This post originally appeared on the Department of Commerce blog.
Post by Fred P Hochberg, Chairman and President, Export-Import Bank of the United States.
This week, I had the opportunity to participate in Foreign Policy’s inaugural summit on American competitiveness, an event that brought together leaders from the worlds of business, security, and government to discuss a range of issues related to America’s capacity to thrive in today’s challenging global climate. David Rothkopf and the Foreign Policy team put together a vibrant and informative event, which included conversations with Secretary of Commerce Penny Pritzker, U.S. Trade Representative Michael Froman, Financial Services Roundtable CEO and former Governor Tim Pawlenty, and a host of economists, CEOs, and global policy experts.
In a speech closing the event, I took the opportunity to focus on one critical element of American competitiveness—one that is very much at risk today: the global race for export success.
EXIM Bank, which equips American businesses with the financing necessary to compete for export sales when the private sector is unable or unwilling to do so, will see its Charter lapse next Wednesday for the first time in its 81-year history. After 16 bipartisan reauthorizations, the support of 13 consecutive U.S. presidents, and a sterling record of service to the American people—including supporting 164,000 U.S. jobs last year while generating a $675 million surplus for taxpayers—it’s hard to believe that EXIM would be allowed to lapse. That’s particularly true when clear majorities in both the Senate and the House of Representatives have expressed support for EXIM’s reauthorization; in this day and age, that sort of consensus doesn’t happen very often.
For the last few months, I’ve been asked over and over again: what’s going to happen on July 1st if you aren’t reauthorized? But frankly, I don’t think that’s the right question to be asking. Because the damage caused by the debate over EXIM has already cost real Americans their jobs, and harmed long-term U.S. global leadership—and we’ll be feeling the consequences for years to come.
General Electric, one of the largest employers in America, does a lot of exporting without EXIM—but they count on the Bank to handle the deals that private financiers can’t. A few weeks ago, we learned that GE is at risk for losing out on a major locomotive project in Angola. This deal was expected to generate 1,800 U.S. jobs across 12 states, but because of the uncertainty surrounding EXIM, the deal is at risk—and China has agreed to step in with state-sponsored financing for their state-owned locomotive manufacturer.
That’s 1,800 American families that won’t be able to count on a dependable paycheck—1,800 jobs that should be going to folks in Pennsylvania, Texas, and Illinois that are instead going to end up in China, all because a vocal minority wants to put ideology ahead of American workers.
Of course, even though GE families are already being hurt by this, most of the pain will be reserved for small businesses that historically find it difficult to obtain export financing in the commercial sector. On Monday, I went to Delaware to meet with one of them, a small, family-owned company called Acrow. They manufacture modular steel bridge kits—a core product for developing countries that want to build a reliable infrastructure.
EXIM is guaranteeing a $73 million commercial loan that will empower Acrow to sell 144 bridges to Zambia. This project will support 200 good-paying jobs at Acrow’s manufacturing facilities in Pennsylvania and Delaware, as well as at their suppliers across ten states. It was only possible because they had access to financing that let them compete and win against their Chinese and European rivals. Without EXIM guaranteeing the loan, no private bank was ready to finance a sale like this to Zambia. That’s just not something that commercial banks do anymore—that’s the exact gap that EXIM was designed to fill.
Buyers in Zambia and around the world want to buy American—they want to buy the best. But if EXIM isn’t around, they won’t always have that option. U.S. businesses deserve better than to be cut off from critical tools that empower them to succeed in global markets. After all, they’re already facing an alarmingly competitive world out there.
In my time as Chairman of EXIM, I’ve met a whole lot of entrepreneurs and workers across America—and I’ve never come across one who wanted a handout. All they want is a level playing field.
When U.S. exporters go into global markets armed with financing from EXIM, they have an opportunity to compete on their merits. When they do, they usually win. And that means more jobs for U.S. workers, and a more competitive American economy. We owe it to them to break down barriers to export success—not to tie their hands.