On September 30, 2014, the charter for the Export-Import Bank of the United States (Ex-Im) is set to expire and right now politics are playing with a vital tool of American economic and national security –  the future of Ex-Im hangs in the balance.

Established in 1934 with the mission of facilitating sales of U.S. exporters to international buyers, Ex-Im provides crucial support to export-reliant U.S. businesses in the form of loans, loan guarantees, and insurance. Its key role is to remove the credit-riskiness inherent in any international sale by assuming the risk of default by a foreign buyer, encouraging companies to do more business and keeping them competitive in the international marketplace. While large manufacturers like Boeing, Caterpillar, and General Electric are often viewed as the biggest beneficiaries of Ex-Im support, it also provides an essential role for small businesses who otherwise could not afford the riskiness of doing global business.

Those who oppose renewing Ex-Im’s charter argue it is an example of crony capitalism that allows the government to pick winners and losers, in the process filling a role that should be left to the private sector. Joking references to its role as the “Bank of Boeing” underscore the perception that it serves the interests of the big and powerful at the expense of taxpayers and small business.

A closer look reveals many of these worries are misguided and allowing Ex-Im to shut down will cost the U.S. thousands of jobs as well as economic security and competitiveness. Ex-Im’s ability to borrow at U.S. Treasury interest rates allows it to operate at a profit from the fees and interest payments it collects from foreign buyers, and its near-spotless default rate of 1.5% has meant no cost to taxpayers. A look at its financial figures also reveals that its perception as a form of corporate welfare for behemoths like Boeing and GE are largely overblown. According to David Ickert, Vice President of Finance for Air Tractor:

 “The Export-Import Bank is essential to exports of U.S. products. For instance, in FY2011, Ex-Im was involved with 3,751 transactions that supported nearly $42 billion in exports from more than 3,600 U.S. companies. Of those transactions, 3,247 – 87% – were with small-business exporters. All of those transactions added up to $6 billion in Ex-Im financing in FY2011. The Ex-Im Bank Pays for itself (through the fees it charges to foreign buyers) and – above and beyond that – returns money to the U.S. treasury. From 2006 to 2010, Ex-Im Bank returned $3.4 billion to the Treasury…Exports have definitely meant jobs in this rural part of Texas, and Ex-Im Bank has helped us provide the export financing to increase our exports and break into new markets.”

Tony Bennett, President of the Texas Association of Manufacturers has also chimed in on the debate.

“Even in the case of large companies that might benefit from Ex-Im, those large companies support thousands of vendors and suppliers across the state of Texas and across the U.S. economy that feed into the host plant. It’s a trickle-down economy, and when you start threatening exports even for the large companies, you’re going to hurt the economy all the way down the staircase.”

At a time when the U.S. is on the verge of completing two of the biggest free-trade deals in history, it seems obvious that Ex-Im has the potential to play a vital role for businesses looking to go global. Ex-Im’s demise means exporting companies will often be forced to require up-front or extremely short term repayment, and in the extremely competitive global market, buyers will simply go elsewhere. With just about every other developed nation providing some form of public financing to encourage exports, it makes little sense to put the U.S. at such a distinct disadvantage.

Studies have shown a strong link between free trade and peace among nations, and the current TPP and TTIP negotiations should be viewed in this light. TTIP will allow Europe to break its energy dependence on Russia, while TPP will signal the U.S. commitment to its allies who are increasingly worried about a suddenly aggressive China. The military utilizes technology produced around the world, and as our current reliance on Russian-made engines to power our space launches illustrates, it is a matter of national security that we have a multitude of reliable trading partners in the event of unexpected geopolitical crises. We live in a world where power is no longer simply a reflection of military might, and our robust economy and competitiveness in the world are assets we cannot afford to take lightly.

American Security Project, along with over 800 other chambers, companies, and association of varying sizes, sectors, and regions, has signed onto a letter drafted by the U.S. Chamber of Commerce  in conjunction with the National Association of Manufacturers urging Congress to renew Ex-Im’s charter (featured below). For the sake of our future economic security, let’s hope Congress gets the message.

FINAL NAM Chamber Joint Ex Im Letter with signatories

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