WASHINGTON — The White House is ramping up pressure on Congress to reauthorize and renew the charter for the Export-Import Bank, a key tool that helps small businesses, including U.S. apparel and textile companies, secure financing for exports.
President Obama convened a group of small businesses at the White House on Wednesday, to discuss the expiration of the bank’s charter at the end of June as well as the importance of reauthorizing it.
“We’ve got companies here that range from 12 employees up to 500 employees,” Obama said. “All of them are savvy business people. If, in fact, they were able to make effective financial arrangements in the private marketplace, they would do so. But private financing in the traditional banks are not able to provide the same service or have the same expertise about dealing with some of these other markets that the Export-Import Bank does.”
“So this should be a no-brainer….From coast to coast, people are being affected by this, and we heard stories from these companies right now that orders are on hold, business is in danger, potentially expansions will stall, fewer employees will be hired if we do not get this done. So we need to get this done,” Obama added.
Separately, supporters on Capitol Hill also advocated Wednesday for the renewal of the Ex-Im Bank, as the Congressional Joint Economic Committee released a report Tuesday outlining the benefits of the bank.
The Ex-Im Bank’s charter has become a political football on Capitol Hill in recent weeks. While it has enjoyed bipartisan support for years in Washington, some conservative Republicans have begun to argue that it is a form of corporate welfare that benefits large corporations. Proponents disagree and argue that the bank provides critical services such as credit guarantees and insurance for small to medium-size exporters.
Last year, the bank financed the sale of $27.5 billion in exports through more than 3,700 transactions, including approximately $16.6 billion in manufacturing exports and supported some 164,000 U.S. jobs, according to a White House fact sheet.
The Ex-Im Bank is an independent federal agency that provides financing mechanisms to help foreign buyers purchase U.S. goods. Its mandate is to help “fill gaps” in private export finance to boost U.S. job growth at “no cost to American taxpayers,” according to the White House.
The bank provides several financing tools, including export credit insurance, working capital guarantees, and guarantees of commercial loans to foreign buyers.
“Because it is backed by the full faith and credit of the United States, Ex-Im is able to assume credit and country risks that the private sector is unable or unwilling to accept,” the White House said.
The bank has provided critical credit insurance and guarantees for textile producers and apparel brands over the years. A coalition of industry groups has also been calling on the bank to expand its tools to better tailor them to serve apparel, textile and footwear companies.
Jay White, president of Morrison Textile Machinery, based in Fort Lawn, S.C., who also sits on the advisory committee at Ex-Im, said the bank provides important tools for his own company, which manufacturers and exports textile dyeing and finishing machinery for fabric producers, primarily in the denim category.
“Really anyone who is exporting yarn, fabric or equipment, or somebody doing finished apparel is going to want some assurance of payment,” he said. “Ex-Im offers credit insurance, which is very important inasmuch as most commercial banks in the U.S., I would venture to say, are not real crazy about doing guarantees of payment with a foreign bank. They want to know there is another layer of comfort there. The Ex-Im bank does that. It sells credit insurance on products and makes sure that somebody doing a deal and shipping say 10 containers of yarn to Nicaragua is going to get paid. Selling on open account overseas can be fairly risky, given the fact that you don’t have U.S. law on your side. It just good business practice to do everything possible to make your assuredness of payment as rock-solid as you possibly can.”
White said the expiration of the bank’s charter has already impacted his company.
“I had one pending [application] myself that is in limbo today,” he said. “I’ve got a machine going to Tunisia, North Africa, but without the Ex-Im credit insurance coverage it is going to be hard for me to do the deal. I’ve got a German competitor that now has leverage over me.”
Augustine Tantillo, president of the National Council of Textile Organizations, said renewing the Ex-Im charter is a “significant agenda item for NCTO.”
“We have been a part of various coalitions that strongly support the re-charter of the bank. We think it’s absolutely essential to U.S. manufacturers and exporters to have this asset in their toolkit, Tantillo said.
Stephen Lamar, executive vice president at the American Apparel & Footwear Association, also noted the importance of the bank and said his association has been working with others, urging the bank to enhance its tools to make them more suitable for apparel, footwear, textile and cotton supply chains.
He said he has had discussions with members of Congress on renewing the bank’s charter.
“There is a lot of demand for products that are made in the USA, especially in other countries,” Lamar said. “From a finished-product side, there is a lot of export potential and opportunity.”