WASHINGTON - Ways and Means Committee Ranking Member Sander Levin (D-MI) and Trade Subcommittee Ranking Member Jim McDermott (D-WA) today made the following statements regarding the agreement to reauthorize the Export-Import Bank:
LEVIN: “Congress needs to act immediately with the Export-Import Bank reauthorization. The United States needs to dramatically increase its exports and reduce our trade deficit to strengthen the economy and create jobs and Export-Import Bank financing will help us do that. As Republicans wring their hands in a stale ideological debate over whether to support American exports, China and other countries are significantly increasing their assistance to help their domestic companies compete abroad."
MCDERMOTT: “The Export-Import Bank is a perfect example of a simple, free way that Congress can help U.S. businesses export U.S.-made products, but Republican radical ideology has gotten in the way again of Congress acting to help the economy - this time they’re refusing to give the Bank the tools it needs to keep helping U.S. businesses remain competitive. The Bank has a proven track record - in 2010 alone, it supported $34 billion worth of U.S. exports and 227,000 U.S. jobs at more than 3,300 U.S. companies. We should be working on a long-term reauthorization of the Bank that gives businesses the certainty that the U.S. government is committed to promoting U.S.-made exports. And, we should also dramatically increase its lending authority so the Bank can keep up with our increased exports - and keep up with our trading partners who give their exporters much more in export financing than we give to American exporters."
Background
The mandate of the Export-Import Bank is to support U.S. exports and the employment of U.S. workers. The Bank uses its authority and resources to finance U.S. exports primarily in circumstances when alternative, private sector export financing may not be available or is prohibitively expensive or risky.
Under the current law, the U.S. Export-Import Bank may not provide loans, guarantees or insurance at any one time in excess of $100 billion. The Bank is expected to reach that limit before the Bank’s authorization expires on May 31. The Bank operates on a self-sustaining basis, using offsetting collections to fund administrative and program expenses.
The Bank seeks to level the playing field for U.S. exporters by matching credit support that other nations provide to their exporters. But the United States is “clearly outgunned when it comes to foreign [export credit] competition," Bank Chairman Fred Hochberg said in testimony before the Senate earlier this year. For example, from 2006-2010, China issued over $203 billion in new medium- and long-term export credit financing, an amount four times invested by the United States in absolute dollars, and ten times more as a share of GDP. (Stephen J. Ezell, The Information Technology & Innovation Foundation, “Understanding the Importance of Export Credit Financing to U.S. Competitiveness, June 2011 )
Countries like China do not always comply with international guidelines relating to export financing, and the Bank is developing new tools to confront this challenge. The President of the Bank recently described how Ex-Im is using these tools to ensure U.S. companies can compete against Chinese financing, using as an illustrative example a competition to sell 150 locomotives to Pakistan Rail. The Chinese Development Bank offered its locomotive manufacturer very generous export financing:
“To remedy this, the Obama Administration put together a competitive financing package. And for the first time, we went to the OECD to share with them our decision to offer financing outside of internationally agreed upon terms and conditions. That’s how we can level the playing field for American businesses[.] … [W]hen we see a clear example that state-directed capital is impeding a sale for an American company, we will go the extra step to offset the market distortion.[1]
