The Export-Import Bank of the United States (EXIM) is the official export credit agency of the United States. Its mission is to support American jobs by facilitating the export of U.S. goods and services. It does so by assuming credit risk, primarily through two programs – extending export credit insurance for exporters and providing working capital guarantees. These programs are available to companies of any size with 80% of authorizations are to SBA defined small business.
The Current State:
EXIM is congressionally authorized through 2019. While this seems several years from now, it’s important to note the last two authorizations have been tenuous, including a period in 2015 when its charter lapsed for six months. President Obama and congressional Democrats generally supported EXIM through this period, however there was an influential group of House Republicans that held up authorization process.
In addition to upcoming the re-authorization debate, EXIM also lacks three board members. Therefore, it does not have the quorum required to approve authorizations over $10MM.
The new administration brings renewed and increased speculation regarding the future of EXIM. President Trump campaigned on a platform of reduced government and seemed less friendly toward global trade. However, he heavily emphasized his business background and experience, which included strong support of U.S. manufacturers and small businesses, both of which he believes are critical to economic growth.
Against this backdrop, members of the Securitas team attended the EXIM 2017 Annual Conference on April 7-8 to learn more about the bank’s future.
- 95% of global population and 80% of global GDP is outside the U.S.
- According to the Organization for Economic Co-operation and Development (OECD), there are 32 countries with Export Credit Agencies (ECAs) that compete with the U.S.
- Exports will become even more critical in helping the U.S. grow its GDP, reduce the debt and balance the budget.
- In order to compete globally against China, the U.S. needs to increase its support of exports. For example, the U.S. EXIM Bank supported $10 billion in authorizations in 2015. In comparison, China supported $500+ billion in exports through EXIM-China, China Development Bank and Sinosure).
- Jobs created by export-related business tend to pay an estimated 18% more according to the International Trade Administration.
During a panel discussion regarding the future of EXIM, congressional members Jack Ryan, R-PA and Chris Collins R-NY both indicated President Trump fully supported the bank and recognized the need to support U.S. exporters though tax policy and regulation reform. They further indicated his commitment to a fully functioning bank by filling the vacancies on its board with immediate appointment approval of three new board members.
While there is still internal debate within the Republican caucus regarding the future of EXIM, it does appear the agency has the backing of President Trump and will continue to be an important tool in the U.S. government’s toolbox to support exports.