WASHINGTON—The U.S. Export-Import Bank, which assists in financing and facilitating exports of American products, faces an impasse as its mandate is set to expire by the end of September unless Congress takes action before then.
The embattled credit agency has become a political target for conservative Republicans who label the bank a “corporate welfare agency” and vow to shutter it.
The White House, however, believes the Ex-Im Bank is critical to protect U.S. economic and national security interests in the wake of rising global trade tensions. It’s considered an important tool to compete with other countries such as China that have strong export-finance agencies.
According to the 2019 Competitiveness Report released by the Ex-Im Bank, foreign governments are playing a growing role in boosting their countries’ exports.
In the past decade, the Chinese state, in particular, beefed up its export-financing program to achieve strategic economic and industrial policy goals outlined in Made in China 2025. Relative to advanced economies, Chinese export financing activity quadrupled, the report found.
Reauthorization of the bank in September is “incredibly important,” according to Kimberly Reed, president and chairman of the Ex-Im Bank.
“In today’s competitive global marketplace, there are more than 100 governments competing aggressively on behalf of their businesses and workers to win economic opportunities around the world,” she told The Epoch Times in an email.
Hence, the survival of the bank is crucial for American companies “to compete on a level playing field for international business opportunities and win those deals on behalf of U.S. workers,” she added.
In May, the Senate moved to revive the export credit agency by confirming three Trump nominees, including Reed, to serve on the board, allowing the bank to have the quorum needed to authorize large loans. Lack of a board quorum for almost four years prevented the bank from approving deals over $10 million.
The credit agency operates under a renewable charter, which requires re-authorization by Congress. The bank may shutter once more unless lawmakers act before the Sept. 30 deadline. During a lapse, the bank can continue to service its existing obligations. However, it won’t be able to approve new loans, credit insurance, and guarantees.
Over the past 10 years, the agency has supported more than 1 million U.S. jobs, Reed said. It has also supported thousands of small businesses across the country, allowing them to sell their American-made products to international markets.
In June, the House Financial Services Committee failed to reach a consensus on a bill from Chairwoman Maxine Waters of California and ranking Republican Patrick McHenry of North Carolina to reauthorize and reform the credit agency.
The measure sought to extend the bank’s mandate for seven years, instead of the four years normally granted. It also proposed to gradually raise the bank’s lending authority to $175 billion from $135 billion.
However, it received backlash from Democrats who demanded fewer restrictions on loans to Chinese firms. Waters pulled the bill from consideration.
In an effort to prevent a looming crisis next month, Sens. Kevin Cramer (R-N.D.) and Kyrsten Sinema (D-Ariz.) also introduced a proposal in the Senate in July. The bipartisan bill includes a 10-year extension of the bank’s authority, the longest ever proposed. It also increases the bank’s lending authority to $175 billion over seven years.
Other cosponsors of the bill include Sens. Thom Tillis (R-N.C.), Maria Cantwell (D-Wash.), Roy Blunt (R-Mo.), and Lindsey Graham (R-S.C.).
Two of the nation’s influential industry trade groups—The National Association of Manufacturers and The Aerospace Industries Association—urged lawmakers to pass the Senate bill to provide long-term certainty to exporters.
The Ex-Im Controversy
Established in 1934, the Ex-Im Bank provides government-backed export financing and loan guarantees to entities abroad buying American goods. It supports large U.S. exporters such as Boeing, Caterpillar, and GE, as well as U.S. small businesses.
In the fiscal year 2017, more than 90 percent of the bank’s transactions—more than 2,200—directly supported exports from U.S. small businesses.
Opponents of the bank argue that the majority of Ex-Im loans in dollar terms go to a small number of politically connected giant corporations, such as Boeing.
Long-term opponent Sen. Pat Toomey (R-Pa.) labeled the bank a “form of crony capitalism.”
He led the opposition against the bank in the Senate by placing holds on the president’s nominations to the bank’s board. He accused the bank of funding the Chinese and the Russian state-owned businesses.
“Historically, the fact is the Ex-Im Bank has used the American taxpayer to subsidize some of the largest and best-connected companies in the world, including governments that are very unfriendly to the United States,” Toomey said on May 7 on the Senate floor.
Proponents of the bank, however, reject the arguments, calling them unjustified. They say the credit agency takes the commercial and political risks to fill trade financing gaps in under-developed countries when private-sector lenders are unable or unwilling to take such risks.
“The trade war is global, and a failure to re-authorize U.S. Ex-Im Bank is not just unilateral disarmament—it is aiding and abetting America’s No. 1 strategic competitor, China,” said Mark Stuckart, who formerly worked for the Department of Commerce and the Overseas Private Investment Corp., Ex-Im’s sister agency.
Beijing, with its vast state-owned banking system including the Export-Import Bank of China, China Development Bank, and the China Export Credit Insurance Corp. (Sinosure) has “weaponized exports” and stolen millions of U.S. jobs over the past 20 years, he said.