OVERVIEW
The China and Transformational Exports Program (CTEP) is a mandate for EXIM to help U.S. exporters facing competition from the People's Republic of China (PRC) and ensure the U.S. continues to lead in the 10 Transformational Export Areas:
AI • Biotech • Biomedical • Wireless Communications • Quantum Computing • Renewable Energy, Storage, & Efficiency • Semiconductors • Fintech • Water Treatment & Sanitation • High Performance Computing
CTEP BENEFITS
Are you facing People's Republic of China (PRC) backed competition? To support your company's bid against PRC competition, EXIM may be able to offer
Reduced Fees
Extended Repayment Tenors
Exceptions from other EXIM policies
Are you working on the frontiers of technology? The 10 Transformational Export Areas also benefit from a tailored content policy
EXIM's full financing support is available for transactions with at least 51% U.S. content
Transactions with less than 51% U.S. content must meet other criteria
Find out how IGA Capital can assist your business with the CTEP program
To fulfill the Congressional mandate to provide financing that aims to advance the comparative leadership of the United States with respect to the PRC, or support U.S. innovation, employment, and technological standards in the wireless communications transformational export area, EXIM provides the following clarifications to the Transformational Export Areas (“TEA”) content policy passed in December 2020 in order to support foreign deployment of such networks and support U.S. comparative advantages.
Applicability: These clarifications to the December 2020 policy applies to 5G, 5G enabling transactions, and subsequent wireless technologies,[1] as jointly determined by the Export-Import Bank of the United States’ (“EXIM”) China and Transformational Exports Program Office (“CTEP”) and Engineering and Environment Division (“E&E”).
Support: EXIM may provide full support allowed under the OECD Arrangement (including using the OECD’s matching principles when appropriate) to contracts supporting the sale of trusted vendor software, hardware, and services to foreign buyers running wireless communications networks
Clarifications:
EXIM loans, loan guarantees, and insurance will be available for the purchase of goods and services shipped or invoiced from any country where EXIM support is not prohibited in order to facilitate U.S. exports (including exports not directly to the buyer) for 5G transactions, subject to Board approval.
All goods financed by an EXIM direct loan or guarantee shipped to the end-user on ocean going vessels must adhere to EXIM’s U.S. flag shipping policies in effect at the time.
EXIM will not provide financing for any goods shipped out of the People’s Republic of China (“PRC”) or any other “covered country” as defined in EXIM’s Charter. Nor will EXIM provide financing for PRC or other covered country content incorporated in third countries.
EXIM will conduct due diligence to ensure content is not of PRC origin, consistent with existing content due diligence practices.
If EXIM determines that a foreign supplier is likely supplying transshipped PRC goods, such goods will be excluded from EXIM support at EXIM’s sole discretion.
Functionally, this means all non-PRC/covered country foreign content is eligible foreign content for purposes of the net contract price and calculations based off the net contract price (e.g., local cost).
Conditions:
Exporters must provide EXIM information on potential U.S. content embedded in foreign manufactured goods or services provided, such as U.S. intermediary inputs (e.g., semiconductors) or intellectual property reflecting U.S. R&D.
As provided by the existing December 2020 policy, for transactions with less than 51% U.S. content, the following requirements apply:
The U.S. exporter provides to EXIM an actionable written plan that describes a pathway to expand meaningfully its U.S.-based jobs in the supported sector in the subsequent 3-5 years, which includes plausible plans to shift sourcing and/or relocate related supply chains to the U.S. from an offshore market, and/or to move away from a proposed plan to offshore jobs. If deemed appropriate by EXIM, it may share with and seek the Department of Commerce’s feedback on the job creation plans submitted by U.S. exporters. A company’s substantial compliance with such plan may be a prerequisite to continued eligibility for the flexibilities set forth herein.
EXIM will assess if one or more of the factors (“7 Factors”) below applies to the transaction:
Whether the foreign project or procurement opportunity includes a significant dollar value of exports of U.S. goods or services;
Whether the foreign project or procurement opportunity provides a substantial probability of future exports of U.S. goods or services by the applicant and/or other exporters;
Whether the foreign project or procurement opportunity provides a substantial benefit to the U.S. industrial base or technological capabilities in the industry, for example by helping to ensure that the United States maintains the capacity to produce a key product or service;
Whether the potential for U.S. export content for the foreign project or procurement opportunity is limited, for example by reason of restrictions or conditions imposed by the terms of the project or procurement opportunity, or because of the economic unfeasibility of sourcing particular goods or services from the United States; and
Whether the foreign project or procurement opportunity provides export opportunities for small and medium-sized enterprises that might not otherwise be available.
