Export-Import Bank of the U.S.

Export-Import Bank of the U.S.

• From 2014 to 2019 helped 589 California exporters with a value of $9 billion.

• More than 80% of exporters helped in California in 2018 were small businesses.

• In the last decade, Ex-Im has supported more than 1.8 million U.S. jobs in all 50 states.

Background

The Export-Import Bank of the United States (Ex-Im Bank) is the official credit export agency of the United States. The Ex-Im Bank’s mission is to assist in financing the export of U.S. goods and services to international markets. The bank enables U.S. companies—large and small—to turn export opportunities into real sales that help to maintain and create U.S. jobs and contribute to a stronger national economy.

Ex-Im Bank does not compete with private sector lenders but provides export financing products that fill gaps in trade financing. The bank assumes credit and country risks that the private sector is unable or unwilling to accept. The bank also helps to level the playing field for U.S. exporters by matching the financing that other governments provide to their exporters.

Ex-Im Bank provides working capital guarantees (pre-export financing); export credit insurance; and loan guarantees and direct loans (buyer financing). No transaction is too large or too small.

Impact

With more than 80 years of experience, Ex-Im Bank has supported almost $600 billion of U.S. exports, primarily to developing markets worldwide.

In addition to supporting U.S. jobs, the Ex-Im Bank is a self-sustaining agency that operates at no net cost to the taxpayers. Ex-Im Bank pays for itself by charging fees or interest to its customers for loans, credit insurance and loan guarantees that they receive. In fiscal year 2017, the Ex-Im Bank generated more than $118 million in excess revenue for U.S. taxpayers.

The Ex-Im Bank has a proven record of success, and the myths questioning its need and effectiveness have no basis in fact. Far from being a burden on the taxpayer, the Ex-Im Bank turns a profit for the U.S. taxpayer. In the 2018 fiscal year, however, due to the continued lack of a quorum, the bank was unable to generate sufficient excess cash inflows to fully self-finance program and administrative costs.

Nor does Ex-Im Bank help only big business. In fact, more than 90% of the Ex-Im Bank’s transactions in fiscal year 2019 directly supported small businesses; further, these small business transaction figures are in addition to the tens of thousands of small and medium-sized businesses that supply goods and services to large exporters.

California has received an estimated $27.4 billion value of Ex-Im assisted exports from 2008 to 2018.

2019 Legislative Activity

President Donald J. Trump’s nominations to the Ex-Im Bank Board, which included Kimberly Reed to serve as president/chair, were finally approved in a bipartisan vote in May 2019 that once again restored a quorum to the board after four years. In 2018, the bank authorized more than $3.3 billion of short-term export credit and working capital guarantees, $2.2 billion of which was for small businesses, to support an estimated $6.8 billion of U.S. exports and an estimated 33,000 jobs.

The charter of the Ex-Im Bank expired on September 30, 2019, but was temporarily renewed through a stop-gap spending bill that extended the charter into November 2019. The U.S. House of Representatives passed a reauthorization bill in mid-November 2019, but it was dead on arrival in the U.S. Senate due to a lack of Republican priorities, such as provisions to ban the bank from dealing with state-owned enterprises in China and Russia, being included in the bill. The authorization for the Ex-Im Bank was then expected to be carried by short-term government funding bills. In mid-December, however, the charter of the Ex-Im Bank was extended for seven years as part of a spending package, which included more restrictions on the bank’s lending regarding China.

Anticipated Action

The California Chamber of Commerce is hopeful that the Ex-Im Bank will finally be able to return to business as usual now that the quorum and the charter has been restored for the future.

The spending package that renewed the charter of the Ex-Im Bank for seven years included tougher restrictions on the bank’s lending regarding China. The bill created a goal of reserving 20% of the bank’s exposure authority to support exports of high-tech products and other U.S. exports that compete directly with Chinese exports. The bill also includes updated reporting requirements to assess transactions of $25 million or greater that involve entities controlled by the Chinese government.

The Ex-Im Bank Board lacked a quorum from 2016 until May 2019; without a quorum, the bank could not approve transactions of more than $10 million. This represented numerous lost opportunities for U.S. businesses and their workers. The bank’s inability to approve transactions exceeding $10 million extends the profound impact of the lapse to larger exporters, the thousands of smaller companies that supply them, and the hundreds of thousands of workers whose jobs depend on exports.

Effects on U.S. businesses and workers from a lack of domestic political support for Ex-Im are exacerbated by the extraordinary steps other countries are taking to support their own exporters and national interests. Export credit agencies (ECAs) abroad are expanding product offerings allowing exporters to compete more aggressively, and more countries are opening new ECAs of their own.

Moreover, the hundreds of workers at large businesses are not the only ones affected by lost U.S. export transactions; there are strong ripple effects on the many small and medium-sized enterprises throughout their supply chains. The United States is home to some of the largest supply chains in the world. Sales and employees in these supply chains depend on exports of larger clients, financed by Ex-Im. Uncertainty for large clients means diminished purchasing, which means fewer sales and has a direct impact on jobs in cities and towns across the country.

CalChamber Position

The CalChamber, in keeping with longstanding policy, enthusiastically supports free trade worldwide, expansion of international trade and investment, fair and equitable market access for California products abroad and elimination of disincentives that impede the international competitiveness of California business.

CalChamber Position

The CalChamber, in keeping with long-standing policy, enthusiastically supports free trade worldwide, expansion of international trade and investment, fair and equitable market access for California products abroad and elimination of disincentives that impede the international competitiveness of California business.

Recent News

International Bills

Councils

Coalitions

Policy Contact

Susanne-Stirling-2012-300x300Susanne Stirling
Vice President, International Affairs