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For eight decades, the U.S. Export-Import Bank (Ex-Im) has provided loans and guarantees to cover financing gaps for American exporters. However, due to congressional inaction, Ex-Im was forced to shut its doors when the bank's charter expired on June 30.
But that doesn’t mean the rest of the world is taking its cues from the Washington-based ideologues who’ve been campaigning to close Ex-Im. No, the world’s 78 other official export credit agencies (ECAs) are continuing to do a brisk business — and they're not hesitating to leverage their financial advantages to take business from U.S. companies and workers when the opportunity arises.
For example, China’s central bank last month injected $93 billion into the Export-Import Bank of China and the China Development Bank to increase their financial support for exports and other sectors. While the former focuses on trade, the latter provides financing for infrastructure projects (both foreign and domestic) but also finances some exports.
“The People’s Bank of China said it pumped $48 billion into China Development Bank and $45 billion into the Export-Import Bank of China,” Reuters reported this week. The latter sum alone is equivalent to about one-third of the entire capital of the U.S. Export-Import Bank.
Elsewhere, other countries’ official ECAs have been expanding their work in novel ways.
For example, China Southern Airways in July received a renminbi (Rmb) loan equivalent to $100 million backed by UK Export Finance (UKEF), Britain’s official ECA, for the purchase of Airbus 330 aircraft manufactured in the United Kingdom.
This pathbreaking deal was the agency’s “first Rmb-denominated guarantee, as the export credit agency recently added the Chinese yuan to its list of supported currencies,” Global Trade Review reported, adding: “According to UKEF, this is also the first time for an export credit agency anywhere in the world to guarantee a loan in Chinese offshore Rmb.”
Even closer to home, Export Development Canada (EDC), the official ECA of Canada, has been forging ahead, too.
EDC recently reported it had signed 1,084 new financing deals in the previous year, increasing total financing by 17% to reach a record C$21.6 billion. EDC also insured transactions worth C$56 billion, the Globe and Mail reported.
For comparison, the Canadian economy is roughly one-tenth the size of that of the United States, but EDC provides approximately three times more support for Canadian exporters than Ex-Im does for U.S. exporters — or, proportionally, 30 times as much.
Ironically, organizations such as the Heritage Foundation laud Canada as one of the world’s leading free market, free enterprise economies — which is certainly a fair assessment. But even Canada’s Conservative government has had no qualms about EDC’s activities.
We live in a world where official export credit agencies are major players in international commerce. And that isn’t changing: Governments are doubling down on their ECAs.
Only a band of Washington ideologues are swimming against the tide. It would be funny - if only they weren’t putting American jobs at risk.