This year, Congress must act on the reauthorization of the U.S. Export-Import Bank. For most of the American public, this is a small agency with an obscure mission. In reality, the "Ex-Im Bank" has a big impact behind the scenes in America's battle for world export markets.
The Ex-Im Bank's importance comes into focus when one looks at what exports mean to our country. Last year, we exported $836 billion in goods and services. This accounted for 1 1 percent of our total national economic output. More than 11 million American workers owe their jobs to these exports.
Even more important, one-third of the annual growth of our economy over the past 4 years has come through the steady increase, year by year, in overseas sales of the products and services that we produce across our country. These export sales bring new revenues from overseas into our economy, benefitting all of us. As exports grow, new jobs are created here at home; as a rough average, every billion in exports leads to 14,000 new jobs.
Clearly, our economic future depends on keeping our exports growing. However, the same is true for every major economy around the world. That's why the competition for world markets is so hot today, and why it will get hotter in years to come.
But who is going to buy all goods and services that we produce, 10, 15, or 20 years from now? In other words, where is the battleground where we will compete with the Germans, Japanese, French, Koreans, British and other major exporting nations?
According to a 1995 U.S. government study, the greatest potential for increasing our exports lies in the "big emerging markets", countries with big populations which are just taking off economically, increasing their buying power enormously. By the year 2010, a little more than a decade from now, 10 such emerging countries will consume nearly 40 percent of all the world's exports. That's twice what they are importing today. A decade later, by the year 2020, six of these countries will rank among the IO largest economies in the world.
For every exporting nation, these are the biggest prizes in the global competition for new markets: China, India, Indonesia, Malaysia, Thailand, Vietnam, the Philippines, South Korea, Argentina, Brazil, Mexico, Korea, South Africa, Poland, and Turkey. Together, the people in these countries will import a trillion dollars in goods and services just in the next decade alone.
In most of these countries, and in many smaller markets around the world, export sales require financing--loans--to make the transaction work. Buyers borrow the money to make the purchase, particularly for big-ticket goods like major industrial equipment, bulk agricultural products, construction supplies, aircraft and vehicles, etc.
American firms face stiff competition in each of these markets. Often the critical factor in making the export sale is the availability of financing. For most transactions in global trade, private finance is available and is used by the importer and exporter to complete the deal. But in some markets, private export lending is difficult to come by, either because of risk, underdeveloped financial markets, etc.
In these situations, every major trading nation has government programs to help their exporters with the financing of exports, such as by issuing repayment guarantees for export loans, insuring the exporter in overseas markets or by providing working capital to facilitate a transaction. For American exporters, this role is filled by the Export-Import Bank. Exporters pay for these services, through fees and premiums. They use Ex-Im Bank guarantees, insurance and working capital loans to win export sales that otherwise would go to companies in Germany, Japan, France, etc.
The Ex-Im Bank is a proven success. In the past two years alone, $27 billion in American goods and services were sold overseas because of Ex-Im support. These supported 400,000 American jobs, paying an average 15 percent more that non-export jobs. Without Ex-Im support, these exports and jobs would have gone to foreign companies and workers.
I would like to cite an example from my state. Tenaska, Inc. is an energy development company with 120 employees which is headquartered in Omaha, Nebraska. Tenaska is involved in a power project in Pakistan and the Ex-Im Bank is providing financing for this project. Initially Siemens AG, a German company, provided a competitive package of equipment, including financing from Hermes, the German equivalent of Ex-Im. However, Ex-Im Bank support for the project ensured that U.S. goods and services would be utilized. Without Ex-Im, over $200 million in goods and services would have been purchased from other countries. This is only one instance in many where the Bank provided critical financing for U.S. exporters.
Today, some 80 governments around the world have export finance agencies like the U.S. Ex-Im Bank. Some are larger than ours. In fact, of the 8 largest trading nations, the U.S. export finance program ranks dead last. Over the last decade, these bigger foreign export agencies have taken at least $25 billion in export sales away from American companies and the 500,000 jobs that went with those exports.
As the competition gets even hotter for world export markets, every major
trading nation will move to strengthen their export finance agency, to try and take
even more sales away from American exporters and even more export-related jobs
away from American workers. We have to meet this competition. One crucial step
is for the U.S. Congress to reauthorize the Export-Import Bank, so it can continue
its vital role in support of American exporters, American jobs and our country's
economic future. I commend my colleague from Minnesota for his leadership on
this issue and fully support him in efforts to reauthorize the Bank.
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