EFIC helps Australian SME exporters make the most of the AUSFTA

Trade Minister Mark Vaile today announced the establishment of a US$50 million bonding line by Export Finance and Insurance Corporation (EFIC) in cooperation with Liberty Mutual Surety to assist Australian SME exporters in the US Government procurement market.

"With the potential new business opportunities for Australian exporters under the government procurement chapter of the Australia US Free Trade Agreement, EFIC's new facility is timely," Mr Vaile said.

The facility is designed to assist Australian SME exporters overcome difficulties they may experience in securing a bonding line from their banks because of insufficient tangible security and the lack of familiarity by US surety bond issuers with Australian exporters.

Surety bonds are performance guarantees that provide compensation to the buyer if the supplying company does not fill its contractual obligations. The US market is unusual because it typically requires suppliers to post bonds for up to 100% of the contract value for performance obligations particularly in the construction industry compared with 10-15% elsewhere.

Additionally, all surety bonds in the United States must be issued by a licensed company in the state where the work is being performed. EFIC is teaming with a leading US surety writer, Liberty Mutual Surety, an operating division of the Boston based Liberty Mutual Group, who is licensed to write surety bonds in all 50 states.

"EFIC's US$50 million bonding line will clear a path through the complex United States bonding rules and allow Australian exporters to reap the opportunities emerging from the Australia US Free-trade Agreement," Mr Vaile said.

About EFIC

EFIC is Australia's export credit agency which assists Australian companies exporting and investing overseas by providing a range of competitive medium to long-term finance and insurance services.

About Liberty Mutual

Boston-based Liberty Mutual Group (LMG) is a leading global insurer and sixth largest property and casualty insurer in the U.S. whose largest line of business is private motor vehicle insurance. As of December 31, 2004, LMG had $72.4 billion in consolidated assets and $19.6 billion in annual consolidated revenue. The Company ranks 111th on the Fortune 500 list of largest corporations in the United States for 2004.

Contact: Mr Vaile's office 02 6277 7420 - DFAT Media Liaison 02 6261 1555