The Export-Import Bank is helping to drive the economic recovery by promoting U.S. exports, according to Democrats on the Joint Economic Committee.
The report examines the role exports have played in the economy since 2009, and argues that re-authorizing Ex-Im should be “part of a strategy to support continued U.S. export growth.” Democrats in the JEC are led by Sen. Amy Klobuchar, who is vice-chair of the Committee. (RELATED: Democrats Rally Support for Export-Import Bank)
The report claims that, “exports have made a significant contribution,” to economic growth over the past four years. “Total exports were 35.1 percent higher in 2013 than in 2009,” while Ex-Im authorizations grew 34.4 percent over the same period.
Export growth, in turn, promotes job growth, because “each $1 billion of exports supports 5,590 jobs.” In 2013, exports were responsible for 11.3 million jobs, 205,000 of which were supported by Ex-Im assistance.
One way Ex-Im promotes exports is “by providing financing the private sector may be unable or unwilling to finance at competitive rates,” which the report says is “particularly important during a credit crunch when private-sector financing dries up.”
Opponents of Ex-Im disagree, saying the bank is a form of corporate welfare, and merely provides financing at below-market rates for the benefit of politically connected companies. (RELATED: Is the Export-Import Bank Crony Capitalism)
Ex-Im is also necessary “to counter the effects of other countries’ similar export credit programs.” Approximately 60 other countries have export-credit agencies, and China, Germany, and South Korea all “provided more medium- and long-term export credit financing in 2013 than the Ex-Im Bank.”
The bank’s detractors, however, contend that Ex-Im does little to protect U.S. companies from foreign export subsidies, because it frequently finances exports to state-owned foreign companies that benefit from those subsidies. (RELATED: Ex-Im Criticized for Lending to State-Owned Foreign Companies)
Failure to renew Ex-Im, the report concludes, “would put U.S. exporters at a competitive disadvantage,” and deprive small- and medium-sized business of the financing they need in order to continue expanding their exports. (RELATED: Some Beneficiaries of Export-Import Bank Oppose Re-Authorization)
However, the report also acknowledges that when Ex-Im was last re-authorized in 2012, Congress included a provision requiring the secretary of the treasury to negotiate with other countries “to substantially reduce export financing programs, with the ultimate goal of eliminating them and other forms of export subsidies.”
As long as the U.S. maintains Ex-Im, however, those countries may consider their own export subsidies as a necessary defense against American subsidies, leading to a cycle of mutual protectionism.
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