Export Import Bank Update
July 7, 2017
In April, it was announced that President Donald Trump would nominate former Republican members of Congress Scott Garrett and Spencer Bachus to two vacant positions in the Board of Directors of the U.S. Export-Import Bank (Ex-Im). On June 20th, the President formally sent the nominations to the Senate where the next step is a confirmation hearing. As a reminder, the current makeup of the leadership at the bank is an Acting Chairman and President, and an Acting First Vice President, whose terms expire on July 19th, 2017. With only two of five possible members on the Board currently, the Bank’s Board lacks a quorum and is unable to approve financing for transactions over $10 million.
Of the five members of the Board, not more than three shall be members of any one political party. Therefore, to establish a quorum that will continue past July 19th, there are two options.
- The President can nominate additional Board members, which can include one Republican and two Democrat or Independent members.
- The President can extend the term of the current board members for up to one year.
Senate Banking Committee Chairman Mike Crapo committed to holding confirmation hearings for any Administration nominees to the Ex-Im Bank Board.
This issue is critical to the U.S. aerospace industry because our companies rely on Ex-Im to help manage the risks of financing exports when private sector lending is unavailable. In fact, currently Ex-Im has about $30 billion of potential exports waiting to be authorized by the Bank. Those exports would support existing domestic manufacturing and have the potential to create even more aerospace jobs in the U.S. Meanwhile, international competition supported by some 96-foreign government-backed export credit agencies are aggressively pursuing sales to former U.S. customers by offering export financing for their countries’ exports.
Additionally, along with aiding direct exporters, increased exports from Ex-Im financing ensures a healthy pipeline for the essential exporters—the small and medium sized companies that make up the industry’s supply chain. These small- and medium-sized businesses represent 56 percent of the value of all U.S. aerospace and defense exports. While their products may be obscured from the public view, every Ex-Im backed aerospace sale enables the sale of the output from thousands of these manufacturers. Additionally, products from small- and medium-sized businesses also support the maintenance, repair and overhaul required over the service life of aerospace products.
By promoting domestic policies that bolster U.S. aerospace and defense manufacturing, essential exporters are more competitive in global markets. Without a quorum on the Ex-Im board, the U.S. will face an uneven playing field and lose the opportunity for job growth in U.S. manufacturing. For example, since the Ex-Im bank was fully functional in July 2015, Ex-Im authorizations for satellite and launch services have dropped from nearly $2 billion in 2013 and 2014 to roughly $4 million in 2015. In that time, at least two U.S. satellite makers have reported that they lost business due to the lack of available Ex-Im financing. If the situation is not changed, reduced sales of commercial satellites will impact national security and the potential for new domestic manufacturing jobs.
We at AIA are encouraged that President Trump has begun the process of appointing Directors to the Ex-Im Bank’s Board to restore the Bank to full functionality. We would like to see a full quorum at Ex-Im so we can level the playing field and give U.S. companies the best chance to attract new customers and sign new deals. When we increase aerospace exports, our industry can sustain and create domestic jobs, spur innovation, and maintain our global leadership in this field.