The FINANCIAL — During his speech, Export-Import Bank Chairman Fred P. Hochberg spoke about how U.S. companies are often forced to go head-to-head with foreign governments who offer attractive financing, provided a strong defense of Ex-Im Bank, and outlined how U.S. companies can succeed in an increasingly competitive global environment.
“American products are the best in the world. And on a level playing field, they often come out on top. But, today more than ever, foreign governments are willing to do whatever it takes to close a sale – putting massive resources behind their chosen exporters, which are often state-owned enterprises.”
“In this year’s competitiveness report, we found that China, Korea, Japan and others are ramping up government export support… Yet, here at home, Congress has required the Treasury Department to begin negotiations with our competitors to end export credits…To end export credits when our competitors are playing by a completely different set of rules…This would be a self-inflicted wound our economy cannot sustain.”
“Make no mistake, foreign governments would love to see Ex-Im go out of business and swoop in and snatch the $50 billion worth of exports we financed last year. They would love to have those 255,000 American jobs for themselves. Failing to reauthorize our charter next year is a particularly bad idea in light of the growth of the global middle class and the unprecedented competition America faces from Asia and Russia, among many others.”
Commercial bank capacity has declined and cost of funds has increased worldwide since the global financial crisis, shifting the volume of demand from commercial lenders to export credit agencies (ECAs), according to Ex-Im Bank.
The global financial crisis has altered the landscape, affecting economic progress in Europe while manufacturing prowess has vastly improved in Asia. Many Asian countries have ambitious export plans to gain market share and the financing that goes along with it.
U.S. exporters compete in many markets and sectors that other countries have targeted as a “national interest,” either explicitly as part of their national policy, or implicitly by making available a range of official financing tools intended to maximize the flow of national benefits.
More and more financing is being offered outside of OECD guidelines. But it’s not just interest rates. It is open season on other inducements as non-OECD countries continue to use financing to sway purchase decisions, according to Ex-Im Bank.
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