FINANCE

Finance

Finance

Should the United States have an ECA and, if so, what role should it play? In your answer, you may wish to discuss EX-IM offerings, various financial constraints which may exist, etc. TN Exhibit 1 may be helpful.

Export credit agency is amongst the most important agencies in the United States. The role of the ECA is to ensure that the companies in United States should be able to export flawlessly across the globe without any hustle. The role of ECAs is to provide export facilities to the exporters helping them in financing and then providing support to exporters through all the platforms locally and internationally. The role of ECA is to ensure that exporters do not face any financial constraint while exporting and buyer should be taken into confidence and provided all necessary support so that they may purchase from United States and encourage other exporters to do the same. The ECA should represent the exporters in different exhibitions across different countries. This will promote the exporters internationally and importers will come to know about the products and the companies which deal in those products and then they may order goods accordingly. This will boost the exports. Financial Constraints which exist are that exporters may receive an order for export but couldn't process it due to unavailability of finances, thus ECA will provide financial support for completing the order so that it can be shipped. If an investor needs to setup export business ECA should provide exposure of international markets to the investors and then provide all the legal formalities which needed to be fulfilled for setting up a plant for export purpose. ECA should also be providing assurances and guarantees to foreign importers so that they can place their orders for exporters.

Some professionals believe that the U.S. should have an ECA since other countries have them. Thus, without one, the U.S. would be at a disadvantage. Using TN Exhibit 1 as a guide, do you agree or disagree?

I agree to the statement that professionals believe it right because exporters need support from the government and other institutions which include primarily the government which provides tax benefits and resolves other issues of the businesses. They also need cooperation from other industries which should be providing them components and supplies which are needed to complete the manufacturing. Thus there needs to be a consortium or agency which should communicate on behalf of exporters from different agencies and provide them support throughout. The disadvantage US will face is that nobody will be effective enough to promote the exporters and as a result companies will not get into this dimension. As a result foreign exchange that could be earned through the exports will be lost. From Jan 2006 the exports have shown significant increase throughout and in 2008 there was a decline. The reason for increase can be attributed the boom which has been faced by the global economy when everything across the global economy has been rising and aggregate demand for the ...