Without the Ex-Im Bank, American businesses and employees will compete on a very uneven playing field.
The charter of the Export-Import Bank of the U.S. (Ex-Im) expired at the end of June, disabling it from making any new loans unless Congress takes action now that it has returned from its July 4th recess. I have heard some Ex-Im opponents cheer this charter lapse as an “historic victory.” But the only thing that will be “historic” is the enormity of the blunder in failing to renew Ex-Im’s charter.
Ex-Im opponents wrap themselves in a cloak of free-market ideals while shutting their eyes to the real-world impact of Ex-Im. Without Ex-Im, American businesses and employees will compete on a very uneven playing field. Nearly 60 other export credit agencies are active in the world today. And some countries’ programs are many times larger than the U.S. China, for example, invests twice as much as Ex-Im, while Japan invests five times as much. We are fighting what Jeff Immelt has aptly described as an “economic war for exports.” In this war, Congress’s failure to reauthorize Ex-Im would be tantamount to a nation unilaterally dismantling its military in the hope that the rest of the world does the same. We know what this kind of Pollyanna approach has realized in history. That same strategy on Ex-Im is a naïve gamble with American jobs as the victim.
If the free-market utopists win, the costs of that “victory” will be borne by Americans who live and work in the real world. These costs will be substantial, and the harmful effects could take years to reverse. The 1.3-million private-sector jobs that Ex-Im has supported since 2009 will be in grave jeopardy. And this includes not only those jobs at companies like GE whose direct customers rely on Ex-Im financing, but also jobs at their suppliers, who contribute parts and services to our projects abroad.
An increasing number of foreign infrastructure projects for which GE competes require the backing of export credit agencies like Ex-Im. Twenty-seven countries so far have imposed this requirement, including key developing markets like Mexico, India and South Africa. Thus, Ex-Im opponents are wrong in believing that private financing companies could simply replace Ex-Im. Without Ex-Im financing, GE alone stands to lose a $350 million deal to build locomotives for Angola, a $668 million drinking water project for Cameroon, and a $130 million sale of steam turbines to Vietnam. To compete for these business opportunities, GE and other American companies will have no choice but to move jobs to countries where export credit is available.
Ex-Im detractors are also wrong in suggesting that Ex-Im’s collapse will hurt only big business or so called “crony capitalists.” GE, Boeing and other industrial giants account for millions of jobs and buy from thousands of suppliers across the country. When our elected leaders attack big companies to score political points, the ones who lose are the individual workers and the small- and medium-sized businesses who are their suppliers. In fact, American small businesses have been the direct beneficiaries of nearly 90 percent of Ex-Im transactions. Closing Ex-Im would severely limit the ability of these businesses to grow.
Why should opponents gamble with the fates of so many American workers and small businesses? I have yet to hear a credible reason, much less a convincing one. The opposition can’t deny Ex-Im’s long history of success. Ex-Im has generated almost $7 billion more than the cost of its operations over the past two decades, and its default rate has been extremely low at less than one-fifth of a percent. It is no wonder that Ex-Im has had the support of every U.S. president since Franklin Roosevelt, who founded the agency in 1934.
It’s time for the truth. We simply can’t afford to let Ex-Im Bank die, and it is time to put this debate to rest. The need for Congress to act is clear: Reauthorize Ex-Im Bank and protect American jobs, small business and U.S. global competitiveness.
Brackett Denniston is Senior Vice President, Secretary and General Counsel for GE.