The California Chamber of Commerce continues to urge Congress to reauthorize the Export-Import Bank of the United States (Ex-Im Bank) in order to continue enabling U.S. companies — both large and small — to turn export opportunities into real sales that help maintain and create U.S. jobs and contribute to a stronger national economy.
The loss of Ex-Im Bank will potentially result in the loss of thousands of U.S. jobs.
Failure to reauthorize the Ex-Im Bank, which expired on June 30, 2015, has already seriously disadvantaged at least one U.S. company. Newspaper articles report Boeing Co. is scrambling to renegotiate an about $85 million satellite contract that became the first big casualty of the Ex-Im Bank’s loss of its operating charter due to congressional opposition.
Asia Broadcast Satellite last month terminated its order for a Boeing 702SP satellite, although the two say they are continuing to discuss the deal. The Bermuda-based telecommunications company said the federally backed bank’s inability to finance new loans led it to begin evaluating options outside the United States that could attract support from other export credit agencies.
The satellite industry relies far more on export credit support than sectors such as commercial jets as most banks are reluctant to finance assets that are difficult to repossess or place with other customers. Ex-Im said it has backed around 60% of sales by U.S. manufacturers in recent years, compared with around 15% of commercial jet deals.
“Ideally on ABS and for our other campaigns, Ex-Im will be reauthorized by the end of the year or we will continue to see terminations and losses,” said a spokesman for Boeing, the largest beneficiary of the agency’s support and the most vocal proponent of reopening the bank.
The mission of Ex-Im Bank is to support U.S. jobs through exports. The Ex-Im Bank, a small federal agency, serves as the official export credit agency of the United States, thereby helping U.S. companies sell their products overseas. It assists small and large U.S. companies in financing the export of U.S. goods and services to international markets.
Ex-Im Bank does not compete with private sector lenders, but provides export financing products that fill gaps in trade financing. It assumes credit and country risks that the private sector is unable or unwilling to accept. It also helps to level the playing field for U.S. exporters by matching the financing that other governments provide to their exporters.
With 80 years of experience, Ex-Im Bank has supported more than $567 billion of U.S. exports, primarily to developing markets worldwide. Ex-Im Bank is vital to American competitiveness — its support is often required to secure commercial financing or even to qualify to bid on overseas projects. Without the Ex-Im Bank, small businesses will lose out to their overseas competitors, many of which are backed by export credit agencies 18 times the size of the U.S. Ex-Im Bank.
California has especially benefited from the Ex-Im Bank’s facilitation of exporting:
- Over the last seven years, the Ex-Im Bank has assisted more than 1,150 California companies.
- Exports from these companies totaled more than $26 billion in sales.
- In 2013 alone, Ex-Im Bank supported nearly 400 California exporters for a total of $5 billion in sales.
- Since 2007, California companies Ex-Im Bank has assisted include 815 small businesses, 139 minority-owned, 106 women-owned, 53 environmentally beneficial and 14 renewable energy.
In addition to supporting jobs, the Ex-Im Bank is a self-sustaining agency that operates at no net cost to the taxpayers. Ex-Im Bank pays for itself by charging fees or interest to its customers for loans, credit insurance and loan guarantees that they receive.
- Small and medium-sized businesses account for 90% of Ex-Im Bank’s transactions.
- In 2013, Ex-Im Bank supported more than 200,000 American jobs.
- In 2014, Ex-Im Bank provided financing or guarantees for $27.5 billion in U.S. exports, thereby supporting more than 164,000 American jobs.
- Over the past two decades, Ex-Im Bank has generated a surplus of nearly $7 billion.
- Last year, Ex-Im Bank sent $674.7 million to the U.S. Treasury as surplus for American taxpayers.
- Since the 2008 fiscal year, Ex-Im Bank has generated $1.6 billion in excess revenue for the U.S. taxpayers.
- Last year, borrowers defaulted on less than one-quarter of 1% of all loans backed by Ex-Im Bank.
- Nearly $14 billion—more than 68%—of Ex-Im Bank reauthorizations supported U.S. exports to emerging markets, where commercial banks often are more reluctant to lend.
For California statistics from Ex-Im Bank: click here.
The CalChamber supports free trade worldwide, expansion of international trade and investment, fair and equitable market access for California products abroad and elimination of disincentives that impede the international competitiveness of California business.
The CalChamber is urging businesses to contact their representatives in Congress to ask that Ex-Im Bank be reauthorized as quickly as possible. An easy-to-edit sample letter is available at www.calchambervotes.com.