WASHINGTON — Supporters of the Export-Import Bank of the United States told Congress June 4 that the bank’s charter should last 10 years before requiring reauthorization instead of the three to five years normally allotted.
Some of those supporters, speaking at a House Financial Services Committee hearing, also voiced a desire to see rules changed so that Ex-Im Bank isn’t limited to financing deals under $10 million, which happens absent a full board of directors.
Congress reauthorized the bank in 2015 five months after its charter lapsed but didn’t approve until last month the minimum number of board members required to constitute a quorum. Without the quorum, the bank was largely unable to support satellite and launch transactions that the space industry had grown accustomed to making with export credit assistance.
Ex-Im Bank’s full operations have been restored for a month, but risk ceasing again Sept. 30 when its charter is currently scheduled to expire.
Ex-Im Bank lost favor among conservative lawmakers in 2015 who viewed the agency as distorting the commercial market. Ex-Im Bank has since gained allies amid concern in Congress and the White House that U.S. manufacturers are losing business abroad to China.
According to Ex-Im Bank data, China provided $36 billion in export credit in 2017 while the U.S. provided just $200 million. Much of China’s export credit supported infrastructure projects for the Belt and Road Initiative that, initially regional in nature, has since expanded globally and even includes a “space silk road,” Roy Kamphausen, senior vice president for research at the National Bureau of Asian Research, said.
Kamphausen said China, which won a rare communications satellite export to Indonesia two years ago and has several new launch vehicles under development, likely does “in excess of $50 billion” in annual export credit financing, with the exact figure obscured by the number of Chinese entities providing that financing. The U.S. supported $27.4 billion in exports through Ex-Im Bank in fiscal year 2014, the last full year it had authorization and a quorum.
“If we’re going to fight back, we need to recognize that modernizing and strengthening the Ex-Im Bank is part of what we have to do,” Rep. Steve Stivers (R-Ohio) said, adding that he viewed the bank as a “national security issue.”
“I believe that the value of the bank should be unquestioned at this point,” said Rep. Anthony Gonzalez (R-Ohio). “It’s exciting to me that we are going to get what feels like some bipartisan energy on getting this done … For me the only question is really one around length of time and confidence in the reforms, and oversight that we can have if we are going to go towards a long-term reauthorization.”
When asked by Rep. Jim Himes (D-Conn.) about the value of 10-year-long authorizations, Ex-Im Bank supporters said that approach would provide much needed stability for U.S. industry.
“Manufacturers would very much support a 10-year authorization,” said Linda Dempsey, vice president of international economic affairs at the National Association of Manufacturers. She cautioned, though, that Congress should also review the limitations around Ex-Im Bank having enough board members to finance large deals.
“Without that certainty of having a quorum, we are going to continue to lose sales,” she said.
Himes agreed, saying the lack of a quorum cost U.S. manufacturers their competitive edge. Ex-Im Bank said in May it had nearly $40 billion in backlogged deals it was unable to support without a quorum.
Owen Herrnstadt, chief of staff to the international president of IAM, the International Association of Machinists & Aerospace Workers, said a 10-year authorization would be “absolutely admirable,” provided Ex-Im Bank is fully funded and otherwise supported.
“From the perspective of the message it sends to China I think that would be a very strong one,” Kamphausen added.
Rep. Maxine Waters (D-Calif.), chairwoman of the house financial services committee, said the unanimous support for a 10-year authorization resonated with her and other members of congress.
“That’s one of the items that [Congressman Patrick] McHenry and I are working on as we try to come to a consensus about what this reauthorization will be,” she said.
Not everyone was onboard with the longer authorization, however.
Rep. Bill Huizenga (R-Mich.) said more details need to be figured out with Ex-Im Bank, such as how to ensure it provides adequate support to small businesses. Huizenga also disagreed with the idea of loosening Ex-Im Bank’s “exposure cap,” which limited the agency to financing $135 billion in deals from 2015 to 2019.
“I’m afraid the majority is determined to plow ahead with a reauthorization for longer than it should be, potentially with no [exposure] caps, at the urging of some folks that may not normally be their comrades in arms when its coming to these kinds of policy things,” he said.
Dempsey said that small businesses often benefit from large corporations receiving Ex-Im Bank financing, since big manufacturers often rely on smaller companies as suppliers.
According to estimates from the National Association of Manufacturers, the U.S. lost at least $119 billion in manufacturing output once Ex-Im Bank all but disappeared in 2015, resulting in 80,000 fewer manufacturing jobs in 2016 and 2017. That business risks being permanently absorbed by international competitors, Dempsey said.
“When we lose a sale overseas and our competitors get it, that may not be just that one sale, that may be a sale for years — for generations to come,” she said.
