Working in international trade is, in many ways, the same as being an international man of mystery. As one of the many, many examples of this truth, famed move spy James Bond’s cover story was that he worked “in the export-import business.” (His fake company was called Universal Exports, for the true film nerds among us.) So, growing up, I always thought that the phrase “export-import” (especially when said in a British accent) had real flair and sophistication.
Flash forward to today, when I’m starting a series of blog posts laying out WCIT’s policy priorities. What else would I start with than one of the most espionage sounding policy issues on the list: the re-authorization of the Export-Import Bank! Now, sure, Ex-Im Re-authorization (as it’s known for short) may not have a cool theme song or exploding pens, but – as far as international trade goes – it’s one of the most vital issues that we can promote.
Don’t know anything about Ex-Im or why it’s so important? Then read on and enjoy…for your eyes only.
To provide a little background, the Export-Import Bank is exactly what it sounds like: an export credit agency that assists in financing the export of U.S. goods and services to international markets. Particularly in times like these when traditional financing is difficult for businesses to secure, Ex-Im Bank provides export financing products that fill gaps in trade financing (capital guarantees, export credit insurance; loans and loan guarantees), assuming credit and country risks that the private sector is unable or unwilling to accept. Last year, Ex-Im lent about $24.5 billion in loans, guarantees and export credit insurance to support an estimated $34.3 billion of U.S. exports worldwide.
The problem is this: Ex-Im Bank’s authorization expires on September 30, 2011. Now, you would think, “Hey, Ex-Im is a self-sustaining agency that carries no cost to the taxpayer. In fact, it has earned $4.5 billion in revenues for the US Treasury since 1992. What could possibly be the resistance to reauthorizing it?” And my response would be that you clearly haven’t been reading the news these days. If all it took was common sense to pass bills, we probably wouldn’t be risking default on US debt obligations, and the FAA would be continuing the important business of ensuring that planes don’t crash. So, it’s vital that WCIT and Washington businesses keep a steady drumbeat of support for the passage of this important legislation.
First off, it’s a competitiveness issue. This kind of government export financing is provided by many other countries, often at a much greater level of lending than ours. The U.S. trails countries like Brazil, Canada, China, Germany, France, India, and Italy in official export credit volumes as a share of the national economy. In 2010, for example, export-import banks in Brazil and China provided 10 times more financing to their exporters as a share of GDP than the Ex-Im Bank did for American exporters, while Export Development Canada’s credit volume was almost the same as ours (even though their economy is about 1/8th the size).
Second, though, these services are particularly vital to Washington’s trade economy. Ex-Im lent over $4 billion in 2010 to Washington companies. Yes, Boeing was the largest beneficiary, but they also helped exporters as diverse as Chateau Ste. Michelle (wine), Halosource (global health), Sonosite (medical devices), Outback Power (clean tech) and Valley Grain (ag). Overall, of the 71 companies supported last year, 55 were small businesses. So, as we try to increase our state’s GDP through international trade, Ex-Im is key to that equation.
So there’s your Ex-Im Re-authorization primer. Tune in next time for the next installment in our WCIT policy priorities series: “Everything You Ever Wanted to Know About the Affordable Footwear Act, But Were Afraid to Ask.”