For decades, the Export-Import Bank of the United States (Ex-Im) has quietly enabled U.S. exporters to win foreign tenders and create American jobs by financing and insuring foreign purchases of U.S. goods. Ex-Im’s benefits to the U.S. economy have been tremendous. By providing financing and guarantees for about $50 billion in U.S. exports in 2012, Ex-Im supported a total of more than 250,000 jobs. In the process, Ex-Im’s fees reduced the federal deficit by hundreds of millions of dollars. In the fiscal year ended September 30, 2012, Ex-Im returned more than $803.7 million in revenue to the U.S. Treasury.
For these reasons and others, the Bank long enjoyed consensus support. Only during the Bank’s most recent reauthorization, in 2011, did ideological groups decide to make it a target for a campaign against “corporate welfare” and “socialism.” These misguided attacks ignore the realities of today’s international markets, and put at grave risk billions in U.S. exports and hundreds of thousands of American jobs.
1. It's more important now than ever before
Although Ex-Im’s ideological opponents deride it as an obsolete “New Deal-era” institution, today’s competitive global market makes Ex-Im more critical than ever for U.S. competitiveness. According to the Organization for Economic Cooperation and Development, more than 60 official export credit agencies (ECAs) worldwide have extended more than $1 trillion in trade finance in recent years. Eliminating Ex-Im would amount to unilateral disarmament, with disastrous results for U.S. exporters.
2. There are high economic stakes in international nuclear energy market
With 71 new nuclear energy facilities are under construction worldwide, and an additional 172 in the licensing and advanced planning stages, the economic stakes for the United States are tremendous. The U.S Commerce Department values the global nuclear energy market at up to $740 billion over the next decade. Achieving just a modest share of this market would enable the United States to create and sustain tens of thousands of high-paying American jobs.
3. It's a prerequisite for U.S. companies to compete in export markets
Export credit agency support is almost always a prerequisite for participation in foreign nuclear power plant tenders, even though many foreign customers ultimately choose not to use Ex-Im financing. Without Ex-Im Bank, U.S. commercial nuclear vendors would be precluded from competition.
Due to the large capital costs of nuclear power and the relatively long construction period before revenue is returned, financing is often the critical factor in awarding a tender. Competitive financing is especially important in emerging markets where global commercial opportunities in nuclear energy are concentrated.
4. We need to level the playing field with Russia and other nuclear energy suppliers
Leading supplier nations such as Russia provide their national nuclear energy suppliers with multiple forms of support, including strong trade finance. Russia has sought a larger share of the global nuclear energy market both as a source of export revenue and as part of a larger plan to increase its geopolitical influence. Financing has played a key role in Russia’s success. Hungary recently cited below-market interest rates to explain its award of a tender for two new nuclear plants to Rosatom. In the Czech Republic, where the national utility CEZ is weighing bids from Russia’s Rosatom and U.S.-based Westinghouse, Ex-Im is providing instrumental support for the U.S. bid.
5. Ex-Im supports small business
Small business accounts for more than 85 percent of Ex-Im’s transactions, and this figure does not include the tens of thousands of small and medium-sized businesses that supply goods and services to large exporters. In FY 2011, Ex-Im provided more than $6 billion in financing and insurance for U.S. small businesses—an increase of nearly 90 percent since FY 2008.
In 2012, Ex-Im Bank authorized $2 billion in financing for U.S. exports to the Barakah One Nuclear Power Plant in the United Arab Emirates (UAE). Small- and medium-sized companies in the U.S. nuclear energy supply chain benefit directly and indirectly from Ex-Im support. Ex-Im’s financing of the Barakah One project in the UAE will support thousands of U.S. jobs in California, Connecticut, New Hampshire, Ohio, Pennsylvania, South Carolina, Texas and other states home to Westinghouse sub-suppliers.
Ex-Im has been operating under a series of short-term authorizations with only a modest increase to its lending cap. Doubts about Ex-Im’s future are seized upon by foreign competitors to urge international customers not to procure from U.S. suppliers.
For the sake of U.S. competitiveness in export markets – and particularly the lucrative market for nuclear energy – ideological attacks on Ex-Im must end. Congress should provide the Bank with a long-term reauthorization, with terms that enable Ex-Im to compete effectively with other ECAs. With help from Ex-Im, U.S. nuclear suppliers can compete on a more level playing field, and win.