Whether other potential sources of co-financing to cover non-U.S. content required by the project or procurement opportunity (e.g., (i) ECAs with which EXIM has Co-Financing Agreements, (ii) other U.S. Government agencies such as the U.S. International Development Finance Corporation, and (iii) private sector reinsurance or financing through sub-participations) were insufficient after due consideration.
Whether the foreign project has the potential to contribute to the establishment of a strategic U.S. export foothold in a key foreign market, as determined by EXIM by demonstrating a successful implementation of a flagship project in markets that are dominated or otherwise detrimentally influenced by foreign competition.
Frequently Asked Questions
Question What does this policy clarification do?
Answer On January 19, 2023, the EXIM Board approved the following clarifications to the December 2020 transformational export area content policy as it relates to 5G, 5G enabling transactions (narrowly constrained to mean wireless projects such as 3G or 4G networks, including maintenance and repair work), and subsequent wireless technologies. EXIM loans, loan guarantees and insurance will be available for the purchase of goods and services produced in or shipped or invoiced from any country where EXIM support is permissible. EXIM will not provide financing for goods or services from the People’s Republic of China (PRC). EXIM will conduct due diligence to ensure content is not of PRC origin, consistent with existing content due diligence practices. All goods financed by an EXIM direct loan or guarantee shipped to an end-user via the ocean must adhere to EXIM’s U.S. flag shipping requirements. Please note that the above description of the approved clarifications is intended for informational purposes only. Exporters seeking EXIM financing for 5G transactions may reach staff by contacting IGA Capital for more information.
Question Will EXIM support content (goods and services) from the People’s Republic of China (PRC)?
Answer EXIM will not provide financing for any goods or services produced in or shipped out of the PRC. EXIM will conduct due diligence to ensure content is not of PRC origin, consistent with existing content due diligence practices. Such due diligence shall examine both components and sub-components of any export proposed to be financed. Any content determined to be of PRC origin will be excluded from EXIM financing. If EXIM determines that a foreign supplier is likely supplying transshipped PRC goods, such goods will be excluded from EXIM support at EXIM’s sole discretion.
Question Does EXIM have a U.S. flag shipping requirement for 5G transactions
Answer All goods financed by an EXIM direct loan or guarantee shipped to the end-user on ocean-going vessels must adhere to EXIM’s flag shipping policies in effect at the time.
Question Does this policy clarification apply to the other transformational export areas?
Answer The policy clarifications approved by the EXIM Board on January 19, 2023, are only applicable to 5G, 5G enabling transactions (narrowly constrained to mean wireless projects such as 3G or 4G networks, including maintenance and repair work), and subsequent wireless technologies.
Question Does this policy clarification cover open radio access network (ORAN) technology?
Answer Yes
Question How much financing can EXIM provide for 5G transactions?
Answer EXIM follows the terms and conditions eligible under the OECD’s Arrangement on Officially Supported Export Credits (OECD Arrangement) for its medium and long-term transactions, including offering full local cost support up to 40%-50% of the net contract price depending on the market. EXIM will also consider the OECD permitted 5% cash payment flexibility for OECD Category II sovereign contracts supporting the sale of trusted vendor software, hardware, and services to foreign buyers running wireless communications networks. Net Contract price means excluding Chinese content and local costs.
Question What happens if my export has some Chinese content in it?
Answer EXIM will not provide financing for goods or services produced in or shipped from the People’s Republic of China (PRC). EXIM financing will be reduced proportionally to the amount of Chinese content identified in a transaction. For example, if a $100 transaction includes 20% Chinese content, EXIM financing would be calculated based on the remaining $80 of eligible content.
Question Why did EXIM’s Board approve this policy clarification?
Answer To fulfill the Congressional mandate to provide financing that aims to advance the comparative leadership of the United States with respect to the People’s Republic of China (PRC), or support U.S. innovation, employment, and technological standards in the wireless communications transformational export area.
Question Are there any other conditions that I should be aware of?
Answer Per the Transformational Export Content Policy, for 5G transactions with less than 51% U.S. content: Additionally, the U.S. exporter must provide to EXIM information on potential U.S. content embedded in foreign manufactured goods or services provided, such as U.S. intermediary inputs (e.g., semiconductors) or intellectual property reflecting U.S. R&D.
The U.S. exporter must provide to EXIM an actionable written plan that describes a pathway to expand meaningfully its U.S.-based jobs in the supported sector in the subsequent 3-5 years. As examples, this could include:
Descriptions of the quantity of new hires made possible by this transaction.
Plausible plans to shift sourcing and/or relocate related supply chains to the U.S. from an offshore market.
Plausible plans to move away from a proposed plan to offshore jobs or procurement.
Plans for investment in new U.S.-based facilities.
EXIM will assess whether the transaction meets at least 1 of 7 factors. Click here for more information.
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