Why the U.S. Needs the ExIm Bank
Export Credit Financing Is Standard Practice Around the World
In the face of increasing competition from China and other emerging economies, the continued disruption of the Export–Import (ExIm) Bank is undermining U.S. competitiveness in key manufacturing sectors. For most major economies, state-backed export credit—the use of loans and other forms of government financing to facilitate exports—is a core element of industrial policy. But while its rivals are expanding their use of this policy tool, the United States has moved in the opposite direction, dramatically constraining its use of export credit.
Financed by the billionaire Koch brothers, a collection of ultra-free-market advocacy organizations, such as Americans for Prosperity, the Cato Institute, and the Mercatus Center, have made the ExIm Bank a prime target in their campaign to dramatically reduce the size of the U.S. government and its role in the economy. By urging congressional Republicans to block the bank’s reauthorization, they successfully shut down ExIm and halted its lending operations for five months in 2015. At that time, approximately 200 transactions worth over $9 billion were stopped in the pipeline. Although ExIm was subsequently reopened, most of its lending activity remains blocked. Free-market conservatives in the Senate have barred appointments to the bank’s board, leaving it without the quorum required to finance transactions over $10 million, which typically constitute 80–90 percent of its loans.
President Donald Trump has nominated two people to fill the vacant seats on ExIm’s board. If approved by the Senate, this would be a first step toward restoring the bank’s quorum and lending authority. But Trump’s appointment to lead the bank, former Congressman Scott Garrett (R–N.J.), is a founding member of the Tea Party-aligned House Freedom Caucus and one of ExIm’s fiercest critics. Many view the appointment of Garrett as an intentional act of sabotage. Meanwhile, the bank’s opponents continue to aggressively press for its elimination.
Conservatives object to ExIm as a deviation from free markets, arguing that it represents crony capitalism and corporate welfare. The bank’sRead the full article on ForeignAffairs.com