House Members, Panelists Advocate for Reauthorization of Ex-Im Bank Amid Trade War With China
House members and experts made the case for a quick and long-term reauthorization for the Export-Import Bank of the United States during a June 4 House Financial Services Committee hearing, saying the move could significantly benefit U.S. exporters and help counter China’s export credit agencies and state subsidies. The hearing came about a month after the Senate voted to confirm three appointees to the bank’s board of directors, giving the bank enough directors for a quorum to approve transactions of more than $10 million (see 1905080073).
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Several panelists speaking on "Promoting American Jobs: Reauthorization of the U.S. Export-Import Bank" urged Congress to ensure the quorum issue does not arise in the near future. Linda Menghetti Dempsey, vice president for international economic affairs for the National Association of Manufacturers, urged Congress to reauthorize the bank for “nine or 10 years.” Steven Wilburn, CEO for FirmGreen Incorporated, an energy technology company, said the bank should be re-authorized for “as long as possible. ... We need that certainty,” Dempsey said. “If we don’t do it for a long period of time, we are going to risk our jobs, we are going to leave our manufacturers and farmers and energy producers outside while others fill the void.”
The panelists -- and some lawmakers -- portrayed the re-authorization not only as helpful to U.S. manufacturers, but as a matter of national security. Rep. Steve Stivers, R-Ohio, pointed to the expansion of Chinese exports and the country’s search for trade “dominance,” saying that China’s export credit agencies provided about $36 billion “in medium- and long-term financing” to its manufacturers in 2017. In comparison, he said, Ex-Im during 2017 provided about $200 million to U.S. exporters. “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,” Stivers said. “It’s a national security issue.”
Dempsey and others underscored the importance of the Bank for U.S. exporters, saying thousands depend on it “as the lender of last resort” and stressed the importance of foreign markets to U.S. businesses. “We depend on the ability to sell overseas and to be globally competitive,” Dempsey said. “For the exporters who use this tool, it is often the difference between winning or losing a deal and growing or risking jobs.” Dempsey said that during the four years the bank’s board of directors lacked a quorum, U.S. manufacturers “lost at least $119 billion in manufacturing output” all while “China, India, Korea and others have been growing their export credit agencies substantially.”
In particular, China’s use of export crediting agencies is of “serious concern,” said Owen Herrnstadt, chief of staff to the international president for the International Association of Machinists and Aerospace Workers. Roy Kamphausen, commissioner for the U.S.-China Economic and Security Review Commission, said Chinese banks provided Huawei Technologies “a huge amount of export-like financing … perhaps up to $10 billion” per year. Congress members said the bank might give U.S. exporters a boost in competing with China. “No one expects the Export-Import Bank to single-handedly neutralize China’s efforts,” said Rep. Patrick McHenry, R-N.C., “but as we continue to examine how to modernize Ex-Im, it’s imperative that we look reality in the eye and adapt the bank to the present day.”
Herrnstadt said U.S. firms are “struggling” to compete in today’s global marketplace. Wilburn said his company recently lost a $57 million project to South Korea because the buyer “went with a foreign company who had financing” from a foreign export crediting agency. “We need a fully funded and reauthorized Ex-Im bank now more than ever,” Herrnstadt said. “Global competition has never been more intense.”
Rep. Andy Barr, R-Ky., expressed reservations about reauthorizing the bank, saying the panel needs to convince Congress that the bank will not cause U.S. companies to export more products to China and inadvertently help Chinese companies “who pose threats to us.” Dempsey disagreed with that notion, saying there are export control laws that prevent U.S. companies from exporting certain items to China that may pose national security risks. “We should be looking favorably at exporting products -- of all sorts, of all sizes, of all types -- everywhere in the world, and with respect to Congressman Barr, including to China,” Dempsey said. “If we don’t have Ex-Im to participate in a number of these deals … we are going to risk our standing in the world.”