Congress likely to give export credit agency a reprieve through June 30.
The U.S. House of Representatives is likely to vote Wednesday on a stopgap funding bill to avert a government shutdown that includes a provision to extend the Export-Import Bank’s charter through June 30, according to Lauren Airey, director of trade facilitation policy at the National Association of Manufacturers.
The Ex-Im Bank’s future has been in doubt leading up to the expiration of its operating authority on Sept. 30 because of ideological opposition from some House Republicans, including Financial Services Committee Chairman Jeb Hensarling of Texas, who believe that private lending institutions, not the government, should help finance American exports and that the quasi-public agency tends to benefit big corporations that don’t need assistance. The continuing resolution will fund the government through mid-December and opponents have agreed to a short-term authorization for the Bank.
Supporters say the export credit agency fills the gap when commercial financing is not available, especially in certain parts of the world where risks are perceived to be greater or where capital markets are not well developed. The Ex-Im Bank 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 more than $1 billion to the U.S. Treasury last year through fees and interest. Its default rate is less than 2 percent, a target set by Congress.
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.
The Small Business Exporters Association found in a 2013 survey that 75 percent of small businesses expressed some level of concern about receiving payment from a foreign customer or not getting paid on time. A majority of these companies only shipped goods after receiving full payment, which can undercut sales opportunities.
The Ex-Im Bank provided $27 billion in financial aid last year, which supported $37 billion in sales to overseas customers and an estimated 205,000 U.S. jobs.
There are 60 countries with strong export credit agencies that support domestic industries that compete with U.S. companies for international sales, according to a June report by the National Association of Manufacturers. The nine largest export credit agencies provide $488 billion in annual export support, and the Ex-Im Bank helps level the playing field for U.S. companies, the trade association says.
Critics complain that Boeing is one of the largest beneficiaries of Ex-Im Bank financing, but proponents point out that rival Airbus can offer customers attractive financing from export credit agencies in France, Germany and the United Kingdom.
The Ex-Im Bank was last authorized in May 2012 after a difficult political fight and for only two years. The legislation included about 18 reforms requiring the institution to make some policy changes and file reports to the Government Accountability Office. Bank officials have followed through on all requirements, Airey said during the National Customs Brokers and Forwarders Association of America fall conference in Washington.
House Democrats, who almost universally support a five-year extension of the Ex-Im Bank’s charter, are unhappy about the nine-month extension because they feel it could be the first step toward termination. They would prefer a short-term extension until December so the current Congress could debate its future during a lame-duck session. Democrats fear Republicans could take control of the Senate in the November mid-term elections and then be able to kill the bank next year, although the House Republican caucus is divided on the issue, Airey said.
Groups like the Club for Growth and the Heritage Foundation are still putting pressure on Republicans to deauthorize the Bank now, calling it an example of “crony capitalism.”
Airey said Senate leaders have indicated they are likely to follow the House lead on whatever it decides about the Ex-Im Bank.
NAM isn’t thrilled that the agency only got a nine-month extension, but “we’re glad you’re not turning off the lights,” Airey said. And the association, along with a coalition of businesses, will vigorously fight any efforts to wind down the bank in the future, she added.
Last week, several business groups including the U.S. Chamber of Commerce, NAM and the Association of Equipment Manufacturers, sent a letter to House and Senate leaders urging Ex-Im Bank reauthorization.
“Exports are more important than ever to U.S. businesses, and access to competitive export financing terms plays a vital role in securing overseas sales and facilitating exports,” the letter said.”Failure to reauthorize Ex-Im would force U.S. exporters to forfeit opportunity in the face of other nations’ aggressive trade finance programs.”
Battle over Ex-Im Bank nears resolution
