^ U^. ENVIRONMENTAL EXPORTS \\ ' Y4.F 76/1: EN 8/10 U.S. Environnental Exports* 103-1 H... HEARING BEFORE THE SUBCOMMITTEE ON ECONOMIC TRADE AND ENVIRONMENT POLICY, OPTHE COMMITTEE ON FOREIGN AFFAIRS HOUSE OF REPRESENTATIVES ONE HUNDRED THIRD CONGRESS FIRST SESSION ON H.R. 2112 AUGUST 4, 1993 Printed for the use of the Committee on Foreign Affairs MAR 1 1 ,55^ U.S. GOVERNMENT PRINTING OFFICE '''^''V^ri 74-432CC WASHINGTON : 1993 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-043293-6 ENVIRONMENTAL EXPORTS U.S. Y4.F 76/1: EN 8/10 U.S. Environnental Exports/ 103-1 H. HEARING BEFORE THE SUBCOMMITTEE ON ECONOMIC TRADE AND ENVIRONMENT POLICY, OFTHE COMMITTEE ON FOREIGN AFFAIRS HOUSE OF REPRESENTATIVES ONE HUNDRED THIRD CONGRESS FIRST SESSION ON H.R. 2112 AUGUST 4, 1993 Printed for the use of the Committee on Foreign AfTairs '**^^»*. MAR 1 1 ;55^ U.S. GOVERNMENT PRINTING OFFICE *' 74-432CC WASHINGTON : 1993 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-043293-6 COMMITTEE ON FOREIGN AFFAIRS LEEH HAMILTON, Indiana, Chairman SAM GEJDENSON, Connecticut BENJAMIN A. OILMAN, New York TROOBMELRATNTG.OST,ORCRaIliCfEoLrnLiIa, New Jersey JWAILMLEISAAM FL.EGAOCOHD,LIIoNwGa, Pennsylvania HOWARD L. BERMAN, California TOBY ROTH, Wisconsin GARY L. ACKERMAN, New York OLYMPIA J. SNOWE, Maine HARRY JOHNSTON, Florida HENRYJ. HYDE, Hlinois EUOT L. ENGEL, New York DOUG BEREUTER, NAraska ENI F.H. FALEOMAVAEGA, American CHRISTOPHER H. SMITH, New Jersey Samoa DAN BURTON. Indiana JAMES L. OBERSTAR, Minnesota JAN MEYERS, Kansas CHARLES E. SCHUMER, New York ELTON GALLEGLY, California MATTHEW G. MARTINEZ, California ILEANA ROS-LEHTINEN, Florida ROBERT A. BORSKI, Pennsylvania CASS BALLENGER, North Carolina DONALD M. PAYNE, New Jersey DANA ROHRABACHER, California ROBERT E. ANDREWS, New Jersqr DAVID A. LEVY, New York ROBERT MENENDEZ, New Jersey DONALD A. MANZULLO, Illinois SHERROD BROWN. Ohio UNCOLN DIAZ-BALART, Florida CYNTHIA A. MCKINNEY, Georgia EDWARD R. ROYCE, California MARIA CANTWELL, Washington ALCEE L. HASTINGS, Florida ERIC FINGERHUT, Ohio PETER DEUTSCH. Florida ALBERT RUSSELL WYNN, Maryland DON EDWARDS, California FRANK MCCLOSKEY, Indiana THOMAS C. SAWYER, Ohio (Vacancy) Michael H. Van Dusen, ChiefofStaff Richard J. Gabon, Minority ChiefofStaff ANNE GREY, StaffAssociate Subcommittee on Economic Policy, Trade and Environment SAM GEJDENSON, Connecticut, Chairman JAMES L. OBERSTAR, Minnesota TOBY ROTH, Wisconsin CYNTHIA A. MCKINNEY, Georgia DONALD A. MANZULLO, Illinois MARL\ CANTWELL, Washington DOUG BEREUTER, Nebraska ERIC FINGERHUT, Ohio JAN MEYERS, Kansas ALBERT RUSSELL WYNN, Maryland CASS BALLENGER. North Carolina HARRYJOHNSTON, Florida DANA ROHRABACHER, California ELIOT L. ENGEL, New York CHARLES E. SCHUMER, New York John SCHEIBEL, StaffDirector EDMITND B. Rice, Republican Professional StaffMember Kathleen Behtelsen, Professional StaffMember Donna LaTorre, Professional StaffMember Peter Yeo, Professional StaffMember (II) CONTENTS Page WITNESSES Hon. G«rry E. Studds, aRepresentative in Congress fromthe State ofMassa- chusetts 3 Hon. Elizabeth Furse, aRepresentative in Congress fromthe State ofOregon 4 Hon. Kenneth D. Brody, President and Chairman ofthe Export-Import Bank ofthe UnitedStates 7 Hon. Ruth Harkin, president and chief executive officer, Overseas Private Investment Corporation 8 NancyFrame, ActingDirector, U.S. Trade and DevelopmentAgency 12 Jonathan Sallet, Director, Office of Policy and Strategic Planning, U.S. De- partmentofCommerce 14 David Driver, executive director, Connecticut Innovations, Incorporated 24 John Mizroch, Interim Executive Director, U.S. Environmental Technology Export Council 26 APPENDIX Prepared statements: Hon. SamGejdenson 31 Hon. Kenneth D. Brody 33 Hon. Ruth Harkin 41 Nancy Frame 53 Jonathan Sallet 61 David Driver 73 JohnMizroch 77 (III) ENVIRONMENTAL EXPORTS AND H.R U.S. 2112 WEDNESDAY, AUGUST 1993 4, House of Representatives, Committee on Foreign Affairs, Subcommittee on Economic Policy, Trade and Environment, Washington, DC. The subcommittee met, pursuant to call, at 1:35 p.m. in room 2172, Raybum House Office Building, Hon. Sam Grejdenson (chair- man ofthe subcommittee) presiding. Mr. Gejdenson. Today and tomorrow, the subcommittee is hold- ing hearings on the need to craft an effective export promotion strategy for the United States and to devote sufficient resources to promoting U.S. exports. We will be looking at two sectors of the economy which are important to the country and to my home state of Connecticut: Today, environmental exports, and tomorrow, the export ofthe products ofdefense diversification and conversion. When new environmental agreements were hammered out at the Earth Summit last year, it was good news for the global environ- ment. But it was also ^ood news for American companies which produce goods and services to prevent, reduce, or clean up pollu- tion. As countries try to live up to their new commitments, new market opportunities will be created for environmental firms. Americas history in the environmental area gives us a strong and important position to make this an important