America needs a strong Ex-Im Bank

America needs a strong Ex-Im Bank
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President Trump’s recent trip to Asia is a vivid reminder of the need for the United States to have a fully functional Export-Import Bank. Of the five countries the president visited, three have export credit agencies that are significantly outperforming our own: China, South Korea and Japan, which have lent $1.23 trillion, $452.77 billion and $181.13 billion, respectively, over the last two years. By comparison, the U.S. Ex-Im Bank has lent only $33.61 billion in the same timeframe. As a percentage of gross domestic product, that translates to 3.75 percent, 10.77 percent and 1.28 percent for the Asian countries, with the total for the United States coming in at just 0.06 percent.

A fully functional Ex-Im Bank is important to strengthen American competitiveness abroad. There are 27 countries that require support from an export credit agency before they will even consider a bid from an international company. When Congress allowed Ex-Im’s authority to expire in 2015, General Electric announced that it was forced to move 500 jobs to France as a direct result of lost export credit agency support, as 80 percent of its total sales for aviation-related turbines came from those 27 countries over the past three years. Many of the commercial aircraft deals awarded to Airbus, in contrast, benefitted from France’s export credit agency.

The opportunities are larger than jets. Of those 27 countries that require export credit agency backing, seven are listed by Bloomberg as the fastest growing economies, making up nearly 40 percent of the world’s population and 10 percent of world’s gross domestic product. They also receive a quarter of all U.S. exports.

While the president continues to push his trade agenda, bolstering the Ex-Im Bank should be a top priority. In June 2015, Ex-Im’s authorization expired. From July 1 until Dec. 3 of that year, Ex-Im remained unauthorized and was wholly inoperable. Congress reauthorized Ex-Im on Dec. 4, 2015, but did so without giving the bank a board quorum, a limbo situation in which the bank remains, with none of the Ex-Im board nominees yet confirmed. Without an active board, Ex-Im can only authorize loans under $10 million, which make up only about 15 percent of Ex-Im’s total business.

In January, Ex-Im’s 2016 annual report showed that its lending was at its lowest point in 40 years, having authorized only $5 billion in financing and leaving 40 deals worth over $30 billion while stuck waiting on a quorum. Using data from Ex-Im’s 2014 annual report, the last full calendar year that Ex-Im was fully functional, research by the American Action Forum found that the shutdown and lack of a quorum allowed 7,768 loans totaling $42.56 billion to go unauthorized, with 6,941 of those loans totaling $10.59 billion prevented from going directly to American small businesses.

If U.S. companies do not have a fully functional Ex-Im Bank, barring them from competing for many projects in these major markets, we can expect to see more jobs move overseas. For an administration with an “America first” agenda, it is imperative that the remaining board nominees be confirmed, and that Ex-Im has a president who will support sufficient levels of export credit to keep jobs and companies in the United States.

Meghan Milloy is director of financial services policy at American Action Forum.