Here's our point-by-point rebuttal:
1. The Ex-Im Bank doesn’t create jobs.
Why this is wrong: The Ex-Im Bank supports just 2 percent of all U.S. exports, which from 2007 to 2014 amounted to $240 billion of export assistance. In terms of jobs, that’s support for 1.5 million U.S. employees.
According to the Bank, every $1 billion in export assistance supports 6,390 U.S. jobs. Countless testimonials by large, medium, and small businesses state that their ability to export would simply not occur without the Bank's assistance.
2. The Ex-Im Bank doesn’t return money to the taxpayers.
Why this is wrong: The Ex-Im Bank sent roughly $1 billion in profit to the U.S. Treasury in 2013. Those who argue against this point base their talking point on an alternative accounting method – fair value accounting – which for many reasons is not appropriate and is therefore not used. One reason is because comparable private rates do not exist for many of the loans given; therefore, fair-value accounting artificially assigns higher rates, causing the bank to appear to operate at a loss.
3. The Ex-Im Bank fails to help small businesses, even though it is required by law to do so.
Why this is wrong: Almost 90 percent of the Ex-Im Bank's customers in 2013 were small businesses. Businesses like Precision Custom Components of York, Pennsylvania.
And it’s also worth mentioning that the Bank’s overall default rate is currently at a historic low of 0.237 percent.
4. The Ex-Im Bank uses American taxpayers’ money to help foreign corporations, including businesses that are owned by the governments of China, Russia, Saudi Arabia, and the United Arab Emirates.
Why this is wrong: The Ex-Im Bank provides loans, insurance, and guarantees so that U.S. businesses can export. As a part of this, the Ex-Im bank will make a loan to a foreign borrower if it allows a U.S. firm to export. In the UAE, Ex-Im Bank loans supported a Korean-led nuclear construction project where IP and other services from Westinghouse were critical to the project. Ex-Im Bank also helped enable Westinghouse win a contract to build four advanced reactors in China. Ex-Im did not, in the end, make a loan or loan guarantee for the China transaction, but ECA support was a bidding requirement that enabled Westinghouse to compete for the tender.
Here's what NEI's Marv Fertel wrote yesterday in the National Journal::
Consider Russia’s negotiations last week with Argentina, during which Vladimir Putin signed a nuclear energy cooperation deal with to bolster trade ties and strengthen Russia's influence in Latin America. Rosatom, the state atomic energy corporation, has made an offer for the construction of two reactors in Argentina, including what Russia’s energy minister called "comfortable" financial terms to Argentina.The following is from a letter sent by NEI's Alex Flint to Chairman Hensarling and HFSC Ranking Member Maxine Waters:
More than 60 percent of the world’s 435 operating reactors are based on technology developed in the United States. With the world’s largest civilian nuclear energy program, the U.S. industry is recognized for reliability, safety and operational excellence. However, new supplier nations have entered the growing global nuclear market, and multi-national partnerships and consortia have been formed to develop nuclear energy facilities. Many U.S. competitors are backstopped with government financing and other incentives.
To compete globally and drive domestic economic growth, the Ex-Im bank fills the gaps, offering loans, loan guarantees and insurance that leverage private finance in pursuit of U.S. commercial and strategic interests.
U.S. nuclear energy suppliers can compete and win on a level playing field. Advanced U.S. reactor technology, world-leading U.S. operational expertise, and broader partnerships with the United States in nuclear energy hold strong appeal to international nuclear energy customers.5. The Ex-Im Bank financed only 1.6% of total U.S. exports in 2013.
However, a global market free of government influence is not the one that U.S. nuclear energy companies compete in today. U.S. companies compete against a growing number of foreign firms – many of which are state-owned and benefit from various forms of state support. All foreign nuclear energy competitors are backed by national export credit agencies (ECAs) or other state financing.
Export credit agencies play an essential role in financing nuclear power projects. ECA support is almost always a bidding requirement for international nuclear power plant tenders. In the emerging markets where commercial nuclear energy opportunities are concentrated, financing is often the most critical factor. Although risk in nuclear power projects is typically low, commercial lenders are unwilling to participate in financing nuclear power plants without an export credit agency’s playing a role as a result of higher capital requirements mandated under the Basel III accord.
Beyond their substantial benefits to U.S. exports and job creation, U.S. commercial nuclear exports provide the United States with substantial influence over other nations’ nonproliferation policies and practices, and help to ensure the highest possible levels of nuclear power plant safety and reliability around the world. U.S. commercial nuclear exports also maintain U.S. leadership in nuclear energy technology and support the U.S. manufacturing base.
Why this is wrong: This statement further proves the point that the Bank is a finely targeted program intended to address specific market failures that the private sector cannot serve.
For a closer look at all of the reasons why the nuclear industry supports the reauthorization of the Ex-Im Bank, see our blog post from June 24, 2014.
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