Time to Reauthorize the Exim Bank
Every single day, manufacturers in the U.S. are up against a wide range of competitors in the global marketplace. Many of these overseas competitors, using significant government support, are aggressively pursuing a global competitive advantage and the jobs that go with it. As a result, the playing field is tilted against us and we are losing jobs.
One of the most important tools we have to offset this disadvantage and grow exports and jobs is the U.S. Export-Import Bank (Ex-Im), and we strongly urge Congress to reauthorize the Bank without delay. And – get this – the bank makes money for U.S. taxpayers. Of all the job stimulus programs, the Exim bank doesn’t cost the taxpayer a dime! Congress should vote as soon as possible to reauthorize Exim!
For the U.S. to grow manufacturing jobs, we must rely on exports to faster-growing markets around the world. In short, exports equal jobs. And unfortunately for our jobs outlook, the United States is falling behind its competitors on the export front. In 2000, the U.S. share of global exports of manufactured goods was 13.8 percent. By 2009, our share had fallen to 8.6 percent. If we had just maintained our market share, U.S. exports in 2009 would have been $435 billion higher. The Commerce Department estimates that every $1 billion increase in exports would create or support 6,250 additional jobs, so that $435 billion jump translates to more than 2.7 million jobs.
One reason that the U.S. is losing valuable market share is that other countries do a better job of securing market access and providing support to their exporters – including financial support. While the United States is still the world’s largest manufacturer, we lack the export drive of our major competitors. In fact, the United States exports less than half as much of its manufacturing output as the global average.
As you can see in the Ex-Im Bank’s 2010 Competitiveness Report, many nations provide significantly more export financing as a share of GDP than the United States. The U.S. trails countries like Brazil, Canada, China, Germany, France, India, and Italy in official export credit volumes as a share of the national economy. Export Development Canada (EDC), for example, facilitated more than $84 billion of business in 2010. Canada’s credit volume is almost the same as America’s, even though their economy is about 1/8th the size of ours.
And it’s not just our friends and allies who are revving up the export credit engine. In 2010, export-import banks in Brazil and China (which are not members of the OECD) provided 10 times more financing to their exporters as a share of GDPthan the Ex-Im Bank did for American exporters. Last year, China issued $45 billion in new export credit compared to the United States’ $13 billion.
As Ex-Im Chairman Fred Hochberg described in his testimony to the Senate Banking Committee in May, China is aggressively using its export credit tools to support homegrown companies. General Electric (GE) recently bid on a $500 million rail project to supply 150 locomotives to Pakistan. The officials preferred GE’s trains and were willing to pay a premium for high-quality and dependability, but there was one major sticking point: financing. The Chinese government, which does not conform to international standards and practices, was offering to give a Chinese competitor credit terms that would give them an advantage GE could not make up for in quality, price or service. The credit terms put the entire sale – and more than 700 jobs in Erie, Pennsylvania at risk.
To remedy this, Ex-Im Bank stepped up with a matching financing package. While the final deal is not yet completed, this situation highlights the crucial niche that the Ex-Im Bank occupies. They only facilitate a small percentage of U.S. exports, but every foreign sale supports jobs here at home.
Manufacturers in the U.S. compete every day in a global market place that isn’t entirely fair. As we continue to fight for better market access and enforceable rules, the Ex-Im Bank must play an active role in supporting exports that would otherwise not happen. The fact that the bank is self-sustaining — and even returns money to the U.S. Treasury — makes it a win-win for industry and for the federal government.
Lauren Airey is director of trade facilitation policy, National Association of Manufacturers.