The Productivity Commission is putting the finishing touches to a draft report on the Export Finance and Insurance Corporation that is due for release in the next week or two. But one thing is already clear from submissions to the review: Australian banks have a poor reputation for performance in the export finance market.The Productivity Commission received terms of reference from the Government in September, asking it to review the rationale for government involvement in the provision of export finance.It was asked to review the EFIC's exemption from competitive neutrality legislation, along with its funding, pricing and service arrangements, and to assess its impact on the private sector provision of financial products and services.In an issues paper published in October, the Commission said: "It is important to determine whether government involvement in the provision of export finance and insurance could improve the allocation of resources across the Australian economy."Government assistance to export activity is warranted only if it gives rise to an increase in community welfare through higher consumption and improved living standards. An increase in export activity alone is not sufficient to justify export assistance."The Commission received 27 submissions, most of which were supportive of the EFIC's role. A number of submissions said the EFIC was an important institution because it filled a vacuum left by the banks.The Australian Institute of Export said the task of raising finance for export transactions "has historically been a major issue for SMEs. EFIC's products have assisted many SMEs [to] overcome the conservative nature of banks."The Australian Services Roundtable said there was evidence that the parts of banks that service small- and medium-sized enterprises did not have the capability to assess international business risk. It said: "EFIC does not crowd out the private sector. In fact, EFIC's operations make it easier for the private sector to assess the returns available from investing in international business risk."The EFIC's products and services include guarantees, insurance, finance and information services.Legislation requires that the EFIC operate in a "market gap", defined as "circumstances where the credit and insurance sectors are not able or are unwilling to provide credit and insurance services to financially viable Australian export transactions or overseas projects."The EFIC must not compete directly with existing commercial sector providers. ANZ, the only bank to make a submission, had no argument with the legitimacy of the EFIC's role in the export finance market. It said: "The private sector has limited appetite for lending related to some countries or markets, particularly developing markets. "The private sector also has limited appetite to support smaller but expanding exporters. In these cases, EFIC plays an important role."The market gap manifests itself in a number of ways: a bank's capacity to take borrower risk; its capacity to provide liquidity; and the capacity to provide terms long enough to match project profiles."In 2009/10, there were around 45,000 exporting firms in Australia. Goods accounted for 79 per cent of the value of exports. The mining industry was the main goods exporting sector, accounting for