Losing ground

New study finds U.S. export financing levels languish far behind other major economies    New data shows that U.S. exporters are at a big competitive disadvantage when it comes to state-supported credit assistance for foreign sales because the Export-Import Bank is operating with congressional shackles that prevent deals from being financed.
   According to the National Foreign Trade Council (NFTC) and the Coalition for Employment through Exports (CEE), the amount of financing the United States provided in 2015 as a proportion of its GDP is less than countries such as France and Italy and dwarfed by China, all of which are much smaller than the $18 trillion U.S. economy.
   The advocacy groups said that analysis of Ex-Im Bank data showed that China’s export financing volumes in 2015 were more than 40 times that of the United States.
   “Fair trade and American jobs depend fundamentally upon maintaining a competitive balance in trading relationships,” NFTC President Rufus Yerxa said in a statement. “This data shows the extent to which our competitors are outspending the U.S. on export financing programs. Giving our exporters a level-playing field so they can compete globally and continue to create jobs is a key component of our economy. The Ex-Im Bank has supported U.S. exporters for decades, and it must not be relegated to the sidelines.”
   The Ex-Im Bank has been caught in the middle of a political fight in Congress, where a powerful group of conservatives want to eliminate the agency on the grounds that government should not get involved in areas suited for the private sector and put taxpayer money at risk, especially when many recipients are big corporations that don’t need assistance. The dispute led to the bank’s temporary closure in the summer of 2015 before Congress reauthorized its charter through September 2019.
   The government’s export financing arm provides working capital lines of credit, loan guarantees to customers of American companies, and insurance on receivables so an exporter isn’t left holding the bag if a customer doesn’t pay its bills. The bank is self-sustaining, contributing nearly $3.8 billion to the U.S. Treasury since 2009 through fees and interest. Its default rate last year was 0.3 percent, well below the 2 percent target set by Congress.

In 2016, the bank authorized $5 billion in financing, the lowest level in 40 years.

   Small businesses, in particular, often find it difficult to provide credit for overseas customers, and 90 percent of the agency’s transactions involve small firms, business and pro-trade groups argue.
   Exporters that rely on Ex-Im Bank financing to secure large international deals are frustrated that the bank cannot approve transactions of more than $10 million. Under its charter only the board of directors can approve deals of that size and Congress did not confirm two Obama nominees – a Republican and a Democrat – to the five-person board to enable the board to have the necessary quorum to hold votes. A legislative proposal to relax the quorum requirement so that the bank could fully function with a smaller board was unsuccessful.
   In 2016, the bank authorized $5 billion in financing, the lowest level in 40 years. The financing supported more than $8 billion in U.S. exports and an estimated 52,000 jobs. The bank sent $284 million in receipts to the U.S. Treasury for debt reduction, according to its annual report in January.
   By comparison, in 2014, the last fully operational year, the bank authorized more than $20 billion in financing, supporting nearly 165,000 jobs, and generating $675 million for taxpayers.
   “The U.S. cannot sustain this imbalance without losing exports and the jobs they support,” CEE President John Hardy said. “Both Houses of Congress understood this when the Ex-Im Bank was reauthorized by super-majorities in 2015. Currently, there are $30 billion in export transactions greater than $10 million in the Ex-Im Bank awaiting action. Those exports support more than 200,000 jobs in the U.S., and they cannot be supported without a fully functioning Ex-Im Bank.”
   Ex-Im Bank President Fred Hochberg says countries around the world are investing in alternative energy technology, transportation, power, telecommunications and other large projects and many want to buy American equipment and products. But competition for contracts is fierce and governments such as Canada, Finland and the United Kingdom are bolstering support for export credit agencies at a time when the United States is pulling back.
   The NFTC and CEE have urged Congress and the Trump administration to address the quorum issue at the Bank so it can fulfill its potential facilitating exports and creating jobs.