Ex-Im still deserves our support, now more than ever

The authorizing charter of the Export-Import Bank of the United States has been allowed to expire by Congress, but it still deserves our support. Recently, there has been heightened skepticism surrounding reauthorization. Ex-Im has unquestionably equipped small- and medium-sized businesses with the means for succeeding in exporting and should be reauthorized before uncertainty and delays can further harm U.S. exporters.

Ex-Im has been cited by the Department of Commerce as a direct contributor to the success of the National Export Initiative, an initiative introduced in 2010 to strengthen and sustain economic growth. According to the department, more American businesses are exporting now than ever before; exports now support 11.3 million jobs in communities across the country, up 1.6 million since 2009.  

Offering an attractive payment arrangement (i.e., through Ex-Im) can give U.S. companies an edge when competing in foreign markets. All major exporting countries have export credit agencies (ECAs) to support their respective countries’ exports. The Export-Import Bank of the United States is the American ECA. Losing the Ex-Im charter would not only mean losing American jobs but would also set us behind all major exporting countries in the world in terms of competitive funding arrangements.

{mosads}The Ex-Im bank offers credit insurance, guarantees and direct lending, and does so quite efficiently; Ex-Im generated a $675 million surplus in 2014. Let us not gloss over this last point. Ex-Im returned $675 million to the U.S. Treasury at the end of fiscal 2014. A significant portion of the valuable support provided by Ex-Im has been specifically designated to U.S. small businesses. In fact, 90 percent of the Ex-Im financing authorizations in 2014 directly served U.S. small businesses, which also translates into one quarter of authorizations by dollar volume.

One of the many small business beneficiaries of Ex-Im’s services is B&P Process Equipment and Systems, LLC in Saginaw, Mich. The company, whose CEO was named Exporter of the Year by SBA, has a total export value of over $82.5 million, which contributes to Michigan’s total export value of $11 billion. Of the 228 Michigan businesses supported by Ex-Im, 169 are small businesses in major industries that include motor vehicles and manufacturing.  

Guarantees through Ex-Im provide businesses with term financing, which funds up to 30 percent of local costs. Local costs are also financed by direct loans, which provide funding for international buyers of U.S. goods and services. Unsurprisingly, numerous small businesses and members of the manufacturing industry have also voiced that they unequivocally support Ex-Im’s reauthorization.

Some believe that reform is warranted to further boost the support that Ex-Im provides to small businesses. Advocates for such reform also recognize that reauthorization is imperative. Ex-Im has been previously reauthorized 16 times since becoming a separate agency by act of Congress in July of 1945. It has enjoyed robust bipartisan support in the past, but has recently fallen into the seemingly endless foray of legislative brinkmanship that includes debt ceilings, annual budgets, appropriations and trade promotion authority. As the bank’s current authorization has been allowed to expire, it is critical Congress act to preserve this resource to so many small businesses and local economies as soon as possible.

The United States would self-inflict barriers to trade and economic growth by making exporting significantly more difficult for small businesses if we allow Ex-Im to disappear. In a time when we frequently see the reduction of observed global trade growth, we as a country, cannot afford to lose the charter for the agency helping small businesses and promoting trade in a large way. 

Crary is president of Saginaw Future Inc. and 2015 chairman of the Board of Directors of the International Economic Development Council.