Free Online Course in International BusinessOther Guarantees Linked with an Exported ProductThe export insurer provides other types of insurance:• A global insurance for corporations having subsidiaries abroad. For companies trading internationally, there is a growing trend for overseas sales to be made not from the head office but through a local subsidiary. The export credit insurer may offer a comprehensive and flexible credit risk management service by providing, through their international network, a cover concerning the local sales of the subsidiaries as well as the head office exports sales. • Manufacturing risk guarantee or work in progress. The insurer can provide a guarantee concerning the goods when they are at the stage of being manufactured. This guarantee protects the exporter against the risk of bankruptcy of the importer or against political/economic risk during the time of manufacturing (before completion and the sale). • Bid bonds or performance bonds or advance payments, or retention bonds or guarantees. These guarantee to protect the exporter against any unfair first demand call on those bonds. • Goods exposed in foreign political upheaval are guaranteed against the political or catastrophic risk for a maximum of six months. • Goods in a consignment stock could be insured for a period of 12 months. • Export insurance could be extended as well to the exporter abroad on his behalf. The guarantee is applicable on the final buyer risk. • Protection of the investment abroad. A corporation can insure its new production unit in a foreign country against the political cause of loss: expropriation, war, non-transfer. • Other coverage, such as, supplier default, breach of contracts, trade fair insurance, etc.
Ex-Im Bank programs follow certain policies designed to create US
jobs and adhere to US trade policies and regulations. In addition,
Ex-Im Bank programs cover a variety of needs, including pre-export
and post-export assistance. They also offer short, medium and
long-term guarantee insurance and direct loan programs. Because of
its policy constraints, Ex-Im Bank has certain restrictions on
utilizing its programs that may prevent some companies from getting
support. To insure the creation of jobs in the US, all products must
be shipped overseas from the US and support may be limited by the US
content of the products. The final manufacturing stage must be in
the US and some programs require shipment on US vessels, with few
exceptions. No product can be shipped to a military buyer. Aside
from these restrictions, however, support is still available for a
variety of trade transactions under numerous programs within Ex-Im
Bank. Ex-Im Banks programs cover a variety of needs, including
pre-export assistance, which is offered through pre-shipment
insurance and a working capital loan guarantee program.
Post-shipment assistance is provided through short, medium, and
long-term programs. All Ex-Im Banks short-term export programs are
insurance programs. These include programs to protect sales to an
individual buyer (single-buyer insurance) or many buyers at the same
time (multi-buyer insurance), including programs designed
specifically for small businesses (the small business program and
the environmental program). All goods covered under these programs
must have at least 50% US content.
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