Calculating Ex-Im Bank Support

Based upon changes to the local cost policy, below is an illustration of how Ex-Im Bank structures local cost financial support in conjunction with support for U.S. exports.

Ex-Im Bank Content Policy:
To be eligible for Ex-Im Bank financing, goods and services must be shipped from the United States to a foreign buyer. Ex-Im Bank will support the lesser of 85% of the Net Contract Price or 100% of the US content.

Ex-Im Bank Local Cost Policy:
Ex-Im Bank can support up to 30% of the Net Contract Price for locally originated and/or manufactured goods and services. For additional information on availability and eligibility, refer to the Local Cost Policy fact sheet at http://www.exim.gov/products/policies/local_cost.cfm.

Scenario:
A U.S. exporter has been awarded a $150 million contract to build a gas power plant in China. The U.S. exporter is responsible for providing the turbines from the U.S. while its subsidiary in China is responsible for providing the foundation work (local concrete and local labor) for the U.S. equipment.

Assumption:

1. The U.S. Supply Contract is $150 million.
2. The ineligible foreign content is $20 million.
3. The local costs included in or related to the U.S. exporter’s scope of work is $50 million.
4. The Net Contract Price is $80 million.
5. The U.S. content is $70 million.
6. The eligible foreign content included in the Net Contract Price is $10 million.

	Terms, Definitions and Calculations	USD
A	Supply Contract/ Purchase Order(s) This amount consists of the aggregate price of all Goods and Services in the Supply Contract/Purchase Oder(s), which includes US content, eligible foreign content (i.e., goods shipped from the United States), ineligible goods and services, and local costs.	$150,000,000
B	Excluded Goods and Services The aggregate price of all Goods and Services that are not eligible for (or excluded from) Ex-Im Bank support (e.g., goods not shipped from the U.S.)	$ 20,000,000
C	Contract Price (A minus B)	$130,000,000
D	Local Costs The aggregate price of all Goods originated/manufactured in the Purchaser’s country and all Services provided by residents of the Purchaser’s country.	$ 50,000,000*
E	Net Contract Price (C minus D)	$ 80,000,000
F	Foreign Content The aggregate cost to the Exporter of any Goods (or components thereof) that were produced or manufactured outside the U.S., Services provided by third country-resident personnel, and foreign freight costs and foreign insurance included in the Net Contract Price for Goods exported from the U.S. (Such amount shall not include any Local Costs.)	$ 10,000,000
G	U.S. Content (E minus F)	$  70,000.000
H	U.S. Content Percentage (G divided by E, expressed as a percentage.)	85%
I	Disbursement Percentage The lower of (i) 85% and (ii) the percentage in H.	85%
*Ex-Im can support a maximum of 30% of the Net Contract Price in local costs, which in this case is $24,000,000. The remaining $26,000,000 of local costs will fall outside of Ex-Im Bank support. .