Reauthorization of the Export-Import Bank: Issues and Policy Options for Congress

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In consultation with committees of jurisdiction in Congress, the bank can deny applications for credit for nonfinancial or noncommercial reasons if it advances the national interest in areas of international terrorism, nuclear proliferation, environmental protection, and human rights, etc.

Reauthorization of the Export-Import Bank: Issues and Policy Options for - Tài liệu

Ex-Im Bank financing may not be available in certain countries and certain terms for U. Depending on the product involved, many exports receiving support must be transported by U. In principle, Ex-Im requires an annual appropriation to cover program costs and administrative expenses. However, the bank retains fees collected during the year in excess of expected losses, called the offsetting collection, and repays the U. Treasury for a zero net appropriation.

In normal circumstances, such subsidies are not needed. However, because other countries and myriad forces distort market competition, there is a case for the U. As with any subsidy, however, the actual economic benefit depends on the fundamentals of the deal. In short, the actual benefit of Ex-Im is not obvious and needs to be judged on a case-by-case basis. Though it is difficult to fully measure the economic impact of the Export-Import Bank, the reauthorization did make a few notable changes to make the bank more transparent in the reporting its impacts.

In particular, it required that loans and long-term guarantees be classified as necessary to 1 assume commercial or political risk private financial institutions are unwilling or unable to bear, 2 overcome limits in private finance, or 3 meet competition from foreign export credit agencies. In that way, the purpose of long-term deals can be evaluated.

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Additionally, when an economic impact analysis is conducted for a loan or guarantee, that study must now be published in the Federal Register to allow for comments by affected businesses. Greater transparency in the fundamentals of individual deals and the assumptions and methodologies used to identify economic impacts will allow for better oversight and scrutiny by the public. One criticism of the Export-Impact Bank is that it may favor certain industries over others.

Of particular interest, the Export-Import Bank continues to play a large financing role in the aerospace industry, matching competition with other ECAs. Ex-Im financing for the aerospace industry is emblematic of the challenge presented by ECAs around the globe. Ultimately, support for Boeing transactions has become a political issue for the bank.

While support for Boeing may be the best way to increase exports and related jobs, mandated by its mission, outsized support compared to other industries will always carry the risk of being labeled unfair or appear to be cronyism. One positive development in this regard is the increased willingness capital market investors have shown to become more involved in aircraft export financing. Manufacturing surpassed the aircraft sector in total authorizations for the first time since While Boeing and large corporations have been criticized for receiving such high dollar value export financing, these types of authorizations do not comprise the bulk of Export-Import Bank financing when measured by the number of transactions.

Though the Ex-Im Bank did not meet its congressionally mandated target of 20 percent of authorizations for small businesses by dollar value, it did hit a record high in the number of authorizations See Figure 5 ; Ex-Im reported 3, small business authorizations in or 89 percent of total authorizations. In its plan, Ex-Im acknowledged that it did not expect to meet congressionally mandated targets for small business or renewable energy authorizations.

Critics favoring elimination of the Ex-Im Bank often cite the potential for taxpayer exposure to bank losses. As mentioned previously, the Export-Import Bank, in cooperation with its Inspector General and the GAO, reviewed many aspects of internal policy and management, which has led to the ongoing development of a more comprehensive risk management framework that is still being implemented [10] and an agreement to improve the methodology and modeling of future exposure projections. However, the last reported default rate is below one-third of one percent.

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Federal budgeting of credit programs is partly to blame for masking risks borne by taxpayers. However, applying fair value estimates generally to federal credit programs would provide a more realistic picture of their budgetary cost to taxpayers.

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The OECD Arrangement includes export credit terms and conditions for the ECAs of member nations with agreements ranging from minimum interest rates to guidelines on environmental procedures. Additionally, many countries have ramped up foreign direct investment programs that operate under the same roof as export credit operations, allowing for the easy coordination of financing strategies. Those functions in the U.

The case for elimination of the Export-Import Bank is relatively straightforward; subsidies interfere with an open, competitive market and export financing obviously falls into that category. Additionally, many have worried about unseen risks to taxpayers. While both justifications certainly have merit, the case for reauthorization of Ex-Im is based on market realities. The activities of the Ex-Im Bank address a longstanding problem, the uneven playing field for U.

What principles should guide reauthorizing the Export-Import Bank? First, Congress should scale back any unneeded capacity, thereby limiting taxpayer risks and unnecessary subsidies to commerce.

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Second, it should distort the pattern of trade as little as possible by limiting quotas and other restrictions on the allocation of credit across regions, industries, and firm-sizes. There continues to be areas needing additional transparency. For instance, publicly available data on program authorizations can often be incomplete and inadequate. For Congress and outside stakeholders to truly keep Ex-Im accountable, transparency and accurate disclosure is paramount.

Continued audits and reviews of these changes is integral to ensuring that Ex-Im financing is appropriately targeted and sufficiently competitive, and that taxpayers are protected. Agency efforts in export finance still overlap; for example, the U. The Trump Administration has received a lot of attention for its high-profile actions repealing or revising past regulatory programs. The conditions in which a person lives, learns, works, and ages contribute to their health more than any other factor.

End Corporate Welfare: Tell Congress to Reject the Export-Import Bank Reauthorization

Program Guidelines and Requirements Table 2 highlights some of the criteria that the Export-Import Bank must take into account when providing financing, as required in its amended charter, internally, and as a result of international agreements. Private Capital In exercising its functions, the bank is required to supplement and encourage, and not compete with, private capital. Small Business 20 percent of authorizations, each fiscal year, should serve small businesses. Renewable Energy The bank is directed to promote the exports of goods and services related to renewable energy sources amount to 10 percent of authorizations per year.

Sub-Saharan Africa The bank is directed to promote the expansion of commitments in Sub-Saharan Africa but lacks a target allocation. Air Force AircraftFigure 1. Periods in the Development and Evolution of the U.

Air Force 6 2. The Credit Crunch of Perhaps, like the banks themselves, they did not envisageall markets for The result of the dislocation in the capital and money marketswould lead to the Northern Rock bank run in the United Kingdom and the threat of bankruptcy for Bear Stearns in the Economic Assessment of the Euro Area: Forecasts and Policy Analysis ppt This is the same as the forecast contained in our autumn report.

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The overall forecast for the Euro Area is strongly influenced by the forecast for Germany. The improvement in the Euro The government is reacting by targeting the allocation of credit away from these sectors. On the other hand, the government has highlighted the promotion ContentsxviiTo narrow the gap between the rich and the poor and to achieve commonprosperity have been a noble dream of human society for millennia; theyare also a part of the pursuit of equality and justice Therefore, when promoting the dualtransfer,