Killing Ex-Im Is An Isolationist Policy
If Congress fails to reauthorize the Bank before June 30, thousands of American exporters – and tens of thousands of businesses that provide parts, equipment and services to those exporters – will be put at risk. In FY2014, Ex-Im financing enabled $27.5 billion of exports that directly supported more than 164,000 jobs. If Ex-Im expires, U.S. companies will be forced to abandon opportunities in foreign markets, isolating the United States from the growth of the global economy and hurting local communities.
When you look at what experts have to say, the evidence is clear; any attempt to end Ex-Im is an isolationist policy that will harm U.S. businesses and allow foreign companies – often backed by foreign export credit agencies – to gain market share in fast-growing regions and across a variety of sectors.
In February, 12 former national security officials, including former Secretary of State Madeline Albright, urged Congressional leadership to support Ex-Im reauthorization, calling the Bank “one of the most important tools in our system of government to enable US companies to compete and secure business in overseas markets.”
Those calling for an end to Ex-Im represent “the libertarian-isolationist wing of the party,” said Bill Schubert, a Texas small-business owner and Ex-Im user.
According to William Reinsch, President of the National Foreign Trade Council, and a former Under Secretary for Export Administration at the Department of Commerce, closing Ex-Im is a “double whammy” of isolationist, anti-business policy:
“Since our major competitors all have counterpart institutions, there is little to prevent a U.S. company from obtaining foreign financing if there is no U.S. Ex-Im Bank to help. Of course, there is a price for that – a percentage of foreign content in the finished product high enough to qualify for another country’s financing. So, shutting down the Bank produces a double whammy. Not only will we lose exports directly, but our manufacturers will have no choice but to design out American parts and design in foreign content to salvage something from the disaster the Tea Party is creating.” (Bill Reinsch, “Guest Blog: Ex-Im Bank Reauthorization: Same Ol’ Criticisms Neglect Bank’s Economic Value,” Wilson Center America’s Trade Policy Blog, 7/8/14)
Bill Brock, former Senator from Tennessee and Reagan Administration official, calls Ex-Im “vital for companies involved in the global economy; without Ex-Im, American exporters simply can’t compete: “As a Republican, I would prefer that the private sector carry the entire load of supporting our international competitiveness. But the world market is not a level playing field, and the bank is absolutely vital for companies involved in the global economy. Having worked closely with Mr. Reagan on trade issues, I am confident that he felt the same.” (William E. Brock III, “Don’t Kill The Export-Import https://exportersforexim.org/files/2015/04/bank,” New York Times, 7/28/14)
Current Secretary of the Treasury Lew also agrees that Ex-Im is “critical” to exporters:
“‘The Export-Import https://exportersforexim.org/files/2015/04/bank is a critical component of our export strategy,’ lew said. ‘We can’t unilaterally put our companies in a position where exporters from other countries have export support and they don’t. If you’re selling from Washington state, I know aircraft is a big issue. If you’re selling aircraft against a competitor that has export financing because of a program like the Export-Import https://exportersforexim.org/files/2015/04/bank, that’s not something you can make up for just by running a tighter operation.’” (Jack Lew, “Treasury Secretary: Ex-Im Bank Is A ‘Critical Component’ Of U.S. Trade Strategy,” Insurancenews.net, 2/6/15)
Doug Holtz-Eakin of the American Action Forum explains that other countries “are all out there trying to gain market shares” and that without Ex-Im the U.S. will lose that market share:
“The reality is you would like to live in a world and I would love to live in a world that does not have a need for an Export Import https://exportersforexim.org/files/2015/04/bank, one where international transactions were done on a level playing field. that’s just not the reality. many other countries, notably china and the brics, other oecd countries, all have an export credit agency. they are all out there trying to gain market shares. the west simply has to not disarm.” (Doug Holtz-Eakin, Bloomberg Bottom Line, 5/23/14)
Former Director of the National Economic Council and Secretary of the Treasury Larry Summers says that Ex-Im is the only thing preventing the U.S. exporters from “ceding ground” to foreign companies in places like China. For Summers, ending the Bank would be “unilateral disarmament”:
“At a time when authoritarian mercantilism has emerged as the principal alternative to democratic capitalism, the US Congress is flirting with eliminating the Export-Import https://exportersforexim.org/files/2015/04/bank that, at no cost to the government, enables us exporters to compete on a more level playing field with those of competitor nations, all of whom have similar vehicles. only by maintaining a capacity to counter foreign subsidies can we hope to maintain a level global trading system and to avoid ceding ground to mercantilists. eliminating the export import bank without extracting any concessions from foreign governments would be the economic equivalent of unilateral disarmament.” (Lawrence Summers, “Put American Foreign Policy Back On The Pitch,’” Financial Times, 7/6/14)
According to Frank Gaffney of the Center for Security Policy, ending Ex-Im would mean the U.S. will “lose export opportunities and jobs”, isolating the U.S.: “Consequently, the upshot of the sort of Republican-led unilateral disarmament now in prospect with respect to Exim Bank is that the United States will lose export opportunities and jobs. In some cases, American companies that have a successful business model, provided they are able to compete internationally on a level-playing field, will become unviable.” (Frank Gaffney, Jr., “The Right’s Unilateral Disarmers,” Breitbart, 7/9/14)
Amadou Sy of the Brookings Institute outlines how other countries will swoop in were Ex-Im to expire: “These initiatives benefit U.S. businesses as they give them opportunities to sell machinery or services to foreign firms, creating jobs at home. If the Export-Import https://exportersforexim.org/files/2015/04/bank ceased to exist, one of the other big global powers, such as china, would just become the partner of choice for development within africa instead.” (Amadou Sy, “The Bank Is Crucial For U.S. Involvement In Africa’s Growing Economy,” The New York Times, 3/16/15)
The National Association of Manufacturers also recently released a report highlighting the growing influence of foreign export credit agencies on international trade. Among the report’s findings is that U.S. was dead last in ECA support when compared to GDP among OECD countries.