In a rarely used legislative maneuver, 218 House members on Oct. 9 signed a 'discharge petition' that will require a House floor vote on a bipartisan, bicameral bill to reauthorize the Export-Import Bank of the United States (Ex-Im). That vote will come as early as Monday.
And not a day too soon.
Since Ex-Im's charter lapsed on June 30, the Chamber has chronicled the human cost as American businesses of all sizes have lost sales and faced the grim reality of 'made in Washington, D.C.' layoffs.
But it's long been clear that ample majorities in both chambers of Congress support Ex-Im. The Senate approved the same bill to reauthorize Ex-Im by a vote of 64-29 on July 27, and the House discharge petition attracted the necessary majority of signatures in just a couple of hours.
As the House vote nears, it's important that members of Congress reflect on the facts: American exporters are usually able to secure export finance from commercial banks, but in specific circumstances, Ex-Im is indispensable.
First, Ex-Im is necessary because - in the case of many small businesses - commercial banks often refuse to accept foreign receivables as collateral for a loan without an Ex-Im guarantee.
For example, W.S. Darley & Co.'s export loan contract was put on hold after Ex-Im's expiration. A firetruck manufacturer based in Illinois, W.S. Darley has already lost a $7 million contract because it couldn't access Ex-Im financing, and it expects to lose several more before Ex-Im's charter is renewed. Until then, Peter Darley, the company's chief operating officer, says his employees are worried about their jobs.
Indeed, buyers overseas increasingly expect vendors to offer financing. Without Ex-Im, many U.S. small businesses would be unable to extend terms to foreign buyers and would have to ask for cash-in-advance. In these cases, sales would most likely go to a firm from another country that can count on the backing of an official export credit agency (ECA) like Ex-Im. These realities are among the chief reasons why small businesses account for nearly 90 percent of Ex-Im's transactions.
In addition to these direct beneficiaries, tens of thousands of smaller companies that supply goods and services to large exporters also benefit from Ex-Im's activities. This includes companies such as GE, which has more than 30,000 small and medium-size suppliers, or Boeing, with more than 14,000.
Second, Ex-Im is necessary because ECA support is often required even to bid on a wide variety of foreign business opportunities.
This includes requests for tender from both public and private sources, including opportunities as diverse as infrastructure projects, nuclear power plants, and contracts to provide medical equipment to hospitals. For example, New Jersey-based Hoffman International, a construction equipment dealer and distributor, had to place on hold a $73 million export deal to Cameroon because it couldn't meet the requirement for financing from an official ECA.
Indeed, a report by the American Action Forum found that - in at least 27 countries - Ex-Im financing or guarantees are essential because these countries require support from an official ECA before they will even consider a bid. These countries include seven ranked by Bloomberg among the world's fastest growing economies, and together they make up nearly 40 percent of the world's population.
According to AAF, American companies face a difficult choice: 'Remain frozen from competing for any projects in those 27 countries - their bids won't even be considered without Ex-Im's backing - or relocate employees and facilities.'
It's worth pointing out that U.S. lawmakers and regulators can do nothing to alter these requirements - they are imposed by foreign governments and companies. In a world where competition in global markets is already fierce, it would be a rude awakening for American businesses to find themselves completely excluded from opportunities such as these.
Third, Ex-Im is necessary because it is par for the course for expensive capital goods to be sold worldwide with unashamed ECA backing, which can make or break a deal.
Consider the March ruling of the D.C. District Court, in which it rejected every argument that Delta made in its suit against Ex-Im. The court found that, without Ex-Im support, 'airlines simply will purchase from Airbus instead of Boeing due to the presence of foreign [export credit agency] financing.' It's that simple.
The court further found U.S. airlines have access to financing alternatives that are superior to Ex-Im. As a matter of fact, Ex-Im financing is three times more expensive than Enhanced Equipment Trust Certificates (EETCs), which are asset-backed bonds used by domestic airlines to finance plane purchases.
Refusing to reauthorize Ex-Im would put U.S. companies selling expensive capital goods such as aircraft, locomotives, nuclear reactors, and turbines at a unique competitive disadvantage because their foreign competitors all enjoy ample financing from their home-country ECAs - enough to easily knock U.S. companies out of the competition.
For some industries, executives will face the question of whether to shift production to locations where ECA support is available. Indeed, it's already happening.
At a time when other trading nations are dramatically expanding the export finance they make available through their national ECAs, Congress should consider carefully the companies and workers that have been left high and dry without Ex-Im.