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Policy Brief 11-6
Revitalizing the Export-Import Bank
by Gary Clyde Hufbauer, Peterson Institute for International Economics
and Meera Fickling, Peterson Institute for International Economics
and Woan Foong Wong, Peterson Institute for International Economics
May 2011
Trade finance will play a crucial role in President Barack Obama's goal of doubling US exports by 2015. Almost 90 percent of exports depend on trade finance in some form—direct credit, credit insurance, or loan guarantees. Even though official export credit agencies (ECAs), including the US Export-Import Bank (Ex-Im Bank), play a small part in the whole scheme of export finance, they occupy a crucial niche. They are "lenders of last resort," taking risks shunned by the private market. Ex-Im Bank is up for reauthorization in 2011, so this is a good time to review its prospects and mandate. As new authorization legislation is drafted, the authors recommend that Congress address seven policy issues: (1) enlarge the Ex-Im Bank's funding level to the point where it can finance 5 percent of US exports of goods and services; (2) draw private banks to play a more active role in financing exports of small and medium-sized enterprises; (3) cut the local content requirement from the bank's current level of 85 percent to a maximum of 50 percent; (4) authorize the Ex-Im Bank to support both service components of merchandise exports and stand-alone services exports in a manner similar to the approach of other ECAs; (5) repeal the cargo preference requirement; (6) move the determination of "adverse economic impact" to the US International Trade Commission and limit the review to countries that are subject to antidumping duties, countervailing duties, and safeguard orders; and (7) use concerted pressure to bring China into the OECD Arrangement on Officially Supported Export Credits.
View full document [pdf]
RELATED INTERVIEWS
The Ex-Im Bank's Troubled Flight Path March 2, 2012
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Policy Brief 12-21: How Can Trade Policy Help America Compete? October 2012
Policy Brief 11-20: The United States Should Establish Permanent Normal Trade Relations with Russia November 2011
Policy Brief 11-8: What Should the United States Do about Doha? June 2011
Op-ed: Trade: An Opportunity About to Be Lost? May 20, 2011
Op-ed: New Imbalances Will Threaten Global Recovery June 10, 2010
Op-ed: How Best to Boost US Exports February 3, 2010
Op-ed: Cooling the Planet Without Chilling Trade November 13, 2009
Paper: Submission to the USTR in Support of a Trans-Pacific Partnership Agreement January 25, 2010
Working Paper 09-2: Policy Liberalization and US Merchandise Trade Growth, 1980–2006 May 2009
Policy Brief 09-2: Buy American: Bad for Jobs, Worse for Reputation February 2009
Paper: Report to the President-Elect and the 111th Congress on A New Trade Policy for the United States December 17, 2008
Op-ed: The Payoff from Globalization June 7, 2005
Policy Brief 08-5: World Trade at Risk May 2008