DEFENSE EXPORT LOAN GUARANTEES.

SEC. 1321. DEFENSE EXPORT LOAN GUARANTEES. (a) Establishment of Program.— (1) Chapter 148 of title 10, United States Code, is amended by adding at the end the following new subchapter: “SUBCHAPTER VI— DEFENSE EXPORT LOAN GUARANTEES “Sec. “2540. Establishment of Ioan guarantee program. “2540a. Transferability. “2540b. Limitations. “2540c. Fees charged and collected. “2540d. Definitions. “§ 2540. Establishment of loan guarantee program “(a) Establishment.— In order to meet the national security objectives in section 2501(a) of this title, the Secretary of Defense shall establish a program under which the Secretary may issue guarantees assuring a lender against losses of principal or interest, or both principal and interest, arising out of the financing of the sale or longterm lease of defense articles, defense services, or design and construction services to a country referred to in subsection (b). “(b) Covered Countries.— The authority under subsection (a) applies with respect to the following countries: 110 STAT. 476 “(1) A member nation of the North Atlantic Treaty Organization (NATO). “(2) A country designated as of March 31, 1995, as a major non-NATO ally pursuant to section 2350a(i)(3) of this title. “(3) A country in Central Europe that, as determined by the Secretary of State— “(A) has changed its form of national government from a nondemocratic form of government to a democratic form of government since October 1, 1989; or “(B) is in the process of changing its form of national government from a nondemocratic form of government to a democratic form of government. “(4) A noncommunist country that was a member nation of the Asia Pacific Economic Cooperation (APEC) as of October 31, 1993. “(c) Authority Subject to Provisions of Appropriations.— The Secretary may guarantee a loan under this subchapter only to such extent or in such amounts as may be provided in advance in appropriations Acts. “§ 2540a. Transferability “A guarantee issued under this subchapter shall be fully and freely transferable. “§ 2540b. Limitations “(a) Terms and Conditions of Loan Guarantees.— In issuing a guarantee under this subchapter for a medium-term or long-term loan, the Secretary may not offer terms and conditions more beneficial than those that would be provided to the recipient by the Export-Import Bank of the United States under similar circumstances in conjunction with the provision of guarantees for nondefense articles and services. “(b) Losses Arising From Fraud or Misrepresentation.— No payment may be made under a guarantee issued under this subchapter for a loss arising out of fraud or misrepresentation for which the party seeking payment is responsible. “(c) No Right of Acceleration.— The Secretary of Defense may not accelerate any guaranteed loan or increment, and may not pay any amount, in respect of a guarantee issued under this subchapter, other than in accordance with the original payment terms of the loan. “§ 2540c. Fees charged and collected “(a) Exposure Fees.— The Secretary of Defense shall charge a fee (known as ‘exposure fee’) for each guarantee issued under this subchapter. “(b) Amount of Exposure Fee.—To the extent that the cost of the loan guarantees under this subchapter is not otherwise provided for in appropriations Acts, the fee imposed under subsection (a) with respect to a loan guarantee shall be fixed in an amount that is sufficient to meet potential liabilities of the United States under the loan guarantee. “(c) Payment Terms.— The fee under subsection (a) for each guarantee shall become due as the guarantee is issued. In the case of a guarantee for a loan which is disbursed incrementally, and for which the guarantee is correspondingly issued incrementally 110 STAT. 477as portions of the loan are disbursed, the fee shall be paid incrementally in proportion to the amount of the guarantee that is issued. “(d) Administrative Fees.— The Secretary of Defense shall charge a fee for each guarantee issued under this subchapter to reflect the additional administrative costs of the Department of Defense that are directly attributable to the administration of the program under this subchapter. Such fees shall be credited to a special account in the Treasury. Amounts in the special account shall be available, to the extent and in amounts provided in appropriations Acts, for paying the costs of administrative expenses of the Department of Defense that are attributable to the loan guarantee program under this subchapter. “§ 2540d. Definitions “In this subchapter: “(1) The terms ‘defense article’, ‘defense services’, and ‘design and construction services’ have the meanings given those terms in section 47 of the Arms Export Control Act (22 U.S.C. 2794). “(2) The term ‘cost’, with respect to a loan guarantee, has the meaning given that term in section 502 of the Congressional Budget and Impoundment Control Act of 1974 (2 U.S.C. 661a).”. (2) The table of subchapters at the beginning of such chapter is amended by adding at the end the following new item: “VI. Defense Export Loan Guarantees 2540”. (b) Report.— Not later than two years after the date of the enactment of this Act, the President shall submit to Congress a report on the loan guarantee program established pursuant to section 2540 of title 10, United States Code, as added by subsection (a). The report shall include— (1) an analysis of the costs and benefits of the loan guarantee program; and (2) any recommendations for modification of the program that the President considers appropriate, including— (A) any recommended addition to the list of countries for which a guarantee may be issued under the program; and (B) any proposed legislation necessary to authorize a recommended modification. (c) First Year Costs.— The Secretary of Defense shall make available, from amounts appropriated to the Department of Defense for fiscal year 1996 for operations and maintenance, such amounts as may be necessary, not to exceed $500,000, for the expenses of the Department of Defense during fiscal year 1996 that are directly attributable to the administration of the defense export loan guarantee program under subchapter VI of chapter 148 of title 10, United States Code, as added by subsection (a). (d) Replenishment of Operations and Maintenance Accounts for First Year Costs.— The Secretary of Defense shall, using funds in the special account referred to in section 2540c(d) of title 10, United States Code (as added by subsection (b)), replenish operations and maintenance accounts for amounts expended from such accounts for expenses referred to in subsection (c). 110 STAT. 478