One year ago, under President TrumpDonald TrumpSix big off-year elections you might be missing Twitter suspends GOP Rep. Banks for misgendering trans health official Meghan McCain to Trump: 'Thanks for the publicity' MORE’s leadership, Congress came together across party lines to re-authorize the Export-Import Bank of the United States (EXIM), our nation’s export credit agency. As our great economic resurgence continues and American companies battle the setbacks caused by COVID-19, that decision looks even better.
Exports are critical for our country, especially in states across the heartland. North Dakota, for example, sold $6.7 billion in goods abroad last year. Exports account for a sizable share of the state’s gross domestic product, and the jobs supported by exports pay as much as an estimated 18 percent more than the national average.
American companies and their workers face an unlevel playing field, where countries like China stack the deck. As just one part of the Chinese Communist Party’s multi-faceted Belt and Road initiative to achieve global dominance, its government offers vast amounts of export finance to incentivize foreign companies to purchase Chinese goods and services. The country’s export financing is estimated to equal 90 percent of what is provided by all G7 countries combined.
While the number of export credit agencies like EXIM has grown to 115 around the world, up from 85 only four years ago, China’s expansive export and trade-related activity far exceeds that of other countries. Unquestionably, China is a catalyst for the increasing assertiveness of other countries’ official export finance activities, further complicating the competitive landscape for U.S. exporters.
That’s where EXIM comes in. When commercial lenders are unable or unwilling to extend credit, EXIM supports U.S. jobs by providing the financing necessary for American exporters to close deals. Offerings like export credit insurance and working capital loan guarantees free up capital for companies large and small to efficiently pay suppliers and grow their business. In fact, approximately 90 percent of EXIM-supported transactions directly benefit U.S. small businesses.
We recently met with North Dakota business leaders to discuss how EXIM can support more jobs through increased sales abroad.
That’s what happened at WCCO Belting, Inc., of Wahpeton, N.D., which has partnered with EXIM for nearly 20 years. “Over that time, we’ve grown from a company that was basically selling into Canada, into one that sells into more than 20 countries,” WCCO CEO/President Tom Shorma said. Collecting on sales is a worry of many exporters and, “that’s what the Export-Import Bank does really well — it guarantees payment,” he added.
For these and other reasons, President Trump signed bipartisan legislation passed by Congress in December 2019 enacting a seven-year reauthorization for EXIM, the longest in the agency’s 86-year history. The reauthorization legislation also tasked EXIM with an important new mission: developing a “Program on China and Transformational Exports.” The effort aims to neutralize export credit or other subsidies provided by China or by other covered countries and to advance the comparative leadership of the United States with respect to China across 10 transformational export categories. The law charges the agency with a goal of reserving no less than 20 percent of its total financing authority — $27 billion out of $135 billion — for support of U.S. exports made pursuant to the program.
History suggests EXIM support could be needed more than ever. In response to the 2008 financial crisis, demand for EXIM services surged as the availability of private capital shrank. EXIM’s portfolio increased by 80 percent. Recognizing the threats COVID-19 presents exporters, the agency adopted a range of temporary relief measures to provide greater flexibility and financing options. The response has been tremendous, as EXIM has extended more than $1 billion in COVID-19-related financing, with additional requests expected to come.
When EXIM was virtually shuttered between 2015-2019, America’s foreign economic competitors celebrated, and U.S. workers lost out on export opportunities. Now with EXIM fully operational with a new, revitalized mandate, brighter days are ahead for our great companies of all sizes that compete in the global marketplace through exports, and for the hard-working American men and women who make their success possible.
Sen. Kevin CramerKevin John CramerSenate GOP signals they'll help bail out Biden's Fed chair Lobbying world The Hill's Morning Report - Presented by Facebook - After high drama, Senate lifts debt limit MORE represents North Dakota. He is a member of the Senate Committee on Banking, Housing, and Urban Development, which has jurisdiction over EXIM. Kimberly Reed is President and Chairman of the Board of Directors of the Export-Import Bank of the United States. She is the first woman and first West Virginian to lead the agency.