There continues to be an ongoing and vigorous debate about the importance of the Export-Import (Ex-Im) Bank of the United States. Opponents are seeking to ensure the demise of the Ex-Im Bank when it expires on Sept. 30. But while the question of the Ex-Im Bank centers on whether or not to support official export credits, the question among our biggest competitors in major foreign markets is whether or not to increase official export credits.
According to new research released by the National Association of Manufacturers, the United States lags behind the following major markets in total export credit authorizations: China, Japan, Canada, South Korea and Germany. In fact, Chinese authorizations are five times larger than the level the U.S. Ex-Im Bank provides, and we have seen export credit rise dramatically over the past few years, helping to fuel even greater growth in Chinese manufactured goods exports. Indeed, there are more than 60 ECAs worldwide that are working to increase export sales in their home markets, with the nine largest ECAs providing nearly half a trillion dollars in export financing and related services.
As markets become more global, manufacturers are increasingly seeing trade as an important vehicle to expand sales and growth. In just over a decade, world trade in manufactured goods has more than doubled, increasing from $4.8 trillion in 2000 to $11.5 trillion in 2012. U.S.-manufactured goods exports reached an all-time high last year, with our firms selling nearly $1.4 trillion in goods abroad, directly supporting 7.1 million workers.
Still, manufacturers in the United States face tough competition from their counterparts around the world as well as an uneven playing field. Despite a record high for U.S.-manufactured goods exports in 2013, the nation’s share of the global market for manufactured goods had fallen from 13.8 percent in 2000 to 8.7 percent in 2012. There are many reasons for this shift, and much of it has to do with faster growth elsewhere. While export finance is clearly not the only factor, it does play an important role worldwide in promoting global trade that supports jobs, manufacturing and a higher standard of living. Not surprisingly, we see some of the fastest growth in exports coming from countries that have been the most aggressive in increasing their trade support programs.
The Ex-Im Bank plays a vital role in the face of such fierce global competition. A self-sustaining agency that has evolved and improved its operations over the years, the Ex-Im Bank helps thousands of small, medium and large manufacturers sell their products overseas annually. In 2013, the Ex-Im Bank provided financing and other services to support $37 billion in U.S. exports (2.4 percent of the total). While Ex-Im financing is not needed for all exports, it is considered vital in certain types of export sales, particularly related to long-term financing for large projects, emerging markets, small business transactions and export sales to foreign governments and state-owned enterprises. Indeed, these are some of the fastest-growing opportunities globally, including in the infrastructure and transportation sectors where ECA activity appears most significant.
Failure to reauthorize the Ex-Im Bank will have lasting and damaging effects in communities all across the country. Manufacturers overseas will increasingly win foreign sales with the support of their growing ECAs, while billions of U.S. exports will be put at risk annually. At a time when the economic recovery remains fragile, policymakers need to ask themselves why they would want to weaken the nation’s manufacturing competitiveness and forfeit growing opportunities in the global marketplace. With manufacturing in the United States on the rebound, it certainly is not the time to destroy an institution that continues to bring export opportunities and the jobs that come with them to all 50 states.
Dempsey is the vice president of international economic affairs and Moutray is the chief economist at the National Association of Manufacturers.