance
FCIA insurance helps remove the barrier of credit
risk in international trade. How does it work? Suppose,
for example, that U.S. Company X arranges the sale
of its product to Foreign Company Y. But that upon
delivery, Company Y can neither pay for the goods nor
arrange for financing. Company X, unwilling to risk ex­tending
its customer the credit, is nevertheless anxious
to make the sale. So the American manufacturer grants
the credit and goes to the FCIA for insurance.
The FCIA offers two types of coverage for a short-term
export credit (up to 180 days). One type protects against
political risks only, and usually insures 90% of the credit.
The other protects against a combination of political and
commercial risks (comprehensive coverage), generally
covering 95% of the credit. (Export credit insurance will
also make it easier for the policy holder to discount his
customer's notes.)
To qualify for a short-term policy, an exporter must
insure all of his short-term credits but may except:
• Credits to major customers;
• Sales made under an irrevocable letter of credit;
• Credits to the exporting company's branches, sub­sidiaries
or affiliates.
Coverage may also be restricted to certain product
lines and divisions.
Premiums vary according to two factors: The length
of the credit period and the economic and political
stability of the importing country. (Although the im-