US dithers on Ex-Im Bank as other countries raise their game on exports
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The latest report from the U.S. Export-Import (Ex-Im) Bank to Congress on the state of global competition in export financing was released at the end of June and provides compelling evidence that America's competitors continue to aggressively raise their game in supporting their exports even as the U.S. Ex-Im Bank remains stymied by political tumult that has severely curtailed its operations.

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In 2015, the Ex-Im Bank's new lending authorizations decreased by a stunning 50 percent compared to 2014, with the bank issuing only $5.8 billion in major new medium- and long-term export credit volume. But as U.S. export credit dried up, making it more difficult for foreign purchasers of American exports to secure needed financing, other nations' export credit agencies eagerly stepped in to fill the void. For instance, China issued $51 billion in export credit support in 2015, nearly nine times as much as the United States in constant dollars and 14 times as much as a share of gross domestic product (GDP). Likewise, Germany’s $15.9 billion in export credit support in 2015 amounted to more than three times as much in absolute dollars and 15 times as much as a share of GDP, while Korea invested 21 times more. And both France and Finland, despite being a fraction the size of the U.S. economy, provided their exporters more export credit support.

America's anemic export credit financing in 2015 resulted from a failure on the part of Congress last spring to swiftly reauthorize the bank, thus halting its ability to offer new financing to customers from July 1 to Dec. 4. This marked the first time in history that Congress allowed the bank's new lending operations to cease for an extended period of time. As a result, the number of U.S. jobs supported through Ex-Im export credit support plummeted by over one-third, from 164,000 in 2014 to 109,000 in 2015. Further, the authorization lapse resulted in 60 percent of U.S. exporters and lenders deeming the U.S. Ex-Im Bank "uncompetitive" relative to its global peers in 2015.

Unfortunately, the efforts of the Ex-Im Bank's opponents to hamstring its operations continue unabated. Most recently, the Senate Banking Committee's continuing failure to hold a committee vote on the nomination of Mark McWatters to the bank's board has prevented it from being able to muster a quorum, meaning it cannot approve transactions greater than $10 million, jeopardizing the exports of scores of U.S. companies. In fact, the Peterson Institute for International Economics estimates that each day the McWatters confirmation vote is delayed costs U.S. businesses $50 million in exports. In total, as much as $20 billion worth of potential export deals, impacting large and small exporters alike, are stuck in abeyance thanks to the fact the bank's board falls short of a quorum.

The failure of some in Congress to understand the realities of modern global economic competition, manifested in the continued political maneuvering to stymie the bank's operations, seriously imperils America's global economic competitiveness. Companies large and small across the United States have reported significant job losses or have missed employment opportunities due to an inability to secure export credit over the past year. For example, in 2015, GE moved 500 jobs abroad in its aeroderivative gas turbines unit, in part because it had more certainty that the export credit agencies of countries including China and Hungary would be able to provide export credit support. Meanwhile, scores of small U.S. businesses, from California-based Combustion Associates to New Hampshire-based Precision Custom Components, have seen export deals and underlying employment imperiled due to uncertainty over their ability to secure deal-supporting export credit financing.

The real nub of this argument is not the budget deficit — the Ex-Im Bank generated $430 million in revenues for the Treasury in 2015. It's also not the effectiveness of the bank — it is widely recognized as one of the best-managed federal agencies. The nub is the ideological views of the opponents that economic welfare is maximized by less government in all areas and that the U.S. economy simply does not compete with other economies. In other words, GE may compete with Siemens, but the United States doesn't compete with Europe. Maybe there was more validity to these views a half-century ago when the U.S. economy was more isolated from the global economy. But not today, when the United States competes fiercely for good, high-wage jobs with the rest of the world. Putting our head in the laissez-faire sands and hoping for the best is a sure path to deindustrialization, slow growth and a weakened defense industrial base.

As the Information Technology and Innovation Foundation has documented, the Ex-Im Bank and the export credit support it provides plays a pivotal role in the health of America's manufacturing and traded-sector economy. Congress needs to stop dallying and act immediately to restore a quorum to the Ex-Im Bank's board, and going forward, it needs to fund and support the bank's timely and effective operations.

Ezell is the vice president, global innovation policy, at the Information Technology and Innovation Foundation, a think tank focused on the intersection of innovation and public policy.