As the fight over reauthorizing the now-defunct Export-Import Bank of America heats up again in Congress, it’s important to realize who would really like to see the agency go away for good: China.
That nation would be among the beneficiaries if Congress failed to reauthorize the “Ex-Im,” whose charter expired June 30. Also winning would be the many other countries that operate export-import banks. That’s because they would be better positioned to sell more of their countries’ exported products, from farm equipment to jumbo jets, by offering financing that the U.S. would no longer provide.
Last year, the Ex-Im financed $27. 5 billion in purchases from American firms. And it even made a profit on the deals, sending $675 million to the U.S. Treasury.
At least 60 nations have export-import banks that offer financing to foreign buyers as a way to lure customers for their nations’ businesses. China’s bank is four times the size of America’s and even offers extras such as tax credits. Losing the Ex-Im would put U.S. businesses at an even greater competitive disadvantage than they are now.
Opponents of reauthorizing the Ex-Im, mainly tea party Republicans, characterize its financing as “corporate welfare” or “crony capitalism.” They call it the “bank of Boeing” because many jet sales are made to foreign airlines via Ex-Im financing.
It’s true that about 15 percent of Boeing sales are financed through the Ex-Im, but the aerospace giant won’t stop selling planes if the bank isn’t reauthorized. Smaller manufacturers – who made up almost 90 percent of Ex-Im authorizations in 2014 – are in a tighter spot; many of them are already seeing foreign markets dry up due to uncertainty over financing.
One unfortunate consequence of losing financing is that some U.S. companies might relocate to countries that do provide that assistance or cut back on their production lines. As the economy slowly recovers, it can’t afford to lose good-paying manufacturing jobs.
Supporters of of the Ex-Im are mounting a last-ditch effort to save it by attaching reauthorization to extension of the Highway Trust Fund, badly needed infrastructure legislation that most lawmakers view as priority business.
In the elbow-throwing scrum of congressional infighting, that may be the best chance the bank has. Washington’s delegation should get behind the effort.