The clock is running out for Congress to reauthorize the U.S. Export-Import Bank’s charter, which expires June 30.
The clock is running out for Congress to reauthorize the United State Export-Import Bank’s charter.
The bank’s existing charter is set to expire June 30.
Fred P. Hochberg, chairman and president of the Ex-Im Bank explained the dire situation facing the bank at the International Association of Machinists and Aerospace Workers Industrial Conference in Chicago last week. “Not long ago,” Hochberg said, “I was speaking with a group of exporters when a supply chain manager from Oregon asked me: ‘if Ex-Im doesn’t get reauthorized, what’s our plan B?’ I paused, and said: ‘There is no plan B. Ex-Im is plan B.’
“For U.S. exporters, plan A is always to secure financing in the private sector — and we have the most robust private sector in the world. But we all know that the commercial sector doesn’t always have the capacity to equip every business that wants to sell overseas. That’s why we’re plan B. And by the way, if plan B goes away — if we, as a country decide to unilaterally disarm — you should know that there’s also a plan C,” he added. “Plan C is China.”
Hochberg warned that Ex-Im Bank’s counterparts in other countries plan to step in to fill the void if the bank should close up shop.
“Of course, there’s also China — you can bet they’ll be continuing to put their foot on the gas. In fact, one of China’s export finance agencies noted that they doubled their activity in 2014 — and they expect to double it again in the next year or two,” he said.
On June 12, Ex-Im Bank released its annual Competitiveness Report to Congress, outlining trade difficulties facing U.S. industry. The report noted there are 85 agencies with a similar charge as the Ex-Im Bank and that China’s export lending grew more than 40 percent last year.
Hochberg noted that in Ex-Im Bank’s 81-year-old history, it has financed just under $600 billion for U.S. exports, while China has done a minimum of $670 billion in the last two years alone.
“American workers have never needed a handout — you just need a level playing field. We don’t have to make the cheapest products in order to compete. After all, when you shop for groceries, a car — whatever it is — you’re not looking for the cheapest thing. You’re looking for value,” Hochberg said.
“China makes cheaper locomotives…ours last longer. China makes cheaper auto parts…ours are more dependable. China makes cheaper bridges, cheaper industrial machinery — pretty soon, they’ll be making cheaper airplanes. And you can bet that they will be financing those airplanes to the hilt,” he added.
A group of mostly Republican legislators have called the bank “corporate welfare” and are intent on seeing its charter expire at the end of the month. These lawmakers point to large beneficiaries of Ex-Im Bank financing, such as Boeing and General Electric, and say these companies don’t need the help.
However, many businesses – large and small – say the bank’s financing helps keep them remain competitive in the global market against producers of similar products in other countries.
Earlier this month, the National Association of Manufacturers and U.S. Chamber of Commerce – collectively representing more than 1,000 companies and associations – wrote a letter to Congress urging the legislature to enact long-term re-authorization of the Ex-Im Bank.
“If Ex-Im is not reauthorized before June 30, American companies would be put at a unique disadvantage in global markets, resulting immediately in lost sales and lost jobs. U.S. businesses of all sizes would be deprived of a vital financing source at a time when boosting exports is increasingly vital to growing our nation’s economy and jobs,” the associations warned.