market for cleaning up pollution. Given the potential benefit ofincreased environmental exports to American companies and American workers, we must help turn these new market opportunities into actual exports. We need to focus our export promotion resources on the U.S. environmental in- dustry for three reasons. First, the United States has a $4 billion trade surplus in the en- vironmental sector in 1990. We have watched U.S. firms lose their competitive edge to overseas competitors in too many critical sec- tors, and AmericEui workers paid the price. The U.S. environmental industry must not be allowed to lose its competitive position. Second, environmental exports not only help American firms and American workers, but also help to protect the global environment. U.S. firms manufacture technology which lower greenhouse gas emissions, reduce water and air pollution, and provide for safe dis- We posal of waste. all benefit by the diffiision of this technology to other nations. (1) Third, the international market for environmental goods and services is erowing rapidly. The global environmental market cur- rently stands at $270 billion annually, ofwhich $155 billion is out- side of the United States, and is expected to reach $400 billion by the end ofthe century. If U.S. firms manage to capture 20 percent ofthe growth anticipated in the overseas environmental market, eui estimated 300,000 new American jobs will be created over the next 7 years. As we have seen in other industries, when we lose in the inter- national marketplace, we shortly thereafter start losing here at home to foreign competitors. We must ensure that U.S. environmental firms are in a good po- sition to fight their European and Japanese competitors for this growth market. Despite the importance of the environmental sector, the United States has clearly not allocated enough resources to promoting en- A vironmental exports. comparison of export promotion spending for manufactured products is a good indicator. The United States spent $231 million in 1990 to promote manufactured exports, while FrEuice spent $417 million, Italy spent $309 million, and the U.K spent $298 million. If the United States is serious about helping U.S. environmental firms win overseas markets, these figures must change. Aside from the spending issue, U.S. export promotion programs need to be fine-tuned and better coordinated to ensure that U.S. environmental firms get the help they need. President Clinton has fortunately called for the development of an environmental export promotion strategy to solve this problem, as have our two col- leagues with us today. Congressman Studds and Congresswoman Furse. In developing this strategy, the administration must consult closely with environmental companies to ensure that the strategy meets their needs. The agencies involved in crafting the strategy especially EXIM, OPIC, TDA and the Commerce Department, also need to reach out to small- and medium-sized environmental ex- porters and encourage them to take advantage of existing pro- grams. It is critically important that these steps be taken. In my home State of Connecticut, there are over 500 environmental firms, all ofwhom should be selling their products and services overseas. In- creasing environmental exports from Connecticut would be a great boost to the local economy, and position the State to be a major player in the international environmental marketplace in the 21st century. I would like to commend Representative Gerry Studds, Chairman ofthe Merchant Marine and Fisheries Committee, and Representa- tive Elizabeth Furse for focusing attention on this important sub- ject, and I look forward to their testimony today. I would also like to thank today's other witnesses for their flexi- bility in arranging today's hearing and for testifying today. Mr. Roth, do you have an opening statement? Mr. Roth. Thank you very much, Mr. Chairman. I will be brief. We do have some very important witnesses today. Let me join in welcoming our witnesses. OPIC, Eximbank, TDA are all key elements of our country's effort to expand our exports. We are fortunate that all three have been well-managed and are on a sound financial footing. I am sure each of you will do your utmost to meet the high standards set by your predecessors. Last year, we took the lead in authorizing the Trade Promotion Coordinating Committee, the TPCC, and putting the Commerce Department in charge. In the coming months, we will review the implementation of that legisla- tion. That brings me to what I see as the central question in this hear- ing: that is we are looking at how to increase our exports of U.S. environmental technology, an area where America has been in the forefront; but to be successful in this effort, we must have a coordi- nated approach. We cannot have Federal agencies all going off in their own directions. We need congruent Federal action. That is my concern in this area. I think our private sector wit- nesses today will confirm that there is a problem. So I ask all the witnesses today to focus on this issue: how do we ensure