Guest Opinion: The state economy’s most important bank is in the other Washington — and it’s at risk of being discontinued.
By Eric Schinfeld, August 8, 2014, Crosscut
What is the most important bank for Washington state’s trade economy? Here’s a hint: it’s not in Washington, and it’s not a traditional bank! Give up? It’s the Export-Import (Ex-Im) Bank of the United States in Washington, D.C., the nation’s official export credit agency!
A vital resource, the bank allows our nation’s exporters to make international sales they ordinarily would not be able to finance. It provides loans and export insurance to U.S. companies selling overseas as well as loans to foreign buyers to purchase American products.
This isn’t just a random pop quiz for my own titillation, however. I bring it up because it is essential that all of us in Washington start taking action to protect it. Although the Ex-Im Bank is critical to the success of many Washington state and U.S. businesses, especially small businesses, it is at risk of expiring very soon if Congress does not take action to reauthorize it by September 30.
Many of you probably remember my column from a few years ago (you know, the one you read every few weeks — just for nostalgia’s sake), extolling the importance and urgency of reauthorizing the Ex-Im Bank. And happily, in large part thanks to great engagement from our state’s leaders, the Ex-Im Bank was indeed reauthorized a few years ago after a tough fight. Unfortunately, that reauthorization was only for two years, and — as a great man once said — it’s déjà vu all over again.
The case for reauthorizing the Ex-Im Bank is very straightforward, particularly for Washington, which exports twice the national average and where 40 percent of jobs are tied to trade. In the last five years, the Ex-Im Bank has financed $91 billion of Washington exports from 165 businesses, over 70 percent of which were small and medium-sized businesses. These are businesses like L’Ecole 41 Winery in Walla Walla, Manhasset Specialty Company in Yakima and Columbia Machine in Vancouver. By the U.S. International Trade Administration’s calculation, the Bank supported 120,000 jobs in Washington state in 2013 alone.
So how do the Ex-Im’s programs work, you ask? Exporting companies can usually take advantage of either the Global Credit Express Direct Loan Program, which delivers short-term working capital loans to small businesses, or the Working Capital Guarantee Program, which backs commercial lenders to make more working capital loans to exporting small businesses. In addition, the Ex-Im Bank helps the exporting business obtain Ex-Im Export Credit Insurance, which limits their international risk by insuring their export sales. What’s more, the bank’s Foreign Buyer Financing Program loans foreign buyers money to finance their purchase of U.S.-made products.
Take, for example, Vista Clara, a Mukilteo-based company that develops, manufactures and provides services for groundwater detection instruments. Since private lenders often will not finance exports, Vista Clara relies on Ex-Im Bank programs to insure all of their international sales. With the help of the Ex-Im Bank and Export Finance Assistance Center of Washington, the company’s international sales have grown to be 44 percent of Vista Clara’s business. As a result, the company has hired six more full-time employees over the past three years, and now supports a total of eight full-time and three part-time Washington employees. Vista Clara President and Founder, Dave Walsh, says the company’s success internationally has sparked domestic interest in their products as well.
The Ex-Im Bank has also allowed Bellevue-based Pacific Valley Foods, a frozen, canned & dehydrated food exporter, to access markets that have traditionally required credit terms. In the past, they have had to pass up these markets due to the credit risk involved. Using Ex-Im Bank’s Export Credit Insurance Program though, Pacific Valley Foods President John Hannah says they have been able to increase sales by 10 percent or more.
Without the Ex-Im Bank, many of our state’s employers would be at a competitive disadvantage to the foreign companies whose countries offer similar support. All of our nation’s key trading partners have equivalent agencies to the Ex-Im Bank, and many of them have higher funding levels. Failure to reauthorize the Ex-Im Bank would be the equivalent of unilaterally disarming the U.S. in the face of growing international economic competition.
By the way, the Ex-Im Bank operates at no cost to taxpayers. In fact last year the Bank earned over $1 billion for the federal treasury that helped pay down other government obligations. What’s not to love about a government program that increases exports, creates jobs, costs taxpayers nothing and even earns a profit?
Our nation and state need the Ex-Im Bank to ensure our employers can successfully sell their products in the global marketplace. We can’t risk allowing a program that supports so many jobs in Washington state to expire.