We come from different parties and our views on the optimal role of government differ. But we both support the U.S. Export-Import Bank, which creates jobs, pays for itself, and reduces the deficit. Efforts now under way in Congress to block reauthorization of the bank's mission are misguided.
Ex-Im, an independent federal agency, provides export financing for American companies in foreign markets where commercial financing isn't readily available. Last year alone, Ex-Im financed $32 billion in U.S. exports, sustaining 290,000 American jobs at more than 3,500 companies. Because of the fees and interest it charges borrowers, the bank is self-sustaining. And since 2005, Ex-Im has returned $1.9 billion to the U.S. Treasury.
Over the last two years, U.S. exports have grown annually at 15.6%. At this rate exports are on track to double within five years. That's an economic accomplishment both parties can be proud of. Despite that good news, within the next 90 days Ex-Im will likely reach its $100 billion loan portfolio cap and will have its current authorization expire. Should that happen, Ex-Im will no longer be able to finance U.S. exporters.
Since its inception in 1934, the bank has played a critical role in making sure American exports reach markets around the world. In the aftermath of World War II, Ex-Im financed the Marshall Plan, which helped rebuild a healthy and vibrant economy in Europe. In Asia, Ex-Im financing built the Burma Road, which opened trade throughout the region, and it was Ex-Im financing that made the Pan American highway possible, connecting trade in North and South America. Over its 78-year history, the bank's loan losses have averaged about 1.5% per year, a very good track record.
Bank critics believe Ex-Im is corporate welfare. We disagree. The large companies that use Ex-Im financing—Boeing, GE, Caterpillar and others—compete in a global marketplace in which foreign companies and their governments systematically use export credit financing. In practice, a Chinese locomotive company can offer government export financing to international buyers, which makes their trains less expensive in foreign markets such as Pakistan. When an American company, such as GE, is competing for that locomotive sale it ought to be able to provide comparable financing for its locomotives. Such policies ensure a level playing field for American companies in an increasingly competitive global marketplace.
Small and medium-size companies seeking international sales face even greater export challenges. Last year alone, the Export-Import Bank supported $6 billion in loans to small businesses, accounting for 87% of Ex-Im transactions.
Export credit financing provides consistent, reliable access to capital in challenging market conditions. The financial crisis of 2008 is a perfect example. As global financial markets contracted, Ex-Im financing expanded, thereby ensuring that U.S. exporters could still reach foreign markets.
Some critics believe that export credit financing distorts free markets, when in fact the opposite is true. Export credit financing is designed precisely to ensure that U.S. goods and services can compete on price and quality. We believe markets should determine the price in accordance with supply and demand, but the reality is that governments around the world provide export financing for certain industries.
Increasingly, U.S. firms are at a competitive disadvantage globally. The U.S. is working to develop international trade-finance agreements that would require that all countries play by the same rules. But we're not there yet, and reducing our global economic footprint would have profoundly negative consequences for American jobs and competitiveness. President Obama has called for increased enforcement of trade agreements and has directed the Ex-Im Bank to provide financing to U.S. firms that face unfair export credit financing provided by other governments.
Congress has legislation before it to pass a full four-year reauthorization and increase the bank's exposure cap to an appropriate level. A government agency that increases U.S. jobs, pays for itself, and earns money for the Treasury is surely worthy of strong, bipartisan support.
Mr. Rubin is co-chairman of the Council on Foreign Relations and was secretary of the Treasury from 1995 to 1999. Mr. Weber is chairman of the National Endowment for Democracy and was a Republican member of Congress from Minnesota from 1982 to 1993.
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