In the next 20 years, new markets for exports will explode around the world due to an expanding middle class, and if support by the government for the U.S. Export-Import Bank isn’t a priority, these opportunities will be left to the United States' competition, or export agencies that use bribes and other favors to secure deals, warned Fred P. Hochberg, the bank's chairman and president.
Hochberg made these claims while unveiling the bank’s annual report on competitiveness Tuesday in Washington. He spoke in strong terms about the movement in Congress to shut down the Ex-Im Bank by not reauthorizing its charter when it comes due in 2014. He contrasted the “bruising congressional fight every two or three years” to refund the agency to foreign competition that simply does what it takes to win new business.
Shutting down the agency, he said, would be detrimental to exports in the United States. It would erase the $50 billion worth of exports the bank financed in 2012 and the 255,000 jobs it created. Congress has also called on the Treasury Department to look into ending export credits, thinking that a free marketplace is a better arena for exports, he said.
“To end export credits, when our competitors are playing by a completely different set of rules and increasing government support by leaps and bounds — many of them operating with no rules whatsoever — this would be a self-inflicted wound our economy cannot sustain,” Hochberg said in his speech.
Holding the agency back, or even shutting it down altogether, would ensure that foreign competition has a leg up on generating exports. Hochberg pointed out that these competitors already offer astounding credit deals like 100-percent financing on 40-year loans with 1 or 2 percent interest due to government funding options.
“In the real world, our private-enterprises are pitted against an array of competitors that are often government-owned, government-protected, government-subsidized, government-sponsored, or all of the above,” he said.
Exports are a $2.2-trillion piece of the $16 trillion economic puzzle, and President Obama’s National Export Initiative has already helped create 1.3 million jobs, he said, emphasizing the fact that exports are leading the national recovery.
“Ending export credits prematurely will only push more of the business to the shadows,” he said. “And that won’t serve American companies and American workers.”
In the bank’s 2013 competitiveness report, it noted the financial crisis has made the export game more competitive, with governments around the world trying desperately to jumpstart their economies with exports. Europe is also no longer the biggest competitor to the United States, and these competitors are offering potential clients funding outside of agreed-upon measures created by the Organization for Economic Cooperation and Development.
In this challenging and changing world, Hochberg said, Ex-Im Bank needs full government support and the ability to function without the fear of being shut down in order to compete effectively. - Jon Ross