I recently met with a firm in Omaha, Neb., that operates factories throughout the world and needed guidance on expanding into Latin America.
I asked the executives whether they would consider financing through the Export-Import Bank, and I was nearly laughed out of the room.
“We would never consider applying to the U.S. Ex-Im Bank for exporting products into new markets,” they said. “The process would take at least two months and force us to comply with mountains of red tape.”
Their alternative was to funnel the wares produced in their Chinese factories using the Export-Import Bank of China for financing, which they said visits factories as soon as the application is filed to facilitate the process.
Congress will likely reauthorize the Ex-Im Bank this week through June 2015 with the normal arguments for and against it.
Proponents declare that it is vital to U.S. economic growth and competitiveness, and its absence would be devastating. Detractors disparage it as the Bank of Boeing for its reputation of supporting the largest American firms, such as Boeing, Caterpillar and General Electric to the detriment of their smaller competitors.
Both arguments carry weight, but the debate should clear room for a third point of view.
Yes, the Ex-Im Bank has underperformed for years and does not maintain pace with a rapidly changing global marketplace. To its credit, it returned more than $1 billion to the Treasury and supported 205,000 jobs last year, but it should have been far more.
Congress created Ex-Im Bank during the Great Depression to finance exports to countries that could not afford U.S. goods and services, which is a common sense job creator. It remains an essential tool in our trade arsenal, but it has been surpassed in capability and strategy by virtually all competitors.
Lawmakers need to explore three critical areas to revitalize the bank.
First, identify successful and transparent strategic goals. The No. 1 objective must be to gain access into markets around the world. Markets worldwide are currently under assault, deeply distorted or, like the entire $2 trillion infrastructure market, increasingly closed to U.S. production. Pry them open and exports and jobs will follow.
Second, lawmakers need to expand the Ex-Im Bank’s authorities. Congress needs to double its lending limits, streamline its processes and expand its reach. The Bank of Boeing propaganda is nonsensical in the context of the danger to the economy. The U.S. share of global merchandise exports declined from 25 percent in 2000 to roughly 10 percent last year. This is a result of inaction, not a reflection of the rest of the world catching up.
To consider just one example, the bank’s much-touted conservative lending practices — a 0.2 percent default rate when a well-run private lending institution’s rates might run 10 times as high — describes a kind of caution bordering on dereliction of duty. Congress needs to enable the Ex-Im Bank to take risks and to innovate.
Businesses don’t compete in countries around the world because they don’t have the necessary investment capital. The Ex-Im Bank is the solution and as such should be actively establishing relationships with American companies of all sizes. It should provide contingent loans and guarantees so that we can sell airports, power plants and all of the other assets that make economies productive, prosperous and able to afford our superior goods and services.
Third, the Ex-Im Bank needs to become explicitly nonpartisan. Are exports, jobs and free markets favored by one political party more than another? I think not. The chairman of the joint chiefs of staff is not a political position, nor is the chairman of the Federal Reserve, yet they are both nominated to solve major national and international problems.
In sum, Congress needs to establish strong and clear objectives, reenergize a marvelous tool for creating prosperity abroad and great jobs at home, and build a nonpartisan board of directors representing businesses of all sizes and industries.
Failing to seize the opportunity of our twin manufacturing and energy revolutions to revitalize our largest export-generating institution is a mistake of vision, strategy and leadership that the American people ought not forgive, and that they certainly should not forget.
Norman F. Anderson is the president and CEO of CG/LA Infrastructure, a nonpartisan global consulting firm based in Washington, D.C., and a member of the World Economic Forum.