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UPDATED: Michael De Camp’s international customers consistently paid for orders on time, yet local banks weren’t willing to extend his company a loan against his foreign, uninsured orders. Consequently, De Camp’s small business -- Eagle Labs of Rancho Cucamonga, California, which makes surgical equipment to repair cataracts and correct vision -- couldn’t get the capital it needed to expand its business and create new jobs.
Enter the U.S. Export-Import Bank, the agency that helps American businesses sell their products abroad. About 15 years ago, Eagle Labs secured credit insurance on those overseas orders from the Ex-Im Bank, and, suddenly, the company was able to secure a loan from a private bank, helping De Camp purchase the expensive equipment his company needed to expand.
Sales have since doubled. So has the company’s workforce.
Eagle Labs’ story was one of many outlined by John Murphy, the U.S. Chamber of Commerce’s senior vice president for international policy, during a hearing Tuesday morning before the Senate Banking, Housing and Urban Affairs Committee. It’s an important week for the Export-Import Bank, which is facing extinction at the end of this month barring reauthorization from Congress. Following his testimony before the Senate panel, Murphy will participate in another hearing before the House Financial Services Committee on Wednesday concerning the critical role of the bank.
The Chamber, in partnership with the National Association of Manufacturers, also helped coordinate a letter sent to members of Congress on Wednesday and signed by more than 1,000 American companies and business associations. It calls for immediate and long-term reauthorization of the Ex-Im Bank. Without renewal, “U.S. businesses of all sizes would be deprived of a vital financing source at a time when boosting exports is increasingly vital to growing our nation’s economy and jobs,” the letter states.
At a time when bolstering trade and increasing exports are at the forefront in Washington, Murphy and other experts are working to make sure American businesses have all the help they need to expand their enterprises overseas and create more jobs at home. Most notably, that means giving the president Trade Promotion Authority and accelerating new trade agreements abroad.
It also means renewing of the Ex-Im Bank.
“Commercial banks often refuse to accept foreign receivables as collateral for a loan without an Ex-Im guarantee,” Murphy told the Senate panel. Consequently, “without Ex-Im’s accounts receivables insurance and lines of credit, many U.S. small businesses would be unable to extend terms to foreign buyers and would have to ask for cash-in-advance. In such a case, the business will most likely go to a firm from another country.”
In other words, the U.S. firm will likely lose that business, lose that revenue, and lose that fuel for job growth. “For these small businesses, Ex-Im isn’t just nice to have,” he said. “It’s indispensable.”
Not surprisingly, many in the business community are “stunned,” Murphy said, that Congress is considering allowing the Ex-Im’s charter to lapse when its current authorization expires. Without action from Congress, businesses like Eagle Labs would be left looking for alternative means of foreign credit insurance, which in the private market is often unaffordable for small businesses.
The Chamber has taken its fight to save the agency beyond the Beltway. Myron A. Brilliant, the Chamber’s executive vice president and head of international affairs, was in Chicago on Tuesday to talk about the Export-Import Bank’s role supporting jobs and business growth in Illinois and across the country.
“Shutting down the Ex-Im Bank would eliminate critical financing options for many small businesses,” Brilliant told a group of local business leaders, according to the Chicago Sun-Times. In an interview earlier in the day with the newspaper, he noted that the campaign to shutter Ex-Im “threatens the 164,000 U.S. workers and $27.5 billion in exports that the Bank supports [nationwide].”
It’s a message the resonated with Mary Howe, president of Howe Corp., a small business that makes high-capacity ice machines and employs 40 people in the Chicago area.
“If Congress doesn’t renew the Ex-Im Bank, our company would lose its access to essential working capital,” Howe told the Sun-Times.
On the Hill and around the country, the Chamber’s message is the same: As Murphy put it Tuesday, “Ex-Im is one of the most important tools at the disposal of U.S. companies to level the playing field for trade finance as they seek to increase exports and create jobs at home.”
It’s that leveling of the playing field between American and foreign companies, Murphy said, that makes reauthorization particularly important. Every major trading nation around the world has an agency that resembles the Ex-Im Bank; generally, they are called export credit agencies, or ECAs.
Cutting off American firms’ access to an ECA while their foreign competitors continue to enjoy similar – and often much more robust – federal export assistance would amount to “unilateral disarmament,” Murphy said, putting U.S. businesses at an “absolutely unique disadvantage.”
That’s especially important when it comes to foreign infrastructure contracts.
“Closing Ex-Im would shut major American exporters out of huge business opportunities overseas because ECA support is often required for a company even to bid on overseas infrastructure projects,” Murphy explained. Without Ex-Im, U.S. exporters wouldn’t be merely put at a competitive disadvantage when vying for major contracts abroad -- they wouldn’t even be permitted to bid.
A number of recent news stories have reinforced Murphy’s warnings about the dire consequences of losing the Ex-Im Bank. Reuters last month reported that General Electric would lose out on a $350 million deal to build trains for sale in Angola if the agency isn’t reauthorized. Meanwhile, The New York Times recently reported on a $668 million drinking water project in Cameroon that would not go to a U.S. company if the agency went dark; it would instead go to the firm’s Chinese competitors.
Linda Dempsey, vice president of international economic affairs for the National Association of Manufacturers, agreed with Murphy, calling the Ex-Im Bank “one of the most important tools the government has to boost exports and support American jobs.”
“Without Ex-Im, the U.S. will be ceding sales to competitors overseas,” she added.
Sen. Sherrod Brown (Ohio), the ranking Democrat on the committee, likened the effects of killing the Ex-Im Bank to “spotting a competitor ten yards in a race.”
“We should support U.S. businesses when they sell their products around the globe,” Brown said, later noting that the agency doesn’t cost taxpayers a penny. Quite the contrary; its fees have actually generated several billion dollars in federal revenue since 1990.
“Reauthorizing Ex-im by June 30th is essential,” Brown added. “It should be easy, and it should be bipartisan.”https://www.youtube.com/watch?v=wWWLJQ0xpdU&feature=youtu.be