The most respected newspaper in Britain says that congressional critics of the Export-Import Bank are hurting America’s reputation and “chipping away at the U.S.-led global economic order.” The prestigious Financial Times, widely considered to be one of the world’s most thoughtful newspapers, called criticisms of the export-credit agency “overblown” in its April 21 edition, and said that uncertainty about Ex-Im’s reauthorization “imposes a cost on US exporters.” The paper also assailed congressional refusal to approve funding for the International Monetary Fund and fast-track trade negotiating authority.
Ex-Im Bank was established 80 years ago to facilitate export of U.S.-made products by providing loans and guarantees to customers who cannot obtain credit in private-sector financial markets. Such customers usually are located in developing countries, and the exports Ex-Im helps finance typically are costly capital goods such as construction equipment, refining technology, jetliners and locomotives. Ex-Im does not use taxpayer money to arrange its loans, instead charging fees and interest that have enabled it to generate a profit every year since 2008 (last year it handed over a billion dollars in surplus fees to the Treasury). It also is not permitted to compete with private-sector lenders.
The Financial Times notes that “by international standards, Exim’s practices are tightly constrained.” That is definitely not the case with export-credit agencies in countries such as China and India, which the paper says offer more generous financing to their own exporters. The FT observes “it would be odd were the US to disarm unilaterally” by failing to reauthorize Ex-Im, but that is essentially what critics in Congress are proposing. The paper estimates that over two million jobs are linked to Ex-Im financing activities.
The most peculiar facet of this misguided campaign is its single-minded focus on what’s wrong in Washington, as if far worse things were not occurring in foreign capitals. Washington has led the fight for free trade since World War Two, while some of its trading partners have made a habit of distorting market forces at every turn. For instance, the World Trade Organization has ruled that the main reason Airbus exists is because every plane it ever marketed has received illegal “launch aid” (government subsidies), and yet Ex-Im critics focus all their fire on Boeing, the sole surviving U.S. competitor to Airbus. Boeing doesn’t get any launch aid from the U.S. government.
The critics wrongly contend that Boeing is getting subsidies from Ex-Im, but how is that possible when the agency is using no taxpayer money and turns a profit for the government each year? If they were to succeed in blocking reauthorization of Ex-Im, then Airbus would still have four European governments to turn to for help in financing exports, while America’s biggest exporter would have none. Guess what that would mean for exports of one of the few technologies in which America still has a sizable trade surplus.
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