that ex- port promotion of environmental technology is coordinated and truly helpful to our exports? Thank you, Mr. Chairman. Mr. Gejdenson. Thank you. Mr. Studds. STATEMENT OF THE HON. GERRY E. STUDDS, A REPRESENTA- TIVE IN CONGRESS FROM THE STATE OF MASSACHUSETTS Mr. Studds. It is a pleasure to be back after an absence of 3 years on this committee. I would like to compliment you on the decor, I would also like a copy of the stretching exercises done by Mr. Fascell in the last term. You and Mr. Roth said it all in your opening statements. I want to begin by thanking you for adding to your agenda the bill Mrs. Furse and I introduced this summer, which has been reported by the Merchant Marine and Fisheries Committee. This is an enor- mous opportunity for the United States. It will not hang around indefinitely. Ifwe do not take advantage of it, the proper balance, you know, those of our competitive world will do so, most particularly Germany and Japan. This is an oppor- tunity to do good and prosper at the same time. Something our Pu- ritan forebears would have taken delight in. We are not wed to the details of our bill, but I think we have it right in general. I wel- come you taking a look at it from your perspective. The key is to establish a public-private partnership. Without participation of the private sector, this ain't going to work. We have some mutual friends, as you know, in New England who took the initiative in forming the Environmental Business Council of—New England wh—o attended the Earth Summit in Rio and found to their horror they were virtually alone there as members of the U.S. business community; and Japan, Grermany and others were way ahead already, cooperating between public and private agencies trying to get a piece of this extraordinary na- tional market. This is an opportunity measured in the hundreds of billions ofdollars in terms ofthe international market. Of course, it was really our environmental laws, our environ- mental leadership which helped create that market in manv ex- traordinary ways. If we do not take advantage ofthis, we will find ourselves outfoxed and outrun and outraced and outside looking in in a world market which we ourselves were preeminent in creating. It will be a sad and ironic thing indeed. Let me say to you, I will spare you the length of my testimony. I know you have a long and important list of witnesses. I was as- tonished at our hearings in our committee at the unanimity and enthusiasm of support by private enterprise from large to small. We had everjrthing from small entrepreneurs to a major corpora- tion such as Raytheon testifying with great enthusiasm as to the necessity and desirability of this legislation. There is an oppor- timity, as I say, to do good things and to profit at the same time. That doesn't come along very often these days. So I thank you for your consideration of our approach to this problem and we look forward with great interest in seeing what conclusions you come to in your own deliberations. Mr. Gejdenson. Thank you. Congresswoman Furse. STATEMENT OF THE HON. ELIZABETH FURSE, A REPRESENTA- TIVE IN CONGRESS FROM THE STATE OF OREGON Ms. FuRSE. Thank you, Mr. Chairman, for allowing me to testify here today. It is a great honor to speak for an industry that is so valuable and particularly for our economic and environmental fu- ture. As you may know, in Oregon we feel we are preeminent in this field. We have over 400 small entrepreneurial businesses in- volved in the environmental technology field. Now as you know, Mr. Chairman, while the United States has developed some of the toughest environmental laws in the world and has developed also some of the best environmental technolofflr in the world, we have not made this concerted effort that I think is needed to market and make available that technology inter- nationally. This industry has grown so rapidly that it is now pre- dicted it will reach $500 billion a year by the year 2000 and we need to go forward; and unfortimately, we have not been able to do that up to now. As you also know, the 102nd Congress had the foresight to see the economic and environmental advantage of expanding markets by passing the Export Enhancement Act. These efforts are laud- able, but I think that the player that needs to be brought in is the private sector to a greater degree. So much has occurred in small entrepreneurial businesses; ways to reduce, recycle or remediate air, water, land pollution; those issues. While these small entrepreneurial businesses and larger ones have great vision and integprity, unfortimately, they sometimes lack the expertise in exporting overseas their goods and services. It is for this reason that I hope that the subcommittee will consider H.R. 2112, which I have the great honor of being a cosponsor of along with Chairman Studds of the Merchant Marine Committee. This bill is aimed principally at enhancing the private industry involvement and assisting them to reach out into global markets. It is a really win-win legislation because it allows us both to de- velop and also export this expertise.