The Foreign Policy Case for Reviving the Ex-Im Bank



The US Export-Import Bank (Ex-Im) stopped doing business on June 30, 2015, when its charter lapsed in the absence of congressional reauthorization. At that time, Ex-Im had an export sales pipeline of $9.3 billion, including 30 major transactions that were put on ice. The third quarter is normally a busy time in the Bank’s calendar, but not this year. Large majorities in both the Senate and House favor Ex-Im, and the Senate voted to reauthorize it in July, but the Rules Committee prevented House members from voting on reauthorization before the August recess.

For more than a year, the wealthy Koch brothers have financed a campaign to kill Ex-Im, using a network of think tanks, including Americans for Prosperity. The Wall Street Journal has pitched in with editorials calling for the Bank’s demise. So far, the Koch brothers and the Journal have succeeded, with Representative Jeb Hensarling (R-TX) leading the Congressional charge against Ex-Im. The oft-repeated claim is that Ex-Im is nothing more than a wasteful vehicle for “corporate welfare.” In the view of opponents, Ex-Im requires a public subsidy to survive at a time when private banks are capable of providing all the finance needed for US exports.

These claims are refuted by four facts:

  • First, Ex-Im consistently makes money, paying some $6.9 billion to the Treasury over the last two decades.1
  • Second, because financial markets are far from perfect, small US exporters often go begging for credit because banks exaggerate the risk of serving such accounts.
  • Third, a sizeable fraction of Ex-Im’s loans and guarantees enables US exports to back projects in developing countries with less than AA ratings. The average country rating for Ex-Im loans is about BB on the Standard & Poor’s scale, a level which makes private banks uncomfortable.2
  • Fourth, Ex-Im finance is often needed to match offers from foreign official export credit agencies (ECAs). In 2014, this was the principal purpose for $7.8 billion of Ex-Im transactions, out of $19.1 billion total transactions.3

The last two facts have important foreign policy ramifications, beyond the straightforward export promotion case for Ex-Im’s existence. To maintain an American voice that’s heard on global policy issues, US firms must do business in developing countries. Business transactions convey American values about the rule of law, respect for labor, environmental and human rights, and other issues. Ex-Im support for key projects in developing countries not only promotes American values and exports but also ensures that national leaders pay greater attention to US foreign policy views on collateral issues.

Two pending deals illustrate the importance of Ex-Im in US foreign policy. Cardinal Resources, based in Pittsburgh, Pennsylvania, manufactures solar-powered systems that produce clean drinking water, almost exclusively for customers in developing and even conflict-ridden countries. Cardinal’s pending deal in Cameroon was in Ex-Im’s funding pipeline when the charter lapsed. Only nine days after the lapse, Cardinal’s customer in Cameroon was approached by French and Chinese competitors backed by their own ECAs. Cardinal’s president Kevin Jones was also approached by Chinese financiers looking to move the manufacturing base—and the associated jobs—to China.4

Taking another case, GE will lose a $350 million deal to build locomotives for Angola unless Congress reauthorizes Ex-Im. When the charter lapsed, GE was finalizing an agreement for 100 lightweight diesel-electric locomotives to be built in Erie, Pennsylvania. Up to 1,800 jobs at GE, its suppliers, and local businesses in 12 states are now at risk. Without Ex-Im financing, Angola will buy Chinese-built locomotives.5

All told, in 2014, Ex-Im supported—through loans, guarantees, and insurance—deals worth more than $14 billion in developing and transition countries in Asia, Africa, Latin America, and Eastern Europe. In 15 of these destination countries, the annual total of support exceeded $100 million, sometimes much more.6 Without Ex-Im support, most of these deals would have gone to foreign exporters supported by their ECAs. Those exporting countries would have enlarged their voice on business norms (issues ranging from corruption to labor rights) as well as collateral foreign policy matters. Meanwhile the United States would have lost exports, jobs, and voice.

In sum, looking just at the foreign policy angle, it is clear that there is every reason for Congress to reauthorize Ex-Im when it next convenes in September. The foreign policy case supplements the overwhelming economic arguments for renewing Ex-Im’s charter. At a time when Congress fully supports the administration’s efforts to conclude the Trans-Pacific Partnership and thereby open markets abroad to US exports, it makes no sense to handicap US firms by closing the Ex-Im Bank.


1. Data supplied to the author by Ex-Im.

2. Export-Import Bank of the United States, 2015, Report to the U.S. Congress on Global Export Credit Competition, June, Washington.

3. Ibid.

4.  Information supplied by Kevin Jones, president of Cardinal Resources.

5. See David Lawder, “Exclusive: GE says to lose Angola locomotive deal if Ex-Im Bank closes,” Reuters, May 19, 2015, (accessed on August 3, 2015).

6; Export-Import Bank of the United States, Annual Report 2014, Washington.

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