EXIM Bank, or the Export-Import Bank of the United States, is a government agency that provides financial support to U.S. exporters and their foreign customers. Its main products are loan guarantees, direct loans, insurance, and working capital. EXIM Bank claims that its mission is to support American jobs by facilitating the export of U.S. goods and services .
EXIM Bank was created in 1934 and operates as an independent executive branch agency. It requires periodic reauthorization by Congress to continue its operations. Its current authorization expires on September 30, 2021 .
EXIM Bank has been a subject of controversy and debate for several reasons. Some of the main issues are:
– The concentration of benefits: Critics argue that EXIM Bank mainly benefits a few large corporations, such as Boeing, General Electric, and Caterpillar, while providing little or no assistance to small and medium-sized businesses. They also point out that most U.S. exports do not rely on EXIM Bank financing and that the agency distorts the market by picking winners and losers .
– The cost to taxpayers: Critics claim that EXIM Bank exposes taxpayers to significant risks and liabilities by subsidizing risky foreign projects and transactions. They also question the accuracy and transparency of EXIM Bank’s accounting methods and its claims of profitability and self-sustainability .
– The impact on global trade: Critics contend that EXIM Bank contributes to a global race to the bottom by engaging in a subsidy war with other countries’ export credit agencies, especially China’s. They argue that EXIM Bank’s activities undermine free trade principles and harm U.S. consumers and businesses that face higher prices and unfair competition .
On the other hand, supporters of EXIM Bank maintain that:
– The agency supports U.S. jobs and competitiveness: Supporters assert that EXIM Bank helps create and sustain thousands of American jobs by enabling U.S. exporters to compete in global markets where financing is scarce or unavailable. They also emphasize that EXIM Bank supports strategic sectors such as aerospace, energy, and infrastructure that are vital for U.S. national security and economic growth .
– The agency protects taxpayers and generates revenue: Supporters claim that EXIM Bank operates with due diligence and prudence, maintaining a low default rate and a high recovery rate on its loans and guarantees. They also highlight that EXIM Bank generates revenue for the U.S. Treasury through fees and interest payments from its customers .
– The agency counters foreign competition and advances U.S. interests: Supporters contend that EXIM Bank is essential for leveling the playing field for U.S. exporters who face aggressive financing from foreign rivals, especially China. They argue that EXIM Bank helps promote U.S. values and standards abroad by requiring environmental, social, and governance criteria for its projects .
In conclusion, EXIM Bank is a government agency that provides export financing to U.S. businesses and their foreign customers. It has been a source of controversy for decades, with critics accusing it of cronyism, waste, and distortion, while supporters defending it as a job creator, revenue generator, and trade enabler.