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U
Sean Mulvaney
Enabling Export Credit to
Support Growth: The Role of
the Export-Import Bank
of the United States
US trade with the rest of the world, whether through
exports or imports, is an essential thread woven
throughout the fabric of the US economy. Such trade is
a key source of growth and competitiveness for the
American companies as well as of boosting the quality
of life for American citizens. Going forward, a critical
task for the United States is how we leverage the prosperity beyond our borders into more growth and prosperity here at home. It will not simply just happen.
Moreover, it will not be the responsibility of just a few
large US companies. Increasingly, US small and medium sized enterprises (typically companies with 500
employees or less) need to engage in international trade.
With 95% of the world’s consumers living outside our
borders, more US companies must look abroad. Of the
US’s 30 million companies, only 1%, or 280,000 companies, export and of those, 58% export to only one market. To engage successfully in cross-border trade, US
companies must:
•
Develop cross-cultural skill sets in sales, marketing
and customer service.
•
Learn how to transport goods efficiently around
the world.
•
Acquire more knowledge of the various methods
for receiving foreign payment or extending credit
internationally.
Going forward, a critical task for the United
States is how we leverage the prosperity
beyond our borders into more growth
and prosperity here at home.
How Can NACM/FCIB Members Leverage the
Export-Import Bank for Overseas Sales?
In the areas of pre- and post-export finance, the ExportImport Bank of the United States (Ex-Im) can play a
support role to US exporters. Guided by specific parameters as authorized by Congress and the President,
Ex-Im can help US companies secure working capital,
mitigate foreign buyer payment risk or provide assistance to facilitate credit to foreign buyers. For many US
exporters, this assistance can make a difference. When
asked about the largest obstacle when selling overseas,
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41% of US exporters worry about getting paid, according to a 2013 survey conducted by the National Small
Business Association and the Small Business Exporters
Association.
As some readers may know, Ex-Im is the official export
credit agency of the US government. The agency is selfsustaining, meaning it does not require a taxpayer
appropriation of resources. Fees are charged to cover its
administrative and program expenses. Reserves are set
aside to cover losses should Ex-Im incur a default on its
credit activities. As it implements its programs, Ex-Im
aims to supplement and not compete with private sector
trade finance.
For 80 years, Ex-Im’s mission has been to support US
exports and US jobs. The Bank’s purpose is twofold.
First, the Bank seeks to ensure a level playing field for
US exports in the global marketplace by attempting to
make sure that buyer decisions are based on price and
quality, not state-sponsored financing. Approximately
60 countries around the world have official export credit agencies that operate with the intent of supporting
their national exporters and exports. Without Ex-Im,
US exporters would not have a defensive tool to combat
foreign ECA supported competition.
And second, Ex-Im aims to fill trade finance gaps the
private sector is unable or unwilling to provide. To
implement the mission, Ex-Im uses a variety of products such as insurance, guarantees and direct lending
which span a spectrum of pre- and post-export credit
needs. In FY 2013, Ex-Im generated $27 billion in credit authorizations supporting $37 billion in US exports
and over 200,000 American jobs.
Ex-Im Working Capital Guarantees Can
Maximize Borrowing Potential
Dependable sources of working capital can be critical
for a company’s financial stability and expansion. Private lenders are often unwilling to finance the working
capital needs of US companies if the output is destined
for overseas customers because of the perceived foreign
payment risk.
Ex-Im’s working capital program assists in obtaining
loans to produce goods or services for export. The