Editorial | Reauthorize the Ex-Im Bank, Warts and All

by

The surprise defeat of then-House Majority Leader Eric Cantor (R-Va.) in a Republican primary in June has raised new questions about the future of the U.S. Export-Import Bank, which in recent years has played a key role in financing satellite projects.

Mr. Cantor has been a supporter of the Ex-Im Bank, whose charter expires Sept. 30 unless it is renewed by Congress. His replacement as majority leader, Rep. Kevin McCarthy (R-Calif.), a supporter of the commercial space industry, says he favors shutting down the bank. 

That sentiment is shared by many of Mr. McCarthy’s conservative Republican colleagues on the House Financial Services Committee, which has legislative jurisdiction over the Ex-Im Bank. This came through during a June 25 hearing whose title said it all: “Examining Reauthorization of the Export-Import Bank: Corporate Necessity or Corporate Welfare?”

Principled opposition to government involvement in what should be private-sector transactions is perfectly understandable. Indeed, it could be argued that export credit agencies like Ex-Im distort markets by propping up commercial ventures whose business case is too weak to attract private capital. Ex-Im officials obviously would beg to differ, but that’s largely beside the opposition’s point, which is that markets, not governments, should determine which commercial projects go forward and which do not.

Fair enough. But here’s the reality: Government export-credit agencies exist, and not just in the United States. China, France and others have export financing arms that are actively involved in satellite deals that promise work for their domestic manufacturing industries. 

Non-U.S. government financing or loan guarantees do not necessarily work against U.S. companies. For example, France’s Coface export-credit agency helped secure financing for a U.S. company, Iridium Communications, to build its next-generation constellation of low-orbiting satellites, a deal that was contingent on a Franco-Italian manufacturer, Thales Alenia Space, getting the prime contract. 

But the main point is, like it or not, this is the environment in which U.S. satellite and rocket manufacturers must compete.  In the last few years alone, the Ex-Im has helped secure satellite manufacturing and launch contracts for U.S. companies including Boeing, Lockheed Martin, Orbital Sciences Corp., Space Systems/Loral and Space Exploration Technologies Corp. 

Were it not for Ex-Im’s involvement, these contracts might have gone to manufacturers in Europe and perhaps elsewhere. 

U.S. lawmakers rarely miss an opportunity to tout their efforts to create or keep jobs in the country. That, in a nutshell, is what reauthorizing the Ex-Im Bank is all about: Whatever the bank’s problems, if Congress allows its charter to expire come Sept. 30, quality U.S. jobs, in aerospace and other industries, will go overseas. It’s that simple. 

Ex-Im’s congressional detractors may have valid concerns about the institution, but they need to ask themselves whether an action — or more precisely, a lack thereof — that has the effect of unilaterally weakening U.S. industry in a highly competitive market is the answer.